DairyProfit Update for April 26, 2012
Senate Ag Committee leaves dairy title unchanged, approves Farm Bill draft
Federal dairy policy reforms with their roots in the National Milk Producers Federation’s Foundation for the Future program are headed for full U.S. Senate consideration.
On Thursday, April 26, the U.S. Senate Ag Committee approved the Agriculture Reform, Food and Jobs Act of 2012, a bipartisan Farm Bill authored by U.S. Sens. Debbie Stabenow (D-Mich.), committee chair, and Pat Roberts (R-Kan.), ranking member.
The Senate Ag Committee approved the bill on a 16-5 vote, sending it to the full Senate. Voting against the bill were Sens. Kristin Gillibrand (D-N.Y.), Thad Cochran (R-Miss.), John Boozman (R-Ark.), Saxby Chambliss (R-Ga.), and Senate Minority Leader Mitch McConnell (R-Ky.).
The committee approved two amendments to the dairy title, without making major changes to the bill. One, offered by Sens. Johanns (R-Neb.) and Casey (D-Pa.), that authorizes a review of the Market Stabilization program at the end of the five-year farm bill lifespan; and a second, offered by Sen. Gillibrand (D-N.Y.), that extends the MILC program through June 2013, at a reduced rate, so there is a safety net in place while the USDA implements the new dairy margin insurance program. The bill was not amended in any way that diminishes the value of the margin protection or market stabilization elements, according to Kozak.
An amendment previously offered by Sen. Michael Bennet (D-Colo.), which would have struck the Dairy Market Stabilization Program from the bill and and replaced it with a stand-alone dairy producer margin insurance program, was withdrawn. That left the dairy title portion of the bill similar to the Dairy Security Act, introduced in the House by Rep. Collin Peterson (D-Minn.)
To view a copy of the Agriculture Reform, Food and Jobs Act of 2012, including the amendments that were accepted by the committee, visit the Senate Agriculture Committee website at http://www.ag.senate.gov/issues/farm-bill. A section-by-section summary of the bill is also available, as well as an archived webcast of the markup procedures.
Kozak testifies at House ag subcommittee Farm Bill dairy title hearing
While the Senate Ag Committee was approving the dairy title of its own 2012 Farm Bill proposal, National Milk Producers Federation (NMPF) president and CEO Jerry Kozak was extolling the same dairy policy reforms before a House Ag Committee subcommittee hearing. Kozak endorsed the Dairy Security Act, based on NMPF’s Foundation for the Future program, which was introduced in Congress last year by Reps. Collin Peterson (D-Minn.), ranking Democrat on the House Ag Committee, along with Rep. Mike Simpson (R-Idaho).
The full House Ag Committee is expected to write a Farm Bill later this spring, and today’s hearing was part of the effort to consider policy options as part of that process.
March milk COP up slightly
Slightly higher feed costs were offset by slightly lower overhead costs, yielding a small month-to-month increase in milk production costs in March 2012 compared to February, according to USDA’s Economic Research Service. Cost estimates are based on $/cwt. of milk sold.
The preliminary March 2012 average is $22.96/cwt., up 4¢ from February 2012, but $1.26 more than a year earlier.
Total feed costs (purchased and homegrown) were up about 18¢/cwt. from February, at $12.23/cwt., and were $1.46 more than March 2011.
Total operating costs (including feed) averaged $15.32/cwt., also up 18¢ from February, and about $1.45 more than March 2011.
Allocated overhead (including labor), at $7.65/cwt. was down 13¢ from February and about 18¢ less than March 2011.
To see the full report, visit www.ers.usda.gov/Data/CostsAndReturns/TestPick.htm#milkproduction.
2011 ‘dairy receipts’ improved
USDA’s annual “Milk Production, Disposition and Income” summary, released April 25, showed 2011 U.S. dairy producer cash receipts from milk marketings totaled a record-high $39.5 billion, up 26% from 2010 ($31.4 billion) and 62% more than 2009 ($24.3 billion).
Record milk prices in 2011 pushed cash receipts above previous highs set in 2007 ($35.5 billion) and 2008 ($34.8 billion). Producer milk payments in 2011 averaged $20.25/cwt., 23.9% more than 2010’s average of $16.35/cwt. Marketings (whole milk sold to plants and dealers and milk sold directly to consumers) totaled 195.3 billion lbs, 1.8% more than 2010.
Receipts represent gross income, not net income. Based on previous preliminary USDA Economic Research Service milk cost of production estimates, 2011 total production costs averaged $23.12/cwt., up about 10% from 2010. For more ...
Find the full report at http://usda01.library.cornell.edu/usda/current/MilkProdDi/MilkProdDi-04-25-2012.pdf.
Two more states – Ohio and Washington – topped the $1 billion mark for annual milk receipts in 2011, bringing the total to 11, according to USDA’s annual “Milk Production, Disposition and Income” summary, released April 25. Also members of the club in 2010 were California, Idaho, Michigan, Minnesota, New Mexico, New York, Pennsylvania, Texas and Wisconsin.
California and Wisconsin accounted for about $12.9 billion, or about 33% of total U.S. cash receipts from milk marketings in 2011.
Additional individual state information will be provided in a special Dairy Statistics insert in June 2012 editions of Eastern/Western DairyBusiness magazines. For more ...
Find the full report at http://usda01.library.cornell.edu/usda/current/MilkProdDi/MilkProdDi-04-25-2012.pdf.
2011 ‘mailbox price’ sets record at $20.20/cwt.
It may seem like ancient history, but the 2011 federal order all-market “mailbox price” of $20.20/cwt. set a record high, surpassing the previous high set in 2007 by $1.04/cwt., and $3.91 more than 2010/cwt., according to USDA’s Ag Marketing Service.
Mailbox prices are collected and published monthly through federal milk marketing order market administrator offices. The mailbox price is defined as the net price received by dairy farmers for milk, including all payments received for milk sold, and deducting costs associated with milk marketing. All mailbox prices are reported at test; there is no adjustment to 3.5% butterfat.
Even though mailbox prices were high by historical standards, in some cases milk checks likely did not cover expenses, especially when factoring in unusually high feed prices. In 2011, USDA’s U.S. average milk-feed price ratio ranged from 1.73 in May to 2.12 in March, with income over feed costs averaging about $8 for the year. In 2010 by contrast, when milk prices were nearly $4/cwt. lower, the milk-feed price ratio bottomed out in December at 1.98, but peaked at 2.40 in October resulting in a more profitable year in general.
Pennsylvania IOFC lowest since September 2009
Lower milk prices and higher soybean prices pushed Penn State University’s measure of income over feed costs (IOFC) to its lowest level since September 2009, according to Jim Dunn, professor of agricultural economics. The net effect was a decrease in income over feed costs of 66¢/cow/day in March to $5.97/cow/day, down 10% from February. It compares to $5.24/cow/day in September 2009.
The Pennsylvania all-milk price was down 90¢ to $18.70/cwt. Feed costs (to produce 65 lbs. of milk) rose from last month by 7¢/cow/day, to $6.18/cow/day. Feed costs per hundredweight on milk produced averaged $9.51/cwt., up 11¢/cwt. from February.
Based on these estimates, the milk margin (estimated amount from the Pennsylvania all milk price that remains after feed costs are paid) was $9.19/cwt.
To see the full report, visit http://dairyoutlook.aers.psu.edu/
