DairyProfit Update for Oct. 22, 2012
If the California Department of Food & Agriculture (CDFA) won't do it, maybe the California state Legislature will.
The Western United Dairymen (WUD) board of directors voted, Oct. 19, to advance a bill that would more closely align the whey value in the California 4b minimum milk pricing formula with the federally regulated minimum price for whey found in surrounding states.
The efforts is the latest stemming from a July recommendation by a CDFA panel, denying changes in the 4b formula. In issuing its ruling, the panel stated the “current Class 4b pricing formula maintains a sound economic relationship between the state’s milk production and marketing conditions for manufactured dairy products.”
CDFA subsequently denied another petition, filed Aug. 6, by WUD, seeking an emergency hearing on the Class 4b formula, as well as a six-month, 50¢/cwt. increase in the minimum price for all classes of milk.
“Too many of our dairy families have fallen victim to a milk pricing formula that has failed to capture adequate revenues for producers in the face of extraordinary feed costs,” said WUD President Tom Barcellos. “We have repeatedly petitioned the CDFA for relief to little avail. California dairy families are very concerned about their future and have been voicing those concerns. We’re all agreed on the need for action as soon as possible. The WUD board of directors is committed to finding a solution that works for all of the industry. We find that our avenues to a better cheese price are blocked leading us to a single lane. That single lane leads us to the California legislature.”
WUD staff was directed to immediately craft legislation language and organize bipartisan support. WUD said five state lawmakers pledged their desire to help WUD advance the measure, designed to provide price relief for struggling California dairy families.
Groups threaten Yakima Valley dairies with environmental lawsuit
The Center for Food Safety and the Community Association for Restoration of the Environment (CARE) last week threatened four Yakima Valley dairy farms with lawsuits after a U.S. Environmental Protection Agency report blamed the dairies for contaminating residential wells. CARE said the dairies had 90 days to “stop contaminating local drinking water supplies with runoff from their dairy operations and begin to make amends for the damage they have already caused.”
Representing the two advocacy groups, national public interest law firm Public Justice served 90-day “Notice of Intent to Sue” letters, alleging that the farms have committed repeated violations of federal environmental laws. The notices come three weeks after the U.S. Environmental Protection Agency (EPA) released a 307-page report, saying wells downstream from the R & M Haak & Sons Dairy and a “cluster” of four other dairies in the lower Yakima Valley – George DeRuyter & Sons Dairy LLC, D & A Dairy LLC, Cow Palace Dairy and Liberty Dairy LLC – were contaminated with nitrates, antibiotics and other pollutants.
The notices also alleged reporting violations of the Emergency Planning and Community Right-to-Know Act (EPCRA) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).
To view the “Notice of Intent to Sue” letters, click here.
The 2012 edition of the National Milk Producers Federation’s Dairy Data Highlights is now available. Dairy Data Highlights is a collection of 53 tables and 19 graphs that provides state-by-state and national metrics on all aspects of milk production through 2011. This includes cow numbers, feed costs, relative prices, the sales of milk and dairy products, the difference between farm and retail prices, and trends in dairy products production. The booklet also tracks export and import information. Dairy Data Highlights has been published annually by NMPF for more than 60 years. (Click here for ordering information.)
September 2012 U.S. milk production was down 0.5% compared to a year ago, but revisions to July and August estimates left preliminary quarterly (July-September) production totals above year-ago levels, according to USDA’s September milk production report.
Nationally, September milk production was estimated at 15.71 billion lbs., down 0.5% from September 2011. Cow numbers, at 9.195 million, were down 6,000 from August 2012, and 27,000 less than September 2011. Cow numbers have declined about 76,000 head since peaking at 9.271 million in April 2012.
Cow numbers in the 23 major states was 8.47 million head, 5,000 head more than September 2011, but 25,000 head less than August 2012. Compared to August, September declines in cow numbers are largest in Texas (-4,000) and Arizona, California, Indiana and Iowa (3,000 each). Only Colorado (+1,000) had an increase in cows.
Compared to September 2011, September 2012 declines in cow numbers were largest in Arizona (-8,000) New Mexico (-5,000) and Pennsylvania and Washington (-4,000 each). Compared to a year earlier, largest increases in cow numbers were in Wisconsin and Michigan (7,000 each), Colorado (+5,000) and California, Florida and Kansas (+3,000 each).
The severe drought across much of the U.S. continues to impact milk production and, as a result, dairy product prices and milk prices continue to strengthen, according to Bob Cropp, professor emeritus, University of Wisconsin-Madison.
September 2012’s milk production was estimated to be 0.5% lower than the same month a year earlier, with cow numbers down 76,000 head since peaking in April, and 6,000 head below a year ago. Milk per cow was 0.4% lower in September.
“For the remainder of this year and going into next year, not only high feed costs, but the availability of quality forages in many cases will continue to reduce cow numbers and either decrease or slow any increase in milk per cow, with the greatest impact in the West,” Cropp said. “We can expect cow numbers to continue to decline well into next year, as some dairy producers exit dairying completely and others reduce the size of their dairy herd in response to high feed prices and availability of quality forages. Dairy cow slaughter this year is about 7% higher than a year ago, with slaughter in recent weeks being as much as 10% higher.”
To read Cropp’s full report, click here.
MARKETS: Butter, cheese prices improve; Class III futures mostly slightly lower
Today's market closing prices:
Butter: up 2.25¢, to $1.9025/lb.
Cheddar blocks: up 1.0¢, to $2.01/lb.
Cheddar barrels: up 5.25¢, to $1.97/lb.
Grade A nonfat dry milk: unchanged, at $1.56/lb.
Extra Grade nonfat dry milk: unchanged, at $1.56/lb.
Class III milk: steady to 20¢ lower, November 2012 through September 2013. Based on current CME closing prices, the average for October-December 2012 is $20.71/cwt.; the full year 2012 average is $17.58/cwt.; and the 2013 average is $18.76/cwt.
Soybean, meal futures move higher
Corn: -1¢ through September 2013. The 2013 average is $7.10/bu.
Soybeans: +2¢ to +13¢ through September 2013. The 2013 average is $14.44/bu.
Soybean meal: -$0.30 to +$7.20/ton through September 2013. The 2013 average is $415.40/ton.
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