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DairyProfit Update: Oct. 13, 2011


Oct. 13, 2011


Casey introduces Dairy Advancement Act

U.S. Sen. Bob Casey (D-Pa.) introduced the Dairy Advancement Act (S. 1682), Oct. 12, at least the fifth bill addressing federal dairy policy reforms introduced in Congress in the past couple of weeks. 


The proposal would give dairy producers a choice in risk management tools by allowing them to continue to participate in the Milk Income Loss Contract (MILC) program, or receive subsidized Livestock Gross Margin-Dairy (LGM-Dairy) revenue margin insurance.


It doesn't mention supply management.


This bill repeals the Dairy Product Price Support Program, and establishes a $15 million/year low-interest loan program for processors to retrofit plants and shift their focus to innovative products in demand globally.


This bill encourages milk pricing reform by simplifying the current federal order four-class system to two classes – fluid and manufacturing – and requiring USDA to come up with a federal order proposal by early 2014. The proposal seeks to improve dairy price and volume reporting by expanding the reportable commodities and increasing reporting  frequency, and requires USDA to audit the reports.


DPAC applauds Dairy Advancement Act

At least one dairy organization is on board with the newest dairy policy reform proposal introduced in Congress, and their timing couldn’t have been better. The grassroots dairy producers of the Dairy Policy Action Coalition (DPAC) were in the nation's capitol, Oct. 12, stressing the need for policies that position dairy farmers to benefit from global trade opportunities, when U.S. Sen. Robert Casey (D-Pa.) introduced Dairy Advancement Act (S. 1682). Casey’s proposal contains key elements of DPAC’s “Cornerstones for Change” dairy policy recommendations.


DPAC noted that while trade agreements – including agreements with Colombia, Panama and South Korea – on the same day Casey’s bill was introduced – open doors for U.S. dairy products, the industry must be positioned to walk through those doors with the products that are in demand. 


DPAC, formed in November 2009, is funded by donations from dairy producers in 20 states and the businesses that serve and supply dairy farms in eight states. DPAC has a 20-member board made up of active dairy producers from Pennsylvania, New York, Ohio, Indiana, Wisconsin, Tennessee, and North Carolina, along with ad hoc members from 12 additional states, including Michigan and Minnesota. 


IDFA responds to Dairy Advance Act

Connie Tipton, International Dairy Foods Association president and CEO, called the proposal a step in the right direction, and threw a challenge into the National Milk Producers Federation’s (NMPF) court.


"Now we are getting somewhere,” she said. “The Dairy Advancement Act, offered by Senator Casey, moves the dairy industry towards consensus on a path forward. Most importantly, the bill will not hamstring our industry with a new government program to limit milk supply as does the (U.S. Rep. Collin) Peterson (Dairy Security Act) proposal. It sets no limits on the ability of dairy farmers to grow their businesses, and offers a safety net without strings attached.  


"Although this bill moves us in the right direction, the unwillingness of the NMPF to compromise and insist on proposals that will constrain the industry by limiting milk supply is disappointing,” Tipton continued. “NMPF continues to refuse to seek consensus by insisting on the Peterson proposal that forces dairy producers to accept supply controls if they want to participate in margin insurance.”


MARKETS: Butter higher, Class III futures slightly higher

Closing on Thursday, Oct. 13:

Cheddar barrels: unchanged, at $1.73/lb.

Cheddar blocks: unchanged, at $1.68/lb.

Butter: up 1.5¢, to $1.8350/lb.

Extra Grade nonfat dry milk: unchanged, at $1.58/lb.

Grade A nonfat dry milk: unchanged, at $1.49/lb.

Class III milk: steady to higher through June 2012. The October-December 2011 average is now $17.39/cwt., yielding a 2011 average of $18.06/cwt.; 2012 average is $16.62/cwt.


Corn futures slightly lower; soy higher

Corn: -3.0¢ to unchanged/bushel through September 2012. The December 2011 price is $6.38/bu.; 2012 average is $6.37/bu.

Soybeans: +7.2¢ to +17.4¢/bushel through September 2012. The November 2011 price is $12.57/bu.; 2012 average is $12.67/bu.

Soybean meal: +$2.10 to +$5.10/ton through September 2012. The October-December 2011 average is $325.95/ton; 2012 average is $329.84/ton.


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Dave Natzke, Editor