DairyProfit Update for Dec. 28, 2012
A motion to approve and distribute settlement funds in the “Southeast Milk” class action lawsuit was filed with the U.S. District Court for the Eastern District of Tennessee Greenville Division on Dec. 21. The plaintiff motion lays out a plan to distribute $145 million in settlement funds from Dean Foods and Southeast Marketing Agency (SMA) and James Baird, less attorneys’ fees and administrative costs.
The initial payment calls for distribution of about $35.5 million, after deducting attorneys’ fees and administrative expenses. Assuming the court approves the motion, 6,165 claims will be eligible for settlement payments. The document contains more than 250 pages of claims (by claimant number) authorized to receive a class action settlement under the motion.
Rust Consulting, class action and claims administrator, proposed to distribute the Dean and SMA/Baird settlement funds to each class member on a pro rata basis, based on each member’s reported production of class-eligible milk sold in Federal Orders #5 and #7 beginning in 2001.
The settlement required Dean to pay $140 million into a settlement fund over approximately four years. Dean made an initial payment of $60 million in February 2012, and will pay $20 million each of the next four years. SMA/Baird paid $5 million into the fund in August 2012.
A trial is scheduled to begin Jan. 15 for remaining defendants: National Dairy Holdings LP, Dairy Farmers of America, Inc., Dairy Marketing Services, LLC, Mid-Am Capital, LLC, and Gary Hanman.
Gearing up to meet growing milk demand to feed the state’s expanding yogurt industry, New York will hold four public hearings, Jan. 4, regarding proposed changes to the state’s concentrated animal feeding operation (CAFO) threshold. All hearings begin at 2 p.m., in Albany, Syracuse, Ray Brook and Avon, N.Y. (For specific locations, click here.)
The proposed changes would allow dairies to grow to 299 cows without facing some costly and extensive environmental permits. The New York Farm Bureau estimated there are 800 dairy farms with 100-199 cows that could benefit from CAFO reforms and expand milk production. If just 10% of those farms add 100 cows to their herd, milk production would grow by more than 160 million lbs. of milk per year.
New York Gov. Andrew Cuomo hosted a “yogurt summit” last August to explore ideas from industry leaders, dairy producers and others to help ensure the state’s yogurt industry has the resources to grow. At the summit, Cuomo announced the state would take action to help dairy producers increase the size of their herds and boost milk production.
Since 2000, the number of New York yogurt processing plants increased from 14 to 29. They doubled production between 2005 to 2011, increasing annual milk use from 158 million lbs. to about 1.2 billion lbs. Most of the increase is due to the introduction and production of Greek style yogurt, which requires three times more milk than traditional yogurt. By some estimates, milk production will have to grow another 15% to meet future demand.
The public comment period ends Jan. 21. For additional information on the hearing and proposals, visit http://www.dec.ny.gov/regulations/87499.html
2013 CMAB, CMMAB assessment rates unchanged
The California Department of Food & Agriculture (CDFA) recently approved the 2013 assessment rates applicable to the California Milk Advisory Board (CMAB) and the California Manufacturing Milk Advisory Board (CMMAB) at 10¢/cwt. These rates are unchanged from the 2012 rates.
These two producer-funded programs conduct dairy promotion and research activities on behalf of
California’s dairy farmers. As in the past, these assessments will be collected from the first handlers who purchase or otherwise acquire possession of milk from producers. Each handler shall in turn deduct such assessments from payment owed to their producers.
These assessments are authorized separate and apart from the 15¢/cwt. assessment of the National Dairy Promotion and Research Board (NDPRB), but qualify California milk producers for a credit toward the NDPRB assessment.
MARKETS: Products unchanged; Class III futures mixed in narrow range
Today's market closing prices:
Butter: unchanged, at $1.4975/lb.
Cheddar blocks: unchanged, at $1.74/lb.
Cheddar barrels: unchanged, at $1.71/lb.
Grade A nonfat dry milk: unchanged, at $1.5575/lb.
Extra Grade nonfat dry milk: unchanged, at $1.56/lb.
Class III milk: -3¢ to +18¢ through November 2014. Based on current CME closing prices, the 2012 average is $17.44/cwt.; the 2013 average is $18.43/cwt.; and the 2014 average is $16.42/cwt.
Corn, soybean futures slightly higher; meal futures mixed
Corn: +2¢ to +4¢ through September 2014. The 2013 average is $6.61/bu.
Soybeans: +4¢ to +7¢ through November 2013. The 2013 average is $13.85/bu.
Soybean meal: -$2.10 to +$1.60/ton through December 2013. The 2013 average is $402.93/ton.
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