DairyProfit Update for May 3, 2012
California’s Farmdale Creamery has proposed a new – but old – alternative whey factor for consideration when a hearing is held on California’s Class 4b milk pricing formula, May 31-June 1. The dairy processor said the value of whey used in determining the price farmers receive for milk processed into cheese should go back to 25¢/cwt., as it was prior to adjustments made on Sept. 1, 2011.
In its proposal, posted on the California Department of Food & Agriculture "hearing matrix” website, Farmdale said small manufacturers faced the dual challenge of having to pay for whey disposal, while being prevented from building cost-prohibitive whey processing facilities. Those two factors left small cheese manufactures unable to recoup the whey’s value in the higher milk prices paid to farmers.
Dairy producer organization proposals modify the current sliding scale in the Class 4b formula to allow the whey factor to more closely reflect the whey value generated by the current federal milk marketing order Class III formula. According to WUD, since the sliding scale – with the 65¢/cwt. cap – was implemented, the California whey value averaged $1.93/cwt lower than in federal orders. Looking at April’s comparable milk prices, the California Class 4b price is $13.42/cwt., while the federal order Class III price is $15.72/cwt., a difference of $2.29/cwt.
The deadline to submit alternative proposals was May 1. A public workshop will be held, May 15, in Sacramento, to review all proposals. CDFA will provide some background and limited analysis of the petitions on those proposals. Hearing exhibits will be available for public inspection on May 24, with the hearing, set for May 31-June 1, in Sacramento, Calif.
For more information, visit http://www.cdfa.ca.gov/dairy/dairy_hearings_matrix.html.
USDA’s monthly Dairy Products report was released May 2. March 2012 production (compared to March 2011) and year-to-date (YTD) production included:
• Total cheese output (excluding cottage cheese) was 946.3 million lbs., 3.7% more than March 2011. 2012 YTD production, at 2.71 billion lbs., is up 4.4% from 2011.
• Italian type cheese production totaled 405.4 million lbs., 1.4% more than March 2011. YTD production, at 1.17 billion lbs., is up 2.9%.
• American type cheese production totaled 382.3 million lbs., up 4.1%. YTD production, at 1.10 billion lbs., is up 4.1%.
• Cheddar cheese production totaled 280.6 million lbs., up 5.2%. YTD production, at 816 million lbs., is up 4.1%.
• Butter production was 176.0 million lbs., 6.4% more than March 2011. YTD production, at 526 million lbs., is up 9.0%.
• Dry milk powders: Nonfat dry milk, human – 188.6 million lbs., up 49.9%. YTD production, at 54.6 million lbs., is up 47.5%. Skim milk powders – 11.9 million lbs., down 71.5%. YTD production, at 69.8 million lbs., is down 40.8%.
• Whey products: Dry whey, total – 90.2 million lbs., down 4.3%. YTD production, at 275.7 million lbs., is up 3.4%.
(Due to Leap Day, YTD production in 2012 includes one extra day).
Farmers who plan to add additional help this year may want to consider hiring veterans, according to Gary Hoff and Carolyn J. Schimpler, Department of Agricultural and Consumer Economics, University of Illinois. You may be eligible for a generous tax credit for hiring unemployed veterans. Recent legislation has expanded the Work Opportunity Tax Credit (WOTC) to include qualified veterans who begin work after Nov. 21, 2011, and before Jan. 1, 2013. The amount of the credit depends on a number of factors, including the length of the veteran’s unemployment, hours the veteran works, and the amount of first-year wages paid.
Generally, the credit is 40% of the applicable first-year wages for the qualified veteran. To qualify for the credit, the employer must complete the certification papers when the worker is hired. These forms can be downloaded at:
MARKETS: Barrels fall; Class III futures sharply lower
Today's market closing prices:
Cheddar barrels: down 2.5¢, to $1.47/lb.
Cheddar blocks: unchanged, at $1.5350/lb.
Butter: down 1.0¢, to $1.3450/lb.
Extra Grade nonfat dry milk: unchanged, at $1.1075/lb.
Grade A nonfat dry milk: unchanged, at $1.1475/lb.
Class III milk: -9¢ to -64¢ lower through APril 2013. Based on current closing prices, the 2012 average is $15.36/cwt.; 2013 average is $15.72/cwt.
Corn mixed, soybeans lower
Corn: -0.4¢ to +8¢/bushel through December 2012. The 2012 average is $5.83/bu.; 2013 average is $5.46/bu.
Soybeans: -1¢ to -11¢ through November 2012. The 2012 average is $14.32/bu.; 2013 average is $13.05/bu.
Soybean meal: -$0.10 to -$4.00 through December 2012. The 2012 average is $405.65/ton; 2013 average is $345.29/ton.