DairyProfit Update for Nov. 14, 2012
A science/consumer organic advocacy group is urging Congress to revise dairy policy and provide more investment in organic dairy programs as part of the 2012 Farm Bill.
With the election decided, Congress has the opportunity to increase support for the organic dairy sector in the “lame duck” session, according to the Union of Concerned Scientists (UCS), a nonprofit organization headquartered in Cambridge, Mass., with offices in Berkeley, Chicago and Washington, D.C. Based on a report (“Cream of the Crop: The Economic Benefits of Organic Dairy Farms”), by Jeffrey O’Hara, ag economist for UCS’s Food and Environment Program, the group offers four primary policy recommendations:
• USDA should revise the federal milk marketing orders, which establish the minimum prices dairy processors must pay to farmers. The antiquated minimum-pricing order policies were written in the 1930’s and fail to account for the ways that organic milk production differs from conventional dairy farming.
• Congress and USDA should offer a subsidized insurance program that is customized to the needs of organic dairy farmers. Insurance programs proposed in Farm Bill deliberations are only designed to support conventional dairies.
• Congress should increase funding for organic agriculture programs.
• Congress should fund and the USDA should implement programs that support regional food system development, such as rural development grants.
The organic dairy sector provides more economic opportunity and generates more jobs in rural communities than conventional dairies, according to the report. Source: www.ucsusa.org
More take sides on CDFA petition request
The California Department of Food & Agriculture (CDFA) continues to receive comments regarding a petition for a hearing to consider a change to the state's Class 4b milk pricing formula. CDFA secretary Karen Ross had 15 days to respond to the Nov. 2 hearing request. If a hearing is granted, it could be held as early as Dec. 1.
On Nov. 2, California Dairies, Inc. (CDI), Dairy Farmers of America Western Area (DFA) and Land O’Lakes, Inc. (LOL) submitted the petition, requesting an emergency public hearing to consider a change to the whey factor in the Class 4b pricing formula.
Supporting the call for a hearing were Alfred and Reis Soares, Alfred Soares Dairy; California Dairy Women president Linda Lopes; Lorinda Dairy’s Loren Lopes; and Joe Augusto, president, California Dairy Campaign.
Calling for CDFA to deny the hearing request were Hilmar Cheese Co. and Los Altos Food Products, Inc.
The petition specifically requests a temporary modification to the sliding scale that translates market prices for dry whey into higher monetary contributions to the California Class 4b price. This change to the Class 4b milk pricing formula would remain in place for 12 months and would represent the full value of whey as contained in the federal order Class III pricing formula.
Previously, the producer organization, Western United Dairymen (WUD), and the state’s largest processor group, the Dairy Institute of California (DIC), submitted letters on opposite sides of the petition request.
For more information on the petition and comments, visit http://www.cdfa.ca.gov/dairy/uploader/postings/petitions/
As Congress moves toward consideration of a 2012 Farm Bill during its “lame duck” session, not all dairy groups approve all elements of dairy title contained in both Senate and House Ag Committee versions.
In a letter to northeast congressional representatives and leaders in the House of Representatives, the Northeast Dairy Foods Association Inc. (NDA) expressed opposition to the bills’ current market stabilization program, instead urging including the Goodlatte-Simpson amendment.
NDA supports passage (of the Farm Bill), but “strongly opposes the market stabilization policy being pushed through by producer groups,” according to Bruce Krupke, executive vice president. “The northeast U.S. could soon become a region where there is not enough raw milk available for processing and manufacturing plants due to the increased production of yogurt and ultra-pasteurized dairy products. Any national policy that discourages production will not benefit dairy producers and restrict growth in the entire industry.”
U.S. feed grain supplies for 2012/13 are projected slightly higher this month, according to USDA’s Feed Outlook report, released Nov. 14.
Based on last week’s Crop Production report, U.S. corn production is forecast 19 million bushels higher and sorghum production forecast up by 4 million bushels. The forecast U.S. corn and sorghum yields are increased 0.3 bushels per acre and 0.9 bushels per acre, respectively, to 122.3 bushels/acre and 51.1 bushels/acre.
Total U.S. corn supplies for 2012/13 are projected up 45 million bushels, but remain at a 9-year low. Tight corn supplies due to drought are expected to result in record-high prices, which will ration demand and lower use. Corn use is projected 17 million bushels higher with increases in food, seed and industrial use. Ending stocks are forecast up 28 million bushels to 647 million bushels, the lowest since 1995/96. Projected 2012/13 world coarse grain supplies, use and ending stocks are increased slightly this month. U.S. projected 2012/13 corn exports are unchanged this month despite a slow start as competitors’ shipments are expected to slow later in the year.
On a September-August basis, 2012/13 feed and residual use for the four feed grains plus wheat is projected to total 114.4 million tons, up from 114.0 million last month and 16.2 million below the adjusted total of 130.6 million for 2011/12. Corn is estimated to account for 92% of feed and residual use in 2012/13, compared with 88% in 2011/12, mostly due to lower expected wheat feeding year-to-year during the September-August period.
MARKETS: Blocks bounce back 5.25¢; Class III futures up, too
Today's market closing prices:
Butter: unchanged, at $1.89/lb.
Cheddar blocks: up 5.25¢, to $1.91/lb.
Cheddar barrels: unchanged, at $1.8275/lb.
Grade A nonfat dry milk: unchanged, at $1.5750/lb.
Extra Grade nonfat dry milk: unchanged, at $1.56/lb.
Class III milk: mostly slightly higher through September 2013. Based on current CME closing prices, the average for November-December 2012 is $20.14/cwt.; the full year 2012 average is $17.51/cwt.; and the 2013 average is $18.45/cwt.
Corn, soybeans and meal futures slightly higher
Corn: 2¢ to 3¢/bushel higher through July 2013. The 2013 average is $6.81/bu.
Soybeans: 1¢ to 13¢ higher through September 2013. The 2013 average is $13.55/bu.
Soybean meal: $0.10 to $2.90/ton higher through May 2013. The 2013 average is $394.36/ton.
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