January 2009 Archived Dairy News
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Friday, January 30, 2009
January Milk Feed Price Ratio is 1.69
Dairy Market Weekly Review  NAJ
January Federal Order Class III Milk Price is $10.78
Confusing Label Claims Brings Nutrition Scoring System
Blood test may screen for mad cow disease: study
Ten Considerations For Culling, Transporting Cattle
CO: Dairy farmers hurt as milk prices sour
MT: Bozeman dairy co-op finds irregularities in audit, launches...
NY: Cheap milk could cripple some dairy farms
WI: Dairy dilemma: Producers receive less for milk produced
Scientists: Cows with names produce more milk
Thursday, January 29, 2009
MILC Payment Rates and Projections
January Federal Order Class III Milk Price Projected to be $11.20
NMPF Calls for Government Help for Dairy Farmers
Dairy farmers seek federal help
Reports: Ag still packs big economic punch in Idaho
Rising feed, falling milk catch farmers in middle
New program will boost consumer confidence in the dairy industry
I-29 Dairy Conference
Leprino lifts dairy farmers' hopes
Wal-Mart buyer waits for perfect milk product
Study: Want more milk from cow? Get to know her
5 am (Dairy Cattle Center)
Wednesday, January 28, 2009|
January 2009 Dairy Market Report
World Ag Expo is Feb 10-12 in Tulare
The milk price crash is here!
ID: Cattle considerations
New England's largest dairy co-op quits hormone
NE: Bailout proposed for hurting dairy industry
WI: DNR Issues Pollution Discharge Permit to Emerald Dairy
NMPF Urges Congress, Obama to Focus Immediately on Dairy Crisis
Baby Calf Health: Colostrum From Neighboring Herds & Amount Cows...
Shenadoah's Pride Dairy Announces $25000 Start Right - End Right...
Australia and allies upset over EU export subsidies
Fonterra denies advocating melamine use in milk scandal
Chocolate milk comes off the bench —kids use it as a sports drink
Happy cows produce more milk, according to researchers at...
Cows with names 'produce more milk'
Tuesday, January 27, 2009
Block Barrel Cheese Price Spread Narrows
There’s no ‘moo’ in the word ‘stimulus’
Putting Genomic Information to Work Topic of March Jersey Seminar
CA: Dairymen hurt by falling prices for their milk
A drop in dairy prices coming to a store near you
Two Japan dairy makers in merger talks-media   Snow Brand Milk Mulls Options
MO: Helping with dairy created solid work ethic
NY: Farmers face loss as milk price falls
NY: Cattle farmer to rebuild after fire destroys his barn in Volney
Reiter Dairy Announces $25000 Start Right - End Right Sweepstakes
2009 Dairy Cow College
WI: Man keeps dairy farming despite serious injury
Canada: Renegade dairy farmer takes on role as lawyer, defending himself
New Zealand: Muscle-building milk extract spawns new dairy company
New Zealand: Milk price recovery seen in 2010
Monday, January 26, 2009
February Milk Payment Will Be At Least $1.3365 per cwt.
Alliance of Western Milk Producers  Dairy CARES Report - Jan 2009
Western United Dairymen Update
Milk Producers Council Weekly Update
Another DFA Lawsuit
CA: Slumping demand for milk washes away dairy farmers' profits
ID: Cattlemen, dairymen battle over herd reduction plans
ME: State postpones slashing milk subsidies
MN: Educator helps dairy farmers in county
MN: Ocheda Dairy completes expansion project
MT: Russians shopping for cattle near Harrison
NC: Bob Scott, folksy governor in turbulent times, dies at 79
OH: Smith Dairy has the scoop on convenience
FL: Cowtown show builds lactose tolerance
First Red and White Champion Tops Farm Show Dairy Contest
South Carolina 4-H members have been selected to serve on a national 4-H level
WI: Unfazed, farmers fend off seasonal freeze
Drugs from genetically engineered poised to debut in US
Friday, January 23, 2009
Dairy Market Weekly Review  NAJ
NMPF Withdraws USDA legal challenge 
February Federal Order Class I Price Will Plunge $5.02
Average U.S. cow Produced 20,460 pounds of milk last year
Dairy Cow Numbers Trend Downward In 2009
NCBA Asks Congress to Oppose Dairy Buyout in Stimulus Package
February milk price won’t cover feed costs
Midwest Winters Challenge Dairy Calf Survival
Spin Trim Introduces Innovative Hoof Trimming Disk for Cattle Industry
Government of Canada Supports Dairy Industry With Innovative Project
Australia: Tassie milker picks up Dairy Week's highest honour
UK: British Cattle Breeders Club's annual event
Thursday, January 22, 2009
December Cold Storage Report
New standards of identity for yogurt could be problematic
2008 All American Winners Announced by Jersey Association 
AR: Plunging Milk Prices Threaten Local Dairies
CA: Dairy processor can pay fine, avoid prosecution
CO: Cattle industry looks to battle tough times
PA: Participation Encouraged Through Discounted Fee For Dairy Summit
Shortage of livestock vets worries Pa.
SDSU Extension: Some dairy cows may be at heightened risk of ...
TX: Dairy Farmers Struggle As Dairy Demand Drops
TX: Ft Fort Worth Stock Show, young competitors' work ethic is also on...
WI: Hearing on Rosendale Dairy slated Thursday
WI: large dairy debated
WA: Sequim FFA loses prize cow to disease
Updated Evaluations Show That Jersey Continues to Rank First for Productive Life
States Hope Obama Will Boost Funds For Renewable Energy
China sentences two to death over tainted milk
Canada: NL project eyes peat bedding for dairy cows
Ireland: Glanbia lament on Dairy performance as Waterford farmers want ...
UK: Export refunds' expected to water down milk prices
Australia: Boyds clean up at dairy week   Llandovery cows top Ilawarras
Wednesday, January 21, 2009
We're About Half Way Through Recession
CA: Farmers try to weather drop in milk prices
MO: Senators told agriculture faces many problems
MN: NFO members say they want dairy stimulus package
PA: Agriculture Department Says Lancaster County Raw Milk Dairy Tests...
PA: Dairy-cow nutrition is topic
RI: Judges like looks of Santos Bros. Farm
Moderate energy diets important in dry dairy cow rations
Cloned milk still a hard sell despite FDA approval
Australian Farmers Criticize EU Dairy Export Subsidies Move
Australia: Warrnambool dairy company cuts farmers' milk prices
Tuesday, January 20, 2009
Market Analysis with Mary Ledman
Dairy Outlook: Favorable Milk Prices, Cheese Production Picks Up
CT: Dairy farmers worrying about proposed milk rulesME: Milk Prices To Plunge
MT: Matching hay quality to range cow's nutritional needs
ND: Dairy farmers face challenges whether they are starting out or established
ND 2008 corn estimate might be off by millions
OH: Whitesels to quit milking
WI: Upcoming WMMB elections
UK: Cow tracks control lameness but design is vital
EU moves unsettle NZ farmers
EU may hand out farm cash for dairy, rural internet
AgriLabs Introduces First Arrival^® with Encrypt™ Paste for Calves
Mireya Hernandez: Mom Was Right - Why You Should Drink Your Milk
Monday, January 19, 2009
DMI Update
CA: Low milk prices force some local suppliers to thin herds
CA: Plunging prices hammer Valley dairy farmers
ID: Demand for grain shrinking; feed costs should stabilize
IN: Regional dairy meetings aimed to help producers during hard times
KS: Ford County man sues dairy farmers' cooperative over prices
NE: Nonny, state's oldest cow, dies
ND: Cow college to be held in New Salem
PA: Manheim farmer wins 2nd in dairy supreme champ contest
PA: Celebrities tackle milking contest at Farm Show
TX: Dairy King: More dairy heifers to be shown at livestock show
TX: 10 things to do at the Stock Show
VT: Farmers Brace for Falling Milk Prices
WI: Farmer looks to future on family homestead
AZ: Agritainment takes root in East Valley farms
Alltech releases 2009 North American Lecture Tour schedule
2009 PDPW Annual Conference is March 17-18
USDA launches biotechnology quality management system (BQMS) pilot project
UK: NFUS president set to quit dairy farming
UK: Rewards will come for farmers, says dairy body
New Zealand: Dairy industry to suffer after EU subsidies
Friday, January 16, 2009
December Milk Production up 1.5 Percent
EU dairy export subsidy measures requires U.S. response
Dairy Market Weekly Recap
Voters wanted change, and consumers want it too
Vilsack eases through ag secretary confirmation hearing
Milk prices poised to take big hit
Controlling Costs Important, Profits Still Possible
Regional dairy meetings aimed to help producers during hard times
Agriculture Committee Chair Peterson Announces Agriculture Committee Members
Emerald Dairy Inc. Retains Consulting for Strategic Growth 1 for ...
Dairy Association defeats several resolutions
CA: Dairy farmers getting squeezed
OH: Young’s Jersey Dairy—
Penn State supplies 'BaRocky Road' ice cream for inaugural gala
PA: Dairy Farm Deals With Brutal Cold
PA: Busy, cold at Hope Acres auction
Cattle Genomics: Sire Types For Commercial Herds
With cows, pedicures are all the rage
So far, dairy clan is true to school
EU restarts export subsidies for dairy
UK: Herds continue to get bigger but fewer
Raw milk becoming more popular with consumers, dairies
China parents of melamine victim paid $29,000
Odds of triplets: 1 in 105,000
Thursday, January 15, 2009
Mid-Week Milk Production Update
Safety Net Not Being Used To Fullest Extent
NMPF Letter to USDA Sec Schafer
Stimulus may bolster dairy industry
PA: Dairy groups hope calf blog promotes industry to kids
TX: Milk prices fall; dairy owners fret   Not good for some
Dairy Cattle: Improving Reproductive Performance
Cow Gas Tax Not Happening
WI: Manure digesters help address the environmental scourge of animal...
WA: C-section saves Christmas calves
Canada: Comment sought on code of care for dairy cows   Newswire
Wednesday, January 14, 2009
Latest Crop Production Report Very Bearish
NMPF Urges Senate to Approve Tom Vilsack as Agriculture Secretary
CA: Dairy farmers getting squeezed
Dairy Association had strong 2008 in Iowa
IA: Prof wants to put cow manure to use
TX: AgriLife Extension workforce program benefits dairy
Australia: All eyes on International Dairy Week
Australia: Dairy farmers face milk price cuts
Tuesday, January 13, 2009
Buyers Picking Up Bargain Cheese
CNN: Falling Milk Prices May Provide Comfort To Food Companies
WI: Fire destroys storage shed on Sinkula dairy farm
Monday, January 12, 2009
Memo further clarifying MILC sign up procedures
USDA Forecasts Lower Milk Production Ahead
Western United Dairymen Update
MPC Weekly Market Update
Alliance of Western Milk Producers Weekly Update
Give consumers more of what they want, when, and where they want it
Vaccine protocol on the dairy farm
CA: Dire times for dairy farmers
CA: An estimated 10% of state's dairy plants could be wiped out
Two men accused of large-scale milk fraud  4 arrested on Oakdale milk theft charges
CA: Raw milk issue a mix-up, says dairy owner
CO: Johnson Dairy files for bankruptcy
CO: Rising costs, falling sales filet ranchers
IN: Rig with 36 cattle overturns
MN: U of M Dairy Days in McIntosh, Ottertail
NH: Dairies are milking it
NY: Medina dairy rebuilds after devastating fire
NY: Failing Economy Hurts Dairy Farmers
PA: Hope Acres Dairy Farm closes
PA: Monitoring Dairy Profitability
PA: Farm show continues to reconnect us to the land
TN: Farmers Say Cow Tax Stinks
TX: Dairy producers can apply for milk production reimbursement
Vermont Dairy Industry Facing Crisis
VA: Cows' Gas Causing a Stink with EPA
WI: Letters: Hearing scheduled for proposed dairy farm
WI: Hildebrandt, Natzke Honored As Outstanding Holstein Boy, Girl
AR: got milk? Local cattle farmers keep milking operation in the family
All-time records for Jersey production set for 2008
First-ever beginning Dairy award application available
National Dairy Shrine award and scholarship applications due at new times  
Alltech releases 2009 North American Lecture Tour schedule
Friday, January 9, 2009
California Class 1 Prices Announced   CDFA Website
National Milk Calls on USDA to clear up MILC confusion
Dairy Market Weekly Review  NAJ
Slumping Economy Changing Dairy Buying Habits
Feed Prices Remain High, Milk Prices Collapse
NM: Tough times for dairy farmers
TX: WINDMILL: Dairy industry boosts economy
UT: Ranchers optimistic for 2009
Wisconsin Dairy Farmers Watch Profits Drop in Milk Business
Wisconsin dairy farmers not yet getting brunt of market tumble
Milk the MILC program
New Zealand: Milk powder returns 'near bottom of price
China plans production controls for deadly melamine
Thursday, January 8, 2009
MILC Payment Rates and Projections Have Been Updated
Mid-Week Milk Production Update
MILC payments begin in February
MILC Payments and Rate Projections
Merial: Protect Cattle From Parasites, Help Clean Up Pastures
Dairy Cattle: Milk Components & Somatic Cell Measurements For Each Cow
Advances in dairy industry have DHIA president excited about future
Dairy leads Idaho ’08 farm receipts
Students receive education in nutrition, fitness
Responsible Drug Use & Consumer Confidence In Beef
Australia: Dairy company struggling to maintain farmer milk price
New Zealand: Farmers braced for drop in milk payout
Wednesday, January 7, 2009
Changing of the Guard in Washington
News for Dairy Co Ops -NMPF
MN: Heusinkvelds have special dairy operation, are Good Neighbors
Southwest Minnesota news and notes
VT: State dairy farms face financially grim year
First Rule For Handling Cows: Slow & Quiet
Canada: This is where milk is collected at the dairy farm
UK: Dairy farmers suffering as milk prices drop
Australia: Small business braces for dairy downturn
Australia: Holstein daughters centre-stage
Tuesday, January 6, 2009
Cash Cheese Prices Have Fallen Below the Government Support Level
Dairy Checkoff Successes: How Producers Helped Drive Sales in 2008  
UK: Dairy business faces loss of 600 head after TB outbreak
UK: Outlook for beef and lamb steady, but dairy fragile
CA: Cows coming to Salinas schools
KS: Dairy farmers crying over too much milk
Moderate demand for quality hay, strong
OH: Dairy scholarships available
WI: Area family wins young farmer award
Canada: Farmers face 2009 with tempered hopes
Canada: Oxford vet charged with cattle embryo fraud
Monday, January 5, 2009
November Dairy Products Report
Drink Milk Between Meals To Reduce Cavities
Podcast: Pfizer Vet Visit: Vaccines and your employees
CA: A bigger dairy industry needs more corn silage
2009 World Ag Expo Top-Five New Dairy Products Announced
2009 World Ag Expo Top New Products Unveiled
ID: Dairymen head into '09 with uncertainty
IL: Dairy dispute takes toll on northwest Illinois
NH: Alvirne instructor wins state farming award
NJ: "Cow taxes" would be detrimental to farmsteads
NY: Dairy farmers navigate turbulent times
NY: Declining milk prices good for shoppers, bad for dairy farmers
The Cow Is Not Like a Switch
WI: We have plenty of poop here; let's harnes
DE: Dairy house replica complete
Canada: Beef program reduces export issues
Australia: Dairy playing games with wheat markets
New Zealand: 1000 cows to be kept in shed
Argentina-Champion dairy cow cloned
Friday, January 2, 2009
December Federal Order Class III Milk Price is $15.28
Alliance of Western Milk Producers
'08 dairy feed costs and milk prices could go down as one of the worst on record
MN: Senator Skogen named dairy ‘Legislator of Year’
PA: Farm Show Friends Bond Over the Love of Cows
As Recession Deepens, So Does Milk Surplus
A story from an Awesome young boy
Thursday, January 1, 2009
Dairy Markets Weekly Review
A Look Back at 2008
Cross Country: 2008 closes on a sour note for farmers -- here's ...
Tags needed to transport dairy cattle in Texas
‘Slick’ gene helps cattle beat heat
Despite economy, consumers go to great lengths for raw milk
Australia: dairy farmers union concerned over milk prices
UK: Farm output 'under pressure'
UK: Dan Buglass: Warning over fall in beef self-sufficiency
Chinese dairy producer pleads guilty for 6 tainted baby formula deaths 
China dairy boss delayed reporting quality issues

Dairy Market Weekly Review
(January 30, 2009) Block and barrel cheese prices strengthened the last week of January. The block price closed Friday morning at $1.15 per pound,  up 7 1/2-cents on the week, 2 cents above support, but 65 cents below that week a year ago when blocks jumped 15 cents, to $1.80. Barrel finished the final week of January at $1.1150, up 1 1/2-cents on the week, but 66 1/2 below a year ago.  

Forty one cars of block traded hands on the week and five of barrel. The NASS surveyed U.S. average block price fell to $1.1529, down 7 cents. Barrel averaged $1.1330, down 13 cents.

Butter closed Friday at $1.1025, unchanged on the week but 12 cents below a year ago. Only one car was sold on the week. NASS butter averaged $1.0724, down a half-cent. NASS nonfat dry milk averaged 82.77 cents, down 0.3 cent, and dry whey averaged 16.59 cents, also down 0.3 cent.

Price support purchases for the week amounted to 600,000 pounds of butter and 8.1 million pounds of nonfat powder, raising the market year’s cumulative totals to 2.1 million and 150.1 million pounds respectively.

January Federal Order Class III Milk Price is $10.78
(January 30, 2009) The down turn in dairy prices continues. The Agriculture Department announced January Federal order milk prices Friday morning and the benchmark Class III milk price plunged to $10.78 per hundredweight (cwt.), down $4.50 from December, $8.54 below January 2008, just 98 cents above the government support price, and lowest it’s been since June 2003. Thursday’s Class III futures portend a bottom of $9.55 in February. March settled at $10.48 and April at $11.24. The peak was $14.85 in December. The January Class IV price is $9.59, down 76 cents from December, and $6.70 below a year ago.  

The NASS-surveyed cheese price averaged $1.2961 per pound, down 45.8 cents from December. Butter averaged $1.0868, down 15.8 cents. Nonfat dry milk averaged 83.18 cents, down a penny, and dry whey averaged 16.96 cents, down fractionally from December.

(January 30, 2009) Consumer research shows many shoppers are confused by all the label claims on the foods they buy so some major grocery chains are responding by employing a new nutrition scoring system.

Dairy Profit Weekly editor, Dave Natzke, talked about it Friday and said that anyone who has been to the grocery store lately knows there are a lot of mixed messages when it comes to health claims on food. With all of the various health and nutrition claims and absence labels, consumers are becoming skeptical.

A new food nutrient scoring system has been created to help make consumer buying decisions easier, Natzke reported. The system, called NuVal, was developed by a team led by Dr. David Katz, chair of Griffin Hospital’s Yale Prevention Research Center and uses a complex formula analyzing 30 nutrients, and then assigns a single number to each food product on a scale of 1 to 100, with the higher the number, theoretically the better the nutrition level.

The scores will be posted next to the price on the supermarket shelf and two large supermarket chains, Price Chopper in the Northeast and Hy-Vee, in the Midwest, have announced plans to score virtually all their food products by 2010.

Creators of NuVal suggest consumers compare food products within a category, and not necessarily across all food products. For example, nearly all vegetable, fruit and grain-based products will score higher than meats.

That concerns Greg Miller, executive vice president of science and research at the National Dairy Council (NDC), who said the system “appears to penalize some nutrient-rich foods, such as dairy and beef.”

Fat-free milk, for example, gets a score of 91 under the  NuVal system, Miller said, but whole milk gets a score of just 52, putting it in the same range as some salt-free organic tortilla chips, and in the  mid-range of many dry cereals.

Miller said the National Dairy Council (NDC), a co-founding member of the Nutrient Rich Foods Coalition (NRFC), is developing a healthy eating education system of its own, and hopes to complete it later this year.

Washington D.C. (January 29, 2009) – With dairy prices collapsing by over $5 for February, one of the largest drops in 50 years, dairy farmers are confronting their worst crisis since the Great Depression. The Dairy Subcommittee of the National Family Farm Coalition, representing dairy farmers from across the country, today sent an urgent letter to Congress asking for emergency measures to be taken in the economic stimulus package and to ensure some of the benefits go to rural America. Paul Rozwadowski, a Wisconsin dairy farmer and chair of the NFFC Dairy Subcommittee, said, "NFFC for over a year and during the entire Farm Bill debate warned we were in a crisis in the dairy industry. These are the worst economic conditions we have ever faced and they are impacting all farmers, whether you milk 50 or 5,000 cows. It is unconscionable for dairy farmers to have to suffer through these low milk prices and we hope Congress can take immediate steps to rectify the situation. Otherwise, we could soon become dependent on Chinese milk powder for our dairy needs."

The letter to Congress suggests 1.) an emergency $17.50 cwt floor price 2.) At least a $3 per cwt differential on all Class I milk (bottled milk) 3.) inventory management that does not rely on ineffective "voluntary herd buyouts." The cost could be offset by a small assessment on all dairy farmers.

In the long-run, NFFC believes the milk pricing system must be reformed and decoupled from the Chicago Mercantile Exchange and begin to address rampant anti-competitive behavior on the part of the few cooperatives and processors who control most of the industry. Arden Tewksbury, a Pennsylvania dairy farmer and head of Progressive Agriculture, said, "The recent $12 million fine by the Commodities Future Trading Commission (CFTC) against Dairy Farmers of America (DFA), the nation's largest dairy cooperative, for price fixing shows how easily manipulated the CME is by our dairy cooperatives, processors and food companies. Dairy farmers need to be asking why prices are crashing and who is behind this since supply and demand have long ceased to function properly in our industry."

In 2007, Senators Bob Casey (D-PA) and Arlen Specter (R-PA) introduced S. 1722, which would have priced milk based on a national average cost of production with an inventory management program to deal with overproduction if necessary. NFFC believes a new pricing system, along with action by  the Department of Justice on their ongoing anti-trust case against a few of the nation's leading dairy cooperatives and processors, are the long-term solutions needed to ensure America has a thriving dairy industry.

Loren Lopes, a California dairy farmer, said, "This catastrophe is hitting all farmers, regardless of region. In California, we are already hearing of farmer suicides. We need real solutions that address our broken pricing system. We do not need morally dubious herd retirement programs that other farm groups have pushed that do nothing to address stable prices for farmers."

NFFC believes immediate action is essential before our dairy economy is completely overwhelmed by bankruptcy. The crisis is not only impacting farmers, but agribusinesses, processors, banks, veterinarians and others who make up rural economies. It is urgent for our nation's food security to ensure the survival of our 60,000 remaining dairy farmers. NFFC believes that rural America and our nation's food supply are important enough for consideration in any stimulus package.  

MILC Payment Rates and Projections
MILC Payment Rates and Projections             
        Year    Boston Class I  Payment        
                Actual  Target  Rate           
        FY 2009                                
        October '08     18.78   18.48   0.0000         
        November        20.58   18.10   0.0000         
        December        18.68   17.68   0.0000         
        January '09     18.99   17.05   0.0000         
        February        13.97   16.94   1.3365         
        March   13.01   16.94   1.7705         
        April   13.28   16.94   1.6473         
        May     13.73   16.94   1.4439         
        June    14.28   17.02   1.2319         
        July    15.10   17.02   0.8638         
        August  16.13   17.17   0.4684         
        September       17.13   17.16   0.0111         
        FY 2010                                
        October '09     17.69   17.35   0.0000         
        November        17.81   17.35   0.0000         
        December        17.96   17.35   0.0000         
        January '10     18.05   17.55   0.0000         
        February        18.03   17.56   0.0000         
        March   18.02   17.56   0.0000         
        April   18.15   17.68   0.0000         
        May     18.28   17.68   0.0000         
        June    18.37   17.77   0.0000         
        July    18.48   17.77   0.0000         
        August  19.75   17.71   0.0000         
        September       20.10   17.71   0.0000         
        Projections based on futures as of 1/27/2009     

NMPF Calls for Government Help for Dairy Farmers
(January 29, 2009) The National Milk Producers Federation has again called for government help for dairy farmers plagued by falling prices. The Federation called on Congress and President Obama to focus immediately on the dairy crisis, according to Chris Galen, in Thursday’s broadcast, stating that they are very concerned about where prices are and where they’re going.  

You’ll recall two weeks ago that Galen reported on a letter sent to outgoing Agriculture Secretary, Ed Shafer, calling for more aggressive help to deal with the collapse in dairy product prices. The letter contained a list of recommendations by National Milk.

One of the most important acts, Galen said, is to improve the ability of manufacturers to sell cheese to the Commodity Credit Corporation (CCC) under the price support program. The reason cheese prices have fallen below the government support price, he said, is that companies are choosing to sell to the commercial market at a lower price rather than going through the hassle of selling it to the USDA.

National Milk has called on USDA to alter its grading and packaging standards so it’s easier for companies to sell product to the CCC at a higher price. The Federation also called for increased purchases of dairy products for government domestic and international feeding programs and to resurrect the Dairy Export Incentive Program, which hasn’t been used for five years.

I asked him about the rumor that was circulating in Washington last week that the so-called stimulus package being crafted in Congress would include a government-sponsored dairy herd buyout program. Galen said that, whenever you have a bill of such magnitude (over $800 billion) to spend, you have just about as many opinions as to where that money should be used.

NMPF is not seeking that, Galen said, but remains focused on utilizing its own six-year old, CWT program and is not looking for a government run program.

The Federation also initiated legal action last month to stop USDA from selling nonfat dry milk through a third party that could have resulted in prices lower than those specified in the price support program. As reported last week, the Department has announced that it will not proceed with this plan.

The new Agriculture Secretary, Tom Vilsack, has only been on the job for a week, Galen said, and is just putting together his team, “so we need to cut him a little slack, on the other hand, a lot of these decisions could be done by people who are not political appointees at USDA and we really think that they need to get moving on these things because it’s apparent that we’re in for a period of low prices, prices are below the price support level right now for cheese and something needs to be done to turn the situation around.”  

Related: 
NMPF Urges Congress, Obama Administration to Focus Immediately on Dairy Crisis

(January 28, 2009) World Ag Expo is February 10-12 in Tulare, California and Expo’s communications director, Steve Knudsen, said in Wednesday’s DairyLine that the show is built on tradition with 42 years of successful agricultural expositions. 2.4 million square feet of exhibit space is there to be explored and some 1600 exhibitors will show their best.

The Dairy Center and the area surrounding it has 600 leading dairy exhibitors, according to Knudsen, that offer new technologies to “enable producers make their dairy more efficient and more profitable.”

Dairy Profit Seminars organized by DairyLine’s sister company, Western DairyBusiness magazine, are also offered daily, plus off the grounds agricultural tours, so Knudsen said “If you’re coming to Tulare, expect the best.”

Expo is the world’s largest farm equipment show and features equipment and services for virtually any agricultural product on earth, irrigation, machinery, tractors, the newest and latest will be at World Ag Expo, he said, in fact last year exhibitors from some 67 countries were at the show.  

Knudsen recommends listeners pre-register on line to save time so they you get to Expo, they can walk through the gate. For more information, log on to www.worldagexpo.com.

(January 27. 2009) The block and barrel cheese price spread narrowed Monday, with blocks inching up a penny and a half, to $1.09, while the barrels held at $1.10. Barrel is at the government support level but the blocks are still 4 cents below.

Dr. Brian Gould, of the University of Wisconsin at Madison, said in Tuesday’s DairyLine that there’s still a lot of uncertainty in the market and, while there have been up ticks in the block price the past week or so, the price has come back down as well. He said he’s waiting for some consecutive upticks and is not sure when that will take place.

Turning our attention to the plunge in the February Federal order Class I base milk price, Gould stated that the fall will trigger a Milk Income Loss Contract Payment (MILC) to producers of at least $1.34 per hundredweight, not factoring the feed cost adjustor.

He said the University uses Friday’s futures markets to update projected upcoming MILC payments and calls for an MILC payment of $1.43 for February, $1.69 for March, $1.71 for April, and $1.56 for May. As of January 23, their projections show six consecutive months where the MILC payment will be at least $1, he said, and show a payment for every month except December. Producers are invited to log on to the “Understanding Dairy Markets” website at http://future.aae.wisc.edu/ for complete, updated details.

(January 26, 2009) Dairy Management Incorporated’s, Joe Bavido, detailed what is called the “Life Cycle Assessment Survey” (LCAS) in Monday’s “DMI Update.” He reported that the dairy industry is working collectively on a major initiative to measure greenhouse gas emissions involved in the production of milk, from the farm to the consumer’s table.

Bavido called the effort “critical” to the industry’s ability to respond to changes in the consumer and retail marketplace, as well as to “protect our industry from undue regulation.”

Dairy processors have already completed an extensive survey detailing their greenhouse gas emissions at the plant level, according to Bavido, and now a detailed survey of dairy operations across the U.S. will be conducted to “accurately measure the current carbon footprint involved in producing milk.”

About 1,000 returned surveys are needed, he said, for a statistically valid analysis and DMI and National Milk are working with participating cooperatives to “make this happen.” The surveys will be mailed out by the co-ops in late January.

The survey is being conducted by a University of Arkansas research team that specializes in LCASs of agricultural production, will be coded, and will not show the name of the individual farm. All information will be confidential, Bavido said, and will become part of a national pool of information that will help determine energy use from the farm to the table.

The survey will ask basic information such as herd size, crop production, manure management, on-farm energy use, and other practices affecting greenhouse gas emissions and a technical support line will be made available for producers to call to get answers to any questions about the survey.

Bavido urged listeners to complete the survey as soon as possible, if they receive one, because “It is critical to sustaining our industry.”

        MILC Payment Rates and Projections             
        Year    Boston Class I  Payment        
                Actual  Target  Rate           
        FY 2009                                
        October '08     18.78   18.48   0.0000         
        November        20.58   18.10   0.0000         
        December        18.68   17.68   0.0000         
        January '09     18.99   17.17   0.0000         
        February        13.97   16.94   1.3365         
        March   13.01   16.94   1.7683         
        April   13.26   17.07   1.7150         
        May     13.67   17.07   1.5294         
        June    14.14   17.24   1.3941         
        July    15.04   17.24   0.9911         
        August  16.00   17.39   0.6248         
        September       16.91   17.37   0.2049         
        FY 2010                                
        October '09     17.49   17.55   0.0270         
        November        17.62   17.55   0.0000         
        December        17.71   17.56   0.0000         
        January '10     17.74   17.76   0.0055         
        February        17.71   17.76   0.0249         
        March   17.74   17.76   0.0112         
        April   18.02   17.88   0.0000         
        May     18.12   17.88   0.0000         
        June    18.37   17.97   0.0000         
        July    18.48   17.97   0.0000         
        August  19.75   17.92   0.0000         
        September       20.10   17.92   0.0000         
        Projections based on futures as of 1/23/2009

Dairy Market Weekly Review
(January 23, 2009)  Cash block cheese closed the Martin Luther King Day-holiday shortened week up a half-cent to $1.0750 per pound, but 57 1/2-cents below a year ago. Barrel closed at $1.10, up a penny on the week but 65 cents below a year ago. Twenty one cars of block traded hands and one of barrel. The NASS U.S. average block price fell to $1.2230, down 12.4 cents. Barrel averaged $1.2630, down 1.7 cents.  

Butter closed Friday at $1.1025, down a penny on the week, and 13 cents below a year ago. Eight cars were sold. NASS butter averaged $1.0772, down 4.2 cents. NASS nonfat dry milk averaged 83.12 cents, down 0.4 cent. Dry whey averaged 16.92 cents, down 0.2 cent.

Price support purchases for the week included 7.7 million pounds of nonfat dry milk and 1.1 million of butter, raising the cumulative totals to 142 million and 1.5 million respectively. USDA announced that it will not use a private third party to resell nonfat dry milk purchased under the price support program as was announced in early December. National Milk has thus withdrawn its legal challenge to the earlier announcement.

NMPF Withdraws USDA legal challenge 
(January 23, 2009) USDA has announced that it will not use a private third party to resell nonfat dry milk powder purchased under the price support program as it previously announced in early December. National Milk has thus withdrawn its legal challenge to the earlier announcement.

The Class III advanced pricing factor remained “the higher of” in driving the Class I value and there was no word on any MILC payment. Obviously the $10.72 base is well below the $13.69 trigger but the new additions to the program, such as the feed cost adjuster, makes it difficult to know what the MILC payment to producers will be until USDA announces it and it remains to be seen when that will happen.

The two-week NASS-surveyed butter price averaged $1.0914 per pound, down 23.5 cents from January. Nonfat dry milk averaged 83.33 cents, down 1.3 cents. Cheese averaged $1.2895, down 50.9 cents, and dry whey averaged 17.01 cents, down from 17.16 cents.

2-week Product Price Averages:

One of the measures of dairy income is the pounds of milk produced by each cow, multiplied by the milk price. The good news, according to Natzke, is that cows earned their wages for most of 2008.

Based on his preliminary calculations, the average U.S. cow produced about 20,460 pounds of milk last year, and the average all-milk price will be about $18.35 per hundred pounds. So, each of the 9 million- plus cows in the United States earned $3,750 in 2008, down slightly from 2007.

Keep in mind, this is gross income, Natzke said, and the extremely high energy and feed costs have to be factored in, so 2008 net income will be sharply lower.

Looking 2009; Natzke said we can expect milk production per cow to remain  fairly steady, but USDA’s all-milk price forecast is somewhere around  $12.20 per hundred pounds. That means average gross income will be less than $2,500 per cow. A $1,250 decline per cow from 2008 means  U.S. dairy farmers’ 2009 gross income could be down about $11 billion from 2008.

On the international scene, 2008 U.S. dairy exports will set a new record and likely top $3.8 billion. Dairy will enjoy a healthy annual trade surplus, but that was shrinking as the year ended. November trade resulted in the second consecutive monthly dairy trade deficit, and most experts predict a weak global economy will stunt exports for much of 2009.

Dairy producers may be asked to participate in what is termed a "Life Cycle Assessment" survey in the near future. Dairy Management Incorporated's, Joe Bavido, talks about it in Monday's "DMI Update," and we have our weekly Pfizer "Vet Visit" in our second half.

December Cold Storage Report
(January 22, 2009) The Agriculture Department’s latest Cold Storage report issued this afternoon shows December butter stocks totaled 118.9 million pounds, down 1 percent or 1 million pounds from November, and down 23 percent or 36.3 million from December 2007. November butter stocks were revised down 200,000 pounds.

The American cheese inventory stood at 541.7 million pounds, up 3 percent or 14.8 million pounds from November, and 6 percent or 33 million above a year ago. November American cheese stocks were revised down nearly 2.3 million pounds. Total cheese stocks amounted to 846.6 million pounds, up 3 percent or 28 million pounds from November, and also up 6 percent or 48.3 million above a year ago. November stock data was revised down 2.7 million pounds. Full Report:  Text | PDF

(January 22, 2009) Some proposed new standards of identity for yogurt could be problematic to dairy producers, according to National Milk’s Rob Byrne. Speaking in Thursday’s DairyLine, Byrne said that the National Yogurt Association petitioned the Food and Drug Administration in 2000 to change the standards.

Bryne admitted that some of the changes were needed, to modernize and allow for technical advances but there were a number of issues in the ingredients standards that, he said, need to be kept so “appropriate dairy ingredients” will maintain a quality and identity of the product as consumers know it.

Some ingredient allowances in the proposal would mean usage based on availability, he said, but National Milk didn’t want to see too many changes to that such as allowing the use of milk protein concentrates that might be imported or allowing too much whey to get into the product.

Maintaining basic quality is the Federation’s primary concern, according to Byrne, who said that the standards are there to protect the product and to protect consumers from getting “a cheap product” in the market place.

The use of other ingredients above and beyond the basic ingredients is included, Byrne said, but the basic minimums on milk, skim milk, cream, etc. need to be kept. Manufacturers can use other ingredients based on functionality or technical reasons, he said, but have to be above and beyond what the minimums provide.

This is just a proposed rule, Byrne said, so there are 75 days to comment, and at the end of March, FDA will review the comments and publish the final rule at some point in the future so there won’t be any immediate changes.

(January 21, 2009) DairyLine listeners got a broader look at the U.S. economy in Wednesday’s broadcast from Bruce Scherr, Chairman of the Board and Chief Executive Officer of Memphis-based Informa Economics, Incorporated. Scherr was the key note speaker at last week’s Dairy Forum in Orlando.

Scherr cautioned that it’s very easy to “be caught in the moment and feel like the economy is never going to turn especially given the press accounts.” He admits that the U.S. is in the midst of a very serious recession, probably the longest, but not likely to be the deepest, since the depression of the 1930s.

He believes we are about half way through and, by the end of summer, we’ll have run the course of a 22 to 23 month recession. The key thing for the dairy industry, agriculture, and the economy in general, he said, is that most economists are looking at a maximum of 8.3-8.5 percent unemployment.

“The trick,” he said, “Is to put people back to work and as they do, the economy will slowly improve but most importantly for the food sector is that, when people are working and have a more positive view of the future, they’re going to spend more and we will see a resumption in the economic growth.”

He doesn’t see dramatic growth and said it will be slow, but there is an enormous amount of policy initiatives underway, both through the stimulus package making its way through Congress in the next one to two weeks and as the new administration takes hold. The second stage is global infrastructure expansion.

We’ve seen that growth the last decade or two in China, India, and Brazil, he said, and they will continue to grow but so will the U.S., Europe, and other industrialized countries around the world.

“That will be quite a dramatic boost, along with improved banking situations,” Scherr said, which he also feels is on the brink of experiencing. There may be bumps in the road, he warned, but there have been lots of policy initiatives.

“There’s a lot of liquidity available,” he concluded. “There’s going to be a surge of policy to grow the economy, and that’s good to bring people back to work and, once people are back to work, it’s positive news for the food sector and the economy in general.”

(January 20, 2009) Market analyst Mary Ledman, Principal of Keough Ledman and Associates in Libertyville, Illinois, said in Tuesday’s DairyLine that she was surprised that Friday's Milk Production report showed more cows were added in December but explained that the all-milk price in November was strong so that carried into December, but she pointed out that 20,000 cows have been added to the nation’s dairy herd since October and “That doesn’t give those in the corporate buying seat any worry that we’re going to run out of milk any time soon.”

She added that “The signal is out there to producers who are watching the market place,” but based on conversations she has had with producers, culling is now being stepped up and that should be reflected in the January and February Milk Production reports but even more so in April and May, “Because those producers who are not watching the markets are probably going to be stunned in March with all milk prices less than $12.00 per hundredweight.”

Ledman admitted that cheese prices ended last week on an up note, but then the Milk Production report was issued that afternoon and “those increases might be difficult to maintain.” She said she’d like to see prices move above support but “that’s going to be a struggle as long as we keep adding cows.”

When asked if she thought cheese would start moving to the government, she said the economic signals are present to do that because, “If you take a CME price of $1.10 per pound and subtract 5 1/2-cents from that, you have the West Coast price for cheese.”

“When you start looking at those types of differences, you would think there would be some cheese moving to the government,” Ledman said. “It’s always been a struggle to get cheese to the government but the longer that we stay here at this price level, it’s going to cause cheese to move to the government.”

The butter situation is much the same, according to Ledman. With a CME price of $1.1050, you have a West Coast price of $1.05, “So whenever the market is less than $1.1050, you can see why West Coast butter will move to the government.” She adds that “We haven’t had the same rejection level of moving butter to the government as what we have with cheese in the past.”  

(January 19, 2009) Dairy Management Incorporated’s, Joe Bavido, continued his series on the major accomplishments of the dairy check off program in 2008 in Monday’s “DMI Update.” He reported that dairy sales in food service saw good sales growth in 2008 and said that the check off has been successful in actually changing the face of foodservice related to dairy.

Case in point is the more than 60,000 restaurants across the country, including Burger King, McDonalds, Sonic, Subway, and Wendy’s that feature milk in single-serve, re-sealable plastic containers. In addition to that, Sonic added string cheese as an option to its kid’s meals and Burger King tested a new macaroni and cheese side item in its kid’s meals.

Dairy producers are also working to sell more cheese in the pizza category, according to Bavido, through a project with Domino’s and others, a project we recently spotlighted here.

“Food service partners have invested more than $100 million in advertising,” Bavido said, “That prominently feature dairy and, over the past five years, DMI food service partnerships have increased sales of milk, cheese. And yogurt by more than a million pounds.” Ingredient marketing also saw impressive growth in 2008, Bavido concluded.

Idaho was up 1.7 percent, despite a drop of 50 pounds per cow. Cow numbers were up 24,000 head. Pennsylvania saw a 2.8 percent decline in production due to a 40 pound drop per cow and 2,000 fewer cows. Minnesota was up 2.3 percent on a 30-pound gain per cow and 2,000 more cows.

The biggest increase occurred in Kansas, up 20 percent on 12,000 additional cows and a 135 pound per cow increase. Texas was next, up 13.7 percent, thanks to 38,000 more cows and a 50 pound gain per cow. Colorado followed with a 6.8 percent gain, New Mexico up 6.1 percent, and Arizona, up 5.6 percent.

The biggest decline was in Pennsylvania, followed by Indiana, down 2.5 percent due to a drop in output per cow of 55 pounds, and Virginia, down 2 percent.

Milk production in the U.S. during the October - December quarter totaled 46.6 billion pounds, up 1.4 percent from the October - December quarter last year.  The average number of milk cows in the U.S. during the quarter was 9.28 million head, 85,000 head more than the same period last year.

Dairy Market Weekly Recap
(January 16, 2009) Cash cheese saw some ups and downs the second week of 2009 as it awaited Friday afternoon’s release of preliminary December milk production data and got word that the European Union is restarting its dairy export subsidies, something that will surely have repercussions on the world dairy market.  

The CME block price inched higher on Monday, then saw three days of losses, but ended Friday on an up note and closed at $1.07 per pound, down a quarter-cent on the week, and 58 cents below that week a year ago when the blocks tumbled 20 cents, to $1.65.

Barrel closed Friday at $1.09, up 2 cents on the week, but 71 1/4-cents below a year ago. Nineteen cars of block traded hands on the week and 13 of barrel. The NASS U.S. average block price fell to $1.3471, down 13.1 cents. Barrel averaged $1.2804, down 15.7 cents.

Meanwhile the cash butter price closed Friday at $1.1125, up a quarter-cent on the week but 10 3/4-cents below a year ago. Only five cars were sold. NASS butter averaged $1.1187, up 1.7 cents.
 
Grade A and Extra Grade nonfat dry milk closed Friday at 83 and 85 cents per pound respectively, unchanged on the week. NASS-surveyed powder averaged 83.6 cents, up 0.4 cent, and dry whey averaged 17.1 cents, down 0.3 cent.

Voters wanted change, and consumers want it too
(January 15, 2009) Members of the nation’s largest dairy processor organization, the International Dairy Foods Association (IDFA), gathered in Florida this week for their annual Dairy Forum. Dairy Profit Weekly editor, Dave Natzke, was there and reported Friday that the overriding theme was echoed by IDFA CEO Connie Tipton, who compared the current state of the dairy industry to the recent presidential election; “Voters wanted change and consumers are telling the food and dairy industry they want change, too.”   

Tipton told the record crowd that consumers want to know how and where food is produced, they want healthier foods with limited added ingredients, they link "processed" foods with obesity, and they want food companies to help solve society’s issues such as global warming and sustainability.

Tipton said current economic conditions are trapping dairy processors in an environment of extreme price volatility, Natzke said, and repeated IDFA’s long-held opinion that the federal milk marketing order system must be overhauled.

She warned that a proposal to expand the Country-Of-Origin Labeling (COOL) law to dairy products would create hardships for processors who use multiple ingredients from multiple sources and produce products in multiple batches.

Tipton and other Dairy Forum speakers said improving the nation’s economy will likely dominate the Obama administration and congressional action for much of 2009, leaving little time to address federal dairy issues.

On a positive note, Tipton said yogurt held tremendous growth potential for the U.S. dairy industry; the proliferation of U.S. restaurants worldwide, a reversal of the current downturn in the global economy, and new trade agreements would benefit the U.S dairy foods industry, according to Natzke.

Other dairy Forum topics covered food safety and traceability, labeling, new innovations, and a dairy industry initiative to identify dairy’s carbon footprint from the farm to the grocery store.  

“Given the state of the economy, the tone of this year's forum was much more open to technology applications in the dairy industry as a way to address dairy food availability and affordability,” Natzke concluded, and said he would address some of those topics in future reports.

(January 14, 2009) While good news for dairy farm profitability is hard to come by these days there was some on the feed front, based on Monday’s Crop Production report, according to Downes-O’Neill broker Dave Kurzawski in Wednesday’s broadcast.

He said the report was “very bearish,” as ending stocks were raised to 1.79 billion bushels, up from December’s estimate of 1.474 billion, and the production estimate was raised from 12.02 billion to 12.1 billion so “We are in a demand bear market.”

The USDA also reduced projected ethanol demand by 100 million bushels and 50 million bushels from feed and export demand and Kurzawski said “The market has been overdone on South American weather concerns.”

He added that grain farmers are likely thinking, “If I get a shot at $4 again on the front month contract or a shot at $4.50 on the new corn contract, I’m going to sell some corn so I think we’ve put a ceiling on the market, at least for the time being prices should fall on the grain side.”

Is it enough to offset falling milk prices? Kurzawski says “Not yet but it’s a hopeful situation.” He warned that we will have “somewhat inflated corn prices,” as he doesn’t see prices falling below $3.00 a bushel, “So we will need to see the Class III milk price come up to put these guys back in a situation where they can be profitable but we’re still a far cry from that.”

Kurzawski’s risk management advice is to look at some options strategy for the second half of 2009, otherwise, “Just sit tight if you haven’t sold anything and not be a seller into this market at this point in time,” Kurzawski concluded. “It’s ready for a correction to the upside, it’s just going to take some time to work through some of the cheese inventory that we have.”

National Milk has made some recommendations to the Agriculture Department to help soften the blow to farmers of falling dairy product and milk prices. Chris Galen outlines them on tomorrow's DairyLine and John Ellsworth has his weekly "Success Strategies" program in our second half.

Buyers Picking Up Bargain Cheese
(January 13, 2009) Cash block cheese saw more strength Monday, up a penny and a quarter, while barrel was unchanged. Alan Levitt, editor of the CME’s Daily Dairy Report, said in Tuesday’s DairyLine that buyers are just picking up bargain cheese as it’s a good opportunity, relative to where prices have been but no one sees this as the start of a new bull market or a big rally.  

Prices remain at six year lows, according to Levitt, and even though Uncle Sam has a standing purchase price of $1.13 on block and $1.10 on barrel, it doesn’t mean manufacturers automatically sell to the government because of the additional costs involved in packaging, grading, and other conditions that take more time and costs. USDA also changed the rules, Levitt said, and no longer buy processed cheese so that’s one less variety we can take off the market.

The last time the government purchased cheese under the price support program was in 2002 and 2003 and in the summer of 2002, cheese prices fell below support in the middle of June and it wasn’t until five weeks later that the first loads of barrel cheese moved to the government and it wasn’t until two weeks after that, that blocks started moving.

And even though there was a 10 month period where blocks averaged $1.13, it was below support much of the time, according to Levitt, and only 14 1/2 million pounds of block and barrel was actually sold to the government. “For whatever reason, manufacturers don’t see the government as a viable option,” he said, “And don’t tend to move a lot of cheese to the government.”

Levitt also reported that the Agriculture Department, in its latest World Agricultural Supply and Demand Estimates report issued this morning, projected that it will purchase 320 million pounds of nonfat dry milk, 20 million pounds of cheese, and 5 million of butter so that will hang over the market for much of 2009.

Forecasts for 2009 were also reduced from last month’s report as “poor returns are expected to manifest themselves in a more rapid decline in cow numbers and slower growth in milk per cow.” 2009 output is now projected at 190.5 billion pounds, down from the 191.4 billion projected a month ago.

Exports for 2009 are expected to remain below those of 2008 as global demand reflects economic weakness. Ending stocks for both 2008 and 2009 are expected to be above levels forecast last month as weak demand is expected to slow domestic use. Sales of nonfat dry milk to the CCC in 2009 are forecast higher and small sales of cheese and butter is now predicted in 2009.

2008 milk and dairy product prices are adjusted from last month reflecting December data. Class milk prices for 2009 were reduced as product price forecasts were lowered. The report states that “Economic uncertainties have reduced demand for dairy products and prices have declined sharply for cheese, with lesser declines in butter, nonfat dry milk, and whey.”

The 2009 Class III price is now projected to average $10.60-$11.40 per hundredweight, down from the $14.50-$15.30 projected a month ago, and compares to $17.44 in 2008 and $18.04 in 2007.

The 2009 Class IV price is expected to average $10.00-$10.90, down from the $10.75-$11.65 expected last month, and compares to $14.65 in 2008 and $18.36 in 2007.

The sharpest declines in cheese and butter prices are expected in the first half of 2009 due to large supplies but the reduction is less later in the year as lower forecast milk production results in declines in stocks of fat-based products. Although forecast weaker than last month, tightening supplies of nonfat dry milk later in the year are expected to help support powder prices.

Give consumers more of what they want, when, and where they want it
(January 12, 2009) Dairy producers, through their dairy check off program, are working to grow the dairy industry by helping to meet unmet demand and give consumers more of what they want, when, and where they want it, according to a recent Dairy Management Incorporated (DMI) press release. DMI’s, Joe Bavido, kicked off a new series in Monday’s DairyLine broadcast that examines the major accomplishments of the check off in 2008.  

Bavido said the check off worked to build sales by developing strong partnerships, innovation initiatives, and the formation of a new industry-wide organization to address long-term industry challenges.

The Innovation Center was established through DMI in collaboration with National Milk and the International Dairy Foods Association, according to Bavido, to “address barriers to becoming more consumer-driven.” The Center’s key priorities include sustainability, health and wellness, product development, and communications, globalization, and consumer confidence, he said.

Export development was another function of the check off in 2008, according to Bavido, who pointed out that world demand was very strong. Check off programs contributed to an all-time high in demand for U.S. dairy products and ingredients, he said, with 2008 exports representing about 10 percent of U.S. milk production. Dairy producers “found a home for increasing milk production,” Bavido concluded, in Mexico, Russia, and the Pacific Rim, among others.  

Dairy Market Weekly Review
(January 9, 2009) Cash cheese prices have fallen below the government support level but ended the first full week of 2009 on an up note. The block price saw 17 consecutive trading sessions of loss before the bleeding stopped and rebounded 3 1/4-cents Friday, to close at $1.0725 per pound, down 6 cents on the week and 77 3/4-cents below that week a year ago when they plunged 30 1/4 cents, to $1.85.  

Barrel closed Friday at $1.07, also down 6 cents on the week and 91 cents below a year ago when the barrels rolled down 11 cents, to $1.98. Thirty eight cars of block traded hands on the week and 11 of barrel. The NASS U.S. average block price fell 17.4 cents, to $1.4784 and barrel averaged $1.4373, down 19.6 cents.

Slumping Economy Changing Dairy Buying Habits
(January 9, 2009) The slumping U.S. economy is changing dairy and food buying  habits of retailers seeking to reduce procurement costs and consumers seeking to reduce overall food spending, according to Dairy Profit Weekly Editor, Dave Natzke.

Reporting in his Friday DairyLine broadcast, Natzke said that, even though food price increases have slowed recently, the latest Consumer Price Index from the Bureau of Labor Statistics indicates 2008 food price inflation will be the highest in decades. Combined with concerns over personal income and wealth, those factors are changing the way consumers spend money on food, Natzke said.

Economists speaking on a recent Rabobank agricultural outlook webinar noted that, beginning in about 2003, U.S. consumers were willing to spend more on premium food items, both at home and when eating out in restaurants. However, beginning with the economic downturn in 2008, that's changed 180 degrees.

The economists said spending on food eaten away from home, as a percentage of the total food budget, is at its lowest level since 1991.

“Consumers are turning away from mid to premium-priced restaurants and toward lower-priced restaurants, and lower-priced menu items,” Natzke said. The trend is similar for food eaten at home, as consumers are shopping at discounters, such as Wal-Mart, Kroger and Costco, and away from the traditional grocers. And, they’re seeking cheaper food items, such as lower quality cuts of beef and store-label products, in order to maximize food value for their money.  

The impact is going further, according to Dennis Erpelding, Elanco manager of government relations, public affairs and communications. Grocery store food buyers are looking for ways to reduce procurement costs, according to Erpelding.

“We've all heard of the move toward sustainability, when production and buying decisions are based on the three-legged stool of economics, environmental and social issues,” says Erpelding. “Food buyers are again putting more emphasis on cost and affordability to meet changing consumer demand.”

National Milk dairy economist, Roger Cryan, predicts some pretty significant payments ahead and he reported in Thursday’s broadcast that the Agriculture Department issued its rule on the program on December 4. Signups began on December 22 at Farm Service Agency offices across the country.

We have outlined some of the changes in the MILC program in previous broadcasts and columns. One of them is a feed cost adjuster and the calculation of the payments was changed resulting in an increased payment by about a third.

The cap on eligible milk was raised from 2.4 million pounds to almost 3 million per fiscal year, according to Cryan. Producers with over a half million dollars in non-farm adjusted gross income will not be eligible for MILC payments, he said, but there are no limits on on-farm income, which USDA now defines more broadly to include on-farm processing and farm related services.

Because of the timing of the crash in dairy prices and growing milk output, larger producers have the potential to cap out after just a few months so they will want to choose which months they want to receive payments very carefully.

Based on high feed prices and falling milk prices, Cryan said he could almost guarantee there will be a payment in February, the first one since February 2007.

As of January 5, Cryan projects that MILC payments will average about $1.10 per hundredweight for the last eight months of this fiscal year and that figure is about 25 percent more than if there were no feed cost adjuster, a provision he said National Milk lobbied for in the Farm Bill.

Farmers who sign up by the end of February can choose to receive payments beginning in February but, if you think you might produce more than the 2.9 million pound limit in the eight months February through September, he advises you to consider carefully which start month will give you the biggest pay out.

Cryan’s MILC projections are posted here and he says they will try to update them weekly. The highest payment will be in March, according to Cryan, but he cautions that they are only projections and are subject to the fast changing markets.

(January 7, 2009) DairyLine listeners got a preview of the changing of the guard in Washington in Wednesday’s broadcast from Jerry Slominski, Senior Vice President of Legislative Affairs for the International Dairy Foods Association. He said that many in the dairy sector are asking what the new Obama Administration will mean for the industry.

“Barack Obama was elected on a promise of change,” Slominski said, “And judging by his cabinet selection, he is serious about delivering on this promise with the economy, health care reform and energy policy,” but he added the caution; “It may be too early to tell what , if any, significant changes we can expect in dairy policy.” 

Slominski pointed out that outgoing Secretary of Agriculture Ed Schafer, who replaced a former governor of a Midwestern state, is the former governor of a Midwestern state, and incoming Secretary, Tom Vilsack, is the former governor of a Midwestern state.”With their shared roots, we may not see a major style or policy difference in the leadership at USDA,” Slominski warned.

“Governor Vilsack enjoys a well-deserved reputation as a political moderate who balanced Iowa's state budget,” Slominski said, “But he will face few greater challenges than guiding a dairy industry that has been rapidly changing and that will likely continue to change regardless of who is in the Oval Office.  “

President-elect Obama has tapped former Dallas Mayor Ron Kirk to replace Susan Schwab as the U.S. Trade Representative. Much like his predecessor, Mayor Kirk has been a consistent advocate for free trade, according to Slominski, but “As shown by the recent decline in dairy prices, it is clear that our industry will not be immune from the worldwide economic downturn.”

Because the Pacific Rim is a target region for the U.S. dairy exports, Slominski said they are encouraged that Mayor Kirk has supported normalized trade relations with China and hope that Kirk's nomination is a signal that the Obama administration is placing a high priority there as well. 

“So far, President-elect Obama's Cabinet selections in agriculture and trade indicate a pragmatic, moderate, approach to governing, Slominski concluded. “Speaking for the members of the International Dairy Foods Association, we hope that these new leaders will change what needs to be changed but also that they stay the course when that is the best direction to take.”

(January 6, 2009) Cash cheese prices fell below the government support level Monday, something that happens because it does cost manufacturers to sell product to the Commodity Credit Corporation (CCC).

The cheese has to meet grade, explained Downes-O’Neill dairy economist, Bill Brooks in Tuesday’s DairyLine. There’s a delay in getting paid for the product, he said, and the manufacturing process itself may be an issue as they have not been specifically making product for sale to the government under the price support program so the product that is being made is not eligible to be sold to Uncle Sam at this point so the price keeps going down under it can find a home.

It’s hard to say how low it will go. Brooks pointed out there’s been such a quick turnaround, having come into December at over $1.80 per pound and left December and begin the new year below support. There isn’t much downside price risk, he said, but blocks have fallen below $1.00 a pound and “hopefully that doesn’t happen but that is a potential.”

Cash Grade A nonfat dry milk dropped 2 cents Monday, to 83 cents per pound and two sales occurred, something Brooks called “surprising,” considering powder has been moving to the government at 80 cents per pound. This is the first sale since early October, he said, and “Not surprising that the price would go down but a little surprising that there would be some sales occur in that market that will continue to work its way down to that 80 cent level.”

(January 5, 2009) The Agriculture Department’s November Dairy Products report issued today puts butter production at 133.6 million pounds, up 3.6 million pounds or 2.8 percent from October and 2.8 million pounds or 2.2 percent above November 2007. 

Mozzarella cheese output totaled 260.2 million pounds, down 3.7 million pounds or 1.4 percent from October, and 13.3 million pounds or 4.9 percent below a year ago. Total Italian type cheese, at 336.6 million pounds, was down 7.5 million pounds or 2.2 percent from October, and 9.3 million pounds or 2.7 percent below a year ago.

Cheddar production totaled 258.9 million pounds, up 3.6 million pounds or 1.4 percent from October, and 3.6 million pounds or 2.3 percent above a year ago. Total American type cheese amounted to 340.5 million pounds, down 2.6 million pounds or 0.8 percent from October, but 15.8 million pounds or 4.9 percent above a year ago.

Total cheese output came to 826 million pounds, down 17.5 million pounds or 2.1 percent from October, but 10.8 million pounds or 1.3 percent above a year ago. 

November nonfat dry milk output amounted to 134.8 million pounds, up 13.8 million pounds or 11.4 percent from October, and 34.8 million pounds or 34.8 percent above a year ago.  

(January 5, 2009) Moms have said it for years. Now the American Academy of Pediatrics (AAP) is saying it; drink milk or water between meals and you will reduce the risk of cavities and ensure good oral health in your children. The policy statement was published in the December issue of Pediatrics, according to the National Dairy Council’s Mary Martin Nordness in Monday’s “DMI Update.”

Nordness said parents are encouraged to give no more than four ounces of 100 percent fruit juice per day, avoid serving children carbonated beverages and juice drinks, and encourages families to follow eating recommendations consistent with the MyPyramid recommendations from the U.S. Department of Agriculture.

“The take home message from all this,” Nordness said, “Is that children should consume only milk or water between meals and that parents should encourage nutrient rich, low fat or fat free milk at all times for beverages.”

The AAP is concerned about the growing number of overweight children in our country, according to Nordness, and “recommending low fat or fat free milk over juice insures that kids will be consuming a beverage that provides vitamins and minerals for growth and development and very few calories.” “The first step is to be a good role model parent,” she concluded, “So instead of choosing a soda, choose low fat milk.”  

The December federal order benchmark Class III milk price was announced Friday at $15.28 per hundredweight (cwt.) down 23 cents from November and $5.32 below December 2007. That pulls the 2008 average to $17.44, down from $18.04 in 2007 and compares to $11.89 in 2006. The Class IV price is $10.35, down $1.90 from November and $8.83 below a year ago.

Looking ahead; the 2009 Class III futures contracts settled Wednesday as follows: $10.80 for January, $10.28 in February and the low for 2009, and $10.77 for March. The high was $14.17 in October.

The four week NASS-surveyed cheese price averaged $1.7544 per pound, up fractionally from November. Butter averaged $1.2448, down 39 cents. Nonfat dry milk averaged 84.25 cents, down 2.8 cents, and dry whey averaged 17.3 cents, down 1.65 cents per pound from November.

California’s December 4b cheese milk price is $13.95 per cwt., down $1.19 from November, $4.63 below December 2007, and $1.33 below the comparable Federal order Class III price. The 4b averaged $16.85 in 2008, down from $17.46 in 2007. The December 4a butter-powder price is $10.15, down $2.05 from November and $8.99 below a year ago. It averaged $14.49 in 2008, down from $17.41 in 2007.

(January 2, 2009) Feed represents one of the largest production costs for dairy farmers and the relationship between 2008 dairy feed costs and milk prices could go down as one of the worst on record.

The December milk feed ratio was just 1.97, according to the USDA’s latest Ag Prices report, down from November’s revised estimate of 2.02, and compares to 2.85 in December 2007. A ratio of 3.0 or higher is considered positive for milk production. December’s ratio is the 13^th consecutive month below that threshold.

Dairy Profit Weekly editor, Dave Natzke, reported in Friday’s DairyLine that, while most dairy producers grow their own feed, USDA’s monthly milk-feed price ratio is an indicator of milk income relative to feed costs and, based on preliminary estimates, the average milk-feed price ratio for all of 2008 was just 2.01, the lowest annual average since at least 1985, the earliest records he could find.

The good news is that December corn and soybean prices were approaching 2008 lows, according to Natzke, and hay prices were down $25 per ton from the highs earlier this fall. The big culprit in this month's low index, he said, is the U.S. average milk price, which fell to $15.90 in December, the lowest level of the year.

One glimmer of good news, Natzke said, is that energy-related costs have come down. December fuel prices were down 14 percent from November and 31 percent less than December 2007.

Natzke also had an update on an issue that remained contentious throughout much of 2008; R-CALF USA, a beef ranchers’ organization, said USDA issued a new memo regarding the National Animal Identification System (NAIS). R-CALF said a previous memo, which mandated premises registration for some livestock producers (participating in some federal disease programs and who are engaged in interstate commerce) was illegal. USDA’s new memo states there is a procedure for producers to remove their names from the NAIS database, ensuring premises registration is voluntary, Natzke reported.

(January 1, 2009) DairyLine’s first program of 2009 featured National Milk’s Chris Galen with a look back on 2008. He said that 2008 will go down in the books as a year dominated by politics and economics and predicted 2009 would be more of the same.

Last year was a good year overall for dairy farm prices, he said, although 2008 ends on a down note for dairy product prices and 2009 will begin with prices being very low.

The silver lining, according to Galen, is the steep drop in input costs, especially on feed and oil prices being reflected at the gas pump. Hopefully, they’ll be reflected in lower fertilizer and farm chemical costs in 2009, he said.

“The big story in 2008 was the economy, both domestically and internationally,” Galen said, and as 2009 starts, we’re going to have a new administration in town and a new Congress and their first order of business is to develop a massive stimulus package designed to get the U.S. economy going.”

National Milk wants to work to make sure that agriculture’s interests are addressed as part of that stimulus package because what’s good for the economy overall will certainly be good for dairy farmers down the road.

Galen predicted that the economy will be the big story in 2009 and a lot of it will be played out in terms of politics of winners and losers and who gets the best deal in the coming stimulus package and we want to make sure that dairy is at that table as well.

Economics will play a big role worldwide and will impact the export markets, Galen said, which has had a huge influence on dairy’s bottom line the last couple years and that has turned around but anything we can do to stimulate not just the U.S. economy but the world economy will be good for our export capabilities and will be good ultimately for dairy farmer’s prices.