Archive for the ‘Todays Dairy News’ Category

Enrollment For New Safety Net Ends Friday

The National Milk Producers Federation (NMPF), in a press release today reminds dairy farmers that they only have a few more days to go to their county Farm Service Agency office and sign up for the new dairy safety net included in the 2014 farm bill. The deadline is Friday, December 5 for enrolling in the new Margin Protection Program, for the remainder of 2014, for all of 2015, or for both.

NMPF President and CEO, Jim Mulhern, said there are good reasons to sign up for the program, even though farm milk prices and margins are both favorable right now.

“First,” Mulhern said, “dairy futures indicate margins are leaving their record territory and will continue down into 2015. We liken the situation to a roller coaster cresting, then starting its descent. Lower milk prices and tighter margins are forecast just as the new program kicks in. This program will provide farmers some control over the situation by enrolling now in the MPP.”

In addition, Mulhern said, with U.S. milk production expected to increase by more than two percent this year, signing up for MPP now locks in an increase in each farm’s production history going forward. The upward adjustment in a farm’s production history only happens for farms once they sign up for the program.

“Under the rules, MPP payments are based on past production history, and the only allowed increase in that production base is the percentage increase in national milk production,” Mulhern said. “So, even if next year’s margins don’t trigger any payments, those who sign up now will be able to insure a larger amount of milk production in future years, because of the rise in U.S. milk production in 2014,” he said. He noted that, through October, 2014’s milk production is up 2.2 percent from the first ten months of 2013.

Rather than supporting milk prices, the Margin Protection Program allows producers to insure their income over feed costs on a sliding scale. Basic coverage is free, aside from a $100 annual administrative fee.

Producers decide annually both the percentage of their milk production history to cover – from 25 percent up to 90 percent – and the level of margin they wish to protect, from $4 to $8. NMPF has a variety of tools on its website and on a separate website devoted exclusively to the new program to help producers make their sign-  up decisions. Included is a downloadable calculator that allows producers to plug in their own numbers and quickly see the program’s protection impact on their farm.

“Basic coverage costs you only $100 a year. But that relatively small investment does a lot to protect the future of your farm,” Mulhern said. “We encourage all producers to get to their county FSA offices, before the end of this week, and sign up for the Margin Protection Program before it is too late.”

November Milk-Feed Ratio Slips

November 26, 2014 — The preliminary November milk feed price ratio was down from the revised October level, according to the Agriculture Department’s latest Ag Prices report USDAissued today. The November milk-feed price ratio is at 2.80, down from 2.91 in October, 2.97 in September, but compares to 2.27 in November 2013.

The index is based on the current milk price in relationship to feed prices for a ration of 51% corn, 8% soybeans and 41% alfalfa hay, in other words, 1lb. of milk today can purchase 2.8 lbs. of dairy feed containing that blend.

The November U.S. average all-milk price was $23.40/cwt., down ($1.50) from $24.90/cwt. in October, but compares to $21.60/cwt. in November 2013 (+$1.80).

November corn, at $3.57/bushel, was up 1¢ from October but 80¢ less than November 2013. Soybeans averaged $10.10/bushel, up 13¢ from October, but $2.60/bushel below November 2013. Alfalfa hay averaged $184/ton, down $10 from October, and $4/ton below November 2013.

Looking at the cow side of the ledger; the report shows the preliminary November cull price for beef and dairy combined averaged $114.00/cwt., down $2/cwt. from October, but $33.30/cwt. above November 2013, and compares to the 2011 average of $71.60/cwt.

IDFA Backs Dairy Product Donation Program

November 26, 2014 — This month’s Processors’ Perspective is with Ruth Saunders, IDFA VP, Policy and Legislative Affairs:

IDFA is a strong supporter of the Dairy Product Donation Program, one of the elements of the dairy safety net included in the new Farm Bill.  The program will help dairy farmers by increasing demand for dairy products when profitability dips catastrophically, such as the situation in 2009.  The donation program would lead to an increase in the farm milk price by providing funds to be used to increase sales of dairy products.

USDA has issued its final rule on the Margin Protection plan and is asking for comments, which are due by December 15th. IDFA has put our thoughts in, stressing the importance of proper timing and urging USDA to donate a variety of dairy products, and to use a variety of distribution methods including vouchers.

We noted that the program must be able to start and stop quickly, as required by the statute, to avoid any market distortions that could harm dairy’s competitiveness. This may be difficult given that milk marketing orders have time lags between when farm milk is marketed, minimum prices are established and payment is made.  According to the rules, USDA would not be allowed to store dairy products for giving out in the future, they would be required to immediately donate the products to needy consumers.

We strongly believe that the program should spread donations across the full range of dairy products in order to minimize market disruptions.  And, by including products with higher minimum regulated prices, especially fluid milk, the program we believe will have the best chance of achieving the greatest impact on farm milk prices.

Donating refrigerated fluid milk could be a challenge.  We proposed that USDA use vouchers, like a coupon, that low-income consumers could exchange for milk in the supermarket.   We pointed out a number of effective voucher programs that USDA currently administers, and that have proven to be effective.

Distribution methods that can accommodate a high volume of dairy products during short time intervals will provide the greatest and most immediate impact on farm milk price recovery – which is the principal goal of this new Farm Bill safety net program.

Last Minute Thoughts on MPP

November 25, 2014 — Andy Novakovic of Cornell’s Charles H. Dyson School of Applied Economics and Management, provided some last minute thoughts about enrollment in the Margin Protection Program this year. The report does not include any recommendations about electing coverage in MPP, but does offer valuable information that you may want to consider when making your decision before December 5th. Read it here: http://dairymarkets.org/PubPod/Pubs/IL14-03.pdf

Fuel Up to Play 60 Program Continues to Make Strides

November 24, 2014 — Fuel Up to Play 60 is a program founded by the National Dairy Council and NFL, in collaboration with USDA. Executive VP Mark Leitner joined DairyLine’s Bill Baker today to update us on the program and how it empowers students to take charge in making small, everyday changes at school. Here’s part one in our series with Leitner:

FuelUp60

 

NMPF: Immigration Policy Must Need Congressional Action

November 21, 2014 — The National Milk Producers Federation issued this statement following the White House’s executive action on immigration policy.

“The executive action announced by the White House this week will not solve the current or future needs of dairy farmers. We still need congressional action, in the form of comprehensive legislative reform of our broken immigration system. This is both an opportunity and an obligation for Congress. We need action in both the House and Senate, with support from both Republicans and Democrats, to do the job that needs to be done,” Jim Mulhern, President and Chief Executive Officer, NMPF.

“NMPF’s focus remains the same going forward, as it has been in the past decade: we must secure a permanent fix to our broken immigration system – and that must be done by the Congress. “Regardless of the executive order announced by the White House, we must continue pressing for a long-term, meaningful solution that provides permanent relief for current workers and future labor needs. It is imperative that Congress address this issue in 2015 and resolve it, once and for all,” he concluded.

In this week’s address, President Obama laid out the steps he took this past week to fix our broken immigration system. From WhiteHouse.gov:

“Enacted within his legal authority, the President’s plan focuses on cracking down on illegal immigration at the border; deporting felons, not families; and accountability through criminal background checks and taxes. These are commonsense steps, but only Congress can finish the job.

As the President acts, he’ll continue to work with Congress on a comprehensive, bipartisan bill — like the one passed by the Senate more than a year ago — that can replace these actions and fix the whole system.”

 

Chicken Little is Right

November 21, 2014 — Cash block cheese, as of Thursday, has dropped almost 17 cents this week in addition to the 25 3/4-cents lost last week. The barrels plunged 20 1/2-cents

Jerry Dryer Dairy Market Analyst

Jerry Dryer
Dairy Market Analyst

last week and dropped 16 1/2 cents Thursday. I had scheduled “Chicken Little” for our Friday DairyLine interview but chose Jerry Dryer, editor of the Dairy and Food Market Analyst,  instead hoping he’d  have a different message. He didn’t.

Dryer sees product prices continuing to dip because prices around the world are significantly lower than here.  U.S. exports are slowing, he said, as other cheese is available. He pointed to the Russian blockade of European cheese, for example, which is “pushing product in this direction so there’s going to continue to be pressure on the market.”

He added the caveat; “My version of Chicken Little, however does have a safety net and that’s the futures market which is higher than I think prices are going to be as we progress into 2015. It’s an opportunity to do some hedging.”

Dryer predicts that milk prices will hit “sub $15 (per hundredweight), maybe sub $14 for a few months next year and there’s still some $17 futures protection that could be bought.”

I ask if China will re-enter the market any time soon and turn things around. He quickly answered, “Things are not looking that way.” He reported that China has a significant volume of product in storage and Dryer’s sources in China state that milk production there has “more than recovered from last year’s downfall so domestically they have a little more milk available and the huge irrational surge of imports in the early part of this year have them backed up.” Sources tell Dryer that China may not be back in the market until Third Quarter 2015, he concluded.

Message to Congress: Restore the Tax Provision

November 20. 2014 — The National Milk Producers Federation this week joined 41 other agricultural organizations in urging Congress to restore a tax code provision that allows small businesses, including farms, to write off capital purchases such as equipment immediately, instead of over time.

The provision, known as Section 179, is one of more than 50 expired tax policies the House and Senate are likely to consider for reinstatement during their post-election lame duck session. The farm groups urged restoration of Section 179 in a November 18 letter to congressional leadership.

“Farming requires significant investments in machinery and equipment,” said NMPF President and CEO Jim Mulhern. “By allowing farmers to immediately write off these purchases on their taxes, Section 179 gives producers an incentive to invest in their businesses while it reduced their record-keeping burden.”

Mulhern said restoring Section 179 will encourage farmers to purchase machinery and equipment in years when they have a positive cash flow. “On the other hand,” he said, “failure to restore Section 179 will add to the financial strains on asset-rich, cash-poor family farmers who already find it difficult to pass on their farms to the next generation.”

Section 179 allows farmers to write off capital expenditures in the year that purchases are made. The farm groups asked that the maximum amount of annual expensing be restored to $500,000, as it was in 2013. In addition, they asked Congress to reinstate the 50 percent bonus depreciation for the purchase of new capital assets, including farm equipment.

October Milk Production up 3.9 Percent

November 19, 2014 — Milk production in the 23 major States during October totaled 16.0 billion pounds, up 3.9 percent from October 2013. September revised production, at
15.5 billion pounds, was up 4.3 percent from September 2013.  The September revision represented an increase of 22 million pounds or 0.1 percent from last month’s preliminary production estimate.

Production per cow in the 23 major States averaged 1,868 pounds for October, 51 pounds above October 2013. This is the highest production per cow for the month of October since the 23 State series began in 2003.

The number of milk cows on farms in the 23 major States was 8.59 million head, 89,000 head more than October 2013, and 3,000 head more than September 2014.

October Milk Production in the United States up 3.8 Percent

Milk production in the United States during October totaled 17.1 billion pounds, up 3.8 percent from October 2013. Production per cow in the United States averaged 1,842 pounds for October, 52 pounds above October 2013.

The number of milk cows on farms in the United States was 9.28 million head, 77,000 head more than October 2013, and 4,000 head more than September 2014.

December FO Class I Drops $1.53

November 19, 2014 — The Agriculture Department announced the December Federal order Class I base milk price this afternoon at $22.53 per hundredweight, down $1.53 from November but $2.16 above December 2013, and equates to about $1.94 per gallon. That puts the year’s Class I average at $23.29, up from $18.84 in 2013, $17.46 in 2012, and $19.13 in 2011. Contrast that to the disastrous 2009 average of $11.48.

The two-week NDPSR-surveyed butter price average used in calculating today’s price was $1.9828 per pound, down 84.9 cents from November. Nonfat dry milk averaged $1.4517, down 5.4 cents. Cheese averaged $2.1872, down 11.3 cents, and dry whey averaged 64.41cents, 1.5 cents from November.

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