April 19, 2013 — The proposal introduced in the Senate on Wednesday was called “historic” by representatives of major dairy, cooperative, fruit and vegetable grower and farm labor organizations during a joint press conference held this week. The members of the Agriculture Workforce Coalition said the proposal addresses the major needs of U.S. farmers and workers, and helps fix a broken immigration policy that is leading to shortages of workers to produce, harvest and pack the nation’s food supply.

The importance of agriculture and food production is evident in the bill, with more than 100 pages of the 844-page bill devoted to addressing agriculture’s specific needs.

National Milk Producers Federation CEO and president Jerry Kozak participated in the press conference. He identified four key pieces of the proposal essential to dairy producers, covering both current and future immigrant workers.

They include creation of a “blue card” for experienced but undocumented workers, providing them legal protection from deportation; and creation of a new visa program that will provide a stable supply of legal workers in the future. The bill would create a system whereby dairy and other agricultural producers can recruit and hire new workers, either on a contract or at-will basis, from a pool of applicants. The visa program would also do away with current visa requirements that only address the needs of seasonal occupations, since dairy farming is a 365-day-a-year job.

The bill would create specific categories of agricultural workers, and establish minimum wages for each group based on the skills required, and provides other worker protections. And, the “blue cards” would be extended to workers spouses and children to help immigrant labor families stay together.

While historic, the proposal is just the next step in what will likely be a long political battle to achieve immigration reform.

March 22, 2013 == Members of the nation’s largest dairy cooperative, Dairy Farmers of America, gathered in Kansas City this week for their 15th annual meeting. DairyBusiness Update’s Dave Natzke was there, and joined us on Friday’s Dairyline to discuss the meeting that dealt with some of DFA’s past, and how it plans to write some new history:

“This week’s DFA annual meeting, attended by 1,500 members and guests, was both a celebration of productivity, sprinkled with some “mea culpa” for some past activities.

Last year was a strong financial year for the co-op, with record earnings and cash flow, built on net sales of more than $12 billion. The co-op marketed about 61 billion lbs. of member and non-member milk, about 30% of the U.S. total. The average milk price paid by the co-op was $18.49 per hundredweight, down about $2 from 2011’s record high.

Offsetting the positive side of the financial ledger was a $216 million charge related to lawsuits involving the co-op, most related to activities nearly a decade old. As we’ve covered in the past, earlier this year DFA settled a lawsuit in a class-action lawsuit in the southeastern U.S., for $159 million. And, this week, DFA was expected to settle a lawsuit regarding Chicago Mercantile Exchange cheese trading practices in 2004, for $46 million.

Looking forward, DFA leaders said the co-op’s business partnerships and joint ventures were profitable for a fourth consecutive year. And, the co-op is positioning itself to be a bigger part of global dairy markets, which currently account for about 8-10% of DFA’s commercial business. Dairy processing plants in Portales, New Mexico, Fort Worth, Colorado, and a new plant scheduled to come online this fall in Fallon, Nevada, will enable the co-op to produce dairy ingredients and products in high demand outside the United States.”

March 15, 2013 — High feed prices in 2012 compounded already difficult times for California dairy producers, still reeling from a collapse of prices in 2009. DairyBusiness Updates’ Dave Natzke joined us on Friday’s DairyLine Radio broadcast to discuss a new report from Rabobank, warning that the state’s dairy industry is at a pivotal point in its future:

In their report, titled “California Dairies: Getting More Moola,” Radobank ag economist Vernon Crowder, and James DeJong, dairy industry analyst, put much of the blame for current problems on the state’s seven-decade-old milk marketing order system.

They say the system has distorted milk prices and revenue distribution, discouraged investment in processing capacity and technology, and encouraged overproduction of milk. And, with prices following the volatility of the Chicago Mercantile Exchange, processors have stayed with staple products, such as non-fat dry milk, butter and cheddar cheese to maintain dependable margins, instead of investing in more innovation that may have put them in better position for export markets.

Due to these factors, the report acknowledged California dairy producers have received an average of $1.50 per hundred pounds of milk less than their counterparts in the rest of the United States, with the gap growing in recent years.
The report noted changes to the California dairy industry will take collaboration between producers and processors. But, that relationship has been strained recently with debate over the value of whey in the state’s Class 4b milk pricing formula. And, another debate is shaping up over transportation allowances, with a public hearing scheduled for April 4.

The news isn’t all bad. The report notes about 20% of California milk production is now exported, and steps are being taken to boost that total. However, the report warned that dairy co-ops must do more, and rapidly, concluding California’s dairy industry is at a pivotal point in determining its future.

March 7, 2013 — Dairy Farmers of America faces additional legal action resulting from alleged activities by its former leaders. DairyBusiness Update’s Dave Natzke reported this week:

Another anti-trust lawsuit, this one filed in the U.S. District Court of Vermont by cheese consumers in five states, alleges former officials with DFA manipulated Chicago Mercantile Exchange cheese prices nearly a decade ago. As a result, the lawsuit says, dairy consumers were forced to pay higher prices for cheese.

Back in 2004, former DFA officers allegedly purchased cheese on the CME in an effort to keep wholesale prices from falling. Those prices are used in formulas to set federal milk marketing order minimum prices paid to farmers for their milk.

Without admitting or denying U.S. Commodity Futures Trading Commission findings, DFA and its former officers paid a $12 million civil monetary penalty in 2008.

A number of anti-trust lawsuits have been filed against the co-op and its subsidiaries since then, and the latest suit will likely be merged with others already combined in the U.S. District Court of Northern Illinois.

DFA, the nation’s largest dairy co-op, holds its annual meeting, March 18-20, in Kansas City.

February 22, 2013 — The National Cattlemen’s Beef Association (NCBA) reported this week they were notified by the U.S. Environmental Protection Agency (EPA) that information regarding concentrated animal feeding operations (CAFOs) has been released to some animal activists organizations under a Freedom of Information Act (FOIA) request.

The information covers CAFOs in more than 30 states and, according to the Cattlemen’s Association, includes such things as addresses and geographic coordinates and telephone numbers.

In January 2012, EPA proposed the Clean Water Act Section 308 CAFO reporting rule to collect this information and make it publicly available. Livestock producers, along with the Department of Homeland Security, expressed concerns that this information could subject livestock producers to animal activist attacks and even put the nation’s food supply at risk to terrorist attacks. Now, it looks like some of that information may be available.

Dave Natzke, DairyBusiness Update

February 22, 2013 — The Food and Drug Administration released its annual National Milk Drug Residue Database (NMDRD) results for fiscal year 2012, and consumers can be assured the dairy products they buy are safe. DairyBusiness Updates’ Dave Natzke reported on Friday’s DairyLine:

Every year, FDA analyzes results of animal drug residue tests in milk at several steps within the supply chain, starting at the farm, and including samples from trucks delivering milk to processing plants, and in pasteurized, finished dairy products.

Of the nearly 3.8 million milk samples tested for animal drug residues last year, only 828, or fewer than 20 thousandths of 1 percent, tested positive for drug residues anywhere in the supply chain. And, probably especially important to dairy consumers, FDA found no positive animal drug residue tests in pasteurized dairy products.

These results provide assurances dairy farmers and veterinarians are using animal medicines properly and following label directions, and that testing procedures are catching any drug residues before they reach the consumer.

February 1, 2013 — The nation’s dairy processors gathered in Florida this week for the International Dairy Foods Association’s annual Dairy Forum. DairyBusinesss Updates’ Dave Natzke provided a recap on Friday’s DairyLine:

From milk pricing policy and dairy product ingredient standards to biofuel energy and food labeling, federal policies no longer adequately address the needs of a modern dairy industry, IDFA CEO and president Connie Tipton told about 1,000 industry members attending the 2013 IDFA Dairy Forum. Tipton said many current policies – dating back to the 1930s – were antiquated, limiting innovation and stifling growth for the U.S. dairy industry. She suggested without changes, dairy processors in all all regions of the United States would no longer be assured of enough milk to meet their demand.

Last year’s drought and biofuel energy policies combined to increase dairy farmer feed prices last year, limiting milk production in some regions. Growing global dairy demand was also shrinking supplies of U.S. milk for some domestic processors, at the same time things like the booming Northeast yogurt industry were increasing domestic demand.

Despite its challenges, the U.S. dairy industry’s future is full of promise and potential, Tipton said. She said with changes to some federal policies, dairy producers and processors would be able to meet the worldwide demand for protein-rich dairy foods, as well as address U.S. consumer demand for convenience, quality and variety in the dairy products it buys.

Natzke also provided an update on the Milk Income Loss Contract (MILC) program:

Last week we talked about extension of MILC under the bill approved by Congress to address the “fiscal cliff.” This week, USDA’s Farm Service Agency (FSA) announced additional details regarding the so-called “start month relief period” for larger dairy producers. Those producers – as well as any new dairy farmers who wish to enroll in MILC – should contact their local FSA office between Feb. 1-28 to do the appropriate paperwork.

FSA also announced that retroactive MILC payments for September 2012 milk marketings – approximately 59¢ per hundredweight – would be sent to dairy farmers beginning about Feb. 5.

January 25, 2013 — USDA released its monthly Milk Production report this week, indicating a strong December with higher cow numbers and more milk per cow pushed 2012 milk production to a record high. DairyBusiness Update’s Dave Natzke reported on Friday’s DairyLine Radio broadcast:

The old saying goes that high prices cure high prices, and after declining cow numbers and less milk production helped raise milk prices last fall, U.S. dairy farmers added more cows and boosted milk production to close out the year, pushing 2012 milk production to a record-high of 200 billion pounds.

Based on December’s estimates, monthly milk production posted its largest year-over-year percentage gain since May, up about 1.6% from December 2011. That means total 2012 milk production will be up abut 2.1% from last year. Cow numbers, which had been on a 6-month decline since peaking last April, increased for a second consecutive month in December, ending 2012 averaging about 37,000 more cows than a year earlier.

The trend isn’t nationwide, Bill, and the major factor is probably feed costs. December production continued to decline in much of the West and Southwest, where dairy farmers tend to buy more feed. Meanwhile, in the Midwest and Northeast, where farmers grow more of their own feed, milk production showed the biggest gains.

With more cows and milk production causing a weakness in 2013 first-quarter milk prices, dairy farmers may be keeping an eye on Washington to see what economic safety nets are in place. While Congress has yet to provide a timetable for 2013 Farm Bill discussions, USDA’s Farm Service Agency announced some details of the extended Milk Income Loss Contract (MILC) program. According to FSA, dairy farmers will not have to re-enroll in the program, which was extended as part of the “fiscal cliff” negotiations. However, FSA has not announced procedures for farmers who produce more milk than MILC payment caps allow.

One other option remains. The next sales period for the USDA Risk Management Agency’s Livestock Gross Margin-Dairy, or LGM-Dairy margin insurance policies, begins Jan. 25. Current insurable income margins are more than historical averages, and dairy farmers interested in coverage should contact their LGM-Dairy policy insurance agent.

January 18, 2013 — Corn and soybeans grabbed nearly all the attention in last week’s USDA Crop Production reports, but the updates also provided information about crops near and dear to dairy farmers – hay and other forages. DairyBusiness Updates’ Dave Natzke joined us Friday:

“Like their counterparts growing corn and soybeans, many of the nation’s hay and forage growers also suffered from the drought. USDA estimated 2012 production of alfalfa and alfalfa mixture dry hay at about 52.0 million tons, down 20% from 2011 and the lowest production level since before I was born in the mid-1950s.

Along with the drought, competition for acreage from high-priced corn and soybeans pushed the area harvested for alfalfa hay down to about 17 million acres, the smallest harvested area since 1948.

With lower production, U.S. farmers entered this year with smaller hay inventories. As of last December, all hay stored on farms totaled about 77 million tons, the smallest hay stocks for this date in 55 years.

Production of other forages, including haylage and greenchop, were also lower, although that decline was offset somewhat by increased production of corn and sorghum silage. U.S. corn silage production was the highest since 1982.

There was also bit of good news regarding future alfalfa hay production. Growers planted 2.4 million new acres of alfalfa and alfalfa mixtures during 2012, the largest increase in seven years. That acreage will come into production this year.

While growers suffered from smaller hay and forage crops, dairy farmers who purchased feed may have suffered even more. According to USDA, November 2012 U.S. dry alfalfa hay prices averaged a record-high $217/ton, and some dairy farmers I’m hearing from are paying up to $300/ton for “dairy quality” hay.”