Archive for the ‘Brian Gould’ Category

Dairy Title Leaves Much Discretion to Ag Sec

Brian Gould

Brian Gould

January 31, 2014 – Dr. Brian Gould doesn’t agree with the Wall Street Journal’s assessment that dairy farmers are losers in the new Farm Bill. Speaking in Friday’s DairyLine broadcast, Gould said the Margin Insurance Program was one of the things dairy producers, via the National Milk Producers Federation, wanted. “That’s not a loss,” he said. “It’s going to be more market driven and there’ll be more producer decision making involved.” Gould said “The strength is individual decision making in terms of participating in that margin insurance program and there’s no requirement.”

One of his issues with the dairy title is that, if producers participate in the USDA Margin Program they’re not allowed to participate in the Livestock Gross Margin (LGM) program. He’s not sure why but says, perhaps it’s because they are both subsidized.

The LGM is a revenue insurance program for dairy producers that has been around since August 2008, according to Gould, and is used to set minimum margin floors. It’s very similar to the USDA Margin Program but is more flexible, he said, can be entered into multiples times per year, and the costs are comparable at least at the upper coverage levels to what the USDA premiums are.

As to the Margin Insurance Program, Gould said national average prices are used, no local bases. The premiums are differentiated by farm size, in terms of your history, with 4 million pounds or less considered a smaller operation, and anything over 4 million considered larger and will have a different premium schedule. Gould’s understanding is that the premiums for the $4 margin are 100% subsidized  but anything else in 2014 and 2015 there will be a 25% reduction in the premiums for smaller operations.

The dairy title is fairly short, Gould concluded. A lot of rules in terms of development are left up to the Secretary of Agriculture. As an example, Gould said it’s not clear whether a farmer has to enter once for five years or once a year and “that has some significant implications in terms of risk management activities.”

Mailbox Price Comparisons

June 11, 2013 — Brian Gould is professor at the Dept. of Ag and Applied Economics at the University of Wisconsin-Madison. He looks ahead at the difference in mailbox prices between California and Wisconsin. Listen to the podcast below and view his website here: http://future.aae.wisc.edu/index.html

 

 

 

Brian Gould

Latest on MILC Payment Projections

January 29, 2013 – Dairy economist Brian Gould from the University of Wisconsin shares with DairyLine Radio listeners the latest projections the Milk Income Loss Contract.

LGM-Dairy Sale is Friday

(August 29, 2012) USDA’s Risk Management Agency (RMA) is offering a Livestock Gross Margin-Dairy Insurance policy sale Friday. Brian Gould is professor at the Department of Agriculture and Applied Economics at the University of Wisconsin-Madison and spoke with DairyLine about last Friday’s announcement.

 

DSA’s Potential Structural Change in Milk Pricing

(April 17, 2012) The proposed Dairy Security Act may see a transition to new competitive pay prices. University of Wisconsin’s Brian Gould discusses the potential structural change in mik pricing and the fluid milk futures contract on Tuesday’s DairyLine.

LGM Should Get Out Of Pilot Status

(February 7, 2012) Brian Gould from the Unversity of Wisconsin-Madison discusses why the Livestock Gross Margin insurance program should get out of pilot status.

LGM Insurance Gets Gobbled Up

(November 25, 2011) Another sales period for Gross Livestock Insurance was gobbled up during Thanksgiving week.  Brian Gould, from the University of Wisconsin-Madison,  joined us on Friday to discuss the latest LGM sale, scheduled November 18th

Market Talk with Brian Gould

The August Consumer Confidence Index declined from 59.2 percent to 44.5 percent, according to Brian Gould, Associate Professor and the Department of Agricultural and Applied Economics at the University of Wisconsin-Madison.

“Consumer confidence and the willingness for consumers to go out and purchase food away from home are very important to the dairy industry,” he said.

Switching gears, Gould anticipates CME spot cheese prices will remain in the $1.70’s. The most recent data available show the ratio of American cheese stocks to American cheese production in July as the highest since August of 1987.

“So we had a lot of stocks out there relative to production and I’m not optimistic that there is going to be a rebound in those cheese prices in the near future,” he said.

Futures prices remain fairly stable.

“They are about $1.70, plus or minus five cents,” he said. “Right now the indicators are not looking for substantial changes on the upside or either on the downside.”

The August Federal Order Class III milk price is $21.67, likely the peak for the year.

“If you look at Class III future settled prices just prior to the announcement of the August value – for example the September settled price on that day was $18.87, the highest on the board and continually declines by June of next year about $17.00, so still relatively high, but I don’t see $20.00 on the board at this time,” he concluded.

Look At Both Sides of the Coin – Income and Feed Prices

S& P this week downgraded the credit ratings of Fannie Mae, Freddie Mac and other agencies linked to long-term U.S. government debt. Farm lenders and debt issued by 32 banks and credit unions are also involved in the latest downgrade. Analysts are saying they are not surprised by this decision.

“Obviously there is a direct linkage between government supported programs and the rating of the federal government,” Brian Gould, Associate Professor of the Department of Agricultural and Applied Economics at the University of Wisconsin-Madison told DairyLine Radio.

“The question remains, theoretically when the quality of bonds goes down the cost of attracting money for those bonds has to go up because there viewed as more risky. If that holds true than both short term and long term loan costs could go up for the ag sector.”

“There is some indication that the markets aren’t reacting as we would have thought in terms of significant increases in those interest rates, but it’s a wait and see because we’ve never been in this state before,” Gould said.

The first two days of CME trading – spot butter was down 3 ¼-cents to $2.07 on four trades and seven offers. Block cheese was also down 3 ¼-cents to $2.13 on four trades and 2 offers. The barrels were unchanged at $2.1350 with no activity.

The dairy industry is seeing some volatility because of the fluctuation in the grain prices. That affects both the revenue side and the cost side. When looking at the relative volatility of feed versus the Class III milk price since 2006, feed markets have been just about as volatile as the Class III market in terms of month-to-month variability of those prices.

“You have to look at both sides of the coin now, we don’t have stable grain prices, and we need to be concerned about volatility in the grain market as well as in the dairy market,” he said.

Gould’s analysis on the volatility of feed prices versus Class III includes a series of 16 percent dairy rations and how it varied relative to the Class III since the BFP formula in 1995.

“Between 2000 and 2005 we did indeed have relatively stable feed prices and we didn’t need to be concerned about margins, all we had to do is look at the milk price side,” he said.

“But since 2006, the volatility measures that I’ve looked at are about equal with respect to the 16 percent dairy ration that I put together verses the Class III milk, so again that implies that you need to look at both the revenue side and feed side since feed is such a high portion of total cost of production.”

Dairy Policy Debate Needs Resolve

Buyers are bidding up the cheese market to a new three-year high this week, and that has some analysts scratching their heads. “It’s unbelievable in terms of what market fundamentals would indicate, with demand softening and cheese stocks remaining high,” said Brian Gould, Associate Professor of Agricultural and Applied Economics at the University of Wisconsin-Madison.

The movements are occurring at a time when discussion of the 2012 farm bill is starting to pick up, specifically the draft dairy policy reform proposal put out by Representative Collin Peterson (D-MN).

The proposal would eliminate the dairy price support program, the MILC program, initiate a margin revenue insurance protection program, institute some supply management and also reform federal orders.

Since Peterson’s announcement, two of the major players in the debate, the International Dairy Foods Association and the National Milk Producers Federation are having a discussion back and forth on whether it’s a good policy or not.

IDFA is concerned about the price impacts of the proposal and National Milk is lauding it to its voluntary control measures. “Where this plays out is anybody’s guess, but movement in today’s cheese price will continue to push this discussion to the forefront,” Gould said.

The major issue of contention is a supply management system designed to send strong signals to producers to increase or decrease their production depending upon market conditions.

With lawmakers focusing on the debt ceiling, it’s even more apparent that the dairy industry becomes united with their cause. Because there isn’t a unanimous, cohesive support for getting a common dairy policy, there could be some delays in any dairy legislation.

“So if the dairy industry would like some consideration to dairy policy reform prior to the farm bill, there’s going to have to be some coming together of these two organizations,” Gould concluded.

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