Market analyst, Alan Levitt, said the cheese market appears to be under pressure. Last week saw a lot of product sold below the market price before final transactions pushed the price back up. He warned that more milk will be moving to manufacturing because of school breaks for the Christmas and year-end holidays and more milk will move into the block vat, away from the barrels.

The block price may slip, according to Levitt, and “The short term outlook isn’t as bullish as we’d like.” Butter has lost 20 cents in the month, “but medium and longer term; Levitt says “There’s reason to be positive.”

The November Milk Production report was down 1 percent from a year ago, he said, and that follows a 1.2 percent decline in October. Cow numbers are down almost a quarter of a million since the beginning of the year so Levitt said that decline in milk production should lead to tighter supplies in 2010 and prices that finally will return farmers to profitability.

When asked about the export prospects, Levitt said they’re “pretty decent.” The world market has been stronger, he said. Prices the last four to five months were up 60-100 percent since mid year on most basic commodities but “A lot depends on whether U.S. suppliers will get out there and make the products that the world market is looking for and try to be that supplier of first resort, which we haven’t always been.”

Scott Stewart, CEO of Stewart Peterson, Inc, continues his podcast series on how dairy producers can protect their bottom line. Good marketing is about being consistent, and Peterson shares five key principles for doing marketing well.

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Brad Scott, California dairy producer, explains the training process of DMI’s “Telling Your Story” program.

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Dr. Mark Kirkpatrick, Dairy Specialist at Pfizer Animal Health, discusses the symptoms of dystocia.

Pfizer Vet Visit with Dr. Mark Kirkpatrick [ 0:01 ] Play Now | Play in Popup | Download

U.S. Agriculture Secretary Tom Vilsack finally unveiled how USDA will distribute $290 million in emergency aid approved in the fiscal year 2010 Agricultural Appropriations Bill. Eligible producers will receive a one-time direct payment based on the amount of milk produced and commercially marketed in the months of February through July 2009. Production information from these months will be used to estimate a full year’s production to calculate the producer’s individual payments, according to Dairy Profit Weekly’s Dave Natzke in his Friday report.

Payments will be capped at 6 million pounds produced during the year. Based on current estimates for 2009 production, the emergency payment on eligible milk would equal about 32 cents per hundredweight, with an individual payment cap of about $19,000. Payments could be distributed within days and farmers should contact their local USDA Farm Service Agency offices for details.

California dairy farmers will also see a temporary boost in their prices during the first quarter of 2010. After receiving proposals from dairy farmer organizations at a November 9 public hearing, the California Department of Food and Agriculture (CDFA) announced that it will temporarily amend pricing formulas for all classes of milk from January 1-March 31, 2010.

Dave Natzke reported in Friday’s broadcast that the effect of these changes should increase the monthly pool prices paid to farmers for those three months by approximately 15.5 cents per cwt.

In 2009, the prices that dairy farmers receive plummeted, dropping by more than half from 2008 levels, Natzke reported. In addition, dairy feed costs kept milk production costs at levels that greatly exceeded farm milk prices. As a consequence, California dairy farmers lost an estimated $1.4 billion in the first nine months of 2009.

Due to those economic factors, California’s 2009 milk production reversed its 30-year trend, and is running almost 4 percent lower than the total for 2008, according to Natzke. Additionally, a growing number of California dairy farmers exited the industry in the latter part of 2008 and into 2009, he said, and, for the first time in decades, the state’s milk production will be less than the total needs of its processing plants.

CDFA analysis said the adjustments will add about 3 cents per gallon to fluid milk production costs, which will likely be passed on to consumers, but the changes should not impact retail prices of other dairy products.

Low California milk prices, combined with high feed costs, has resulted in the reversal of a 30-year trend of increasing milk production in the nation’s largest dairy state, Natzke said, and, while the temporary price adjustment is not designed to recover the financial losses that California dairy farmers incurred over the past 12 months, it is designed to help dairy farmers sustain their operations as milk prices begin to improve to near profitability, CDFA said.

In other news, Natzke turned our attention to greenhouse gases and, with the backdrop of this week’s controversial global climate change meeting in Denmark, reported that USDA and the Innovation Center for U.S. Dairy has agreed to work jointly in an effort to reduce U.S. dairy industry greenhouse gas emissions by 25 percent over the next decade.

Although specific details are sketchy, a primary effort under a “Memorandum of Understanding” signed by U.S. Agriculture Secretary Tom Vilsack and Dairy Management Inc. CEO Tom Gallagher, will be to accelerate adoption of methane digesters on dairy farms. Additional USDA research support could include a look at how feed mixtures affect methane emissions from cows, Natzke concluded.

DairyLine’s Lee Mielke interviewed FSA Administrator Jonathon Coppess about today’s announcement of the implementation of the new Dairy Economic Loss Assistance Payment (DELAP) program.

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The 2010 Agricultural Appropriations Bill authorized $290 million for loss assistance payments to eligible dairy producers. Read more details here.

WASHINGTON, Dec. 17, 2009 – Agriculture Secretary Tom Vilsack today announced the implementation of the new Dairy Economic Loss Assistance Payment (DELAP) program. The 2010 Agricultural Appropriations Bill authorized $290 million for loss assistance payments to eligible dairy producers.

“Through this program, eligible dairy producers will receive economic assistance that will help stabilize their operations during these tough economic times,” said Vilsack. “I have personally heard from hundreds of struggling dairy farmers from all across our country who have been hit hard by declining prices over the past year, and now, we’ll be able to offer them help.”

Milk prices declined substantially through early-to-mid-2009, with the national price for milk averaging $16.80 per hundredweight (cwt.) in the fourth quarter of 2008 and averaging $12.23 per cwt. in the first quarter of 2009, a 27-percent decline. On average, the price U.S. dairy producers received for milk marketed in the summer of 2009 was about half of what it cost them to produce milk.

“The dedicated employees of the Farm Service Agency deserve a great deal of credit for acting quickly to provide this critical assistance to America’s dairy farmers,” said Jim Miller, Under Secretary of USDA Farm and Foreign Agricultural Services.

Eligible producers will receive a one-time direct payment based on the amount of milk both produced and commercially marketed by their operation during the months of February through July 2009. Production information from these months will be used to estimate a full year’s production for an operation to calculate the payments, using a 6-million pound per dairy operation limit.

Dairy producers who have production records at the USDA Farm Service Agency (FSA) county office because they participated in another FSA dairy program do not need to apply for the program. FSA will use existing production records for February through July 2009 to calculate and issue their payments.

Producers who have not provided production data for those months to FSA, and have not already been contacted by FSA to provide such data, have 30 days, until Jan. 19, 2010, to apply. FSA officials estimate that more than 95 percent of eligible producers will receive benefits without having to fill out a new application.

A national per hundred weight payment rate will be determined by dividing the available funding of $290 million, less a reserve established by FSA, divided by the total pounds of eligible milk production approved for payment. Based on current information, FSA estimates that 875 million cwt. of milk production will be eligible for payment. The reserve will cover new applicants and appeals. The expected payment rate is approximately $0.32 per cwt.

To be eligible for DELAP, the dairy producer and the dairy operation in which the producer has a share:

Must have produced milk in the United States and marketed milk commercially at any time from February through July 2009;

Must have milk production data for those months;

Must certify to all milk production produced and marketed by the dairy operation during that time.

Also, any dairy producer who has an annual average adjusted gross nonfarm income of more than $500,000 for calendar years 2006 through 2008 is not eligible for DELAP.

For more information and eligibility requirements on the new DELAP program, please visit your local FSA county office or www.fsa.usda.gov.

Through much of this past year, USDA took a number of steps to provide relief to dairy farmers around the country. Some of these steps include:

USDA reactivated USDA’s Dairy Export Incentive Program (DEIP), to help U.S. dairy exporters meet prevailing world prices in addition to encouraging the development of international export markets in areas where U.S. dairy products are not competitive due to subsidized dairy products from other countries.

USDA spent approximately $1 billion in fiscal year 2009 on purchases of dairy products (Dairy Product Price Support Program) and payments to producers (Milk Income Loss Contract (MILC).

USDA increased the amount paid for dairy products through the Dairy Product Price Support Program (DPPSP). USDA estimates that these increases, which were in place from August 2009 through October 2009, increased dairy farmers’ revenue by approximately $243 million.

In March, USDA transferred approximately 200 million pounds of nonfat dry milk to USDA’s Food and Nutrition Service, which will not only remove inventory from the market, but also support low-income families struggling to put nutritious food on their tables.

DELAP details announced by USDA

Lower forecast milk production in 2010, combined with continued recovery in dairy product exports, is expected to lift milk and dairy product prices in 2010 according to the Agriculture Department’s latest Livestock, Dairy and Poultry Outlook issued this morning. The report points out that feed costs have fallen substantially in 2009, but are unlikely to fall as much next year.

The benchmark 16-percent protein ration value is projected to average in the mid-$7.00 per cwt range this year compared with over $9.00 per cwt in 2008. In 2010, the price should continue to fall, but not by nearly as much. Falling soybean meal prices will constitute a large share of the drop. Corn prices for the 2009/10 crop year are forecast to decline to $3.25 to $3.85 per bushel compared with the 2008/09 crop year average of $4.06 per bushel. Soybean meal prices are forecast to decline from $331 per ton average in 2009/10 to a forecast $260, with $310 per ton in 2010/11.

The U.S. dairy herd is forecast to continue to contract in 2010, with most of the herd reduction coming in early 2010 and attenuating later in the year. The report also includes a special article addressing the Cooperatives Working Together program.

Dairy producers now have online access to the National Dairy FARM program. FARM stands for “Farmers Assuring Responsible Management.” The program was developed by the National Milk Producers Federation with support from Dairy Management Incorporated.

NMPF’s Chris Galen said in Thursday’s broadcast that this is a Federation New Year’s resolutions to get farms and marketing systems enrolled in the FARM program, which is a voluntary, nation-wide program that was designed to “bring uniformity to animal care through education, on-farm evaluations, and objective third-party verification.”

Consumers and processors are paying more attention to where food is coming from and the conditions under which animals are kept and “We need to be proactive and play some offense in talking about the good things that dairy farmers are doing every day on their farms.”

But, to prove that, Galen quickly added, “We need to have a program like the FARM program that demonstrates a commitment from the birth to the death and throughout the life of the dairy cow so that involves everything from animal health to the environment to proper facility use to nutrition, transportation, and handling.

To learn more information, log on to www.nationaldairyfarm.com. Galen said the print materials will be supplemented in 2010 with videos because, “a picture is worth a thousand words,” and “we can describe things but a lot of times, with dairy farm practices, it’s a lot better to illustrate them and thanks to the era of YouTube, we now have the ability to put video clips on the website and we will be doing so next year.”

A number of proposals are being discussed around the country and on Capitol Hill to change how milk is priced to farmers in this country. One proposal that is being supported by California’s Milk Producers Council and several other producer groups around the country is called the Dairy Price Stabilization Program (DPSP). We talked about it with California dairy producer, Geoffrey Vanden Heuvel in Wednesday’s DairyLine.

Jeff Vandenheuvel [ 0:01 ] Play Now | Play in Popup | Download

Vanden Heuvel began by pointing out that growth and demand for dairy products in the U.S. is very stable, averaging about 1-2 percent per year, in accordance with the population growth.

The problem, he said, is that, when milk prices are profitable, dairy farmers want to produce more milk, about 3-4 percent more milk, “that’s the incentive, that’s the result.” That, he said, is not sustainable if demand is only up 1-2 percent and “is why we have crashes and we have gotten into a boom and bust.”

The DPSP allocates market share, according to Vanden Heuvel, and if a farmer wants to grow beyond that 1-2 percent, he would pay a modest market access fee. That fee would go into a fund and all of that money would be distributed to the producers who did not increase their milk output above the 1-2 percent.

He called it a “simple dollar in, dollar out agreement amongst us as producers so that all of us don’t try to increase at the same time, which is unsustainable.” He added that the DPSP is unlike the Canadian base quota system which “has a rigid fixed base that has accumulated tremendous a lot of value because it’s transferable. “

Those elements are not part of the DPSP, he said, and “the plan has been designed to not accrue a lot of value in base and would not be a barrier to new entrants.” For more information, log on to www.stabledairies.com.