In news from “the Hill;” National Milk expressed concern this week that dairy farmers will need to file a plan to avoid oil spills from their bulk tanks if changes in pending Environmental Protection Agency (EPA) regulations aren’t changed. The way they are written now, the butterfat in milk would be considered an oil and thus the law of unintended consequences is about to kick in this fall.

NMPF’s Jamie Jonker reported in Thursday’s DairyLine that the regulations referred to as the Spill Prevention Control and Countermeasure Rule (SPCC) looks to insure that oils are not spilled from containers and if it does happen, there’s a way to quickly clean up those spills. Animal fats would fall under this definition he said, and that would include milk.

The regulations have nothing to do with the oil gushing out of the ocean floor in the Gulf as they were written long before that occurred but revisions

NMPF worked with the EPA and other interested groups to obtain an exemption for bulk storage of milk products and the EPA was very ameanable to that in January of 2009, he said, but has not finalized that exemption yet.

It’s important for the dairy industry because of the approaching November compliance deadlines so, without that exemption, there’s significant uncertainty how dairy farmers would be affected.

The International Dairy Foods Association last week issued a press release saying that it had learned that the EPA had agreed to the exemption and Jonker said they have heard the same rumors and hopes they are true but there has not yet been an official statement from EPA to that effect.

Dairy producers need to be involved and informed of what’s going on in the beef side of the business, according to Ted Greidanus of Tipton, California. Greidanus raises black and white bull calves in the heart of California’s dairy industry and is a current Beef Board member and Operating Committee member.  

Speaking in Wednesday’s “Beef Board Update,” Greidanus said there’s a good percentage of their calves that go directly to beef production along with their market ready cows thus dairy animals make up a good percentage of U.S. beef production and that beef goes throughout the world. 

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Dairy producers have an investment via the beef check off on their bull calves and cows, according to Greidanus, who called it a “very good investment,” based on statistical information which shows that their one dollar investment returns about five dollars to the farmer. 

“The Beef check off does so much,” Greidanus said, and he knows it first-hand because he serves on the Operating Committee which makes recommendations to the Executive Committee on how the check off money is to be spent, being it advertising, research, developing international markets, or food safety. 

The budget runs around $40 million, he said, though it is declining because cattle numbers are declining so “We need to work hard with the precious resources that we have but it’s about promoting beef and making sure that, that dollar that gets invested through the check off program returns more dollars back to the producers.”

You can whip a horse harder, but you still can’t make him win.

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Cash block cheese lost another three quarters of a cent Monday, slipping to $1.39 per pound, while the barrels held at $1.3575. Downes-O’Neill dairy economist Bill Brooks said in Tuesday’s DairyLine that the question on everyone’s mind is how low will it go?

“You would anticipate that our level of support would be $1.3650 which we hit on April 20th, Brooks said.” Cheese has been trading between $1.30 and $1.50 for the most part, he said, and “Whenever we have had pullbacks in our price, we’ve established higher lows on the downturns so that would indicate that maybe we’ll stay above the $1.3650 though we’re not very far away from it.” The low $1.30s would be the next point of support, he said.

Weather is good in the Midwest, according to Brooks, a little warm but not too bad but a lot of that milk is going into cheese and right now we’re not seeing demand keep up with production.

The $1.39 U.S. block price is well below the world price, world price meaning Australia and New Zealand via Dairy Market News price reports. We’ll see new prices this week, he said. Two weeks ago, it was at $1.8144 down slightly from the previous price level.

The problem we run into in exporting cheese, Brooks warned, is getting geared up for it and making the Cheddar the international market wants and that is a white Cheddar that is much whiter than what the world market is used to. That makes it difficult to get into that market, he said, even with the lower price.

Butter, on the other hand, continues to creep higher, up a quarter-cent Monday, to $1.5775. The gains haven’t been outlandish, Brooks said, but good and steady and Monday was the eight consecutive session of gain and only one load has been sold since May 26.

“Those who have butter are holding on to it with confidence,” he said, and a lot of our butterfat is working its way out of the churn and into Class II products like ice cream, frozen desserts, sour creams, and dips and that’s keeping things tight and anticipation of the tight world market for butterfat is spilling over into the U.S. although Brooks is not sure U.S. butter makers will be able to take advantage of it because of the difference in product and the color issue that sometimes pops up but “it’s helping out and is kinda the only area that’s bright point right now for dairy prices.”

Dairy Management Incorporated’s Joe Bavido continued his series reviewing the objectives and goals of the dairy check off in Monday’s “DMI Update,” and spotlighted the partnership with Domino’s Pizza. He said the check off is working with Domino’s and other leading pizza chains to reenergize the pizza category by focusing on cheese, the core ingredient of pizza, as well as in their menu development via DMI’s consumer marketing efforts.

Check off consumer research communicated the consumer’s “love affair with cheese,” Bavido said, and that influenced Domino’s strategy to increase the amount of cheese offered on their pizza. Domino’s reported an increase in same store sales of over 14 percent between January and March of 2010, according to Bavido. Domino’s attributed the increase to their new pizza recipe which included an increase in the amount of cheese used as well as the type of cheese, having included a hint of Provolone, along with improved sauce and crust.

The chain also doubled the amount of cheese on its cheese-only pizzas and this is in addition to last year’s creation of its American Legends specialty pizza line which includes 40 percent more cheese than Domino’s traditional pizzas. Domino’s increased cheese use resulted in an additional 120 million pounds of milk in 2009, Bavido reported, and that demand will grow even further in 2010.

The May Federal order Class III benchmark milk price was announced this morning by USDA at $13.38 per hundredweight (cwt.), up 46 cents from April, $3.54 above May 2009, and 98 cents above California’s 4b cheese milk price. That pulled the 2010 Class III average to $13.57, up from $10.23 a year ago, but compares to $17.86 in 2008.

Thursday’s Class III futures portend a $13.52 Class III price in June, $13.28 in July, $13.87 in August, $14.52 in September, and a peak of $14.70 in November before retreating.

The May Class IV price is $15.29, up $1.56 from April and $5.15 above a year ago.

The four week-NASS-surveyed cheese price averaged $1.4257, up 4.3 cents from April. Butter averaged $1.5801, up 10.3 cents. Nonfat dry milk averaged $1.2520, up 13.1 cents, and dry whey averaged 36.45 cents, virtually unchanged.

A New Zealand dairy products company has made greater inroads into the U.S. dairy industry with the purchase of a Midwest cheese company. Dairy Profit Weekly editor, Dave Natzke, reported in Friday’s broadcast that DairiConcepts, a joint venture between New Zealand dairy company Fonterra and Dairy Farmers of America, the largest dairy cooperative in the United States, has purchased the U.S.-based Italian hard cheese business owned by Rochester Cheese, a wholly-owned affiliate of Swiss Valley Farms and another large U.S. dairy co-op.

The deal includes Rochester’s Italian cheese plant in Dalbo, Minnesota. Rochester Cheese will retain ownership of another plant, in Springfield, Minnesota, but transfer all Italian cheese production to the Dalbo plant.

DairiConcepts, formed in 2000 by Fonterra and DFA, manufactures dairy and cheese ingredients for retail, foodservice and industrial customers. The deal would make DairiConcepts the second-leading maker of Italian cheeses in the United States, according to Natzke.

And, with U.S. milk production anticipated to grow and dairy farmer milk price recovery continuing to be slow, dairy policy discussions are heating up during June Dairy Month, according to Natzke. A meeting to gain support for a national dairy supply management proposal was held in California this week, and the second meeting of the Dairy Industry Advisory Committee wrapped up Friday in Washington, D.C., as U.S. Agriculture Secretary Tom Vilsack seeks input on federal dairy policy proposals.

In addition, the House Ag committee has been holding field hearings on the 2012 Farm Bill for about a month, and now Senate Ag committee chair Blanche Lincoln (D-AR) announced that her committee will kick off Senate hearings on the next Farm Bill, beginning June 30.  Also, a joint USDA/Department of Justice hearing on antitrust issues related to the dairy industry, will be held in Madison, Wisconsin, June 25.

Much thought and analysis went into the CWT’s decision to launch its tenth herd retirement program. CWT CEO Jim Tillison said in Thursday’s DairyLine that they consider a number of factors and one of them is dairy cow culling, which has picked up dramatically.  

“Cull cow prices are very strong,” he said, “And cow prices on the market are not as strong so we thought that now would be an ideal time to keep things moving in the right direction and to take out as many cows as we could with the limited funds that CWT has available.”  When asked about a bred heifer program not being included this time around, Tillison said its original intent was to “take out future milk production,” but the belief this time was that the most effective use of CWT money would be to take out cows that are currently being milked or soon will be. He also added that the bred heifer program was not “strongly subscribed to” in the past.  

When asked about the criticism over the maximum bid only being $3.75 per hundredweight, Tillison responded, “One of the things that we can’t do is pay much more than what cows are selling for in the marketplace.”  He said that CWT always set a maximum bid but it’s just been in the last three removals that a maximum bid was announced. He said the committee considers what top springers are selling for across the country and “if you look at the sales, and I’m not talking about purebreds, I’m talking about top springers, they’re selling for around $1500.00.” They also consider beef prices which are running as high as 80 cents but have been averaging closer to 60 cents per pound.  

“When you take those two factors together, $3.75 is a pretty good price, Tillison argued. A producer bidding in the program with a 20,000 pound cow, production wise, is going to get probably close to $1500 per head, depending on the milk production of the cow, he concluded.

            (Palos Verdes Estates, CA)  Say Cheese magazine, edited for consumers who enjoy specialty cheese, is expanding its retail distribution into Washington and Oregon, according to Publisher John Montandon.

             “We’re delighted that Say Cheese will now be available in 22 Haggen and TOP Foods grocery stores in this well regarded chain.  This is in addition to the 107 outlets from 33 retailers in California already providing the magazine free to consumers in the cheese aisle,” adds Montandon.

             Montandon continues, “This expanded distribution will bring the circulation of our Summer issue to a total of 60,000.  We’re very pleased with the very positive response to our first two issues from retailers, specialty food marketers and consumers themselves.”

With an accessible and inviting editorial package, Say Cheese contributes to enhanced awareness, enthusiasm and purchase of cheeses of all types. Additional content on cheese-friendly foods and beverages inform and inspire the audience as the publication seeks to more fully integrate cheese into consumer lifestyles.

               Working with the California Cheese and Butter Association (CCBA), a trade group dedicated to supporting its members through education, Say Cheese truly is for today’s consumer. It educates via a smartly designed, recipe-rich magazine that is beautiful, practical and informative. Building on the rich heritage of traditional cheeses from North America and internationally, as well as the many new artisanal varieties that small producers are crafting from cows, goat and sheep milk, Say Cheese embraces the entire cheese experience.

                Four issues are being published in 2010: January, April, July and October. The magazine is also available digitally at www.saycheesemedia.com; the site also posts exclusive content and has a vibrant and dynamic community for its readers.

Say Cheese is published by DairyBusiness Communications, which produces multi-media for the dairy industry including three monthly magazines (Western DairyBusiness, Eastern DairyBusiness and Holstein World), DairyProfit Weekly newsletter, DairyLine Radio Network, five active web sites and DairyProfit Seminars.   A division of Multi Ag Media, LLC, it is based in Syracuse, NY.

The Agriculture Department’s April Dairy Products report puts butter production at 138.6 million pounds, down 0.1 percent from March and 3.6 million pounds or 2.5 percent below April 2009.

Mozzarella cheese output totaled 288.6 million pounds, down 11.7 million pounds or 3.9 percent from March, but 18 million or 6.6 percent above a year ago.

Total Italian type cheese, at 366.5 million pounds, was down 14.1 million pounds or 3.7 percent from March, but 20.5 million or 5.9 percent above a year ago.

Cheddar production totaled 272.7 million pounds, down 9.3 million pounds or 3.3 percent from March, but unchanged from a year ago.

American type cheese amounted to 360.1 million pounds, down 2.2 million pounds or 0.6 percent from March, but up 5.3 million pounds or 1.5 percent from a year ago.

Total cheese output came to 862.8 million pounds, down 28.8 million pounds or 3.2 percent from March, but 15.2 million pounds or 1.8 percent above a year ago.

Nonfat dry milk output, at 150.1 million pounds, was up 10.7 million pounds or 7.7 percent from March, but 3 million pounds or 2 percent below a year ago.