ARLINGTON, VA – The effort to make dramatic improvements in U.S. dairy policy took a big step forward Wednesday with the release of draft legislation incorporating the key elements of NMPF’s Foundation for the Future program.

The discussion draft text has been made available by the House Agriculture Committee’s Ranking Member Collin Peterson (D-MN) here: http://democrats.agriculture.house.gov/

“This is a long-anticipated and very welcome next step in the process of upgrading dairy policy to better provide farmers with protection, stability, and the opportunity for growth,” said Jerry Kozak, President and CEO of NMPF. “We appreciate the attention that Congressman Peterson has brought to this issue, and we will be working with him and his colleagues on Capitol Hill to help advance and implement the concepts of Foundation for the Future.”

The legislative language is termed a discussion draft, rather than a bill, as it now provides members of Congress with the opportunity to allow fellow congressmen, key stakeholders, and constituents the opportunity to view the language prior to the official introduction of a bill. It also allows backers of the draft to seek cosponsors who wish to affix their names to the bill, prior to it being formally introduced.

Kozak noted that the economic impact of the reforms contained in the Foundation for the Future proposal will save the government money, compared to current dairy program spending. Such a development “becomes a critical part of the effort to help us move it forward, because all of the talk in Washington lately has been about cutting spending, and specifically, which farm program expenditures can be reduced,” Kozak said. “We now have a good answer to that question where dairy programs are concerned.”“Connecting Cows, Cooperatives, Capitol Hill, and Consumers”

The Congressional Budget Office has evaluated, or scored, the legislative draft to assess its budget impact, and that process necessitated two changes, compared to the original Foundation for the Future package as proposed by NMPF (which can be reviewed in this magazine describing the program: www.futurefordairy.com/pdfs/NMPF_FFTF%20Magazine-6-11.pdf).

With respect to the Dairy Producer Margin Protection Program, the amount of basic (no cost to the farmer) margin coverage has been adjusted to 75% of a producer’s production history. This change saves money, compared to the current baseline for dairy. However, the DPMPP supplemental coverage option remains at 90% of the producer’s production history, as NMPF had proposed.

In addition, due to a number of issues that deal with tax provisions and the overall federal budget deficit, CBO has determined that 50% of any dollars collected as a result of the implementation (i.e. “triggering in”) of the Dairy Market Stabilization Program (DMSP) will be remitted to the Treasury, rather than being spent to purchase dairy products. This provision ensures a measure of cost savings sufficiently significant to reduce the overall cost of FFTF.

Kozak said that NMPF will spend the coming weeks building support for the legislative draft, in anticipation of the subsequent formal introduction of a bill in the House, “with an emphasis on obtaining bipartisan support from across the country for this critically-important improvement in dairy policy. We also hope the Senate will take up the charge, so that we can get the legislation passed and implemented as soon as possible.”

The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance the well being of dairy producers and the cooperatives they own. The members of NMPF’s 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies. For more on NMPF’s activities, visit our website at www.nmpf.org

This week’s Cattlemen’s Beef Board podcast, Elizabeth Clavin Bliler, Central Illinois dairy producer, shares with us her operation, including converting the dairy’s record keeping from pen and paper to DeLaval’s system.

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17 carloads of block cheese were sold in the first two days of trading this week at the Chicago Mercantile Exchange. We are starting to see a shift in the supply and demand area, according to FC Stone dairy economist Bill Brooks.

He told DairyLine Tuesday that the block market has been as tight as what the barrel market was and is now starting to loosen up. Last week’s trading hit 17 loads. The last time we saw that many loads trade hands during the course of a week was the week ending May 20 where 16 loads changed hands.

“It looks like we have flipped things around a little bit,” he said. “Profitability at cheese plants seems to have recovered as we went through May and into June, so that’s probably helping out production.”

He noted there is still a fair amount of barrel production in the Midwest despite the recent heat and humidity. “Minnesota and Wisconsin milk production is lagging from a year ago so it may be tightening up that barrel market a little more and now we’re back to an inverted spread like what we had towards the end of May,” he said.

The barrels are trading 4 ¾ cents above the blocks. Brooks said the inverted spread, from a milk buying standpoint, usually requires a little bit more cost to make and package up blocks.

Barrels are usually thrown into a fiberboard barrel that is easy to extract off the cheese and can be used for further manufacturing, he said. So, there’s not as much packaging and not as much cost in there.

“Whenever the spread becomes inverted like it is now, you end up with a situation where you have a little higher cost in dealing with the block product versus barrels, and you’re paying a little bit more for your milk. So that squeezes those plant margins a little bit and makes it just a little bit harder to business out there whenever the milk price and your end product and income is not.”

The block price will not hold if we continue to see several carloads trading a day.

“Still, if folks who would like to have some extra product see the market dropping, there going step back away from it,” he said. That could eventually pull the barrel market down.

Immigration reform has been in the news a lot, but the Mexican border has also been the demarcation line for another dispute related to trucking and U.S. dairy exports. Dairy Profit Weekly’s Dave Natzke gave us the details on Friday’s DairyLine. 

The United States and Mexico have signed an agreement creating a pilot cross-border trucking program, a step in ending a trucking dispute between the two countries, and potentially eliminating a threat to some U.S. cheese and dairy product exports.

Under the plan, Mexico will reduce import tariffs on U.S. cheese and other products by 50%. Those tariffs were imposed on U.S. exports after a ruling the United States had failed to comply with North American Free Trade Agreement provisions by applying restrictions on Mexican truck movement into the United States. The remaining 50% import tariffs will be removed when the pilot program becomes permanent. The higher tariffs had threatened U.S. access to markets in Mexico, the largest importer of U.S. dairy products in the world.

The leader of the Obama Administration’s anti-trust efforts is resigning. Christine Varney, Assistant Attorney General of the Department of Justice Antitrust Division, said she will step down, Aug. 5. Probably most familiar to dairy farmers, Varney led the Department of Justice team, hosting a series of workshops around the country last year in conjunction with the U.S. Department of Agriculture, to discuss competition and regulatory issues faced by the agriculture industry.

And finally, last week’s USDA crop acreage report indicating a big jump in U.S. corn acreage caught many by surprise, sending futures prices lower and leading to hope dairy farmers might get a break in feed prices. That hope may be short-lived, however. The initial lower prices brought foreign buyers back to the U.S. market, pulling prices back up this week. Recent USDA and California Department of Agriculture reports indicate feed prices were the primary reason for higher dairy farmer production costs so far in 2011.

Leaders of IDFA member companies converged on Capitol in June for our annual Washington Conference. At a leadership breakfast, attendees heard from Ranking Agriculture Committee Member Colin Peterson and Reid Ribble, a freshman Congressman from Wisconsin and member of the committee.

IDFA’s Peggy Armstrong reported on Wednesday’s DairyLine:

In his comments, Representative Peterson urged IDFA members to continue to work with producers on dairy policy reform in the 2012 Farm Bill. And while the executives were receptive to Mr. Peterson, the message they shared with him and their Members of Congress was simple: they cannot support programs that increase the amount of government regulation and interference into markets.

In more than 100 meetings with congressional leaders and staff, IDFA members explained why they are opposed to National Milk’s Foundation for the Future: its centerpiece, the Dairy Market Stabilization Program, will discourage and impede the growth of U.S. dairy production and processing. They shared economic analysis showing the proposal will cause exports to decline, imports to increase and milk prices to be more volatile. The proposal will actually stop the dairy industry from capturing new international markets at a time when Congress and the President agree that exports are essential for job growth here at home.

In his remarks, Representative Ribble called Washington Conference attendees “the nation’s job creators.” Estimates show that approximately 20,000 new jobs were created in the last decade by dairy export growth, and the growth continues today. For example, the Leprino Foods Company is building a new cheese facility in Greeley, Colorado that is expected to produce 500 new jobs. Colorado dairy farmers are expected to add 80,000 new cows to their herds to double current milk production to supply the facility.

After two days of briefings and Congressional visits, Washington Conference concluded with the 29th annual Capitol Hill Ice Cream Party. This event is a favorite among members of Congress and their staff, who enjoy an ice cold bowl of ice cream on a hot summer afternoon.

The June Federal order benchmark farm milk price took a much needed jump. The Agriculture Department announced the Class III manufacturing grade milk price Friday morning at $19.11 per hundredweight, up $2.59 from May, $5.49 above June 2010, the highest it has been since June 2008, and equates to about $1.64 per gallon. The 2011 average now stands at $17.06, up from $13.58 at this time a year ago, and compares to an anemic $10.19 in 2009.

The June Class IV price is $21.05, up 76 cents from May, and $5.60 above a year ago.

California’s comparable 4a price was announced at $20.79 and the 4b price at $18.79. 

The 4-week NASS-surveyed cheese price averaged $1.8999 per pound, up 24.7 cents from May. Butter averaged $2.1287, up 10 cents. Nonfat dry milk averaged $1.6520, up 4 cents, and dry whey averaged 52.33 cents, up 3 cents from May.

What should you do if you can’t afford to dispose of spoiled silage?

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