Cost of production is one of the top concerns for farmers, especially those regularly purchasing feed inputs. Alfalfa hay supplies are tight. During 2011, domestic buyers are increasingly competing with off shore buyers for hay. 

Foreign Agricultural Service (FAS) reports for January to August had U.S. exports of alfalfa hay, at 1.1 million tons, up 13 percent from the same months of 2010. FAS reports Japan and United Arab Emirates lead in importing alfalfa hay.

Milk supplies also are heavy in New Zealand and Argentina as I reported last week however the Daily Dairy Report says a natural gas pipeline leak on New Zealand’s north island this week resulted in the closure of 15 Fonterra dryer plants and subsequent dumping of an estimated 30 million liters of milk per day. Some plants were soon back on line with back-up gas supplies. Estimates vary, the DDR said, but as much as a third of New Zealand’s milk production was reportedly withheld from the market on Tuesday, October 25.

In politics; the International Dairy Foods Association (IDFA) gave a thumbs-down to the Institute of Medicine’s (IOM) front-of-pack nutrition labeling rating and symbols recommendations, saying it uses a “flawed formula that could confuse consumers seeking information on the nutrient content of food and beverages.”

“According to the proposed labeling system, low-fat dairy products, which are recommended as nutrient rich foods to encourage in the Dietary Guidelines for Americans, would receive a rating of 2 stars while products devoid of positive nutrients such as a diet soft drink could qualify for 3 stars,” said Cary Frye, IDFA vice president of regulatory and scientific affairs. 

“A labeling system that focuses on calories and ‘nutrients to avoid’ does not provide consumers with the full range of information needed to make healthy and nutritious choices,” IDFA said. The call was made for a simplified label symbol that would go on the front of all food packages and highlight the number of calories per serving. The symbol would also use a 0-3 star, or point, system to indicate how healthful a food is based on eligibility criteria and qualifying levels of saturated fat and trans-fat, sodium and added sugars.

“Providing a complete picture of the product, including nutrients to encourage and others to limit, in an easy-to-understand, consistent labeling format would be much more helpful than this over-simplified approach,” said Frye.

The continuing slide in fluid milk sales remains a disappointment for the dairy industry and some question whether fluid milk promotion is “spending good money after bad.” Dairy Management Incorporated’s Joe Bavido told me in an interview at World Dairy Expo that DMI’s board has had similar thoughts after spending $50-70 million per year in the ‘90s on the “Got Milk” and “Milk Mustache” campaigns and yet sales continued to fall.

That led to changes, according to Bavido, and DMI totally eliminated the generic advertising of milk as they felt they could gain more with partnerships with fast food outlets like McDonalds. Bavido said fluid sales have grown there and DMI concentrated on doing a better marketing job of milk in schools, offering a product “the way kids wanted it and where they wanted it.” The repackaging of milk was also part of that switch, he said, pointing to the plastic, single-serve, re-sealable bottle, which helped spur fluid sales.

The latest challenge is to chocolate milk and its sugar content.

Bavido said their answer has been to work with processors to reduce the sugar level so it comes into compliance with new dietary guidelines and in areas where they have reformulated chocolate milk, sales have been successful.

Whenever flavored milk is eliminated in schools, there’s a definite decrease in sales, Bavido said, but the reduction in sugar content has not resulted in lost chocolate milk sales. The reformulation was initially tested with kids, he said, and the processors who have done so have not lost volume sales.

I asked if the data reported on fluid sales included milk sold in fast food outlets and schools and he said yes but added the caveat that 70 to 78 percent of fluid milk sales are in retail, the gallon or half gallon jugs.

“We haven’t done anything to innovate changes to the consumer so we haven’t given the consumer incentive to increase retail sales,” Bavido admitted. This still has to be addressed by processors and the checkoff program and research needs to be conducted to find out what we can do.

There is “unmet demand there,” he concluded, “We just have to reach the consumer in that area.”

I hit a milestone this week, turning 60. I’m being fitted for a walker next week; just kidding. It’s amazing how young 60 looks when it appeared so old in my 20s. Age is indeed a number and I love the message from a preacher I recently heard on the radio. He had walked through a cemetery and noticed the dates on the headstones; the year of birth and the year of death. But, he said the most important part is left blank and that is what went on in “the dash,” the years between the two dates. He asked; “what are you doing with your dash?” That’s profound and I challenge you today with that question as well!

Back to business; all eyes remain on dairy product prices, which continue to keep pundits gainfully employed trying to figure out what they mean. The cash Cheddar block cheese price closed the last week of October at $1.7725 per pound, up 5.25 cents on the week, and 13.25 cents above a year ago. Barrel, which traded a few days above the blocks, closed at $1.7675, up 7.75 cents on the week, and 10.25 above a year ago. 

Seven cars of block found new homes on the week and 11 of barrel. The NASS-surveyed U.S. average block price hit $1.7271, down a penny, and the barrels averaged $1.7417, up 1.9 cents.

Butter closed Friday at $1.88, up 2 cents on the week, but 30.5 cents below a year ago. Thirteen cars were sold. NASS butter averaged $1.8039, up 5.1 cents. Cash Grade A nonfat dry milk lost 6 cents on the week, closing Friday at $1.43. Extra Grade held all week at $1.58. NASS powder averaged $1.4969, down 2.6 cents, and dry whey averaged 62.08 cents, up 0.2 cent.

Checking the cupboard; the latest Cold Storage report shows September butter stocks at 151.1 million pounds, down 9 percent from August, but 16 percent above September 2010. 

The CME’s Daily Dairy Report (DDR) says the decline was the smallest for the month in 10 years and barely half the historical rate.USDA’s Dairy Market News says “Butter producers and handlers are indicating that orders remain strong for upcoming holiday needs.” 

American type cheese stood at 632.6 million pounds, down 2 percent from August, and 1 percent below a year ago. 

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Lee Mielke may write to him in care of this publication.