A new study from two dairy economists was reported by Jerry Slomionski, senior vice president, legislative and economics at the International Dairy Foods Assoc. (IDFA). Slominiski said the study was conducted by Charles Nicholson, of Cal Poly and Mark Stephenson, of the University of Wisconsin-Madison, who did the economic modeling for National Milk’s original Foundation for the Future plan.

“Nicholson and Stephenson have looked at the latest proposal, introduced in Congress by Representative Collin Peterson (D-Minn.) as the Dairy Security Act (DSA), and found that it will have some very eye opening results,” Slominski said. “The economists say one of their original findings remains consistent: milk price volatility would be substantially reduced under the proposed plan,” Slominski admitted. “But that reduced volatility comes at a price for dairy farmers: significantly lower farm milk prices and lower net farm income across all sizes of dairy farms.”

He said this new look suggests the reforms could lower the U.S. all-milk price by 92 cents per cwt. and lower cumulative net farm operating income 32 percent to 48 percent.

He also quoted a press release from the Professional Dairy Business Assoc. in Wisconsin, where one of the authors concluded that “the proposal would cause small farms to leave the dairy industry at a faster pace than without the program.” For more details, log on to www.dairy.wisc.edu

A National Milk press release questioned the “selective and simplistic interpretation of new dairy legislation by organizations opposed to the Dairy Security Act.” At issue are government costs of the program and speculation as to how many dairy producers would participate in DSA’s safety net provisions. 

National Milk CEO Jerry Kozak said “these contrary findings clearly illustrate the challenges associated with simplistic attempts to communicate results from complex economic modeling,” adding that “assumptions about how producers will respond to the program is highly uncertain.” See www.nmpf.org for more details.

Top executives of six of the country’s biggest dairy exporters have written members of the Joint Select Committee on Deficit Reduction expressing opposition to the DSA. They outlined what they consider to be the “negative effects the act would have on domestic and global dairy markets,” according to an IDFA press release, and said it has no place in deficit-reduction talks. 

The bill is expected to be part of the recommendations submitted by House and Senate Agriculture Committee leaders to the supercommittee for inclusion in the debt-reduction bill.

In another news item this week the IDFA and Organic Trade Assoc. (OTA) declared victory after the state of Ohio agreed to drop its regulations for so-called “absence claims” on dairy product labels.

Dairy Profit Weekly Editor Dave Natzke reported in Friday’s DairyLine that the action comes more than three years after those organizations filed a lawsuit against a 2008 regulation covering milk and dairy products labeled as rbST-or bovine growth hormone-free. 

A lower court initially upheld Ohio’s labeling requirements but a three-judge panel in the Sixth Circuit of the U.S. Court of Appeals ruled in favor of IDFA and OTA in 2010. The organizations claimed the labeling rule requirements violated dairy processors’ First Amendment rights and consumers’ rights to know regarding food production. Proponents of the rule said the labels implied product quality or safety differences which did not exist.

I have often read about and even written about the gap between “city slickers” and “country folk,” but that gap was greatly evidenced to me this week as I visited a local nursery in town that was selling dead corn stalks for $4.95 each! Sure hope they were “organic.”

Now if city slickers can be convinced to buy water in a bottle and dead corn stalks, there just has to be a way for the dairy industry can get them to consume more milk and dairy products. PT Barnum said “There’s a sucker born every minute” or words to that effect. We just have to find a way to satisfy the sucker, I mean the slicker.

The USDA announced the October Federal order Class III benchmark milk price Friday at $18.03 per cwt., down $1.04 from September, $1.09 above October 2010, and equates to about $1.55 per gallon. The decline pulled the 2011 Class III average to $18.25, up from $14.36 at this time a year ago and an anemic $10.72 in 2009. The Class IV price is $18.41, down $1.12 from September, but $1.26 above a year ago.

The NASS cheese price averaged $1.7471 per pound, down 11.2 cents from September. Butter averaged $1.7893, down 19.9 cents. Nonfat dry milk averaged $1.5109, down 3.3 cents, and dry whey averaged 61.52 cents, up 2.3 cents.

The November Class III futures contract was trading late Friday morning at $18.89 and December at $18.40, which would result in a 2011 average of $18.32, up from $14.41 in 2010 and $11.36 in 2009.

California’s October 4b cheese milk price was $15.78 per cwt., down 55 cents from September, but 12 cents above October 2010, and $2.25 below the comparable Federal order Class III price. The 4b price has trailed the Federal order Class for 13 months, ranging this year from a low of 8 cents in February to a high of $3.07 in August. The Golden State’s 4b price average now stands at $16.41, but is still $3.15 above the level at this time a year ago. 

The 4a butter-powder price is $18.29, down a dollar from September, but $1.64 above a year ago. Its 2011 average now stands at $19.15, up $4.48 from 2010. 

Cash cheese saw some holiday strength for the third week in a row. The blocks closed the first Friday in November at $1.88 per pound, up 10.75 cents on the week, and 40 cents above that week a year ago.

Good demand for barrel pushed the price above the blocks, to $1.92, up 15.25 cents on the week, and 41 cents above a year ago. Only five cars of block traded hands on the week and six of barrel. The NASS-surveyed U.S. average block price slipped a half-cent to $1.7226 and barrel averaged $1.7411, down 0.1 cent.

Cash butter headed down Friday, reversing four weeks of gains, and closed the week at $1.8325, down 4.75 cents, and strangely 4.75 cents below a year ago when it plunged 30.5 cents on the week for no real clear discernable reason. Sales for Halloween week amounted to eight carloads. NASS butter averaged $1.8290, up 2.5 cents. NASS nonfat dry milk averaged $1.4872, down a penny, and dry whey averaged 62.38 cents, up 0.3 cent.

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.