In dairy politics, a group of South Dakota dairy manufacturers are opposing the supply management provision included in legislation expected to be included in the draft Farm Bill, according to a press release from the International Dairy Foods Assoc. (IDFA).
 

The group included the presidents and CEOs of four large dairy companies; Saputo Cheese USA, Inc., Lake Norden Food Ingredient Company (Davisco Foods International, Inc.), Valley Queen Cheese Factory, Inc., and Bel Brands USA and expressed concern to Sen. John Thune (R-S.D.) pointing to the growing dairy industry in South Dakota, and called it “alarming that Congress would consider legislation that would limit milk production, increase regulation and allow government interference in free markets,” according to the release.

Thune sits on the Senate Committee on Agriculture, Nutrition and Forestry, which will consider the legislation as part of the proposed “Dairy Security Act,” expected to be included in the farm bill. 

“The dairy industry in South Dakota has been growing tremendously in recent years,” the dairy leaders wrote. “Our investments in dairy manufacturing plants in the state bring new jobs as well as increased demand for milk from dairy farmers. 

In fact, we have been working with Gov. Daugaard in his efforts to bring new milk production to our state in order to keep up with the growth in our operations.” 

“It’s also important to note that the opportunity for dairy expansion into global markets is terrific for our industry,” the dairy leaders added. “Just a decade ago, our nation was a net importer of dairy products. Now, we export the equivalent of 15 percent of the milk produced by our nation’s dairy farmers.” They called on Thune to oppose “this approach for the dairy industry and our nation.”

Meanwhile, National Milk’s (NMPF) Board of Directors supported a resolution urging Congress to pass a Farm Bill in 2012 that contains “an improved safety net for farmers in the form of the Dairy Security Act” (DSA). A press release said the Board does not support any extension of current farm programs and “delay the creation of a better dairy program.”

Kicking the can down the road into 2013, where the farm bill is concerned, is neither good politics, nor good policy,” said Randy Mooney, Chairman of NMPF and a dairy farmer from Rogersville, Mo. “The tough choices about budget priorities won’t be any easier next year. But more to the point, dairy farmers need a better program than what we have right now. A farm bill extension in 2012 doesn’t do us any good.”

The Federation has worked since 2009 to formulate a comprehensive economic safety net that is based on margins, rather than just the farm level price of milk, a NMPF press release stated. After developing its own proposal, the “Foundation for the Future,” NMPF worked with Reps. Collin Peterson (D-Minn.) and Mike Simpson (R-Idaho) to include those concepts into H.R. 3062, the DSA.

NMPF’s Chris Galen reported on the first of four field hearings on the new Farm Bill by the House Ag Committee in Thursday’s DairyLine. 

The first hearing was held in upstate New York where much of the focus was on dairy. The Federation had three dairy producers testify in support of the DSA, Galen reported.

The Senate, on the other hand, completed its four farm bill hearings this week. Galen said “All the cards are now beginning to line up to have something done, at least in the Ag Committees by the end of this spring or by early summer, getting a Farm Bill created.” “The key,” he concluded, “Will be trying to get it passed through Congress and signed by the White House this year before the elections sweep away anything that can get done here in Washington.”

Cash block cheese closed mid-March at $1.5825 per pound, up 9 cents on the week, the third week in a row for a gain, but still 10.25 cents below a year ago when they plummeted 33 cents, to $1.6850, and barrels plunged 26.5, to $1.70. The barrels also closed Friday at $1.5825, up 8 cents on the week, and 11.75 cents below a year ago. The gains came on bids; no cheese was sold in the cash market this week. 

The blocks have been trading below the barrels from time to time the past few weeks. Why is that noteworthy? The March 15 Daily Dairy Report reminds us that “Margins for block manufacturers are squeezed when the barrel price exceeds the block price.”  The NASS-surveyed block price inched up a half-cent, to $1.4926. The barrels averaged $1.5146, up 0.8 cent.

FC Stone Dairy Economist Bill Brooks wrote in the March16 e-Dairy Morning Executive Edition; “There is concern about where milk and dairy product supplies will be later this year and some buying is likely occurring for the summer grilling season.”

In some heavy trading, cash butter closed Friday at $1.5150, up 6.5 cents on the week, but 55.5 cents below a year ago. Twenty six cars were sold. NASS butter averaged $1.4150, down 0.8 cent. NASS nonfat dry milk averaged $1.3410, down 2.3 cents, but whey reversed six weeks of decline and regained 1.3 cents, climbing back to 61.93 cents per pound.

“Unlike the cheese market, buyers of butter have found the price level at which sellers are willing to let go of product,” says Brooks.

“There are concerns about future milk supplies and warm weather could be pulling milkfat into ice cream and other Class II products, he said, but warned; “There is no shortage of milkfat.” 

Looking “back to the futures;” the average Class III milk price for the first six months of 2012 stood at $16.35 per cwt. on Feb. 3, (after factoring in the announced January and February Class III milk prices) $16.19 on Feb. 10, $16.08 on Feb.17, $15.69 on Feb. 24, $15.65 on March 2, $15.77 on March 9, and was hovering around $16.04 late morning March 16.

California’s April Class I milk price was announced by the California Department of Food and Agriculture at $17.21 per cwt. for the north and $17.48 for the south. Both are down 39 cents from March and $4.45 below April 2011. The northern price 2012 average now stands at $18.30, down from $18.56 a year ago at this time and $16.37 in 2010. The southern price average is $18.57, down from $18.83 a year ago and $16.65 in 2010. The Federal order Class I base price is announced by USDA on March 23.

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.