The CME’s Daily Dairy Report says commercial disappearance of American cheese and other-than-American cheese was up in January versus the prior year, based on USDA’s Economic Research Service (ERS) data. At 371.6 million pounds, American cheese was up 17.6 million.

Other-than-American cheese totaled 574.4 million, up 26 million pounds from January 2011. Butter and nonfat dry milk commercial disappearance was off.

Butter, at 117.7 million pounds, was down 12.2 million pounds from a year ago, and nonfat dry milk, at 159.5 million, was off 4.4 million pounds.

USDA also reports that basketball-themed party ads were featuring cheese and sour cream. Advertising plans centered on the St. Patrick’s Day holiday however did not include many tie-ins with dairy products. The number of butter ads was lower this period with pricing slightly higher at $2.71 for a 1 pound pack. The number of cheese ads was lower for most sizes, with the exception of 2 pound block packs. 

Ice cream features are most common for a single item and many stores are featuring both a national and store brand. This period’s pricing level is $3.25, down 6 cents from two weeks ago. Yogurt features and prices are lower this reporting period with pricing for 4-6 ounce Greek yogurt and yogurt down slightly.

I’ve said it before, the dairy industry’s problem is not so much one of over production as it is under consumption and part of that issue continues to be fluid milk. Tom Gallagher, CEO of Dairy Management Incorporated, addressed that at the recent Dairy Farmers of America annual meeting.

Dairy Profit Weekly Editor Dave Natzke reported in Friday’s DairyLine that, for the week ending Jan. 22, 2012, fluid milk sales were down 3.9 percent over the previous 12-month period, according to Gallagher, but the retail price averaged $3.90 per gallon, up 11 percent from a year earlier. Commercial disappearance of overall fluid milk was down 1.7 percent, with an increase in consumption of milk in coffee drinks possibly offsetting some of the fluid milk sales decline.

Gallagher said studies for four decades have revealed the “elasticity” in the relationship of the retail milk price and retail sales. Each 1 percent change in the price impacts sales by 0.35 percent in either direction. If the price goes up 1 percent, sales go down 0.35 percent. If the price goes down 1 percent, sales increase 0.35 percent.

The trouble, said Gallagher, is that gallon jugs of milk are traditionally thought of as a commodity. Thus, it’s always marketed on price. “When we treat it as a commodity at retail, so do the consumers, and they buy milk on price,” he explained. “Margins shrink, leaving little room for innovation.”

“Some of the strongest ‘brands’ in the world market something that comes out of your tap, water,” he continued, adding that cereal, soda, toothpaste and laundry detergent are all largely the same, but are not treated as commodities. “They have strong marketing programs by brand.”

In dairy politics; the International Dairy Foods Assoc., (IDFA) reports that 25 of their member dairy manufacturers, including some of the largest food companies in the U.S., have called on House and Senate Agriculture Committee members to oppose supply management proposals and adopt a compromise producer safety net in the new farm bill. The manufacturers would be directly regulated under the pending Dairy Security Act, H.R. 3062, which was proposed by National Milk and introduced by Representative Collin Peterson (D-Minn.). 

IDFA charged that “other commodities have moved to insurance and other risk management tools instead of government price intervention. Not only will dairy exports decline if Congress imposes supply management, but dairy imports will be encouraged, causing problems for future trade negotiations.” 

“Some groups want to completely eliminate government support for agriculture commodities while others are arguing that government needs to step in and control milk supply to assure high milk prices,” said Jerry Slominski, IDFA senior vice president of legislative affairs and economic policy. “We think there is a middle ground where government can help dairy farmers successfully manage their own businesses.”

Three taxpayer organizations, Citizens Against Government Waste, Americans for Tax Reform and the National Taxpayer’s Union, have also called on lawmakers to oppose the legislation, calling it “an egregious mistake.”

In other legislative news, DPW reports that Florida U.S. Rep. Tom Rooney, chair of the House Ag Subcommittee on Livestock, Dairy and Poultry, co-sponsored the bipartisan “Preserving America’s Family Farm Act,” HR 4157, which would prevent the Department of Labor (DOL) from enacting controversial new restrictions on youth working on family farms.

HR 4157 would prevent the DOL from implementing its proposed rules to restrict family farm operations. The new mandates would prohibit youth under 18 from being near certain animals without adult supervision, participating in common livestock practices like vaccinating, handling most animals more than six months old, operating farm machinery over 20 PTO horsepower, completing tasks at elevations over six feet high, and working at stockyards, grain and feed facilities.

And, National Milk has become the new manager of the licensing and use of the REAL seal, one of the food industry’s most recognizable product logos. The management was transferred from the United Dairy Industry Assoc. as a result of an agreement between it and NMPF, according to a press release, as “the best opportunity to place a renewed emphasis on highlighting the importance and value of American-made dairy foods.” 

“The REAL seal was created more than 30 years ago to help consumers distinguish between real and artificial cheeses, as the pizza category was really taking off,” said Jerry Kozak, president and CEO of NMPF. “Today, a generation later, we still see a need to differentiate American-made dairy products from imports, and real dairy foods from those made with soy or rice or even hemp. Our management of this labeling program will benefit consumers, as well as the farmers who have a direct stake in how their milk is marketed.”

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.