Immigration reform has become a hot topic as activists staged protests around the country, primarily against the House bill. The Senate Judiciary Committee passed a bill last week that opens the door for millions of illegal immigrants to seek U.S. citizenship. Agriculture, including dairy, has a lot at stake in this issue and is watching it closely.

National Milk’s Chris Galen reported that the bill passed by the Senate Judiciary Committee contains several provisions sought by agriculture. The Senate is expected to vote on the measure in the next couple weeks.

One of the key elements that NMPF has been pushing for, according to Galen, is a guest worker provision so that dairy farms and other agricultural operations don’t lose access to migrant labor. That provision is included in the Senate bill, he said, but it’s not without controversy and will be one of the most hotly contested legislative issues this year.

The House bill does not contain the provision, so once the Senate passes its bill, a conference committee will have to be formed so House and Senate members can work out the differences.

Galen said NMPF hopes the Senate does pass a bill that contains a guest worker provision, and he urges farmers to contact their elected officials encouraging their support.

The House passed the Milk Regulatory Equity Act this week, a move that received widespread praise from dairy producers and processors, said Dairy Profit Weekly Editor Dave Natzke.

The most immediate impact, he said, will be in the Southwestern United States and California where there’s been an ongoing battle on the border of the California state milk marketing order, the Arizona-Las Vegas federal milk marketing order and unregulated areas of Nevada.

Natzke said the bill primarily targets Arizona processors who buy milk in California, where it’s generally cheaper than in the adjacent federal milk marketing order, then processes and bottles the milk in Arizona, and in turn markets it back in California. Until now, those plants were able to sell milk back into California without paying a portion of Class I milk revenues into order pools, with the end result being lower producer milk blend prices.

The issue has been the subject of ongoing lawsuits, according to Natzke, with affected processors charging that California’s milk marketing order rules violated the Commerce Clause of the U.S. Constitution.

House bill S. 2120, approved 285-128, brings those processors under state and federal milk marketing order rules. It also requires large producer-handlers that sell more than 3 million pounds of fluid milk per month to comply with federal order rules. The legislation also clarifies that plants in Nevada selling into a federal milk marketing order must now abide by federal pricing regulations.

Those speaking against the bill, including Rep. Dave Obey (Wis.-D), said the issue is much larger, and he called for California to come under federal milk marketing order rules instead of having its own state order. Opponents also say the bill will raise consumer milk prices in the affected areas.

The bill passed the Senate in December; and now goes to President Bush to be signed into law. Both the National Milk Producers Federation and the International Dairy Foods Assoc. supported the bill.

Mexico has been added to the list of countries eligible to receive cheese and butter exports facilitated by the CWT program. Earlier this month, Mexico was made eligible for whole milk powder exports but is now eligible for cheese and butter as well on a “trial basis.”

Bids were also accepted by the CWT from Seattle-based WestFarm Foods to export 211,200 pounds of butter to Egypt and three bids were accepted from Humboldt Creamery of Fortuna, Calif. to export 1.2 million pounds of whole milk powder to Turkey, 44,000 pounds to Mexico and 44,000 pounds to Viet Nam.

The March Federal order Class III milk price was announced March 31 at $11.11 per cwt., down $1.09 from February. The Class IV price is $10.68, down 42 cents from February.

The four-week, NASS-surveyed cheese price averaged $1.1612, down 10.25 cents from February. Butter averaged $1.1647, down 7.3 cents. Nonfat dry milk averaged 86.97 cents, down from 88.33 cents in February, and dry whey averaged 34.09 cents, down from 35.31 cents in February.

California’s March 4b cheese milk price was announced Thursday at $10.49 per cwt., down 65 cents from February, $3.38 below a year ago. The 4a butter-powder price is $10.19, down 39 cents from February.

Cash block cheese closed the month of March at $1.1675 per pound, down 1.75 cents on the week. Barrel closed at $1.1350, up a half-cent on the week. One car of each traded hands, the first block sale since March 10. The NASS U.S. average block price inched up 1.3 cents, to $1.1531. Barrel averaged $1.1325, up 0.6 cent.

Butter ended the month at $1.16, up a penny on the week, but 39.25 below a year ago. One car was sold. NASS butter averaged $1.1530, up 0.1 cent.

Al Levitt, editor of the CME’s Daily Dairy Report, said commercial American cheese stocks were at their highest levels ever for the end of February and that’s likely to continue through the spring. Butter inventories also took a big jump. Butter prices are at a 30-month low, he said, and the Easter buy is pretty much finished.

“There’s not a lot of hope for prices jumping there,” Levitt said.

The bearish news from the latest Cold Storage report and the February milk production data has made hedging a challenge. Downes-O’Neill dairy broker Dave Kurzawski said it’s “limiting the hedging opportunities that are available to producers at price levels that really are adequate for them.” But, he quickly added that “There is still opportunity there.”

Looking to the second half 2006, Kurzawski said, as of March 27, there was an $11.76 average in the market. He said they are sellers for producers at around the $12 average for the second half and suggest producers lock in at least a quarter to a half of their milk at these levels, given these reports.

There are probably a lot of producers who wish that they had contracted earlier.

Kurzawski said, “It’s sometimes hard to get out of the bull market mentality and that’s kind of what we have seen here.”

He added that producers have been looking at bearish information for the past eight months.

“It finally started to dig its teeth into the market as we got into January, but there really hasn’t been a sense of urgency for producers across the country because, by and large, their milk checks have still been pretty good,” Kurzawski said.

This farm news was published in the April 5, 2006 issue of Farm World.