Digest Highlights • Milk marketings through California and Federal Milk Marketing Orders highly concentrated • July Class I base gets a small nudge • Spring flush slows cow slaughter pace • Dairy Business Innovation Act proposed • GAIN report: China dairy
‘Order’ milk marketings concentrated
A vast majority of milk marketed through California and Federal Milk Marketing Orders (FMMOs) is highly concentrated (see map above), based on an annual summary from the Central FMMO market administrator.
According to the June Marketing Service Bulletin, by quartile:
• Milk produced in just 13 counties (in red) marketed 25 percent of milk;
• the next 46 counties (in blue) marketed another 25 percent;
• the next 120 counties (in purple) produced another 25 percent
In total, those 159 counties produced 75 percent of all milk marketed on California and FMMOs in December 2017.
The magnitude of milk from eight California counties with the most marketings dwarfs a majority of all other counties combined. Ranking all the counties with California and FMMO milk marketings in ascending order would require marketings from the smallest 1,357 counties to equal the amount from the eight largest California counties.
Tulare County, California, the largest dairy county in the U.S., marketed 917.7 million pounds of milk in December 2017. To equal this total would require the combined milk marketings from the smallest 1,081 counties.
July Class I base price gets a small nudge
The July 2018 FMMO Class I base price is $15.36 per hundredweight (cwt), up 11 cents from June, but $1.23 less than July 2017’s price of $16.59 per cwt.
Through the first seven months of 2018, the Class I base average is just $14.60 per cwt, about $1.72 less than the average for the same period in 2017.
Spring flush slows cow slaughter pace
With the spring flush, the number of U.S. dairy cows sent to slaughter during May followed seasonal patterns lower, according to the monthly USDA Livestock Slaughter report, released June 21.
For May 2018, federally inspected milk cow slaughter was estimated at 245,100 head, 3,800 head fewer than April, but 7,900 more than May 2017.
So far, 2018 daily dairy cow slaughter is running about 500 head more than 2017. Through the first five months of 2018, the culling total is 1.331 million head, about 72,700 head more than the same period a year ago and the second-highest January-May total for any year dating back to at least 1985. January-April 2013 culling totaled 1.347 million head.
Part of the reason for increased culling, of course, is that there are more cows in U.S. dairy herds. The USDA’s latest Milk Production report indicated there were 9.404 million cows in U.S. dairy herd in May 2018. Based on the slaughter estimates, about 2.6 percent of the herd was culled in May 2018.
Dairy Business Innovation Act proposed
A U.S. Senate proposal would support dairy product innovation, provide resources for new dairy entrepreneurs and help existing dairy processors modernize and expand, according to the plan’s author. (A copy of the proposed legislation was not yet available on congressional websites.)
The Dairy Business Innovation Act, proposed by U.S. Sen. Tammy Baldwin (D-Wisconsin), would establish regional initiatives to provide technical assistance and grants to:
• support new and expanding dairy businesses with business plan development, accounting, market evaluation and strategic planning.
• promote product innovation, marketing and branding, packaging, distribution, supply chain innovation, food safety training and consultation, and dairy product production training.
• assist with dairy plant modernization and process improvement, including assistance with plant upgrades, food safety modernization, energy and water efficiency, byproduct reprocessing and use maximization, and waste treatment.
The Dairy Business Innovation Act would provide resources to serve prospective and established businesses that produce a product made from milk from a dairy animal, including farms with their own dairy processing facilities.
Under the proposal, the regional dairy business initiatives could be hosted by state departments of agriculture, nonprofits, universities or cooperative extension services, and could partner with foundations and dairy checkoff organization.
Organizations expressing support for the proposal include the International Dairy Foods Association, Wisconsin Cheese Makers Association, Wisconsin Specialty Cheese Institute, National Milk Producers Federation, Midwest Dairy Coalition, Associated Milk Producers Inc., Ellsworth Cooperative Creamery and First District Association.
GAIN report: China dairy
Progressive Dairyman offers insights and snippets from recent USDA Foreign Agricultural Service Global Agricultural Information Network (GAIN) semi-annual reports regarding dairy around the world. This time, a look at China.
At 39 million metric tons (MT), China’s 2018 fluid milk production is expected to grow about 1 percent compared to 2017. China’s dairy cattle herd will remain stable in 2018, following a roughly 10 percent reduction in 2017. Small and midsized farms are being squeezed out of the market due to the implementation of strict environmental rules and low milk prices. Milk production from the top 15 large farms accounts for 19 percent of China’s total milk production, and production on those farms increased by about 10 percent in 2017.
The current forecast sees China’s overall dairy consumption increasing 9.5 percent from 2017, paced by strong growth in yogurt consumption. The growth is mainly driven by consumers from second- and third-tier cities in China. China’s per capita milk consumption is about 36 kilograms per person, which is less than one-third of the world average and less than one-tenth when compared to developed countries. But Chinese consumers are increasingly health conscious, and dairy products are generally viewed as a healthy beverage option. Furthermore, Chinese consumers are becoming more selective about the quality and safety of the dairy products they consume.
China will continue decreasing its dairy cattle imports in 2018. China mainly imports live cattle for genetic improvement. With the large number of imports in the past, the demand for new genetics is waning. 
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Dave Natzke
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