Digest Highlights: Two California dairy producers groups asked the state ag department for a public hearing to plea for an emergency hike in milk prices. U.S. Jersey breeders are funding research into A2 milk. New York court dismisses lawsuit seeking collective bargaining rights for farm workers. Find a summary of this and other news here.
California dairy groups request emergency hearing for milk price increases
The California Dairy Campaign (CDC) and Western United Dairymen (WUD) have petitioned the California Department of Food and Agriculture, seeking an emergency hearing to consider increases in minimum milk prices paid to dairy farmers.
The request seeks price increases for the 12-month period of April 1, 2018, through March 31, 2019. Specifically, the organizations have proposed a 60-cent-per-hundredweight (cwt) increase on Class 1, 2 and 3 milk; a 10-cent-per-cwt increase on Class 4a price; and a 40-cent-per-cwt increase on Class 4b.
“California dairy families have suffered severe economic hardship in the past three years,” WUD Chief Executive Officer Anja Raudabaugh and CDC Executive Director Lynne McBride wrote in a letter to CDFA Secretary Karen Ross. “As a result, many have gone out of business or acquired massive debt on top of eroded equity.”
While U.S. milk production has steadily increased, monthly year-over-year milk production in California has declined in 32 of the past 36 months.
Citing declining California milk volumes and high operating costs, California Dairies Inc. (CDI) announced it will cease operations at a Los Banos cream cheese and Neufchatel manufacturing facility in March. Read also: California Dairies Inc. announces closure of its Los Banos manufacturing facility
The dairy leaders said significant negative income margins witnessed every quarter since January 2015 have placed many California producers in a dire financial situation. While 2017 provided a modest recovery in milk prices, the improvements were short-lived and not significant enough to generate positive margins, according to CDFA’s cost of production estimates. Based on that data, the smallest margin deficit during the three-year period was 23 cents per cwt, during the first quarter of 2017.
“2017 ended on a sour note, with the estimated overbase price reaching the lowest level since June 2016,” Raudabaugh and McBride wrote. “As we start 2018, producers are facing an even lower overbase price, with current commodity prices yielding an overbase of $13.30 per cwt. Unfortunately, the forecast is even more concerning, with potential for prices to fall below that level in the next few months.”
The request comes at the same time efforts to move California into the Federal Milk Marketing Order (FMMO) system are reaching final stages. However, Raudabaugh and McBride said the implementation of a California FMMO could still be another year away.
“Until then, we urge the CDFA to increase milk prices to prevent the closure of more California dairies,” they concluded.
Jersey organization funding A2 research
National All-Jersey Inc. (NAJ) is funding two Purdue University research projects related to A2 beta-casein in milk.
The issue of A2 milk has garnered considerable attention from both consumers and producers in recent years. Anecdotal evidence from some consumers indicates A2 milk does not cause the digestive stress they experience with conventional milk.
Beta-casein is one of the proteins found in milk. Genetically, cows that are homozygous for the A1 allele will only produce milk containing A1 beta-casein, and cows homozygous for A2 will only produce milk containing A2 beta-casein. Cows that are heterozygous (A1/A2) will produce milk with a mixture of A1 and A2 beta-casein.
Recent genomic testing of more than 3,000 animals found the frequency of the A2 gene is approximately 80 percent among Jerseys. The testing was done by the GeneSeek laboratory in conjunction with the American Jersey Cattle Association (AJCA).
One research project, being done in conjunction with the Purdue’s biochemistry department, is to develop a robust, highly sensitive and accurate method of measuring the beta-caseins A1 and A2 in milk and milk products.
A second project, funded jointly by NAJ and the A2 Milk Company, is comparing digestion of milk with different beta-casein protein content among those consumers known to have digestive problems after ingesting lactose. Dr. Dennis Savaiano, Purdue nutrition policy professor and director of the North Central Nutrition Education Center for Excellence, will conduct field trials involving four milks (A2, conventional retail, Jersey milk and lactose-free).
a2 Milk Company expanding In Northeast
Officials with the a2 Milk Company announced an expansion into northeast U.S. retail markets.
The a2 Milk Company works with local dairy farmers to identify cows that only produce the A2 beta-casein protein.
Originating in New Zealand in 2000, a2 entered the U.S. natural foods market in California in 2015, moving eastward and expanding its presence in the Southeast in 2017. It currently has distribution in approximately 3,600 stores across the U.S., including Kroger, Publix, Safeway, Whole Foods, Sprouts and The Fresh Market.
The latest expansion gives the company access to roughly 60 million new consumers, representing about 20 percent of the U.S. fluid milk volume category, according to a2 U.S. Chief Executive Officer Blake Waltrip. When fully implemented, a2 Milk will be available to consumers in New York, New Jersey, Connecticut, Massachusetts, Pennsylvania, Rhode Island, New Hampshire, Vermont and Maine through more than 1,400 new retail locations.
The a2 Milk Company has trading activities in Australia, New Zealand, China, the U.S. and United Kingdom. It claims a 10 percent market share of the Australian total fresh milk grocery market and a 5 percent share of the total infant formula category in China.
Margins start January mixed
Dairy margins were mixed over the first half of January, weakening in nearby marketing periods due to lower milk prices, while holding steady in through the second half of 2018, according to Commodity & Ingredient Hedging LLC.
Margins remain negative and well-below average from a historical perspective in both the first and second quarters of 2018, while above breakeven, but still below average in the thirds and fourth quarters of the year.
Milk prices continue to struggle from the large overhang of dairy product stocks in the global market. The USDA lowered forecasted 2018 U.S. milk production, but also cut average Class III and Class IV price projections due to expectations for slower domestic demand and growing competition in world export markets.
On a positive note, the latest results from the Global Dairy Trade showed a 4.9 percent increase in the price index from the previous auction. The results were largely attributed to reduced production due to recent unfavorable weather in New Zealand.
New York court dismisses lawsuit seeking collective bargaining rights for farmworkers
A New York Supreme Court has dismissed a lawsuit seeking collective bargaining rights for farm workers. The ruling was issued by Judge Richard McNally, Jan. 3, in the New York Supreme Court of Albany County.
The New York Civil Liberties Union filed the lawsuit in 2016 on behalf of Crispin Hernandez, an employee at Mark Farms LLC, a large upstate dairy farm from April 2012 until September 2015. The lawsuit alleged Hernandez was fired after he and another employee discussed workplace conditions with other co-workers and labor organizers.
The suit sought to lift a provision in the State Employment Relations Act (SERA) that excluded the state’s farmworkers from the right to organize. The State of New York and Gov. Andrew Cuomo were named as defendants in the lawsuit.
Even though named as a defendant, Cuomo refused to defend the law, calling the exemption a “flaw” in the SERA.
Eighteen state agricultural organization leaders – including Agri-Mark, Dairy Farmers of America, the Northeast Dairy Producers Association and Upstate Niagara Cooperative – signed a letter urging Cuomo to defend the law. The New York Farm Bureau (NYFB) said Cuomo and the state attorney general had abandoned farmers by failing to defend SERA, and NYFB was subsequently granted legal permission to intervene in the lawsuit. Read: New York Farm Bureau seeks to intervene in farm labor lawsuit
NYFB argued the legislature had the power to change state law, not the courts. The Court agreed. In his decision, Judge McNally wrote, “ … the plaintiffs and the State have not demonstrated that the Labor Law statues are racially discriminatory or that farm workers are a suspect class entitled to constitutional protections. Any changes to the SERA (State Employee Relations Act) should emanate with the New York State Legislature as ‘the legislative power of this state shall be vested in the senate and the assembly.’”
California extends dairy digester grant application deadline; utilities announced call for pilot projects
Additional funding is available to help California dairy farmers reduce methane emissions. Dairy biogas development is rapidly increasing in California. There are currently about 40 projects in the works, and experts expect there could be as many as 120 projects being developed by 2022.
• The California Department of Food and Agriculture (CDFA) has extended the grant application deadline for the Dairy Digester Research and Development Program (DDRDP) to Feb. 23.
The DDRDP will provide between $61 million and $75 million in grants to California dairy farms to install anaerobic digesters that reduce their methane emissions.
Prospective applicants should visit the CDFA DDRDP website.
• Four California utilities are seeking applicants for dairy biomethane pilot projects. Southern California Gas Co., San Diego Gas & Electric, Pacific Gas and Electric Company, and Southwest Gas jointly issued a draft solicitation. Proposed projects must demonstrate an ability to capture and process biogas from dairy cows to produce renewable natural gas, which can replace traditionally sourced natural gas for generating electricity, heating homes and fueling vehicles. At least five projects will be selected.
The draft solicitation is the first step in a new program created by the California Public Utilities Commission (CPUC), which has been directed to reduce methane emissions from agriculture in the state by 2030.
Pilot projects will be selected by the CPUC, California Air Resources Board and the CDFA. The agencies will jointly choose projects based on an evaluation of the proposed business model, likely greenhouse gas reductions realized, and cost-effectiveness of achieving these reductions, environmental benefits, disadvantaged community benefits and project readiness.
The utilities will explain the draft solicitation process at a workshop and webinar on Jan. 31, 1 to 3 p.m., at the California Department of Food and Agriculture, 2800 Gateway Oaks Dr., Room 101, Sacramento, CA 95833. Additional information on the draft solicitation as well as the workshop and webinar can be found here.
Pacific Northwest ag land values steady, despite pressures
Low commodity prices and lower net farm incomes remain troubling factors for land values across the Northwest. Nonetheless, agricultural real estate values have remained stable to increasing through 2017 supported by limited supplies of good-quality agricultural properties. Both irrigated and dry cropland values remain strong despite lower prices for many crops, according to the latest Northwest Farm Credit Services (FCS) Land Values Market Snapshot.
Agricultural property listings remain low, with many transactions occurring between landlords and tenants. However, many areas report increased investor interest in quality, agricultural investor interest in agricultural properties.
Regionally, drought conditions have been replaced by average to well-above-average winter and spring moisture conditions in most areas of the Northwest. The exception is eastern Montana, particularly the northeast corner, where 2017 conditions were dry.
• Washington: The market has been active, with prices for most irrigated properties remaining strong with good demand from local farmers.
• Oregon: Demand for land for purchase or rent remains strong despite generally lower commodity prices in recent years. The supply of good-quality ag properties remains limited. Agricultural producers interested in expansion have made most of the land purchases. Investors continue to be active, particularly for larger, irrigated properties.
• Idaho: The overall market trend has been steady to higher, with good demand for a limited supply of quality agricultural properties. Development in the Treasure Valley near suburban areas is occurring rapidly. Reservoir water storage is mostly above average.
• Montana: Most areas report a limited supply of available agricultural properties, resulting in high interest from agricultural operators and investors for all property types. A significant number of wildfires and severe drought in northeast Montana plagued the state in 2017, but neither has shown a negative impact on land values to date. 
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Dave Natzke
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