Digest Highlights

NMPF urges more balanced USDA dairy purchases

The National Milk Producers Federation (NMPF) urged the USDA to maintain dairy product purchases as part of future federal nutrition assistance programs, while also recommending more balance in those purchases to minimize farm-level milk price distortions.

Natzke dave
Dave Natzke
Editor / Progressive Dairy

Jaime Castaneda, NMPF senior vice president for policy strategy and international trade, made the comments during a USDA listening session on the Farmers to Families Food Box Program. The USDA is soliciting feedback on how it should overhaul or restructure the program implemented last year as part of the federal response to the coronavirus pandemic.

Castaneda highlighted the nutritional and economic value delivered by dairy products in federal food assistance programs. He noted, however, that disparity in product purchases “caused tremendous market volatility and unusual pricing challenges throughout the country, including extreme price differentials between neighboring farms.”

“We are eager to work with USDA to improve upon the product balance, particularly between cheese and butter, and ensure the department’s efforts better meet the needs of all producers as well as the families that benefit from these dairy products,” he said.

The comment period on the Farmers to Families Food Box program is open through March 31.

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USDA reports will provide dairy feed cost pictures

Two USDA reports to be released on March 31 will help set the tone for dairy feed costs in the year ahead. The agency will update current corn and soybean inventories with the quarterly Grain Stocks report and provide its first look at anticipated 2021 crop acreage in the Prospective Plantings report. Both those reports are set to be released at noon (Eastern time).

Later that day, the USDA releases its monthly Ag Prices report, which will include milk, corn, soybean meal and hay prices used to calculate the February Dairy Margin Coverage (DMC) program margin and indemnity payments. That report is released at 3 p.m. (Eastern time). Check back with Progressive Dairy for report summaries and analysis.

February retail dairy sales strong

Consumers made fewer trips to grocery stores in February but filled their carts a little higher, according to a monthly update from the International Dairy Deli Bakery Association (IDDBA). Those fuller carts included more dairy.

February 2020 was the last month of “normal” consumer retail grocery store behavior prior to the onset of the COVID-19 pandemic. Compared to that baseline, February 2021 retail dairy sales were up nearly 11% on a value basis and about 5% on a unit basis, with sales volume up in nearly all product categories. In many cases, volume increases outpaced unit sales increases, an indication shoppers are buying larger packages of dairy products.

Based on Information Resources Inc. (IRI) U.S. grocery store sales data, individual product category increases in February on a value and volume basis, respectively, were:

  • Natural cheese sales: 16.8% (value); 14.9% (volume)
  • Fluid milk: 6.2%; 3.1%
  • Butter: 10.9%; 8.5%

Cream cheese and whipped toppings posted value and volume gains of more than 25%. The sales value of processed cheese and sour cream were each up more than 15%, with volume increases at about 14% and 16%, respectively.

Sales of yogurt were up about 1% on volume but down 1% on value.

Deli cheese sales were up about 22% on a value basis and 17% on a volume basis, attributed in part to in-home Super Bowl and Valentine’s Day celebrations.

Looking ahead, March 2021 sales comparisons will go up against the two biggest weeks in the history of grocery retailing and will likely turn negative versus year-ago levels. However, based on the pattern of the last few months, sales are likely still going to track ahead of the baseline of 2019. An early Easter (April 4) should also help boost end-of-month March retail sales.

With the average number of new COVID-19 cases coming down, pent up demand for eating out should increase food service spending, particularly as more states are opening up on-premise dining.

April 2021 Class I base: $15.51 per cwt

The Federal Milk Marketing Order (FMMO) Class I base price remains stuck in a narrow range. At $15.51 per hundredweight (cwt), the April 2021 Class I price is up 31 cents from March but $1.13 less than April 2020. The average through the first four months of the year is $15.35 per cwt, the lowest average over that period since 2018.

2021 fluid sales start weaker

Here’s an update on U.S fluid milk sales data from the USDA Agricultural Marketing Service:

  • Total sales: January 2021 sales of packaged fluid milk products totaled 3.87 billion pounds, down almost 5% from the same month a year earlier.
  • Conventional products: January sales totaled 3.62 billion pounds, down 5.7%. Flavored whole milk was the only major category showing growth, up 5.5%, while sales of whole and reduced-fat (2%) milk were down 2.7% and 2.3%, respectively.
  • Organic products: Monthly sales totaled 255 million pounds, up 8% from a year earlier. All organic categories except fat-free (skim) milk posted gains. Organic represented almost 6.6% of total fluid product sales.

The U.S. figures represent consumption of fluid milk products in FMMO areas and California (now a part of the FMMO system), which account for approximately 92% of total fluid milk sales in the U.S. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, nonfood stores, schools, the food service industry and home delivery.

Farm Workforce Modernization Act moves to Senate

A bill seen as a step to address dairy farm labor shortages has been approved in the House of Representatives and introduced in the Senate. The Farm Workforce Modernization Act was approved in the House on a 247-174 vote, March 18. The Senate companion bill was referred to the Senate Judiciary Committee on March 22.

Among major provisions for dairy, the bill would provide a path to legalization for current farm workers and expand the H-2A foreign guest worker program to accommodate the year-round needs of livestock farmers.

Proponents of the bill include major dairy and other agricultural organizations, including NMPF and Edge Dairy Farmer Cooperative.

“It has become nearly impossible to fill all available positions on dairy farms with American citizens,” said Brody Stapel, a Wisconsin dairy farmer and president of Edge Dairy Farmer Cooperative. “Demographics have changed, labor patterns are evolving and the nature of the jobs remains demanding. Foreign-born employees are invaluable parts of our work crews and family businesses. It’s critical that there be a way for them to remain here and also a path for qualified new employees to come to this country.”

Existing immigrant agricultural labor rules, which focus on seasonal work, are not sufficient, said Stapel, whose group has members throughout the Midwest.

Things you might have missed

  • Fairlife LLC announced the opening its newest production and distribution facility in Goodyear, Arizona. The $200 million, 300,000-square-foot facility will manufacture nearly all products in the fairlife portfolio. Fairlife has partnered with the United Dairymen of Arizona (UDA) to source milk from numerous dairy farmers in the region. Fairlife produces multiple varieties of dairy-based beverages at a production plant in Coopersville, Michigan, and Peterborough, Ontario.

  • The Haulers of Agriculture and Livestock Safety (HAULS) Act has been reintroduced in the Senate. The legislation would eliminate the requirement that ag and livestock hours-of-service exemptions only apply during state- designated planting and harvesting seasons and authorizes a 150-air mile exemption from hours-of-service requirements on the destination side of a haul for ag and livestock haulers.

  • The USDA announced an extension, through September 2021, of the 15% increase ($28 per person per month) in Supplemental Nutrition Assistance Program (SNAP) benefits. In total, the American Rescue Plan Act of 2021 adds about $12 billion to ongoing nutrition assistance programs.  end mark