Digest Highlights

DMC enrollment coming to a close

Both the number of operations establishing milk production history and operations enrolling in the Dairy Margin Coverage (DMC) program rose from last week, according to the USDA’s Farm Service Agency (FSA). Dairy farmers have until the end of Friday, Sept. 27, to enroll for 2019.

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Dave Natzke
Editor / Progressive Dairy

As of Sept. 23, 22,235 dairy operations had signed up for the DMC program. That number represents about 77% of the 28,968 dairy operations with established milk production history. Total DMC 2019 indemnity payments for those enrolled as of Sept. 23 were estimated at about $297.7 million, averaging $13,389.

Two other DMC significant dates remain in 2019.

  • After enrolling in the program for 2019, participating dairy operations who had an intergenerational transfer between 2014 and 2019 have until Dec. 6, 2019, to take advantage of a one-time opportunity to increase their established production history during the 2019 and 2020 annual coverage election periods. Retroactive payments based on the increased production history will apply for 2019 and not prior years.

  • The deadline to enroll in DMC for 2020 is Oct. 7, 2019 – Dec. 13, 2019. Producers who locked in coverage in the 2019 sign-up must certify the operation is producing and commercially marketing milk and pay the annual administrative fee during the 2020 enrollment period.

Read: Last call: 2019 DMC enrollment deadline is Friday

Minnesota extends DMC premium assistance sign-up period

With the extension of the Dairy Margin Coverage (DMC) enrollment period until Sept. 27, small- and medium-sized Minnesota dairy producers will have an extra week to complete enrollment in the Minnesota Department of Agriculture’s (MDA) new Dairy Assistance, Investment and Relief Initiative (DAIRI) program.

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Applications postmarked by Oct. 8, 2019, will be accepted for the program, which provides qualifying dairy producers payments if they have first enrolled in five years of coverage in the USDA Farm Service Agency’s DMC program.

The Minnesota Legislature this year authorized $8 million for the DAIRI program. In order to qualify, farmers must have produced less than 160,000 hundredweight (cwt) of milk in 2018.

The MDA is issuing payments on a rolling basis. Producers can expect to receive their first payments roughly two to four weeks after successfully applying. They will be paid based on production levels, up to 50,000 cwt of milk produced in 2018.

An application form, a W9, a copy of their DMC enrollment form and a statement from their processor(s) detailing the amount of milk produced in 2018 are required to complete the application.

Producers may receive a second payment, depending on remaining available funds.

Additional information and the application forms are available on the MDA website’s DAIRI section.

FDA process brings OTC medically important anti-microbials used for animals under veterinary oversight

The FDA released draft guidance establishing a process to voluntarily bring remaining approved animal drugs containing anti-microbials of human medical importance under the oversight of licensed veterinarians by changing the approved marketing status from over-the-counter (OTC) to prescription (Rx).

A limited number of medically important anti-microbials, such as injectables, are currently marketed as OTC products for both food-producing and companion animals. When finalized and fully implemented, all dosage forms can only be administered under the supervision of a licensed veterinarian and only when necessary for the treatment, control or prevention of specific diseases.

The guidance continues the FDA’s five-year plan for anti-microbial stewardship. Previously, animal drug sponsors worked in collaboration with the FDA over a three-year period to voluntarily change OTC medically important anti-microbials used in the feed or drinking water of food-producing animals to Veterinary Feed Directive/Rx marketing status and eliminated the use of these products for production purposes.

The FDA is proposing a two-year implementation period that would begin after the agency issues the final guidance. Public comments on the guidance are being accepted until Dec. 24, 2019.

To electronically submit comments to the docket, visit the Regulations.gov site, and type FDA-2019-D-3614 in the search box.

Former USDA secretaries support USMCA

Seven former U.S. secretaries of agriculture have announced support for the U.S.-Mexico-Canada Agreement (USMCA).

In a letter to congressional leaders, all former ag secretaries since the 1980s – John Block (Reagan administration), Mike Espy (Clinton), Dan Glickman (Clinton), Ann Veneman (W. Bush), Mike Johanns (W. Bush), Ed Shafer (W. Bush) and Tom Vilsack (Obama) – underscored the importance of passing USMCA.

“We need a strong and reliable trade deal with our top two customers for U.S. agriculture products. USMCA will provide certainty in the North American market for the U.S. farm sector and rural economy. We strongly support ratification of USMCA.

“Support for USMCA crosses all political parties, specifically when it comes to the agriculture community, and I am proud to stand side by side with former agriculture secretaries who agree USMCA is good news for American farmers,” said current Secretary Sonny Perdue.

Democrats question dairy deal in Japan trade agreement

Democratic lawmakers representing three dairy states are asking the Trump administration to provide assurances the U.S. dairy industry’s market is protected in a trade agreement with Japan.

U.S. Reps. Ron Kind, Gwen Moore and Mark Pocan (all from Wisconsin), along with Reps. Suzan DelBene (Washington) and Peter Welch (Vermont), sent a letter to U.S. Trade Representative (USTR) Robert Lighthizer. They expressed concern that the U.S.-Japan trade agreement will not provide a level playing field for U.S. dairy companies as compared to provisions granted to the European Union and other countries through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).

The lawmakers said the administration is required to consult with Congress when new trade agreement negotiations are happening in order to ensure any new agreement would include access for key agriculture sectors like dairy. Those said those conversations never happened.

When dust settles, Cropp and Stephenson expect better prices

The news of slow growth in August milk production was overshadowed by extreme cheese price volatility in September, according to the latest podcast from Mark Stephenson, director of dairy policy analysis, and Bob Cropp, dairy economics professor emeritus, with the University of Wisconsin – Madison.

Read: U.S. milk production growth remains small in August

Chicago Mercantile Exchange (CME) cheddar cheese blocks jumped to $2.2375 per pound on Sept. 16 but then declined to $2.05 per pound on Sept. 20-23. That pulled Class III milk futures prices along for the ride, topping out at $19.74 per cwt on Sept. 16, then falling back to $18.33 per cwt on Sept. 23.

With those wide swings, where will milk and cheese prices be when the dust settles?

Combined with the trend toward weaker milk production growth continuing, holiday buying demand should support cheese prices, Cropp said. With a smaller supply of replacement heifers, he doesn’t see cow numbers coming up dramatically, and questionable forage quality will also keep a lid on production per cow.

Short of some major global economic storm, both Cropp and Stephenson are skeptical of current Class III milk prices softening into the $16s for the first half of 2020.

Cropp sees Class III prices settling in the high $17 or $18s after the holidays, but both Cropp and Stephenson said $19-per-cwt prices should be sustainable, and both forecast that 2020 prices will be higher than 2019.

Tennessee, Vermont and Wisconsin named DBI grant recipients

Three states – Tennessee, Vermont and Wisconsin – will receive USDA funding to create regional initiatives to drive dairy innovation. The grants, each for $454,392, will fund projects designed to support dairy businesses in the development, production, marketing and distribution of dairy products.

Fiscal year 2019 USDA Dairy Business Innovation (DBI) grant recipients and their projects include:

  • The University of Tennessee will evaluate opportunities to work with producers to develop and market value-added products. Workshops will help dairy producers understand and manage risks associated with adding or expanding a dairy business.

  • The Vermont Agency of Agriculture, Food and Markets will provide technical and financial assistance to help dairy producers address the most pressing concerns for small farmers and processors across the New England region: consumer relevancy, increased consumption through diversified markets, food safety, business viability and development of a resilient supply chain.

  • The University of Wisconsin – Madison plans to create a formal, regional (Wisconsin, Minnesota, Iowa, South Dakota and Illinois) initiative called the Dairy Business Innovation Alliance (DBIA), which will seek to collaborate on dairy industry growth by improving on-farm diversification, creation of value-added products and increasing dairy exports.

Pennsylvania over-order premium stays at $1 per cwt; co-op reporting proposal

The Pennsylvania Milk Marketing Board (PMMB) will keep the state’s over-order premium at $1 per cwt, effective Oct. 1, 2019, through March 31, 2020. The premium, which applies to all Class I milk produced, processed and sold in Pennsylvania, has been at $1 per cwt since April 1, 2019.

Following up on a Pennsylvania dairy producer survey showing a lack of knowledge regarding the over-order premium, the PMMB is moving forward on a proposal that dairy cooperatives be required to provide a line item on monthly statements to their producer members that shows the amount of the premium being paid.

As of December 2018, there were approximately 1,100 independent producers and 4,500 cooperative member producers in Pennsylvania. The independent producers are provided information on their monthly pay statements showing the direct benefit they receive from the over-order premium. However, the majority of the 4,500 co-op member producers do not have a line item detailing the amount of over-order premium they are being paid.

The producer survey, conducted in April-May 2019, found 69% of cooperative members did not know or were unsure if there was an over-order premium paid in Pennsylvania.

CDFA awards nearly $102 million for dairy methane reduction projects

The California Department of Food and Agriculture (CDFA) announced $102 million in funding for 96 dairy methane reduction projects as part of the Dairy Digester Research and Development and Alternative Manure Management programs. These projects are expected to reduce greenhouse gas emissions (GHG) from manure on California dairy farms by an estimated 789,536 metric tons.

The projects are in three categories:

Since 2015, 213 dairy families in California have participated in DDRDP and AMMP programs, cutting GHG emission by an estimated 2.2 million metric tons.

New York DEC extends ‘enforcement discretion’ for waste tires used to cover bunker silos

The New York Department of Environmental Conservation (DEC) has extended the use of enforcement discretion until May 3, 2021, for regulating waste tires used to cover feed storage bunker silos.

Working with the New York Farm Bureau, Northeast Dairy Producers Association and Cornell’s PRO-DAIRY, DEC established a “beneficial use determination” for use of waste tires to cover stored feeds in 2014. An original enforcement discretion notice was issued in 2018 and extended until May 2019.

Farms utilizing whole waste tires for covering bunker silos must have procedures in place that minimize standing water and insect breeding areas, including:

  • Keep vegetation down around stacks/piles of tires when not in use

  • Put tires that are not in use under cover (tarp or building) to reduce water buildup

  • Stack tires neatly so that minimum amounts of water can accumulate

  • Rims can be kept in place in tires, which can prevent retention of water.

  • While splitting or drilling holes in tires reduces water retention, radial-ply tires have metal wires in both the tread and sidewalls, creating significant health hazards to employees and cattle.

DEC and farm organizations continue to discuss viable recycling options for unneeded tires. Farmers are reminded that burial or burning of tires are expressly prohibited. If seeking to discard tires at a permitted disposal site, farmers should call ahead to find out if there are specific requirements for the disposal facility.

Dairy Defined podcast: When standards go horizontal, be careful

In its first installment of the National Milk Producers Federation’s (NMPF) Dairy Defined podcast, Clay Detlefsen, senior vice president for regulatory and environmental affairs, comments on an FDA meeting on “Horizontal Approaches to Food Standards of Identity Modernization.”

Detlefsen notes that while efforts to change food standards of identity that cut across categories and encourage goals like “innovation” and “flexibility” sound great, the FDA should proceed with caution. Food products are unique, and an across-the-board approach could have unintended consequences that could harm consumers.

“It’s a nice approach on its face, but I think when you start to get into details, concerns start to surface,” he said. “Consumers definitely could be misled.”

NMPF’s Dairy Defined series explores today’s dairy farms and industry using data and podcast-style interviews. To listen to the full podcast, click here.

USDA reports later this month

Several reports with potential impacts on dairy prices and feed costs were released after this week’s Progressive Dairy Extra. Check back with Progressive Dairy later this week for updates on:

  • Dairy Margin Coverage program margin and indemnity payment calculations, along with monthly average milk and feed prices for August, Sept. 27

  • The USDA’s quarterly Grain Stocks report, Sept. 30  end mark
Dave Natzke