Digest Highlights

USDA providing payments for disaster-related milk losses

Some U.S. dairy producers may be eligible for payments if they were forced to dump milk due to weather- or fire-related disasters.

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Dave Natzke
Editor / Progressive Dairy

Payments under the USDA’s Wildfires and Hurricanes Indemnity and Milk Loss (WHIP-ML) program were authorized under the Additional Supplemental Appropriations for Disaster Relief Act, approved last June. Program provisions and requirements were published as a final rule in Federal Register (7 CFR Part 1416) on Sept. 12, 2019.

WHIP-ML program payments for calendar years 2018 and 2019 will be made to eligible dairy operations for milk that was dumped or removed without compensation from the commercial milk market due to hurricanes, floods, tornadoes, typhoons, volcanic activity, snowstorms and wildfires. Potential payments will be calculated using each operation’s milk production base multiplied by the number of days milk was lost or dumped.

Dairy operations which received a partial payment for milk that was dumped – through a marketing organization, insurance or other sources – are eligible for the fair market value of the milk that was not compensated, less any transportation and hauling fees and promotional fees.

Applicants must submit a completed FSA-375 form and supply other information to their county USDA office no later than Feb. 1, 2020. Required information includes sales documents or monthly milk marketing statements for milk marketed during the claim period(s); information on the number of times per day the cows are milked and the approximate time of each milking; approximate time and how often the milk is picked up by the marketing organization; dates the milk loss or dumping occurred; the weather event that caused the milk loss; size of the geographic area affected by the disaster event; how the milk was removed; whether the milk was measured before removal; records of the milk removal; and other noteworthy details of the disaster event, including photos.

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WHIP-ML will only pay indemnity for a maximum of 30 days per disaster year. For dairy operations with multiple sites, a separate form must be completed for each dairy operation that incurred a loss. While the USDA adjusted gross income (AGI) limitations do not apply, the annual USDA payment cap of $125,000 does.

Contact your local USDA office for further information.

California QIP Phase 2 meetings postponed; opposition continues petition drive

An update on an article appearing in last week’s Progressive Dairy Extra Weekly Digest: A series of four meetings to enable California dairy producers to provide feedback on the ideas related to the state’s Quota Implementation Program (QIP) has been postponed. The meetings were originally scheduled for Sept. 25-26, in Tulare and Modesto, California.

According to a notice from the United Dairy Families of California, input gathered at Phase 1 meetings could not be compiled in time for the Phase 2 meetings. No new dates were announced.

While California dairy farmers and allied industry representatives continue the process to resolve issues related to the QIP, a group of dairy farmers seeking to terminate the program is also moving forward.

In addition to participating in Phase 1 and Phase 2 meetings, the Stop QIP Dairy Tax Coalition has renewed a petition drive to end the program. In May, the California Department of Food and Agriculture (CDFA) had ruled an initial petition seeking a referendum to consider termination of the QIP fell short of the qualified signatures necessary.

California’s quota system came about in the late 1960s as a means of compensating milk producers selling into the higher Class I market. With California’s recent move into the Federal Milk Marketing Order (FMMO) system, a stand-alone QIP, administered separately by the CDFA, was approved in a statewide referendum in 2017. Quota certificate holders received payments above the state blend price for the amount of milk covered by their certificate.

The coalition estimates the total QIP payments equal about $12 million per month. Because the QIP payment lowers the amount of money left in the California Federal Milk Marketing Order pool, it reduces the overbase price received by all producers.

Global Dairy Trade index moves higher

The index of Global Dairy Trade (GDT) dairy product prices rose during the latest auction, Sept. 17. It was the first increase since July 16, ending three consecutive auction sessions in which the price index declined.

The overall index increased 2%, as prices for all major product categories were up:

  • Skim milk powder was up 3.4% to $2,599 per metric ton (MT).
  • Cheddar cheese was up 0.4% to $3,846 per MT.
  • Butter was up 2.7% to $4,129 per MT.
  • Whole milk powder was up 1.9% to $3,133 per MT.

The next GDT auction is Oct. 1, 2019.

Dairy margins start September significantly stronger

Dairy margins improved significantly since August due primarily to surging milk prices as feed costs held steady, according to Commodity & Ingredient Hedging LLC.

A shortage of cheddar blocks in the cash market has caused spot prices to spike to the highest level since 2014, now trading over $2.20 per pound. Cheddar barrel availability has not been nearly as tight given the industry’s demand for whey, which has caused the block/barrel spread to widen to historical highs near 30 cents per pound. Class III milk futures on the Chicago Mercantile Exchange are now approaching $20 per hundredweight (cwt) in the October contract. While deferred contracts are not trading nearly as high, dairy margins through the first half of 2020 are close to the 90th percentile of historical profitability within the last decade.

There is concern that milk production will ramp up through next spring’s flush given the stronger indicated margins, and that is part of the reason for the significant discount in forward milk contracts relative to spot values.

The USDA released their September World Ag Supply and Demand Estimates (WASDE) report which continued to suggest higher corn yields and larger production than what most analysts have been expecting. Similar to corn, the USDA’s estimated soybean yield and production were higher than pre-report average industry expectations.

Congress moving to include MFP funds in continuing resolution

With the new fiscal year (FY) starting Oct. 1, Congress is headed for another continuing resolution (CR) as it attempts to finalize spending levels for FY 2020 funding allocation for all 12 federal agencies.

While the House had already passed most of its bills, the Senate Appropriations Committee was still working through the dozen funding packages. However, even if the Senate completes all 12 bills, a CR will be needed to allow for House/Senate conference negotiators to present a final bill to President Trump. A CR would likely extend current funding at FY 2019 levels until late November or December.

Lawmakers have been asked to include a provision in the CR that would allow the Commodity Credit Corporation (CCC) to surpass its $30 billion borrowing limit to make sure farmers receive direct payments under the USDA’s Market Facilitation Program.

Under the Market Facilitation Program, dairy farmers are to receive 20 cents per cwt on their annual milk production history, paid in three installments. Distribution of initial payments of 10 cents per cwt started in August. Separate payments of 5 cents per cwt each are scheduled for November 2019 and January 2020.

First District Association breaks ground on major expansion

Dairy cooperative First District Association broke ground, Sept. 12, on a major dairy-processing expansion project at its site in Litchfield, Minnesota.

The 80,000-square-foot expansion encompasses a new cheese plant, cooler addition, lactose plant and milk-receiving facility. According to the co-op, the project will include the largest single cheese-manufacturing processing line and largest cheese belt ever constructed.

Commissioning of the complex is spring of 2021, according to co-op President and CEO Bob Huffman. When completed, the co-op’s processing capacity will increase to 7.5 million pounds of milk per day.

Minnesota-based First District Association represents about 700 dairy farm families. The completion date coincides with First District Association’s 100th anniversary.

MMPA delegates approve leadership structural changes

Michigan Milk Producers Association (MMPA) delegates approved board-proposed revisions to the organization’s bylaws, updating the dairy cooperative’s governance structure and leadership titles. The delegates gathered for a special meeting in August to vote on the changes.

Following the delegate meeting, the MMPA board reaffirmed the appointment of Joe Diglio as president and CEO, Kris Wardin as board chair, Doug Chapin as board vice chair and Eric Frahm as treasurer.

Diglio was previously appointed MMPA general manager in 2014. Wardin, a dairy farmer member of MMPA from St. Johns, Michigan, was elected president in March 2019.

Chapin, who farms in partnership with his wife, Cheri, and son, Samuel, near Remus, Michigan, was originally elected to the MMPA board in 2016. Frahm, a dairy farmer from Frankenmuth, Michigan, has served as MMPA treasurer since 2015.

MMPA is a dairy farmer-owned cooperative serving approximately 1,600 dairy farmers in Michigan, Indiana, Ohio and Wisconsin, handling approximately 5 billion pounds of milk annually. MMPA operates two SQF Level 3 certified manufacturing plants in Michigan and a cheese plant in Indiana. Products made at MMPA’s plants include cheese, ultrafiltered milk, butter, milk powder, cream and condensed skim milk.

Wisconsin lawmakers seek plant-based product labeling restrictions

No longer waiting on the FDA, several Wisconsin lawmakers are moving ahead on proposals seeking labeling restrictions on plant-based or lab-created products promoted as “milk,” “dairy” or “meat.”

Sen. Howard Marklein (R-Spring Green), Rep. Travis Tranel (R-Cuba City) and Rep. Loren Oldenburg (R-Viroqua), are circulating two separate bills related to labels on imitation dairy product and meat, and a third covering the labeling of plant-based “milks” that would be enforced if at least 10 other states adopt similar laws. All bills require the Wisconsin Department of Agriculture, Trade and Consumer Protection to promulgate rules to implement labeling prohibitions.

Tom Crave, president of the Wisconsin-based Dairy Business Association, said his organization supports the proposals. “The plant-based food industry increasingly masquerades its products as real dairy foods,” said Crave, whose family operates a dairy farm and on-farm cheese production facility. “This mislabeling confuses customers who often make judgments about a food’s nutritional value based on its name. Words do matter. Milk is milk, and cheese is cheese. Customers deserve transparency."

Cornell Dairy Advancement Program expanding

More dairy farmers will be able to participate in Cornell University’s Dairy Advancement Program (DAP) thanks to additional funding through the New York state budget. The increase in funding allows expansion of the program and enables farms of greater herd size (maximum 699 cows) to apply.

Previously known as the Dairy Acceleration Program, DAP is designed to assist New York dairy farmers with business planning, analysis and advisory teams. New initiatives of the program focus on improving recordkeeping for decision-making and operational budgeting to improve annual operations. The program also continues to provide funds for environmental planning through the development and implementation of comprehensive nutrient management plans (CNMPs). DAP maximum funding rates vary by project category.

DAP is funded through the New York State Department of Agriculture and Markets and the New York State Department of Environmental Conservation. The program is coordinated through Cornell PRO-DAIRY and delivered to farms in partnership with Cornell Cooperative Extension and agriservice professionals.

Applications are being accepted on a first-come, first-serve basis, with the program closed once available funds have been depleted. Visit the DAP website for program applications, guidelines and other information.

Girard promoted at CDI

California Dairies Inc. (CDI) promoted Phil Girard to the position of senior vice president and chief financial officer (CFO). In his new role, he will based at CDI’s corporate headquarters in Visalia, California, and oversee the cooperatives’ financial, accounting, treasury, information technology and risk management functions.

Girard has served as the vice president of finance for CDI since 2013. He previously served as corporate controller for Sun-Maid Growers of California and held multiple accounting positions with Land O’ Lakes Inc. and Leprino Foods Company.

CDI is the largest member-owned milk marketing and processing cooperative in California, manufacturing butter, fluid milk products and milk powders. Its 400 dairy farmers produce 16 billion pounds of milk annually, about 40% of the state’s yearly production.

Wisconsin groups call for halt to livestock farm siting rule changes

Organizations representing nearly every aspect of Wisconsin’s livestock agriculture industry have called the state board of the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) to reject some proposed changes to rules regulating new or expanding livestock operations. About a dozen groups held a press conference, Sept. 16, warning the proposed changes would harm farmers and related industries.

ATCP 51 is an administrative rule implementing the state’s livestock siting law, governing the approval process local governments must follow if they choose to regulate construction of livestock facilities. Implemented in 2006, it was designed to create a uniform statewide framework for siting new and expanding livestock farms in areas of Wisconsin zoned for agricultural uses and on livestock operations expected to house more than 500 animal units.

A series of public comment periods on the proposed changes was held in August and early September, and a public comment period closed on Sept. 13. The DATCP board was scheduled to get an update on the hearings at a meeting on Sept. 19. Based on the proposed timeline, the revisions would be submitted to the Wisconsin Legislature for consideration in January 2020.

Among other things, the proposed changes:

  • Address waste storage structures, nutrient management, waste treatment and vegetated treatment areas

  • Modify setback and odor standards

  • Modifies procedures that local governments must follow in issuing a siting permit under a zoning or licensing ordinance

Among its criticisms, the livestock and allied industry organizations’ concerns range from the process used to develop the proposal, alleging disregard or exclusion of farmers’ input, to drastic changes to setbacks that would be unworkable in rural Wisconsin.

Not all Wisconsin farm organizations agreed. Wisconsin Farmers Union President Darin Von Ruden called on the DATCP board to move forward with ATCP 51 rule revisions. He said the DATCP board should use the process to hold large livestock operations accountable for the damage they are causing to land, water, roads and neighboring property values.  end mark

Dave Natzke