Digest Highlights

May fluid sales down a little

May 2019 sales of conventional whole milk and several categories of organic milk were higher than a year ago, but it wasn’t enough to stem an overall decline in fluid milk sales, based on the USDA’s latest monthly sales report.

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Dave Natzke
Editor / Progressive Dairy

• At 3.9 billion pounds, overall May 2019 sales of packaged conventional and organic fluid milk were down 0.8% compared to a year earlier. January-May 2019 sales were estimated at 19.5 billion pounds, down 1.8%.

• May sales of conventional products totaled 3.68 billion pounds, down 0.8% from the previous year. Year-to-date sales totaled 18.45 billion pounds, down 1.6%. In the conventional category, May sales of whole milk were up 3.2%, at 1.3 billion pounds, and year-to-date sales totaled 6.2 billion pounds, up 1.2%.

• May sales of organic products, at 217 million pounds, were down 0.7% from a year earlier. Year-to-date, organic sales totaled 1.04 billion pounds, down 5%. Organic products represented about 5.6% of total sales in May, and 5.3% year-to-date.

The U.S. figures represent consumption of fluid milk products in federal milk order marketing (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, non-food stores, schools, the foodservice industry and home delivery.

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Dairy margins start July steady to weaker

Dairy margins were flat to slightly weaker over the first half of July, according to Commodity & Ingredient Hedging LLC. A decline in projected feed costs was largely offset by lower milk prices.

The milk market had been supported through June by strength in the cash cheese market. However, an early July correction in cash blocks and barrels at the Chicago Mercantile Exchange caused Class III futures to correct.

Concern is growing that higher prices may begin to discourage dairy product demand at the same time producers are incentivized to increase milk production. The forward curve would appear to reflect this thinking as Class III prices in early 2020 are trading at more than a dollar discount to fall 2019 values.

The USDA’s July World Ag Supply and Demand Estimates report reduced the 2020 milk production forecast from a month earlier. (Read: USDA raises 2019 milk price forecast slightly.)

Fat-basis imports were raised on higher expected imports of butterfat products, but fat-basis exports were reduced for both 2019 and 2020 on expectations that U.S. butter exports will continue to be less competitive globally. The USDA reduced skim-solids basis exports for both 2019 and 2020 on lower expected exports for lactose, whey products and other dairy products. Lower feed demand from China due to the African Swine Fever outbreak has been a major drag on whey exports this year, and that trend is expected to continue into 2020.

The Class III price forecast was raised, however, as higher cheese prices are expected to more than offset lower whey prices. The Class IV price forecast was also raised as higher nonfat dry milk prices more than offset lower butter prices.

Pennsylvania proposal extends dairy dealer-producer contract termination notice to 90 days

The Pennsylvania Milk Marketing Board (MMB) published notice of a proposed rule to extend the commonwealth’s dairy dealer-producer contract termination notice requirement from 28 days to 90 days, according to the Penn State Agricultural Law Blog.

According to MMB, the proposed extension is to allow dairy producers additional time to secure alternate outlets for their products prior to a termination. The proposed rule, however, does provide dealers with an exception to the 90-day termination notice requirement if the dealer experiences “financial hardship, business loss or catastrophic event.”

Interested individuals have 30 days from publication (July 13, 2019) of the proposed rule to submit comments, suggestions or objections to MMB regarding the proposed extension. Submissions must be emailed or sent to Doug Eberly, Chief Counsel, Pennsylvania Milk Marketing Board, 2301 North Cameron Street, Harrisburg PA 17110.

USDA tool aids loan search

The USDA’s new online Farm Loan Discovery Tool can help farmers find information on USDA farm loans that may best fit their operations.

From buying land to financing the purchase of equipment, USDA’s Farm Service Agency (FSA) offers a variety of loan options to help farmers finance their operations. Compared to this time last year, FSA has seen an 18% increase in the amount it has obligated for direct farm ownership loans, and the 2018 Farm Bill increased limits for several loan products.

The tool is built to run on any modern browser like Chrome, Edge, Firefox or Safari, and is fully functional on mobile devices. It does not work on Internet Explorer.

Light-protected milk unveiled

Noluma International LLC announced a new partnership with Lancaster Local, a Pennsylvania-based community of small, grass-based dairy farms producing fluid milk. The companies teamed up to design light-protected packaging that preserves the milk’s nutrients, flavor and overall quality. The milk is now available in Pennsylvania, Maryland and Washington, D.C.

New York to enact Farm Laborers Fair Labor Practices Act

New York Governor Andrew Cuomo signed the Farm Laborers Fair Labor Practices Act into law on July 17. Effective Jan. 1, 2020, it grants collective bargaining rights to farm laborers; provides for the 60-hour work week and requires an overtime rate at one and one-half times normal rate; requires a 24-hour day of rest each week; and provides disability and paid family leave coverage, unemployment benefits and other labor protections.

A coalition of farm organizations, Grow NY Farms, says the law fails to address the challenges and needs of farmers and farmworkers. It identified what it called four flaws: failure to apply a standard wage rate for farmworkers who decide to work on the prescribed day of rest; failure to include the state commissioner of the Department of Agriculture and Markets on the wage board; failure to expand the family farm definition to include close relatives; and failure to preserve secret balloting for both farmworkers and farmers when voting to form a union.

“Dairy represents New York’s largest agricultural industry. Our farms must operate 24 hours a day, 365 days a year in order to care for our cows and produce fresh, nutritious milk. We certainly appreciate legislators who listened to the many voices expressed by stakeholders in trying to negotiate a bill fair to everyone, but we were disappointed in language added in the final hours that has the potential to both negatively impact the long-term viability of our farms and the earning potential and livelihood of our workers,” said Jon Greenwood, president of Northeast Dairy Producers Association and dairy farmer in Canton, New York.

USDEC to receive $2.5 million in Ag Trade Promotion funding

The U.S. Dairy Export Council (USDEC) will receive another $2.5 million from a USDA program designed to help organizations develop new export markets to offset the negative impact of ongoing trade wars and retaliatory tariffs.

USDEC is one of about 50 organizations receiving a total of $100 million under the second round of the Agricultural Trade Promotion (ATP) program. The ATP is one of three USDA programs created to mitigate the effects of trade retaliation against U.S. farmers and exporters.

USDEC previously received $5.3 million under the first round of the program, announced last January.

Click here to find a list of all ATP recipients.

4,500-cow MVP Dairy hosts open house

MVP Dairy, a 4,500-cow partnership between McCarty Family Farms and VanTilburg Farms, held an open house on July 18. Milk production began at the farm last November.

Located in Ohio’s northern Mercer County, MVP Dairy produces non-GMO milk for U.S. yogurt maker Danone North America. The MVP Dairy is 18 miles from Danone's facility in Minster, Ohio.

This is the fifth McCarty Family Farms dairy and its first in Ohio. The VanTilburg family, who live next to the MVP Dairy site, are lifelong residents of Celina, Ohio.

Cows are housed in six freestall barns and milked in a carousel parlor. The farm also features an innovative and patented anaerobic manure treatment cell system. In accordance with Danone North America's animal welfare guidelines, MVP Dairy is certified by Validus, an independent audit firm with the most stringent requirements for socially responsible, scientifically based, economically viable long-term solutions for dairy animal care. The cows are monitored daily and provided routine health screenings. In addition, all employees are regularly trained in animal welfare and farm safety.

"Our family has been farming here in Celina for more than four generations, and we are passionate about using farming methods to ensure we are conserving the land and improving soil health for generations to come," said Kyle VanTilburg, co-owner of MVP Dairy.

MVP Dairy operates as part of Danone North America's 'cost-plus' model, with long-term contracts established to cover the cost of production plus a profit margin for the farmer.

The other McCarty operations milk 8,500 cows at four sites; three in Kansas and one in southwest Nebraska.  end mark

Dave Natzke