Digest Highlights

‘Retroactive’ MPP-Dairy sign-up open through May 10

Some dairy farmers who participated in the 2018 Livestock Gross Margin for Dairy (LGM-Dairy) program can now retroactively sign up for the 2018 Margin Protection Program for Dairy (MPP-Dairy), according to a notice from the USDA’s Farm Service Agency (FSA). The retroactive MPP-Dairy sign-up period runs from March 25 to May 10 at county FSA offices.

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Dave Natzke
Editor / Progressive Dairy

Previously published reports estimated up to 400 U.S. dairy farmers who had purchased LGM-Dairy policies for 2018 were blocked from participating in MPP-Dairy under USDA rules prohibiting participation in both programs. (Read: State MPP-Dairy payments listed; LGM-Dairy participants on outside.)

In late August 2017, USDA Secretary Sonny Perdue granted an “opt out” option for dairy farmers already enrolled in MPP-Dairy. That allowed dairy producers unhappy with the program to end participation and, if they chose, to seek other options to protect income, including margin insurance coverage under LGM-Dairy, administered by USDA’s Risk Management Agency (RMA). As 2018 started, milk futures prices weakened, and some producers elected to put in a margin floor by enrolling in LGM-Dairy.

Then in February 2018, Congress altered the MPP-Dairy program as part of a federal budget bill, sharply reducing margin insurance premium levels, raising the Tier I level coverage to 5 million pounds of milk per year, changing margin calculations to monthly and instructing the USDA to reopen the 2018 enrollment period. Left in place, however, was the federal law that prohibited dairy farmers from participating in both LGM-Dairy and MPP-Dairy simultaneously. 

The USDA rolled out a “new” MPP-Dairy program on April 3, 2018, and eventually extended enrollment until June 22. By the year’s end, dairy producers enrolled at the $8 per hundredweight (cwt) coverage level received MPP-dairy indemnity payments in eight months of 2018: February through August and December. LGM-Dairy participants, however, were left out until a provision of the 2018 Farm Bill created an opening for them to retroactively participate in MPP-Dairy.

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This retroactive sign-up is only for dairy producers with 2018 LGM-Dairy coverage who produced and commercially marketed milk in 2018 but did not obtain full year MPP-Dairy coverage. According to the USDA notice, FSA will send a postcard with program details to all dairy producers who had LGM-Dairy coverage in any month of 2018. Eligible producers must visit their county FSA office to sign up and make a coverage election for retroactive 2018 MPP-Dairy payments. In some cases, producers may need to establish a milk production history to calculate indemnity payments. FSA will provide a one-time payment for all months in 2018 that had margins triggering MPP-Dairy assistance.  

There is a $100 administrative fee, and premiums must be paid at the time of enrollment, or an assignment can be created to collect the premiums once the indemnity is paid. All payments are subject to a 6.6 percent sequestration deduction.

Cropp-Stephenson outlook more optimistic

Mark Stephenson, director of dairy policy analysis, and Bob Cropp, dairy economics professor emeritus, reviewed recent USDA reports and the impact on dairy markets in their monthly podcast and Cropp’s outlook report. They’re more optimistic than current milk futures prices indicate.

On the production side, fewer cows with a small increase in milk yield per cow slowed U.S. milk production growth to just 0.2 percent in February. Drought in New Zealand and Australia and tepid growth in the European Union has also slowed global milk production.

“Down the road, more herds will probably exit in the first quarter of this year, slaughter numbers are up a little, and dairy replacements entering the year were down a little bit,” Cropp said. “I think production will continue to grow relatively slow. With this kind of production, we ought to be easing down [dairy product] stocks and seeing some strength in the cheese market and milk prices moving forward.”

“There’s finally talk that our heifer supply is tightening to a point we won’t be able to have the explosive growth we’ve had in the past – if we get the prices to support it,” Stephenson said. “Farmers have been much disciplined about how many heifers they want to raise, picking the best out of the herd, and breeding other animals to beef.”

As the U.S. spring flush approaches, Stephenson hopes it “flushes” some of the stocks out of the system.

“We have to get cheese prices to $1.70 [per pound] to get a $16 [per hundredweight] Class III milk price, because dry whey price keeps dropping a bit,” Cropp said.

Both economists see milk prices surpassing current Chicago Mercantile Exchange futures prices later in the year. Neither would rule out Class III prices hitting $17 per hundredweight in the fourth quarter of 2019.

“The futures market is too soft for the last half of the year,” Cropp said.

Stephenson described two scenarios where demand helps support price increases: Opportunistic buying as the market thinks prices have reached their low point – and again when stocks tighten, and production isn’t robust.

DFA to market products on GDT Marketplace

Dairy Farmers of America (DFA) will market dairy products on the Global Dairy Trade (GDT) Marketplace online dairy trading platform, according to a GDT press release.

The GDT Marketplace has over 400 registered buyers around the world. DFA products on GDT Marketplace will include: anhydrous milkfat, cheese, milk protein concentrate, nonfat dry milk, skim milk powder, sweet whey powder and whole milk powder.

Fed: Interest rate hikes on hold

Notes published from the Federal Reserve Bank’s Federal Open Market Committee (FMOC) indicate additional interest rate hikes in 2019 may be on hold.

Citing a low unemployment rate, slower growth of household spending and business fixed investment, and a decline in overall inflation, FMOC maintained the target range for the federal funds rate at 2.25 to 2.5 percent. And according to the statement, the committee “will be patient” as it determines future interest rate adjustments.

Coming up: What will 2019 crop acreage look like?

The USDA’s Prospective Plantings report will be released March 29, providing an initial indication of potential acreage levels for major U.S. crops in 2019. Uncertainty on trade issues and subsequent price movements add a degree of difficulty to acreage decisions this year, according to Todd Hubbs, University of Illinois (UI) ag economist.

Writing in "Spring Acreage in Focus,” Hubbs said flooding and the weather forecast indicate an above-average probability of wet conditions this spring across large parts of the Corn Belt, which may slow planting and impact acreage allotments and prevented-planting acreage. Competition for corn and soybean acres could hinge on acreage devoted to spring wheat and cotton in some other major production regions. 

The possibility of lower corn acreage remains a dominant consideration due to fieldwork issues, high fertilizer costs and poor weather conditions. Soybean acreage expectations indicate much lower acreage levels than last year’s 89.2 million acres.

Wisconsin dairy task force approves list of recommendations

Members of a special Wisconsin dairy task force have approved nearly 50 recommendations to address current issues steering the industry in the years ahead. Meeting since last August, individual task force subcommittees forwarded the recommendations for final votes on March 15.

Dubbed the “Dairy Task Force 2.0” and patterned after a similar panel created in the 1980s, the panel was created in June 2018 as a joint effort between the Department of Agriculture, Trade and Consumer Protection (DATCP) and the University of Wisconsin System. The 31-member committee included 14 dairy farmers, nine members representing processors and eight members from allied organizations. It was led by Mark Stephenson, director of dairy policy analysis at the University of Wisconsin – Madison.

Nine subcommittees tackled more than 130 issues initially raised by task force members. The areas of focus included: dairy and rural community vitality, access to capital, education and workforce, consumer confidence and perception, price volatility and profitability, markets, regulatory certainty, research and innovation, and generational succession and transition.

Major themes of recommendations approved on March 15 included: identifying and implementing ways to expand dairy markets locally, regionally and around the world, increase producer educational opportunities and tools in a wide range of topic areas, increase collaboration within the dairy supply chain, raise U.S. milk quality standards and increase investments in rural infrastructure.

Only two recommendations, one dealing with structural changes to the Federal Milk Marketing Order system and another calling for implementation of California fluid milk standards, were voted down at the meeting. A final task force report is expected this summer. 

Iowa passes new ag trespass law

Iowa lawmakers made another attempt to protect farmers from persons who use deception to enter an agricultural operation without permission, according to Tiffany Dowell Lashmet, assistant professor and extension ag law specialist with Texas A&M Agrilife Extension.

Previously, Iowa’s so-called “ag gag” law was declared unconstitutional by a federal court (Jan. 19, 2019, issue Progressive Dairyman). Iowa Attorney General Tom Miller filed an appeal with the U.S. Court of Appeals for the 8th Circuit earlier this year.

Writing in her Texas Agriculture Law Blog, Lashmet said the new law, titled “Agricultural production facility trespass,” targets persons using deception to enter an ag production facility with intent to cause physical or economic harm or other injury to the facility’s operation, agricultural animals, crop, owner, personnel, equipment, building premises, business interest or customer. It makes such trespass a misdemeanor for a first offense and an aggravated or serious misdemeanor for subsequent or related offenses.

While the law is more narrowly written than the prior version, Lashmet said a legal challenge is almost certain.

Minnesota offers dairy farm improvement grants

Minnesota dairy farmers seeking to move from Grade B to Grade A milk production are eligible for grants to make necessary improvements.

The Minnesota Department of Agriculture (DMA) is offering grants for up to $10,000, with no matching requirement. Eligible costs include the equipment, services and physical improvements needed to meet or maintain Grade A dairy farm and quality standards.

Proposals are due on May 1, 2019. For more information and to apply, producers may visit the AGRI Dairy Farm Improvement Grant webpage.

MMPA issues $1.5 million in cash patronage refunds

The Michigan Milk Producers Association (MMPA) recently paid $1.5 million in cash patronage refunds to its dairy farmer member-owners. This cash allocation represents 100 percent of the farm supply earnings and 25 percent of the milk marketing earnings. All members who marketed milk through MMPA for fiscal year 2018 received a portion of the allocation.

Cash patronage funds and equity allocations are based on the amount of milk each individual member farm marketed and on the supplies purchased through the cooperative during the year in which the earnings were achieved.

MMPA members received other cash payments in April 2018 of $4 million through retirement of the cooperative’s 2008 equities.

Kroger teams up with Georgia dairy farmers

The Georgia Department of Agriculture’s Georgia Grown program is partnering with over 168 Kroger stores across the state as part of the “Milk Makes Amazing” promotion. Driven by “Milk on My Mind,” a dairy awareness program initiated by the Georgia Agriculture Commodity Commission for Milk (ACCM), the partnership with Kroger aims to educate consumers about the benefits and versatility of milk and dairy foods.

"Part of the Georgia Grown mission is to support our local farmers by introducing our communities to some of the amazing products made right here in the state," said Georgia Agriculture Commissioner Gary Black. "We're proud to promote some of Georgia’s most authentic products at Kroger stores across the state."

Georgia Kroger shoppers will see “Georgia Grown” milk and dairy products showcased through in-store and digital advertising. Recipes and videos from local chefs on social media platforms will demonstrate easy dishes to entertain friends and family with dairy products.

East Central/Select Sires and NorthStar Cooperative to merge, May 1

East Central/Select Sires delegates and NorthStar Cooperative common stock owners voted in favor of merging the two cooperatives, unifying the two business entities under the name CentralStar Cooperative Inc., effective May 1.

The boards of directors for East Central/Select Sires, based in Waupun, Wisconsin, and NorthStar Cooperative, Lansing, Michigan, previously approved merger plans.

Currently, NorthStar Cooperative serves dairy and beef producers in northern Wisconsin, Michigan and north of U.S. Highway 50 in Indiana. East Central/Select Sires serves dairy and beef producers in southern Wisconsin. There is no overlapping territory between the two cooperatives.

CentralStar will focus on enhancing producer profitability through integrated services, providing Accelerated Genetics, GenerVations and Select Sires genetics, artificial insemination (A.I.) technician service, genetic consultation, reproduction services, DHI services, diagnostic testing, herd management products, research and development, and more. All current business locations will remain open for the foreseeable future.

World Dairy Expo recognizes dairy leaders

World Dairy Expo named recipients of the 2019 Expo Recognition Awards, to be presented in conjunction with World Dairy Expo, Oct. 1-5, 2019, in Madison, Wisconsin. The 2019 honorees include:

  • Dairy Woman of the Year: Janina Siemers, Siemers Holsteins, Newton, Wisconsin
  • Dairyman of the Year: Steve Maddox, Maddox Dairy, Burrel, California
  • Industry Person of the Year: Dr. Randy Shaver, University of Wisconsin – Madison, Department of Dairy Science, Madison, Wisconsin
  • International Person of the Year: Dr. Julio A. Brache Arzeno, Rica Group, Santo Domingo, DN, Dominican Republic

These individuals will be recognized at World Dairy Expo’s Dinner with the Stars, Oct. 2. Banquet tickets will be available online beginning July 1.  end mark

Dave Natzke