Digest highlights
- 2022 DMC premiums due Sept. 1
- USDA buying fluid milk in fourth quarter
- GDT price index continues decline
- Bill supports ‘small’ cattle producers
- Proposal seeks to identify foreign ownership of U.S. farmland
- DFA acquires two ESL plants
- Ag producer sentiment improves despite financial pressures
- April all-milk, mailbox price spread averaged 88 cents
2022 DMC premiums due Sept. 1
With monthly Dairy Margin Coverage (DMC) program triggers well above the $9.50-per-hundredweight (cwt) coverage level, there have been no indemnity payments distributed through the USDA’s Farm Service Agency (FSA) through June 2022. So while in the past producers were able to deduct annual DMC premiums from indemnity payments, that’s not the case this year.
Read: Milk price plateau cuts into June DMC margin.
Consequently, approximately 80% of calendar year 2022 DMC and Supplemental DMC premiums have not paid as the payment deadline of Sept. 1 approaches, noted W. Scott Marlow, deputy administrator of farm programs with the FSA.
In a notice to state and county FSA offices, Marlow instructed offices to notify dairy operations, via letter by Aug. 15, with a payment deadline reminder and the amount of outstanding premium balance due. County offices will not send letters to dairy operations with $10 or less of total unpaid premium balances.
Failure to pay the DMC premium by the deadline will halt future indemnity payments and may affect a dairy operation’s ability to participate in the DMC program in future years. Contact your county FSA office for further information.
Latest estimates using the USDA’s DMC decision tool indicate there is a small chance indemnity payments for Tier I/$9.50-per-cwt coverage could be triggered in one or more months, August-December 2022.
USDA buying fluid milk in fourth quarter
The USDA’s Agricultural Marketing Service (AMS) awarded multiple contracts for the delivery of fluid milk for distribution through domestic feeding programs in the fourth quarter of 2022 and is looking for more.
Announced contracts covered delivery of 1.48 million gallons of skim, 1%, 2% and whole milk in one-half gallon and gallon containers. All deliveries were scheduled between Oct. 3-Dec. 28, 2022. Contracts totaled $5.5 million. Contracts covering an additional 125,550 gallons of milk were not awarded due to lack of bids or price considerations.
The USDA also announced it was accepting bids for an additional 125,550 gallons of fluid skim, 1%, 2% and whole milk in one-half gallon and gallon containers to be delivered during the same period. Bids close Aug. 12, and contracts will be awarded on Aug. 22.
GDT price index continues decline
The latest Global Dairy Trade (GDT) auction saw the overall price index decline another 5%, marking the ninth decline in the last 10 auctions. Prices in all individual product categories were lower in the Aug. 2 auction, including:
- Skim milk powder was down 5.3% to $3,524 per metric ton (MT, or about 2,205 pounds)
- Whole milk powder was down 6.1% to $3,544 per MT
- Butter was down 6.1% to $5,194 per MT
- Cheddar cheese was down 0.7% to $4,798 per MT
- Anhydrous milkfat was down 1.4% to $5,518 per MT
The GDT platform offers dairy products from six global companies: Fonterra (New Zealand), Dairy America (U.S.), Amul (India), Arla (Denmark), Arla Foods Ingredients (Denmark) and Polish Dairy (Poland). The next GDT auction is Aug. 16.
Bill supports ‘small’ cattle producers
A newly introduced proposal would provide direct financial support for small-herd cattle producers seeking risk management and marketing assistance.
H.R. 8590 (the Small Family Farmer and Rancher Relief Act) was introduced by U.S. Rep. David Scott (D-Georgia), chair of the House Ag Committee. Under the proposal, producers with 100 cattle or fewer could be eligible for increased premium subsidies when purchasing insurance policies through the Livestock Risk Protection (LRP) program. The bill offers incentives for insurance agents to better market LRP policies to small producers.
The bill also creates a USDA indemnity program that provides relief to small producers when the price spread of the farmer’s share of the retail dollar drops below 51.7%.
The bill also addresses marketing opportunities for small-herd producers and cooperatives through establishment of a grant program to create value-added and local markets and direct-to-institution sales.
Proposal seeks to identify foreign ownership of U.S. farmland
A bill to force disclosure of foreign ownership of and future investment in U.S. farmland has been introduced in the Senate. The Farmland Security Act, introduced by U.S. Sens. Tammy Baldwin (D-Wisconsin) and Chuck Grassley (R-Iowa), would require the USDA to report to Congress on foreign investments in agricultural land in the U.S., including the impact foreign ownership has on family farms, rural communities and the domestic food supply. The initial report would be required within 180 days of the bill being signed into law.
Thereafter, the USDA would be required to provide disclosures of foreign investments in agricultural land in the U.S. on an interactive public USDA database and have real-time updates.
According to Baldwin and Grassley, foreign ownership of U.S. agricultural acreage has nearly doubled in the past decade. However, they note, the data that has been collected is incomplete and inaccurate.
“Foreign buyers, especially those backed by governments like China, buying up prime farmland here in the U.S. raises serious national security concerns – and the American people have a right to know about it,” Grassley said.
A one-pager on the legislation is available here.
DFA acquires two ESL plants
Dairy Farmers of America (DFA) has acquired two extended shelf-life (ESL) processing facilities from SmithFoods. The processing plants located in Richmond, Indiana, and Pacific, Missouri, produce a variety of ESL dairy and non-dairy beverages, ice cream and shake mixes for both retail and food service customers. The facilities will become part of the DFA Dairy Brands division and will operate as Richmond Beverage Solutions and Pacific Dairy Solutions.
“There is increasing consumer interest in extended shelf-life dairy products, and this acquisition aligns with our strategy to increase commercial investments and expand our ownership in this space,” said Pat Panko, executive vice president of DFA and president of DFA Dairy Brands North.
Despite the change in ownership, the existing management team will continue to oversee the day-to-day operations, and employees at the facilities will retain their current positions.
