Digest highlights

Natzke dave
Dave Natzke
Editor / Progressive Dairy

January 2023 DMC payments top $57 million

Dairy Margin Coverage (DMC) program indemnity payments on January 2023 milk marketings enrolled in the program were estimated at nearly $57.2 million, according to the latest update from the USDA’s Farm Service Agency (FSA).

The January DMC margin was $7.94 per hundredweight (cwt), triggering Tier I indemnity payments at $9.50, $9, $8.50 and $8 DMC coverage levels.

Wisconsin led all states in January DMC indemnity payments at $12.82 million. That was followed by: California – $5.54 million, New York – $5.45 million, Minnesota – $4.87 million and Pennsylvania – $4.67 million. 

January DMC payments averaged $3,417 per dairy operation enrolled in 2023. All payments are subject to a 5.7% sequestration deduction.

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Based on latest enrollment data as of March 6, 16,739 dairy operations have enrolled in the 2023 DMC program, representing about 73% of operations with established production history. Milk volume covered under the program totals 155.9 billion pounds, almost 78% of production history established in 2023. The report does not include enrollment in the Supplemental DMC program.

The February DMC margin and potential indemnity payments will be announced on March 31.

April 2023 Class I base price dips to $18.85

April 2023’s Federal Milk Marketing Order (FMMO) advanced Class I base price declined slightly, dipping to an 18-month low. At $18.85 per cwt, the April 2023 Class I base is down 14 cents from March and $5.53 less than April 2022.

Class I zone differentials are added to the base price at principal pricing points to determine the actual Class I price in each FMMO. With those additions, April Class I prices will average approximately $21.67 per cwt across all FMMOs, ranging from a high of $24.25 per cwt in the Florida FMMO 6 to a low of $20.65 per cwt in the Upper Midwest FMMO 30.

Analyzing the Class I mover, the spread in the monthly advanced Class III skim milk pricing factor ($8.46 per cwt) and advanced Class IV skim milk pricing factor ($9.37 per cwt) is 91 cents per cwt, down slightly from March.

Based on Progressive Dairy calculations, the Class I mover calculated under the “higher-of” formula would have resulted in a Class I base price of $18.57 per cwt, 27 cents less than the actual price determined using the “average-of plus 74 cents” formula.

The economic impact on uniform milk prices within individual FMMOs depends on Class I milk utilization in each FMMO. Those FMMOs with highest Class I utilization are affected the most.

Through the first four months of 2023, the Class I base price averages $20.26 per cwt, about $1.90 less than the same period a year ago.

California dairies facing flooding emergency

With flooding impacting California dairy producers and processors – including forced relocation of some dairy herds – multiple organizations are working to connect producers with emergency resources.

The current storm patterns have caused historic flooding throughout the state, resulting in forced evacuation of dairies and property damage, including catastrophic feed losses.

Significant increases in livestock mortality have not been reported. Regional flooding has also caused transportation delays and unplanned downtime at processing facilities.

In its most recent newsletter, California Milk Producers Council (MPC) General Manager Kevin Abernathy, urged members to contact his office if emergency needs arise. Most transportation needs for evacuating livestock has been organized by dairy trade organizations, Abernathy said. State and federal resources are available.

He also urged members to begin documentation of disaster-related expenditures immediately to be eligible for recovery funds.

“We know that many producers are facing dire situations on their farms, having to evacuate animals, employees and their families due to flooding,” he said. 

The California Department of Food & Agriculture and county milk inspection agencies are providing expedited equipment inspection for producers that are evacuating to an empty dairy or who are returning home.

The California Dairy Quality Assurance Program (CDQAP) has also prepared a document titled, “Emergency Flooding Advisory: Tulare & Central Valley Counties.”

Western United Dairies (WUD) published a list of several flood resources in Tulare County, including a flood hotline to report evacuations and road-river-levee work requests: (559) 802-9791, option 4.

WUD has been working with state and local agencies to provide assistance and resources to dairy farmers and farm workers impacted by flooding in Tulare County, setting up a website landing page to provide producers with up-to-date information.

Court issues limited injunction on WOTUS rule

The U.S. District Court for the Southern District of Texas issued a limited injunction blocking implementation of the “Waters of the U.S.” (WOTUS) rule, but only in Texas and Idaho.

The lawsuit was filed by the two states, seeking an injunction within their borders, and 18 national trade associations, asking for a nationwide injunction. The ruling, issued on March 19 by U.S. District Judge Jeffrey Vincent Brown, came a day before the Waters of the U.S. rule was scheduled to be implemented on March 20. 

Announced last December, the EPA and Army Corps of Engineers posted the revised Waters of the U.S. rule in the Federal Register on Jan. 18. Agricultural organizations expressed almost immediate displeasure with the proposal when it was unveiled.

Read: Timing, scope of WOTUS rule disappoints dairy

At least two other lawsuits seeking injunctions against the Waters of the U.S. rule are pending. Adding a complication to the new Waters of the U.S. rule is the pending decision by the U.S. Supreme Court on a lawsuit (Sackett v. EPA) which could limit the EPA’s jurisdictional authority over regulated waters.

Separately, U.S. House of Representatives passed H.J. Resolution 27, a resolution of disapproval regarding the Waters of the U.S. rule, and the U.S. Senate was expected to vote on a similar joint resolution this week. Under the terms of the Congressional Review Act, Congress can strike down a federal agency rule if a resolution of disapproval is approved by both chambers and signed by the president. President Joe Biden has already said he would would not sign a resolution.

Interest rate raised again

Meeting March 21-22, the Federal Reserve’s Open Market Committee (FMOC) raised its benchmark lending rate another 0.25%, to 5%.

In February, the FMOC raised the rate 0.25%, to 4.75%, the highest in 15 years.

Read: Weekly Digest: Agricultural loan interest rates highest since 2007

GDT index declines

Reflecting the direction of global dairy prices, the latest Global Dairy Trade (GDT) price index declined 2.6% in an auction held March 21. Prices in individual product categories were all lower:

  • Skim milk powder was down 3.5% at $2,648 per metric ton (MT, or about 2,205 pounds).
  • Whole milk powder was down 1.5% to $3,228 per MT.
  • Anhydrous milkfat was down 3.8% to $5,150 per MT.
  • Butter was down 3% to $4,748 per MT.
  • Cheddar cheese was down 10.2% to $4,052 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 April 4.

World Dairy Expo names 2023 award winners

World Dairy Expo named recipients of 2023 Expo Recognition Awards. The honorees are:

  • Dairy Producer of the Year: Randy Kortus, Lynden, Washington, Mainstream Holsteins, Jerseys and Ayrshires
  • Industry Person of the Year: Tom Morris, Amery, Wisconsin, Deronda Farm, Tom Morris Ltd. and Cattle Connection
  • International Person of the Year: Bonnie Cooper, North York, Ontario, Canada, Holstein Journal

They will be recognized during the 2023 World Dairy Expo on Oct. 4. Banquet tickets will be available beginning July 1. The 56th World Dairy Expo will be held Oct. 1-6, in Madison, Wisconsin.