Digest highlights
- Dairy co-ops add to processor FMMO petition opposition
- May 2023 Class I base price moves higher
- GDT index increases
- 2023 Farm Bill congressional sessions continue
Dairy co-ops add to processor FMMO petition opposition
With a USDA decision deadline still about more week away, numerous dairy cooperatives have joined in voicing opposition to a dairy processor request for a Federal Milk Marketing Order (FMMO) hearing.
On March 28, the International Dairy Foods Association (IDFA) and Wisconsin Cheese Makers Association (WCMA) submitted petitions requesting a FMMO hearing to Dana Coale, deputy administrator of USDA Agricultural Marketing Service (AMS) dairy programs. The USDA had 30 days to either deny, issue an action plan or request additional information for any petitions seeking to amend a current FMMO.
The National Milk Producers Federation (NMPF) and American Farm Bureau Federation (AFBF) asked the USDA to reject the dairy processor petitions, which focused on manufacturing or “make” allowances. Instead, the producer organizations said a more comprehensive hearing covering a wide range of FMMO issues was necessary.
In addition to NMPF and AFBF, opposition letters have been submitted by multiple dairy producer organizations and posted on the USDA AMS FMMO petition website. Organizations with posted letters include the American Dairy Coalition, California Dairies, Dairy Farmers of America, Land O’Lakes, Maryland & Virginia Milk Producers Cooperative Association, Dairy Farmers of America Inc., Edge Dairy Farmer Cooperative and Michigan Milk Producers Association.
IDFA and WCMA also submitted response letters, defending their requests.
Read also: Tracking Federal Milk Marketing Order policy developments
May 2023 Class I base price moves higher
May 2023’s FMMO advanced Class I base price reversed course, increasing from the previous month for the first time since November 2022. At $19.57 per hundredweight (cwt), the May 2023 Class I base is up 72 cents from April 2023 but $5.88 less than May 2022.
Class I zone differentials are added to the base price at principle pricing points to determine the actual Class I price in each FMMO. With those additions, May Class I prices will average approximately $22.39 per cwt across all FMMOs, ranging from a high of $24.97 per cwt in the Florida FMMO 6 to a low of $21.37 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 ($10.37 per cwt) and advanced Class IV skim milk pricing factor ($9.08 per cwt) is $1.29 per cwt, up slightly from April.
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 $19.48 per cwt, 9 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.
GDT index increases
For the first time since early February, the Global Dairy Trade (GDT) price index jumped 3.2% in an auction held April 18. Prices in individual product categories were mostly higher:
- Skim milk powder (SMP) was up 7% at $2,776 per metric ton (MT, or about 2,205 pounds).
- Whole milk powder was up 1% to $3,089 per MT.
- Anhydrous milkfat was up 4.7% to $4,981 per MT.
- Butter was up 4.9% to $4,821 per MT.
- Cheddar cheese was up 5.7% to $4,411 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). U.S.-based Darigold Inc. will begin offering SMP at the auction in June.
The next GDT auction is May 2.
2023 Farm Bill congressional sessions continue
The Senate Committee on Agriculture will host a 2023 Farm Bill hearing on conservation programs, April 20, 10 a.m. (Eastern time) in Russell Senate Office Building, Washington, D.C.
The House Ag Committee will host a farm bill listening session on April 24, 2 p.m. (Eastern time), at the University of Florida Extension Office, Newberry, Florida. Livestreaming access had not yet been announced. Comments are being accepted in a House Ag Committee feedback form.
