Here is a brief look at the news affecting dairy producers during the final week of September 2023:

Natzke dave
Dave Natzke
Editor / Progressive Dairy

Digest highlights

USDA publishes dairy checkoff report for 2020

The USDA has posted an audit report on two national dairy checkoff programs for 2020, with two more reports (covering 2021 and 2022) still due.

The latest report follows a letter from a bipartisan group of lawmakers, urging USDA Secretary of Agriculture Tom Vilsack to submit the annual reports to Congress, as required by federal law. The letter noted the annual reports have been delayed multiple times under Vilsack’s leadership.

The enabling legislation for both the National Dairy Promotion and Research Program (NDB) and the National Fluid Milk Processor Promotion Program (Fluid Milk Board) requires the USDA to submit an annual report to House and Senate Ag Committees. The reports include an accounting of funds collected and spent, and an independent analysis of the effectiveness of both programs' promotion and research campaigns. Independent analysis of the program is conducted under a contract with Texas A&M University.

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In the past, reports lagged by a year to acquire all financial data for the previous year. In more recent years, report release dates included: 2019 (August 2022), 2018 (November 2020), 2017 (March 2020), 2016 (February 2019) and 2015 (September 2017).

The congressional letter came after Farm Action and the National Dairy Producers Organization requested their release in a letter last June. Read: Organizations demand dairy checkoff reports

In a follow-up letter to the 2020 report on Sept. 22, Jenny Lester Moffitt, USDA undersecretary for marketing and regulatory programs, said the Ag Marketing Service was currently reviewing the 2021 report and would begin working on the 2022 report when the 2021 analysis was completed.

According to the latest report, mandatory dairy producer assessments (15 cents per hundredweight [cwt] of milk marketed) totaled $346.8 million in 2020. Of that total, $120.5 million was directed to the NDB and $223.6 million went to “qualified” dairy product promotion, research or nutrition education programs (QPs). Dairy Management Inc. (DMI), a management and staffing corporation, is a joint undertaking between the NDB and the United Dairy Industry Association (UDIA), a federation of 16 of the 62 QPs.

Mandatory assessments collected under the Fluid Milk Act totaled $85.7 million in 2020, with $7.2 million returned to the California Milk Processor Board.

Last February, members of both the House and Senate introduced the Opportunities for Fairness in Farming (OFF) Act, a bill establishing additional requirements on all checkoff programs.

Butter inventory lowest since January and prices soar

Lower milk production cut into butter inventories in cold storage in August. The tighter supplies are driving prices higher.

 According to the USDA’s monthly Cold Storage report, released Sept. 25:

  • Butter stocks were estimated at 289.1 million pounds on Aug. 31, down 12% from July and the lowest since January 2023 but still 4% more than August 2022. Chicago Mercantile Exchange (CME) spot butter prices rose more than 28 cents per pound during the week of Sept. 18-22 and have risen another 13 cents per pound as of Sept. 30 to $3.1325 per pound.
  • Total natural cheese stocks were estimated at about 1.49 billion pounds on Aug. 31, down slightly from July but up 1% compared to August 2022. Stocks of American cheese were estimated at about 849 million pounds, up 1% from both the previous month and year.

Feedlot cattle numbers down

Beef sales impact dairy producer incomes too. Beef steers and heifers represent about 78% of monthly cattle slaughtered under federal inspection; cull dairy cows generally represent about just under 10%.

Beef cattle and calves on feed in the nation’s largest feedlots (those with capacity of 1,000 head or more) totaled 11.1 million head on Sept. 1, 2% fewer than a year ago. August placements totaled 2 million head, 5% less than a year earlier. Fed cattle marketings during August totaled 1.88 million head, 6% below 2022.

According to the USDA’s World Ag Supply and Demand Estimates report, 2023 fed cattle prices are forecast to average $178.50 per cwt, with average prices reaching $190 per cwt in the fourth quarter.

U.S. average prices received for cull cows (beef and dairy, combined) in July averaged $111 per cwt, up $4 from June and the highest monthly average since July 2015.

July 2023 fluid milk sales stay on trend

Fluid milk sales were lower in July 2023, although whole and flavored whole milk again provided some positive signs, according to monthly data from the USDA Agricultural Marketing Service:

  • Total sales: Sales of packaged fluid milk products totaled about 3.25 billion pounds, down 1.5% from the same month a year earlier. At 24.43 billion pounds, year-to-date (YTD) sales of all fluid products were down 2%.
  • Conventional products: Monthly sales totaled 3.02 billion pounds, down 1.7% from the same month a year earlier. YTD sales totaled 22.79 billion pounds, down 2% from January-July 2022. July sales of whole milk were up 1.5%, and flavored whole milk sales were up 21.6% from a year earlier.
  • Organic products: July sales totaled 230 million pounds, up 0.7% from a year earlier. At 1.64 billion pounds, YTD sales of all fluid organic products were down 1.7%. Sales of organic whole milk were up from a year earlier and year to date. Organic represented about 7% total fluid product sales in July and 6.7% YTD.

The U.S. figures are based on consumption of fluid milk products in Federal Milk Marketing Order (FMMO) areas, which account for approximately 92% of total U.S. fluid milk sales, and adding the other 8% from outside FMMO-regulated areas. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, nonfood stores, schools, the food service industry and home delivery.

ODMAP payments: An update

The USDA recently announced a second round of payments for dairy producers through the Organic Dairy Marketing Assistance Program (ODMAP). Read: USDA paying second round of ‘organic’ assistance

The USDA’s Farm Service Agency (FSA) has already paid out $15 million in the first round of payments for eligible producers, covering 75% of approved milk production. Second-round payments, totaling up to $5 million, will cover the remaining 25% of approved production.

For established organic producers, the second ODMAP payment is automatic; participating producers who applied last summer do not need to take any additional action.

New, transitioning or expanding dairy operations requesting 2023 estimated milk production be used to determine their ODMAP payment are in the process of being approved by the USDA’s FSA. Those approved after Sept. 15, 2023, will receive payments covering 100% of the enrolled ODMAP production.