Here’s an update on news and economic factors impacting your dairy entering the second week of February 2024.

Natzke dave
Dave Natzke
Editor / Progressive Dairy

USDA publishes final rule amending the Appalachian, Florida and Southeast FMMOs

The USDA Agricultural Marketing Service (AMS) published a final rule amending three Federal Milk Marketing Orders (FMMOs) in the southeastern U.S. designed to address long-standing milk deficit problems.

Published in the Federal Register on Feb. 1, the final rule amends transportation credit-balancing fund provisions in the Appalachian and Southeast Federal Milk Marketing Orders and establishes distributing plant delivery credits in the Appalachian, Florida and Southeast FMMOs.

Following a public hearing in February-March 2023, the AMS published a recommended decision in July 2023 and a final decision in December 2023. More than the required number of producers voted in favor of implementing the amended rule in a producer referendum.

Specifically, the final rule amends transportation credit-balancing fund provisions in the Appalachian and Southeast FMMOs. It also establishes distributing plant delivery credit provisions in the Appalachian, Florida and Southeast FMMOs that would make market-wide service payments to qualifying handlers and cooperatives for milk shipments to pool distributing plants from farms that are year-round, consistent suppliers.

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The amendments will be effective for milk marketed on and after March 1, 2024. The amended mileage rate factor and assessments will be contained in the March price announcement to be released on Feb. 21, 2024.

For more, the hearing record is available at the USDA AMS website.

Most February FSA interest rates lower

With the Federal Reserve holding the line on interest rates during last week’s meeting, interest rates on loans through the USDA’s Farm Service Agency (FSA) were reduced to begin February 2024. Interest rates for operating and ownership loans (compared to January) are as follows:

  • Farm operating loans (direct): 5.125%, down from 5.625%
  • Farm ownership loans (direct): 5.375%, down from 5.875%
  • Farm ownership loans (direct, joint financing): 3.375%, down from 3.875%
  • Farm ownership loans (down payment): 1.5%, down from 1.875%
  • Emergency Loan (amount of actual loss): 3.75%, unchanged

The FSA also offers guaranteed loans through commercial lenders at rates set by those lenders.  For more information producers can contact their local USDA Service Center.

Tax relief bill seen as beneficial to farmers

The House of Representatives passed a bipartisan tax bill: H.R. 7024, the Tax Relief for American Families and Workers Act of 2024.

In addition to reviving and expanding the child tax credit for low-income families, the bill is seen as beneficial to businesses – including farm families – because it restores and extends 100% bonus depreciation for qualified equipment and property purchases, retroactive to the beginning of 2023. The bill also revives an expired rule allowing research and development costs to be immediately and fully deducted rather than spread across five years.

The bill now heads to the Senate, where it faces a tougher road toward passage.

FDA withdraws animal feed policy

The FDA announced that it is withdrawing long-standing policy that classifies animal feed ingredients as animal drugs if making claims on production, environment or food safety-related benefits. The National Milk Producers Federation (NMPF) has long advocated for the FDA to rescind this policy to pave the way for expeditious review and approval of animal feed ingredients that can reduce enteric methane emissions.

According to NMPF, the FDA also supports the Innovative FEED Act (H.R. 6687, S. 1842), which will provide clear direction to the agency to review enteric-reducing and other products using its food additive petition process.

Looking back at December costs

Lower average milk prices offset slightly lower feed costs, triggering Dairy Margin Coverage (DMC) program indemnity payments in December. Read: December DMC margin is $8.44 per cwt

Outside of feed – and not factored into DMC margins – other production costs were mixed in December.

  • The December index of prices paid for commodities and services, interest, taxes and farm wages was down 0.5% from November 2023 and down 0.6% from December 2022.
  • Fuel costs were down 4.6% from November and down 11% from December a year ago. Both gasoline and diesel fuel prices were lower.
  • December machinery costs were unchanged from the previous month but 0.8% more than a year earlier.
  • Fertilizer prices rose 0.6% from November but were 33% less than December 2022. Higher prices for nitrogen and potash and phosphate more than offset lower prices for mixed fertilizer.

Coming up

Watch the Progressive Dairy website and digital newsletters for upcoming dairy-related USDA reports:

  • On Feb. 7, USDA's Economic Research Service (ERS) will release the first farm income statement and balance sheet estimates and forecasts for 2024.
  • Released on Feb. 8, the USDA’s World Ag Supply and Demand Estimates (WASDE) report will update milk production and price, beef and dairy feedstuff price forecasts for 2024. It’s likely to incorporate results of the USDA’s latest estimates regarding lower dairy cow and replacement heifer inventories.
  • The U.S. Dairy Export Council and the USDA will provide summaries of December and full-year 2023 dairy and related exports on Feb. 8-9.
  • On Feb. 13, USDA’s National Agricultural Statistics Service (NASS) will release the 2022 Census of Agriculture data. The release event will start at 12:30 p.m. (Eastern time) and livestreamed on USDA’s YouTube channel and website.
  • With the announcement of January Class II, III and IV milk prices (above), administrators of the 11 FMMOs will report January uniform prices and pooling data, Feb. 11-14. That will be followed up on Feb. 15 by Progressive Dairy’s monthly review of the numbers to provide some additional transparency to your milk check.

In case you missed it

A blizzard in eastern Nebraska, Jan. 12-15, closed over 1,700 miles of roadways and shut down milk hauling routes. According to the Nebraska State Dairy Association (NSDA), more than 1.2 million pounds of milk was dumped, resulting in significant economic losses. According to NSDA Director Kris Bousquet, the organization is seeking financial assistance through the USDA’s Milk Loss Indemnity Program.