Here is a look at news affecting a dairy producer's bottom line:
- Class I base price falls for December
- GDT index up 1.9%
- USDA extends application deadline for Organic Dairy Marketing Assistance until Dec. 13
- SNAP Healthy Fluid Milk Incentive program expands to 1,150 stores in 32 states by 2025
Class I base price falls for December
After hitting a two-year high in October, the Federal Milk Marketing Order (FMMO) advanced Class I base price fell again to end 2024. At $21.43 per hundredweight (cwt), the December 2024 advanced Class I base price is down $1.10 from November 2024. Despite the decline, the December price is still $1.67 per cwt above December 2023.
With the December price, the 2024 average Class I base price was $20.35 per cwt, up $1.15 from a year ago and the third-highest annual average in the past decade. Previous high annual averages were $23.66 per cwt in 2022 and $23.29 per cwt in 2014.
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, December Class I prices will average approximately $24.25 per cwt across all FMMOs, ranging from a high of $26.83 per cwt in the Florida FMMO to a low of $23.23 per cwt in the Upper Midwest FMMO. Those prices will be felt in December regional FMMO uniform milk prices, to be announced Jan. 11-14, 2025.
The spread in the monthly advanced Class III skim milk pricing factor ($9.70 per cwt) and advanced Class IV skim milk pricing factor ($10.77 per cwt) narrowed to $1.07 per cwt for December. That means that the current Class I mover formula positively impacted Class I prices slightly, and for the fourth time in the second half of the year.
Based on Progressive Dairy calculations, using the Class I mover calculated under the “higher-of” formula would have resulted in a Class I base price about 21 cents less than the actual price determined using the “average-of plus 74 cents” formula.
For the year, the preliminary Class I price under the “average-of" formula was about 55 cents less than the price calculated under the higher-of formula. A change in the formula back to higher-of calculations is included in the FMMO modernization proposal.
GDT index up 1.9%
The price index of dairy product prices sold on the Global Dairy Trade (GDT) platform increased again. This time it was up 1.9% in the auction held Nov. 19. At 1,239 points, the index is 25% higher than a year ago and the highest it has been since July 2022.
Compared to the previous auction, prices for individual product categories were mixed. Whole milk powder had the largest gain at 3.2%, while anhydrous milkfat, skim milk powder and butter increased marginally. Cheese sold lower with mozzarella down 6.6% and cheddar cheese down 3.1%. Buttermilk powder and lactose were not traded.
The GDT platform offers dairy products from several global companies: Fonterra (New Zealand), Darigold, Valley Milk and Dairy America (U.S.), Arla (Denmark), Arla Foods Ingredients (Denmark), BMI (Germany), Kerry Dairy (Ireland) and Solarec (Belgium).
The next GDT auction is Dec. 3.
USDA extends application deadline for Organic Dairy Marketing Assistance until Dec. 13
The USDA is extending the application deadline for the Organic Dairy Marketing Assistance Program (ODMAP) 2024 to Dec. 13. This extension gives organic dairy producers two additional weeks to apply for the program. Eligible producers include certified organic dairy operations that produce milk from cows, goats and sheep.
ODMAP 2024 helps mitigate market volatility, higher input and transportation costs, and unstable feed supply and prices that have created unique hardships in the organic dairy industry. Specifically, through ODMAP 2024, USDA’s Farm Service Agency (FSA) is assisting organic dairy operations with projected marketing costs in 2024 calculated using their marketing costs in 2023.
“Extending the deadline for the Organic Dairy Marketing Assistance Program 2024 gives hardworking organic dairy producers additional time to request the support they need,” said FSA Administrator Zach Ducheneaux, “We will continue doing everything we can to keep the market for organic dairies sustainable as they weather challenges outside of their control.”
Dairy producers who participate in ODMAP 2024 will benefit from improvements to provisions outlined in the program. Specifically, ODMAP 2024 provides a payment rate increase to $1.68 per cwt compared to the previous $1.10 per cwt. Additionally, the production cap has increased to 9 million pounds compared to the previous 5 million pounds.
To apply, producers should contact the FSA at their local USDA Service Center. To complete the ODMAP 2024 application, producers must certify pounds of 2023 milk production, show documentation of their organic certification and submit a completed application form.
SNAP Healthy Fluid Milk Incentive program expands to 1,150 stores in 32 states by 2025
The USDA recently awarded a grant to Auburn University’s Hunger Solutions Institute (HSI) to significantly expand the Healthy Fluid Milk Incentives Projects (HFMI) to more than 1,150 retail stores in 32 states since the program began in 2020. HFMI pilot projects provide Supplemental Nutrition Assistance Program (SNAP) beneficiaries with a dollar-for-dollar match when they purchase healthy fluid milk options, helping SNAP participants stretch their dollar with healthy dairy options.
Since 2022, the USDA has awarded nearly $10 million in grants to Auburn HSI to partner with retail food establishments to implement HFMI projects. The latest USDA grant will provide $2.79 million in fiscal year 2024 congressional appropriations to Auburn to bring the program to 438 additional participating locations across 18 states, including locations in rural communities, counties with persistently high poverty rates, and low-income and low access census tracts. HFMI, or Add Milk! as it is known at retail stores across the country, is reaching more than 25,000 SNAP households every month, a number that continues to increase as more stores come on line and more SNAP participants become aware of the program.
The International Dairy Foods Association (IDFA), led by President and CEO Michael Dykes, DVM, lauded the expansion of the HFMI program, noting the important role dairy incentives play in improving health outcomes for Americans. IDFA led the charge to create HFMI in the 2018 Farm Bill and has continued to closely collaborate with Congress and the USDA to expand the program to more communities across the country.
IDFA is asking Congress to include provisions in the next farm bill that would expand the existing HFMI program to include all milk varieties as well as cheese and yogurt.
