Dairyline
By Lee Mielke
Breaking news from Dairy Profit Weekly: A federal district judge pared back parts of a major dairy antitrust lawsuit, but allowed the bulk of complaints to proceed.
The class action suit, filed in October 2009 and amended in January 2010, was filed by (plaintiffs) Vermont dairy farmers Alice and Laurance Allen and New York dairy farmers Garret and Ralph Sitts, against (defendants) Dairy Farmers of America, Inc. (DFA), Dairy Marketing Services LLC (DMS), Dean Foods and HP Hood LLC.
Between 2005-09, the Allens and Sitts marketed milk through DMS, a milk marketing organization established in 1999 through an agreement between DFA and Dairylea Cooperative, Inc., Natzke reported. According to court documents, DMS markets approximately 80 percent of the milk in the Northeast, with milk going to both Dean Foods and HP Hood.
The suit alleges price-fixing and conspiracy to monopolize and monopsonize the fluid milk market in the Northeast against all the defendants. A monopoly is when there is a single source on the supply side (as in selling milk); a monopsony is when there is a single source on the demand side (as in buying milk).
DFA, DMS, Dean and HP Hood sought dismissal of the charges. Federal District Judge Christina Reiss, U.S. District Court for the District of Vermont, heard oral arguments for dismissal on May 6 and issued the ruling on Aug. 30.
Reiss dismissed all claims against HP Hood and those alleging a price-fixing conspiracy between DFA and DMS. However, she ruled against a DFA request for dismissal of price-fixing claims on the basis of Capper-Volstead immunity, and denied all requests for dismissal by Dean Foods.
Act now for MILC payments
While dairy profitability has improved with strengthened milk prices, feed prices have also strengthened and futures prices for common feedstuffs such as corn and soybeans are increasing.
Dairy Profit Weekly’s Dave Natzke pointed out in Friday’s “DairyLine” that that could trigger Milk Income Loss Contract (MILC) payments in 2011, but he warned that dairy farmers need to act now to maximize potential payments next spring.
National Milk Producers Federation’s Roger Cryan provides weekly updated MILC projections, estimating payments based on milk and feed futures prices during the next fiscal year which starts Oct. 1 – based on his latest estimates, dairy farmers could receive MILC payments during a six-month period beginning in April 2011.
Cryan’s estimated payments for that period average 22 cents per cwt., ranging from a high of about 38 cents in July to lows of about 10 cents next April and 8 cents next September.
“It’s important for any dairy farmers who produce more than the MILC cap of 2.985 million pounds of milk annually to designate a start month in which to receive payments,” Natzke warned. “If they fail to declare a new start month in fiscal year 2011, payment months automatically default to fiscal year 2010, or begin the first month MILC payments are triggered.”
Based on his latest projections, a farmer producing the MILC maximum of 2.985 million pounds in a single month could see a payment of $2,850 in April 2011, compared to a payment of nearly $11,000 in July 2011.
Cryan notes if market conditions change, dairy farmers can change their MILC start months later, but it’s important to visit a USDA Farm Service Agency office to make the adjustments before payments are triggered, he concluded. Cryan’s weekly MILC payment estimates are posted at www.dairyline.com
Nominations sought
The International Dairy Foods Assoc. (IDFA) is seeking nominations for its annual Innovative Dairy Farmer of the Year award.
IDFA’s Peggy Armstrong said in Wednesday’s “DairyLine” that many dairy farmers are modernizing their operations in order to continue to support their families and provide consumers with high-quality dairy products, but “too few farmers get the recognition they deserve for their efforts.
“Every year IDFA teams with Dairy Today magazine to honor an outstanding U.S. dairy producer,” Armstrong said. “We look for producers that exemplify creativity and forward thinking to achieve greater on-farm productivity and improved milk marketing.”
She invited “DairyLine” listeners to nominate a colleague, customer or community member. To be eligible, the nominee must be an active U.S. dairy farm operation. Complete details and the nomination form are available online at www.idfa.org
Last year’s winner is Haubenschild Dairy of Princeton, Minn. Dennis Haubenschild operates on 1,300 acres with 14 full-time employees and 1,100 cows. The farm was selected for its continued emphasis on innovative solutions and ideas, particularly in the areas of renewable energy and sustainability, Armstrong said.
He was the first to sell carbon credits on the Chicago Climate Exchange and has teamed with the University of Minnesota to develop the prototype for a hydrogen-fuel cell-technology system.
They hope to find ways to fuel the farm’s tractors with hydrogen fuel cells made with biogas from the farm’s digester, she said.
This year’s winner will receive an all expenses-paid trip to the 2011 Dairy Forum, Jan. 23-26 at the Doral Golf Resort in Miami, Fla.
CWT helps butter producers
The CWT program, in view of current prices, announced its last export assistance bids on butter on Aug. 30, totaling 291,000 pounds. The program drew criticism that it even included butter, but CWT Chief Operating Officer Jim Tillison said in Thursday’s broadcast that the decision was made in July when butter was running around $1.79.
CWT members were being undercut by foreign competition, so the decision was made to assist those who had existing business.
July milk prices were still not at a level dairy producers wanted them to be yet, Tillison argued. “The real run-up in the butter price happened in just a matter of days,” he said.
Butter was at $1.95 and in four trading sessions it hit $2.15. “Butter was very tight in this country,” he said, “And we didn’t want to do anything that would potentially push the price higher.”
He listed other factors affecting the price, such as the hot weather that impacts the milk supply and yields. The remaining CWT export funds will be directed to exporting cheese, he said.
Herd audits for CWT’s latest herd removal have been completed though information is still being collected and analyzed. Tillison reported that about 31,000 cows will be removed, representing 600 million pounds of milk, but final numbers won’t be available until all information has been collected.
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