One of the recommendations from USDA’s Dairy Industry Advisory Committee asks USDA to research what impact establishing higher national total solids standards in fluid milk would have on milk consumption, prices and farm income.
Dairy Profit Weekly Editor Dave Natzke reported details in his Friday broadcast, pointing out that we all know milk contains water, butterfat and non-fat solids, made up of protein, lactose and minerals but the percentage content of each of those can vary by the breed of cow, season, diet and region.

And, the nutritional content can be enhanced by taking out fat, or adding more non-fat solids.

Current national standards set the minimum composition of fluid milk at 8.25 percent nonfat solids. In California, however, the standards are higher, from 8.7 percent for whole milk, up to 11 percent for low-fat milk. That means some fluid milk must be fortified with non-fat dry milk to reach the higher solids standards.
One of the questions, Natzke asked is “what impact fortifying fluid milk with extra solids throughout the United States would have on consumers?”
A recent study, commissioned by the California Milk Advisory Board, suggests consumers would prefer fortified milk, and may be willing to pay more for it. The study was conducted among 900 consumers in six U.S. cities, and involved taste tests of whole milk, 2 percent milk, 1 percent milk and non-fat milk.
According to the report, a small percent of consumers (44 percent compared to 42 percent) preferred the taste of nutritionally-fortified milk over milk produced at current federal standards. About 14 percent indicated no preference, he said.

Ratings for flavor, color, thickness, texture and overall quality were similar, with a slight rating advantage to the milk produced at California standards.
When nutrition was a factor, about 86 percent said they would select the higher solids milk if offered a choice, and they would be willing to pay an average of $1.74 more per gallon to get it. Next week, Natzke will look at how mandating higher solids nationally would impact dairy farmers and nonfat dry milk markets.

U.S. milk production up 2.7 percent last month
January milk production in the 23 major states hit 15.2 billion pounds, up 2.7 percent from January 2010, according to preliminary data in USDA’s latest Milk Production report. Output in the 50 states totaled 16.4 billion pounds, up 2.3 percent from a year ago. Revisions lowered the December total by 17 million pounds, to 15 billion, still 2.7 percent above December 2009.

January cow numbers in the 23 states totaled 8.4 million head, up 14,000 from December, and 82,000 more than a year ago. Output per cow averaged 1,813 pounds, up 29 pounds from a year ago.

California was up 0.7 percent. Cow numbers were down 11,000, but output per cow was up 25 pounds. Wisconsin was up 1.6 percent on a 5,000 cow increase and 20 pound gain per cow. New York was up 4.4 percent, thanks to a 75 pound gain per cow. Cow numbers were unchanged. Idaho was up 5.3 percent, on 23,000 more cows and 20 pound more per cow. Pennsylvania was up 1 percent, on 2,000 more cows and a 10 pound gain per cow, and Minnesota was down 0.3 percent, due to a drop per cow of 5 pounds. Cow numbers were unchanged.

Florida showed the biggest increase, up 8.8 percent, followed by Colorado, up 8.5 percent, and Kansas, up 7.8 percent. Missouri registered the biggest decline, down 4.8 percent, followed by Virginia, off 1.4 percent, and then Minnesota.

Slaughter report shows 31,800 more culls in February
Meanwhile, USDA’s Livestock Slaughter report estimated 263,900 culled dairy cows were slaughtered under federal inspection in January 2011, up about 31,800 head from January 2010, but 900 head less than December 2010.
Last week it was all but certain that cheese would hit $2 per pound but that didn’t happen and Mary Ledman, principle of Keough Ledman and Associates, Inc. in Libertyville, Ill., said in Tuesday’s DairyLine that, if it does, it will get there “kicking and scratching,” and she bases that on Friday’s Milk Production report.

The block price, after 23 consecutive sessions of gain, was unchanged Thursday, but inched another quarter-cent higher Friday, still flirting with $2, but closed just shy, at $1.9875 per pound, up 3.25 cents on the President’s Day holiday-shortened week, and 64.75 cents above a year ago.
Barrel showed a fissure Wednesday, inching down a half-cent, but gained back a penny Thursday, and closed Friday at $1.95, also up 3.25 on the week, and 66 cents above a year ago. Thirteen cars of block traded hands on the week and 10 of barrel. NASS-surveyed block averaged $1.7850, up 13.3 cents, while the barrels averaged $1.8088, up 11.1 cents.

Butter closed at $2.02, up 1.5 cents on the week, and 60.5 cents above a year ago. Seven cars were sold. NASS butter averaged $2.0792, down 0.7 cent.
Cash Grade A nonfat dry milk closed Friday at $1.8325, up a quarter-cent on the week. Extra Grade held all week at $1.80. The lagging NASS price averaged $1.3938, up 3.2 cents, and dry whey averaged 43.50 cents, up 1.5 cents.
“Cows, cows, and more cows” is what the January Milk Production report said Ledman, adding that we got a sneak preview in USDA’s latest Cattle report released in late January. It indicated higher cow numbers than previously thought by USDA and “that has definitely come to fruition.”

“We added 16,000 head in December versus November,” Ledman reported. “We added another 16,000 in January and given that we have 85,200 heifers that are more than 500 pounds that are expected to calve this year, I think we’re going to see those cow numbers grow through the first half of the year. This is the highest gain in milk cow numbers in a month since January of 2008,” she warned.

She added that culling has been strong and the mailbox milk price in February was “nothing to write home about” so she believes dairy producers supplemented their income with culling. Over 60,000 head have been culled, according to Ledman. “It’s been pretty consistent since the beginning of the year” she said. “Clearly they’re making room for these heifers to come into the milking herd, but much of this culling is also due to profitability and the need for cash flow.”

The supply demand fundamentals suggest we slow down, she concluded. “We’re really taking ourselves out of the export market and that’s been so critical for commercial disappearance in 2010.”

Readers with questions or comments for Lee Mielke may write to him in care of this publication.