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| Vilsack directs emergency aid through direct payment |
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I begin by wishing DairyLine readers a happy and blessed Christmas. “There is a reason for the season” therefore I wish you the season’s best.
U.S. Agriculture Secretary Tom Vilsack finally unveiled how USDA will distribute $290 million in emergency aid approved in the fiscal year 2010 Agricultural Appropriations Bill, referred to as The Dairy Economic Loss Assistance Payment or DELAP. Eligible producers will receive a one-time direct payment based on the amount of milk produced and commercially marketed in the months of February through July 2009. Production information from these months will be used to estimate a full year’s production to calculate the producer’s individual payments, according to Dairy Profit Weekly’s Dave Natzke.
Payments will be capped at 6 million pounds produced during the year. Based on current estimates for 2009 production, the emergency payment on eligible milk would equal about 32 cents per cwt., with an individual payment cap of about $19,000. Farmers should contact their local USDA Farm Service Agency offices for details.
Farm Service Agency Administrator Jonathan Coppess, in an exclusive DairyLine interview posted on our website, said the payments will be direct deposited in producer accounts sometime in the next two weeks and he defended the time it took to make the announcement. He said they got it turned around in near record time, but said he understands that for hurting dairy farmers, “every day is nearly an eternity when the situation is as bad as it is.”
And, while Coppess told DairyLine that he anticipated no legal challenges to the DELAP, Dairy Profit Weekly reports that not everyone is happy with it. California Congressman Jim Costa (D-Fresno) called the payment formula a disappointment.
Although production is down somewhat in 2009, the average California dairy produced about 21.6 million lbs. (216,000 cwts.) of milk in 2008. The cap of 6 million pounds (60,000 cwt.) means about 28 percent of California milk production is eligible for the DELAP payment.
California took big hit
Costa called California “ground zero” for the major meltdown in the industry. “(DELAP) offers almost no viable assistance to our dairy producers,” he said. “In fact, it’s a slap in the face to every dairy producer in California. California leads our country in dairy production; we produce almost 25 percent of America’s milk, cheese and cream, yet California will receive approximately 10 percent of the assistance.
The payments most dairy families will receive won’t even cover a month’s feed bill, let alone help producers obtain a new line of credit at the bank. I received assurances that the assistance USDA provided would be distributed fair and equitably. I don’t know a dairyman in my district who believes this is fair for California.”
Meanwhile, as the markets awaited Friday afternoon’s preliminary November Milk Production report, industry eyes were on the large price spread which grew this week between Chicago Mercantile Exchange block and barrel cheese.
It is the longest lived spread ever, and is hurting barrel manufacturers particularly.
The blocks closed the third week of December at $1.7025 per pound, up a quarter-cent on the week, and 40 cents above a year ago when the blocks plunged 21 cents, to $1.3025. Barrel closed December 18 at $1.44, down 2 cents on the week, 8.5 cents above a year ago, but 26.25 cents below the block price.
Forty five cars of block traded hands on the week and only two of barrel.
The NASS-surveyed U.S. average block price averaged $1.6227, up 3.8 cents.
Barrel averaged $1.5165, down slightly. Butter closed at $1.3250, down 12.5 cents on the week, but 15.5 above a year ago. Eight cars were sold. NASS butter averaged $1.4520, down 4.6 cents.
Cash Grade A nonfat dry milk closed Friday at $1.37, down a penny. Extra Grade held all week at $1.40. NASS nonfat dry milk averaged $1.2756, up 1.4 cents. Dry whey averaged 36.34 cents, up 0.1 cent.
Traders content with price
Cheese traders seem comfortable with prices where they’re at, even with a big price spread. Downes-O’Neill Dairy Economist Bill Brooks said that “We can’t really say there’s a shortage, but it does seem to be a pretty decent imbalance between those who need block cheese and those who have it and, at the moment, those who have it aren’t really letting go of it for anything less than $1.70 or in that ballpark.”
The barrel market seems more than adequately supplied, Brooks said. “Buyers are getting a pretty good deal and, if sellers do have extra, they don’t want to push it down any more because that just increases the negative spread between what they’re paying for milk and the price they’re receiving for their output.”
Brooks warned of possible pressure in butter as domestic supplies build due to more milk entering the churn from school closings for the Christmas holiday. On the other hand, the international market appears interested in U.S. butter, he said, and “that could keep that pressure at a minimum.”
USDA announced the January 2010 Federal order Class I base milk price Friday at $15.03 per cwt. That’s an increase of $1.04 from December, but 71 cents below January 2009, and is above the trigger for an MILC payment to producers.
The NASS-surveyed butter price averaged $1.4823, up 12.9 cents from December. Nonfat dry milk averaged $1.2701, up 15.5 cents. Cheese averaged $1.5764, up 6.5 cents, and dry whey averaged 36.29 cents, up 1.8 cents.
California’s January Class 1 milk price is $18.22 per cwt. for the north and $18.49 for the south. Both are up $2.18 from December and 80 cents above a year ago.
prices begin to improve to near profitability, CDFA said.
New opportunities exist
In other news; with the backdrop of this week’s controversial global climate change meeting in Denmark, Natzke reported that USDA and the Innovation Center for U.S. Dairy has agreed to work jointly in an effort to reduce U.S. dairy industry greenhouse gas emissions by 25 percent over the next decade.
Although specific details are sketchy, a primary effort under a “Memorandum of Understanding” signed by U.S. Agriculture Secretary Tom Vilsack and Dairy Management Inc. CEO Tom Gallagher, will be to accelerate adoption of methane digesters on dairy farms. Additional USDA research support could include a look at how feed mixtures affect methane emissions from cows, Natzke concluded.
Lower forecast milk production in 2010, combined with continued recovery in dairy exports, is expected to lift milk and dairy product prices in 2010 according to USDA’s Livestock, Dairy and Poultry Outlook. The report points out that 2009 feed costs have fallen substantially, but are unlikely to fall as much next year.
The U.S. dairy herd is forecast to continue to contract in 2010, with most of the reduction coming in early 2010 and attenuating later in the year. The report also includes a special article on the Cooperatives Working Together program. |
| 12/23/2009 |
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