Last Friday Dairy Profit Weekly’s Dave Natzke reported that USDA clarified rules covering organic dairy pasture access. National Milk’s Chris Galen said Thursday that this has been a struggle within the organic community for several years in terms of using pasture access as a way to define organic production.

The Agriculture Department announced that organic dairies will be required to pasture cows a minimum of 120 days per year or about four months out of the year and that 30 percent of their feed intake must include pasture-grown forage.

The decision will be final in June, he said, and is the latest salvo in an on-going battle over defining certain organic practices, but is really aimed at keeping larger farms from obtaining the organic status.

While there is a minimum 120-day threshold to keep cows out on pasture, Galen said, “If you live in a more temperate part of the United States like certain parts of the Southwest or California, the expectation is that the cows will be out on pasture most of the year, if not all 12 months, and that may present some management challenges, particularly during the cold, rainy months.”

Organic has previously been defined to a certain extent by what it is not, Galen said. There are no antibiotics used, no growth hormones, no pesticides, etc., and now the definition is leaning toward the types of feed the cows are given, how they’re handled, and where they’re housed.

The organic niche has grown rapidly, but Galen believes the growth has leveled off. He cited the recent USDA study of organic operations that Dave Natzke discussed last week, and reported that about 200,000 of the 9.1 million head of dairy cattle in the U.S. are considered organic producers and represent about 1.4 percent of U.S. dairy production.

“Even though the category has grown, it’s still a very small niche,” he concluded, “And the purpose of this rule is to exclude, often times larger farms, so that will make it hard for the organic category to continue growing at least in terms of production.”

January milk production hits 14.8B
January milk production in the top 23 states hit 14.8 billion pounds, up slightly from December, but down 0.6 percent from January 2009, according to preliminary data in USDA’S latest Milk Production report.

Revisions added 18 million pounds to the December estimate, putting the total at 14.6 billion, down 0.7 percent from December 2008. USDA also reported that 2009 annual production totaled 189 billion pounds, down 0.3 percent from 2008. Revisions to 2008 output decreased the annual total 10 million pounds. Revised 2009 production was up 61 million pounds from last month’s estimate.
Production per cow in the U.S. averaged 20,576 pounds for 2009, up 181 pounds from 2008. The average annual rate of milk production per cow has increased 13.1 percent from 2000. The average number of milk cows on U.S. farms in 2009 was 9.2 million head, down 1.2 percent from 2008. There was no revision to the average number of milk cows for 2008.

January cow numbers totaled 8.3 million, up 4,000 from December, but 191,000 below a year ago. Production per cow averaged 1,782 pounds, up 30 pounds. California’s January production was down 2.4 percent from a year ago, due to 72,000 less cows, but output per cow was up 30 pounds. Wisconsin was up 4.7 percent, thanks to a 70 pound gain per cow and 5,000 more cows. New York was down 1.3 percent. Cow numbers were off 14,000, but output per cow was up 15 pounds. Idaho was up 1.5 percent, despite a decline of 4,000 cows. Output per cow was up 40 pounds. Pennsylvania was down 1.7 percent on 9,000 fewer cows. Minnesota was up 3.6 percent, thanks to a 50 pound gain per cow and 2,000 more cows.
The biggest increase was in Washington State, up 5 percent, followed by Wisconsin and Minnesota. The biggest decline occurred in Colorado, down 10.4 percent on 13,000 fewer cows and 10 pounds less per cow. Missouri was down 9.5 percent with 6,000 fewer cows and a 50 pound loss per cow, and Florida followed, down 8.7 percent, on 6,000 fewer cows and 60 less pounds per cow.
Meanwhile, the Agriculture Department’s latest Livestock Slaughter report shows about 232,000 cows were culled under Federal inspection in January, up 1,000 head from December and unchanged from January 2009.

Cash cheese prices lost more ground in the final week of February. The blocks closed that Friday at $1.34 per pound, down 7.25 cents on the week, but are still 16.5 cents above that week a year ago when the blocks plunged 13.5 cents, to $1.1750. Barrel cheese closed Friday at $1.29, down 8.75 cents on the week, but 11 cents above a year ago.

The losses were on top of the previous week’s declines of 9.25 and 6.75 cents respectively. Thirty one loads of block traded hands on the week and 15 of barrel. The lagging NASS-surveyed U.S. average price on block cheese gained 0.4 cent, hitting $1.5059. Barrel averaged $1.5005, down 0.9 cent.

Butter closed February at $1.4050 per pound, up 4.5 cents on the week, and 25.5 cents above a year ago. Thirteen cars sold on the week and the NASS butter price averaged $1.3407, down a penny. NASS nonfat dry milk averaged $1.0697, down 7.2 cents, and dry whey averaged 39.46 cents, down 0.1 cent.

The University of Wisconsin’s Dr. Brian Gould pointed out in Tuesday’s DairyLine that the Class III futures market has been headed down for a couple of weeks and the March to July settlements on Feb. 19 were down an average of 39 cents from the previous Friday while the August to January contracts were down 26 cents, “reflecting the high level of cheese stocks out there but also what’s going on in milk production.”

Cow numbers were down 2.4 percent from January 2009 in USDA’s latest Milk Production report, Gould admitted, however milk per cow was up 1.9 percent, the net result was a drop of only 0.6 percent and that’s a big concern for the industry, with all those heifers out there that are available at a relatively inexpensive price. The decline in milk production may be short-lived, he warned.

Another interesting point from the data is the regional differences, according to Gould. Milk production was down in California, Colorado, Arizona, New Mexico, and Texas were all down significantly, whereas the Upper Midwest continued its dramatic increase. Wisconsin, for example, was up 4.7 percent, he said, and, while a lot of that was output per cow, there was no decrease in herd size. Gould gave no estimate on how low cheese will go, admitting that he thought $1.49 would be but he’s been shown wrong on that. He suggested listeners go to his website “Understanding Dairy Markets” at http://future.aae.wisc.edu/ to see what the implied cheese value is, based on that day’s contributing futures prices.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Lee Mielke may write to him in care of this publication.