By LEE MIELKE
Mielke Market Weekly 

The USDA announced Jan. 12 that more than half of U.S. dairy operations have enrolled in the new Margin Protection Program (MPP) for dairy in 2015.

"Enrollment far exceeded our expectations in the first year," USDA Secretary Tom Vilsack said. "We’re pleased that so many dairy producers are taking advantage of the expanded protection. USDA conducted a lot of outreach to get the word out. When you compare the initial enrollment rate for the Margin Protection Program to the longstanding federal crop insurance program, where participation ranges from 30 percent to 80 percent depending on the crop, it’s clear that these outreach efforts made a difference."

National Milk President and CEO Jim Mulhern called the announcement "an encouraging start to this crucial new safety net program for our industry."

A NMPF news release reports that more than 23,000 dairy operations signed up for the program during the three-month window that ran until Dec. 19, 2014, according to USDA data, a sum that represents about half of the overall number of dairy farms in America.

"The margin protection program is a welcome improvement to federal dairy policy and comes at an important time to help farmers deal with what will be a more challenging economic outlook in 2015," Mulhern said. "The MPP is now the only widely available tool to help farmers protect against both lower milk prices and higher feed costs. It represents a new paradigm in shared responsibility between farmers and the government to cover the cost of that insurance."

While the USDA has yet to release the volume of U.S. milk production covered under the program, anecdotal reports indicated that the sign-up extensions granted after Thanksgiving, coupled with a sharp downturn in milk price forecasts for 2015, encouraged additional participation prior to the Dec. 19 cutoff.

NMPF expressed appreciation to the USDA for allowing additional opportunities for dairy farmers to insure themselves through the MPP.

"Secretary Tom Vilsack is to be commended for maximizing the opportunity for farmers to use this new tool," Mulhern said, and he thanked the leaders of the agriculture committees for establishing the MPP in the farm bill passed last year.

But, not everyone is happy about the MPP. Arden Tewksbury, manager of the Progressive Agriculture Organization in Meshoppen, Pa., in a Tuesday news release asks the question: "Do you as a dairy farmer really think the margin insurance program will help you to manage your farm in a more efficient way?"

"The Secretary of Agriculture announced that slightly over 23,000 dairy farmers signed up for the margin insurance program. Now however, nearly one half of those producers signed up for the minimum coverage of $4 per hundredweight.

"There are 46,000 dairy farmers in the United States. These figures mean that between 34,000 and 35,000 dairy farmers did not sign up for the program or took only the minimum coverage. This is a long ways from being a real exciting support for the program."

Rep. Collin Peterson (D-MN) announced that dairy farmers now will be able to manage their farms better, and consumers will see less fluctuation in prices in the grocery stores."

Tewksbury goes on to ask; "Has anyone told Mr. Peterson that all dairy farmers are still going to be paid under the same ill-fated formula that they have for many years? Has anyone told the members of Congress that nearly 50 percent of the cost on a dairy farm will not be affected by the margin insurance program? Has anyone told the Congress that milk prices will still be unstable in the grocery stores? It is time dairy farmers get stirred up and realize your cost on your farms will not be covered on a continued basis until you dairymen begin to support a new pricing formula based on the national average cost of production."

Cash cheese prices crashed the second full week of the New Year. The Cheddar blocks closed Friday, Jan. 16, at the lowest price since Feb. 27, 2012, at $1.47 per pound, down 12 cents on the week, 76 cents below a year ago, and 98 cents below the record high hit in September 2014. The Cheddar barrels gained a nickel Monday, plunged 15.25 cents Wednesday, regained 1.75 cents Thursday and lost a penny Friday to finish at $1.45, down 9.5 cents on the week, 75.25 cents below a year ago, and $1.04 below their September record high. Six cars of block traded hands on the week and 13 of barrel. The lagging NDPSR-surveyed U.S. average block price fell to $1.5984 per pound, down 1.4 cents, and the barrels averaged $1.5322, down 3.5 cents.

Midwest cheese manufacturing is "hunkered down, moving milk through the plants," according to Dairy Market News (DMN). Inventory levels and sales vary plant to plant. Some plants have lower sales than recent weeks, which resulted in inventory levels increasing. Other plants feel milk intakes are balanced with output and are comfortable with the current production/sales/inventory situation.

Spot milk supplies and discounts are less evident although some plants are balancing extra milk into cheese. Most production schedules are back closer to normal as the holiday weeks fade into the past. Early year uncertainty about market price signals now must process the first CME cheese price decreases of 2015 on Wednesday. The sudden magnitude of lower prices was not an unexpected trend considering present conditions and factors looking ahead.

Wholesale cheese prices in the West are higher this week. Swiss cheese prices are steady. The market tone remains steady. Cheese production is mostly steady to higher as milk supplies in the West slowly increase. Cheese stocks are building. Export demand is low but starting to pick up.

Cheese imports are challenging domestic cheese production. Global Trade Information Services (GTIS) reports European cheese exports for October to the U.S. were 25 percent higher than year ago levels.

Cash butter closed Friday, Jan. 16, at $1.55, up a penny on the week, 30.25 cents below a year ago when it jumped almost 18 cents, and is $1.51 below its record September 2014 peak. Only one car traded hands on the week. NDPSR butter averaged $1.5558 per pound, down 6.1 cents.