Dairy Profit Weekly Editor Dave Natzke was in Lexington, Ky. this week, covering Alltech’s annual Global Dairy 500 conference. The conference brought together dairy and beef farmers from 31 countries and covered all areas of dairy production management and marketing.

Natzke reported that international visitors got a firsthand look at American democracy in action with this week’s elections. What they witnessed was profound political change that could impact future U.S. dairy and farm policy.

The biggest change will be in the House, where Republicans won the majority, and as many as 16 Democrats on the House Ag Committee lost reelection bids. The committee’s ranking minority member, Rep. Frank Lucas (R-Okla.) is in line to take over as chair; followed by Rep. Bob Goodlatte (R-Va.), who chaired the House Ag Committee from 2003-2006.

In the Senate, just a half-dozen ag committee members faced reelection bids. But, even though the Democrats retained the majority, current Senate Ag Committee chair Blanche Lincoln, of Arkansas, lost her reelection bid. It appears Sen. Debbie Stabenow, a Michigan Democrat, will be named chair of the Senate Ag Committee.

The election not only impacts the makeup of Congressional ag committees, but could also impact the pace of work on the 2012 Farm Bill. Lucas, the expected House Ag Committee chair, has been quoted as saying he prefers to delay the farm bill because the “fiscal mood in Washington will be better in 2012.”
Lucas also opposes “cap and trade” greenhouse gas regulations, and believes in limiting powers of the U.S. Environmental Protection Agency.

With all new faces on the House Ag Committee – as well as the change in leadership in the Senate Ag Committee, farm and dairy groups will have their work cut out for them when it comes to educating lawmakers on their issues in preparation for the 2012 Farm Bill.

NMPF supports lowering SCC levels

The National Milk Producers Federation (NMPF) is backing a ratcheting down of somatic cell count (SCC) levels. The resolution was approved at NMPF’s recent annual meeting, according to Jamie Jonker, vice president of scientific and regulatory affairs.

He said there was much spirited discussion on NMPF’s delegate body supporting the three-step reduction to reduce SCC levels. The proposal would be to reduce the current level from 750,000 to 600,000 effective Jan. 1, 2012, then to 500,000 by 2013, and a final reduction to 400,000 by 2014.

“There’s been pressure for reducing somatic cell counts from a variety of areas, certainly what has been happening in the international arena, but I think also domestically,” Jonker said.
NMPF will propose the reduction to the National Conference on Interstate Milk Shipments, which will be debated by industry and state regulatory authorities and the Food and Drug Administration (FDA). If approved by the conference, it will be part of the Pasteurized Milk Ordinance (PMO).

If a dairy farm has a SCC level that is higher than the threshold two times out of the last four months, they would receive a warning letter. If the SCC were higher three times out of the previous five months, the farm would become de-listed and would be able to re-enter the Grade A program with a new test under the regulatory threshold.

“That part of the warning letter and de-listing would be the same that is currently done under the Pasteurized Milk Ordinance, the only change we are proposing is reducing the somatic cell count threshold,” Jonker said.

Based upon USDA data, about 15 percent of dairy producers in the U.S. are currently above that 400,000 level.

“That’s why the delegate body took the approach of a three-step reduction to get to that 400,000 level by Jan. 1, 2014,” he said. “It allows those producers that need to make management and animal changes over a period of time, to put those changes in place so they could meet the new regulations should it be passed by the conference.”

The resolution includes regulatory discretion within the state to temporarily allow for variances in the somatic cell count threshold based on seasonal depen-dent increases and natural disasters.

Checkoff touts strong relationship with McDonald’s

Partnerships are an important part of the dairy checkoff’s effort to increase dairy product sales. One of the first of those partnerships was with the fast food giant, McDonald’s, and they still are a partner, according to Paula Meabon, Penn., dairy producer and chairman of the National Dairy Board.

We talked about it at the recent World Dairy Expo and that conversation aired on Monday’s “DMI Update. Meabon said McDonald’s has been a great partner and DMI is currently working with them regarding their beverages.

“McDonald’s wants to be the beverage destination,” Meabon reported, and DMI worked with them on their McCafe line, which consists of up to 80 percent milk or about 300 million pounds of dairy farmer milk.

Frappes includes 50 percent milk, which makes up for 100 million pounds more milk and has been their biggest seller, according to Meabon,

The dairy checkoff actually employs a dairy food scientist to work on projects for and with McDonald’s to generate new and creative ideas to sell more milk for dairy farmers. Meabon pointed out that, for every dollar that dairy farmers contribute to a partnership project, the partner adds $6 so “partners are so important.”

McDonald’s was the first fast food chain to introduce the round, plastic, re-sealable milk containers in its outlets and that project is still a success, she said. It started with just 15 containers a week per restaurant and that number has increased to 300 and growing; and is “very impressive.”

“We know, as dairy farmers, that milk is naturally nutrient; and now we’re getting the word out through McDonald’s,” Meabon said, adding that many new projects are on the drawing boards. “The industry is ever-going,” she concluded, and we can find a lot of new things.”

Milk price improves 68 cents in September

The October Federal Order Class III milk price was announced by the USDA at $16.94 per cwt., up 68 cents from September, $4.12 above October 2009, and $1.28 above California’s comparable 4b cheese milk price.

The 2010 Class III average now stands at $14.36, up from $10.72 at this time a year ago, but compares to $17.91 at this time in 2008. The October Class IV price is $17.15 up 39 cents from September, and $5.29 above a year ago.

Class III futures were heading back down late Friday morning. November was at $15.50, December at $13.74 and January 2011 at $13.65.

The four-week, NASS-surveyed cheese price averaged $1.7666, up 6.5 cents from September.

Butter averaged $2.1893, up 3.2 cents. Nonfat dry milk averaged $1.1674, up 2.9 cents, and dry whey averaged 36.76 cents, up fractionally.

California’s October Class 4b cheese milk price was announced by CDFA at $15.66 per cwt. That’s up 18 cents from September, and $2.97 more than October 2009. The 4a butter-powder price is $16.65 per cwt., up four cents from September and $5.11 more than October 2009.

Year-to-date, the average 4b price is $13.26, up $2.88 from the same period in 2009. The average Class 4a price stands at $14.67, up $4.54 from the same period a year ago.