In politics, after “dealing” with the debt ceiling, Congress is in recess until after Labor Day. National Milk’s grassroots tour to sell their “Foundation for the Future” dairy policy proposal also took a break the first week of August. Dairy Profit Weekly Editor Dave Natzke reported in Friday’s DairyLine radio broadcast that a roadblock in the debt ceiling debate was opposition to additional taxes, and taxes are now an added dimension to federal dairy policy discussions.

During regional meetings to explain the Federation’s reform proposal, CEO Jerry Kozak, said that Foundation for the Future is not only a better safety net for dairy farmers, but also is more budget friendly than current federal dairy programs. He cited Congressional Budget Office analysis showing new program would save the federal government about $166 million over the next five years.

However, the processor’s International Dairy Foods Assoc. said the program creates new taxes on dairy farmers, by diverting a portion of assessments farmers would pay under certain conditions, to the U.S. Treasury.

“Federal dairy policy is often a contentious issue among farmers,” Natzke said, “And adding the political issue of taxes to the discussion, especially in an upcoming election year, is sure to heat up the debate.” The grassroots tour meets next in Harrisburg, Penn. on Aug. 8; Syracuse, N.Y. on Aug. 10; Ocala, Florida, on Aug. 12; and finishes Aug. 22 in Nashville.

A rose by any other name is still a rose, so they say (whoever they are), but that’s not the case with milk. A popular sports drink calling itself “Muscle Milk” is not milk, according to Uncle Sam.
National Milk’s (NMPF) Chris Galen talked about it in Thursday’s DairyLine and said it was over 10 years ago that they pressed the Food and Drug Administration to “crack down on the misleading use of terms like rice milk and soy milk that are just imitations of real cow’s milk.”

While the FDA failed to respond to NMPF pleas, the call was reinvigorated about 15 months ago, according to Galen, when they provided documents on other products that were mislabeled, “not only misusing the term milk but other terms like cheese and yogurt that are dairy specific but are not made from dairy ingredients.” The FDA has since warned the manufacturer of “Muscle Milk.”

Galen pointed out that the label has bold letters “Muscle Milk”
but very fine print stating that it contains no milk. He said NMPF is gratified the FDA has finally taken action against at least one company they believe is “playing fast and loose” with the regulations on what can and can’t be called milk.”

The law actually states that a product calling itself milk has to be from the lactation of an animal, he explained, and that cheese and yogurt are manufactured from a specific list of dairy ingredients and does not include beans, seeds, weeds, nuts, or things like that.

He said we’re seeing more of these “imitators,” something NMPF warned of 10 years ago, “If regulators did not do a good job of enforcing the letter of the law.” These products are often displayed in or near the dairy case and use similar packaging that real dairy products use, he concluded, but he hopes this “shot across the bow will prevent others from also misappropriating dairy terminology.”

July Class III milk jumps $2.28
The July Federal order Class III benchmark milk price jumped $2.28, to a record high $21.39 per hundredweight (cwt.), according to the Agriculture Department. That’s $7.65 above July 2010, the highest since July 2007, $2.04 above California’s comparable 4b cheese milk price, and equates to about $1.84 per gallon. The 2011 Class III average now stands at $17.68, up from $13.60 at this time a year ago, and compares to just $10.16 in 2009 and $18.24 in 2008.

The August Class III price will likely be the peak for the year at a record $21.50, if the CME futures contract is any indication. That’s what it was trading at late Friday morning. The September contract was at $20.19, October; $19.10, November; $18.27 and December at $17.44. Those prices would result in a 2011 average of $18.36, up from $14.41 in 2010, $11.36 in 2009, and $17.44 in 2008.
The July Class IV price is $20.33, down 72 cents from June, but $4.58 above a year ago. The NASS-surveyed cheese price averaged $2.1243 per pound, up 22.4 cents from June. Butter averaged $2.0304, down 9.8 cents. Nonfat dry milk averaged $1.6159, down 3.6 cents, and dry whey averaged 54.94 cents, up 2.6 cents.

California cheese up from June
California’s July 4b cheese milk price is $19.35, up 56 cents from June, $5.98 above a year ago, and equates to about $1.66 per gallon.

Its 2011 average now stands at $16.20, up from $12.44 at this time a year ago, but the gap widened again between it and the Federal order Class III price. The difference this year has varied from 8 cents below the Class III in February to $2.64 below in March. The July 4a butter powder price is $20.07, down 72 cents from June, but $4.45 above a year ago.

Those futures prices may sound great but it’s the bottom line that really matters and that looked a little better in July as well, according to USDA’s latest Ag Prices report. Increased milk prices covered rising feed costs. The All-Milk price was estimated at $22.10 per cwt., up 90 cents from June, and the highest ever.
The cost of feed to produce 100 pounds of milk was $11.57, up 29 cents from June, according to the CME’s Daily Dairy Report (DDR). Corn increased 8 cents, to $6.46 per bushel, soybeans were up 20 cents, to $13.40 per bushel, and alfalfa hay was up $9, to $189 per ton. All three were record highs, according to the DDR, which added; “Rising milk prices left income over feed costs of $10.53 per cwt., 61 cents per cwt. higher than June.” “Over the last 10 years, income over feed costs has averaged $9.09 per cwt.,” the DDR said.

National Milk’s Roger Cryan points out that “Feed costs have risen since a month ago, but so have projected Class I milk prices, driven by rising cheese values.” As a result, Cryan does not see any MILC payments to dairy producers for this fiscal year, which ends Sept. 30.

Meanwhile; the cash block cheese price closed the first Friday in August at $2.1325 per pound, down 2 1/4-cents on the week, but 53 cents above a year ago. Barrel closed at $2.1350, up a half-cent on the week, and 56 3/4-cents above a year ago. Sixteen cars of block traded hands on the week and one of barrel. The ever lagging NASS-surveyed U.S. average block price inched a half-cent higher, to $2.1062, while the barrels averaged $2.1344, down 0.2 cent.


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.