In politics, the board of directors of the National Dairy Producers Organization (NDPO), this week, announced a nationwide call for dairy producers to immediately decrease their milk production. Board member Bob Krucker, called on dairy producers whose milk goes into making Class III inventoried products to voluntarily reduce their milk output by five percent.

Krucker referenced the existing cheese inventory, which is over a billion pounds in a NDPO press release. “With cheese inventories rising and the price of cheese plummeting clearly the supply of milk exceeds profitable demand.”
NDPO hopes producers will work together to regain market control, he said, and noted; “When dairy producers choose to be milk supply regulators they will become milk price regulators and will become profitable.”

But, not all dairy farmers are on board with supply management. Dairy Profit Weekly reports on John Pagel. Pagel’s Ponderosa Dairy located near Kewaunee, Wis., which has established a “Risk Management – Not Supply Management” website. The website includes a link for like-minded dairy farmers to sign a petition opposing supply management proposals.

“After a very difficult few years, dairy farmers are finally catching a break,” Pagel said. “Prices are up, the immediate outlook is good, and the conversation about dairy policy reform has begun in earnest. We applaud and thank the National Milk Producers Federation for starting the necessary dialog about dairy policy reform with their Foundation for the Future proposal.”

Pagel adds that, “While we support many elements of the proposed policy changes, the supply management portion gives us great concern for the future of the dairy industry. We urge our fellow farmers and residents to call their congressional representatives and tell them to vote this down before it hurts all of us,” said Pagel.

“In times of financial issues, dairy farmers need risk management, not supply management.”

For more information, visit www.stopsupplymanagement.com-staging.com
The website also includes frequently asked questions concerning supply management, a link to notify your legislator of your opposition to supply management, and the link to join the petition.

California hopes to adjust 4a, 4b formulas
Last week, I reported on changes the California Department of Food and Agriculture (CDFA) will make in its 4a and 4b milk pricing formulas. The Milk Producers’ Council’s Rob Vandenheuvel wrote in his newsletter that week that “While the market for dry whey products has had an ongoing impact on the California Class I minimum price formula, it has been an irrelevant factor in our Class 4b (cheese) formula since 2007.”

That will change, he said, due to CDFA’s announced changes, but he adds that “While the new “sliding scale” dry whey factor will be an improvement over the current fixed factor of $.25 per cwt., it still falls woefully short of bringing California’s Class 4b formula in line with the Class III (cheese) formula used in the Federal Orders that most U.S. dairies operate in.”

He blasted CDFA’s decision charging that it falls short of what needs to be done; “Unfortunately, it appears that CDFA believes California dairy farmers will produce all the milk we need regardless of the price paid for that milk.”
He adds that “there are major issues to resolve in the California dairy industry, and we cannot expect our State’s Department of Food and Agriculture to lead the charge in fixing those problems; not when they have time-after-time endorsed a low-price-leader strategy when it comes to the milk prices paid to our state’s dairy families.”
Complete details are posted at www.milkproducerscouncil.org/

Milk price high, but so are feed costs
The farm benchmark milk price is the highest in four years, hitting a record high for August, but has peaked for 2011. The U.S. Department of Agriculture announced the August Federal order Class III price at $21.67 per cwt., up 28 cents from July, and $6.49 above August 2010. That pulls the 2011 Class III average to $18.18, up from $13.80 at this time a year ago and $10.29 in 2009.
The strong prices are being offset in part by strong feed prices, more on that ahead, but Class III futures portend a downturn. The September contract settled Thursday at $18.87; October at $18.75; November, $18.51; and December at $18.02.

The August Class IV price is $20.14, down 19 cents from July, but $4.53 above a year ago. California’s August 4a price was $20.23.

The four week NASS-surveyed cheese price averaged $2.1402 per pound, up 1.6 cents from July. Butter averaged $2.0695, up 3.9 cents, nonfat dry milk $1.5739, down 4.2 cents, and dry whey averaged 56.91cents, up 2 cents.
California’s comparable 4b cheese milk price is $18.60 per cwt., down 75 cents from July, $4.21 above a year ago, but $3.07 below the Federal order Class III price. The 4b price average for 2011 now stands at $16.50, up from $12.69 a year ago. The 4a butter-powder price is $20.23, up 16 cents from July, and $4.54 above a year ago. The 4a average stands at $19.24, up from $14.18 a year ago.

Hurricane Irene left her mark on pretty much everyone and dumped 6-12 inches of rain over New England causing severe flooding and power outages from eastern New York to southern Maine. What an irony to name a hurricane “Irene,” a name that means “peace.”

Vermont’s governor said his state was facing “a full-blown flooding catastrophe”. Many roads were closed due to wash outs, downed trees and/or bridges being damaged or destroyed. Some communities in the Northeast were without power for over 96 hours. Milk pick-ups remain difficult and in some spots impossible so milk was being dumped. The full extent of the loss and damage has yet to be determined, but manufacturing milk supplies were at near normal levels as the week began as many producers shipped prior to the storms arrival, USDA said.

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.