In dairy politics, the International Dairy Foods Assoc.’s Peggy Armstrong addressed falling fluid milk sales in Wednesday’s DairyLine, blasting efforts that would result in higher milk prices to consumers. She reiterated how milk provides nine essential nutrients Americans need, including calcium, vitamin D and potassium and that, according to the 2010 Dietary Guidelines, “these nutrients are especially important for growing children.” 

She warned that milk is “losing ground” in “a competitive beverage environment,” reporting that per capita milk consumption has continued a slow and steady decline at a rate of about 1 percent a year for the past 35 years, according to USDA data, but a recent statistic suggests the decline might be escalating.

U.S. fluid milk product sales declined 1.4 percent in 2010, the largest annual decline in more than a decade, she said, and “This trend has continued into 2011, with U.S. fluid milk product sales down 1.6 percent through June.”

She said “It’s important to note that according to the Bureau of Labor Statistics, the retail price of milk has been higher during most of this period than the same month a year earlier so it appears that in a tight economy and a competitive marketplace, consumers are increasingly looking to beverages other than milk.”

“That is why the last thing the U.S. dairy industry needs is a change to the Federal Milk Market Order system that would result in higher Class I prices,” she warned, and pointed to the plan proposed by Rep. Collin Peterson, of Minnesota which is based on National Milk’s “Foundation for the Future.” 

“NMPF’s own analysis estimates that the minimum fluid milk price would have averaged 51 cents higher in recent years under the proposed federal order changes in the draft legislation,” Armstrong charged.

“Everyone in the U.S. dairy industry should pay close attention to dairy policy reforms that could hurt demand. That especially applies to proposed legislation that will increase the cost of fluid milk products.

We cannot afford to lose any more ground and Americans cannot afford to lose the health benefits of drinking milk,” she said. 

Congress has plenty on its plate to deal with, primarily the economy and budget issues, according to National Milk’s Chris Galen in his Thursday DairyLine talk. He said the nation awaited President Obama’s plan to help the economy and deal with high unemployment. Coincidentally, Thursday was also the first meeting of the so-called Congressional Super Committee whose mandate is to identify an additional $1.5 trillion in budget savings over the next decade.

“A lot of what’s going to drive the process here this fall in Washington is to reconcile those two issues,” Galen said, “How to stimulate the economy formally or informally and help put people back to work and at the same time, identify ways to cut government spending.” 

The committee is supposed to complete its work around Thanksgiving, he said, and present recommendations for Congress to vote on. Many expect farm programs to be targeted for cuts, he concluded, so the groundwork may be in the works for the next farm bill. 

The House Agriculture Livestock, Poultry and Dairy Subcommittee also held a dairy policy hearing Thursday. Witnesses included USDA officials from the Farm Service Agency and Agriculture Marketing Service.

After attending the hearing, NMPF President and CEO Jerry Kozak stated in a press release that the general tone of the questions at the hearing from the committee members indicated “a concern that current dairy programs are not up to the task of providing a meaningful farm-level safety net.” He added that “NMPF shares that concern, and that’s what has driven the creation of Foundation for the Future. We believe we have the best answer to the bottom line question of what should come next for dairy policy.”

But, Friday’s DairyLine asked the question, “Is supply management a solution for the future or a problem from the past?”

Wisconsin dairy producer, John Pagel, who has established a “Risk Management Not Supply Management” website, said he doesn’t believe supply management is the answer for the Midwest or for the U.S. dairy industry. He argued that there are so many foreign countries that need dairy products and the Midwest is “sitting in the driver’s seat in being able to supply those products.”

Pagel does agree that the dairy industry needs a safety net, but not supply management. The free market allows farmers to produce as much as they like, he argued, “The better job that you can do on your farm and the more efficient you can be, creates profit on the bottom line and it’s up to the rest of the industry to help us export products and do the best job that we can to make sure our dairy industry stays strong.”

He admits there’ll be ups and downs like any other business, but doesn’t believe it’s in farmer’s best interest to “slow down production and reduce possible opportunities for feeding the rest of the world,” as he put it.

He praised National Milk’s efforts to put together a program that would help the dairy industry, but supply management is one part he and others do not agree with. He admitted there are regional differences that present challenges in putting a plan together but, with the Midwest having a large amount of processing capacity, “we don’t want someone telling us how much milk we can produce” and therefore favors risk management as opposed to supply management. More details and a petition are available to sign at www.stopsupplymanagement.com

The latest employment data showing no job creation in August and declining consumer confidence doesn’t bow well for the dairy industry, according to the University of Wisconsin’s Dr. Brian Gould. Speaking in Tuesday’s DairyLine, Gould said consumers are not willing to purchase food away from home (restaurants). He cited the August consumer confidence index which declined from 59.2 to 44.5. That’s about a 20 percent drop, he said.

When asked about cheese prices, Gould pointed to existing stocks relative to production and said “They’re pretty high.” Case in point is the ratio of American cheese stocks to American cheese production in July which was the highest since 1987, “so we have a lot of stocks out there relative to production,” and he warned that he’s not optimistic there’ll be a rebound in prices in the near future.

Futures prices on cheese are pretty stable, according to Gould, right around $1.70, plus or minutes five cents, “so right now the indicators are not looking for substantial changes on the upside or even on the downside.”

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.