In politics, with the issue of supply management threatening the future of National Milk’s “Foundation for the Future” (FFTF) dairy policy reform proposal, the Federation announced it would modify its plan. Dairy Profit Weekly Editor Dave Natzke reported in his Friday DairyLine program that the revisions would make participation in the supply management portion voluntary. However, participation in the supply management program, called the Dairy Management Stabilization Program, would be a prerequisite for farmer eligibility for income insurance payments under the Dairy Producer Margin Protection Program.

“By making the program voluntary instead of mandatory, it also eliminates another controversial area,” Natzke said. “Under the previous plan, half of all money collected under the Dairy Management Stabilization Program would have gone to the U.S. Treasury. Now, all funds could go to purchase dairy products to be used for feeding programs.”

Instead of specifying comprehensive changes to the federal milk marketing order system, the revised plan mandates USDA to replace current end-product pricing formulas and make allowances with a competitive pay price formula, but leaves the method up to a dairy farmer vote.

The plan still calls for elimination of the Dairy Price Support and Milk Income Loss Contract programs and the revisions were rolled into legislation drafted by Rep. Collin Peterson (D-Minn.), ranking member on the House Ag Committee, and Rep. Mike Simpson, (R-Idaho). 

In a Friday morning conference call, Peterson reported that he would introduce the bill (“Dairy Security Act of 2011”) that afternoon in the House with National Milk’s modifications. He said support is growing for the plan, but because of delays in getting the original bill scored by the Congressional Budget Office, it will now likely be part of the new farm bill. The International Dairy Foods Assoc. said the changes to the FFTF still “miss the mark.”

Natzke also reported that a second dairy policy reform plan was outlined this week, this one from U.S. Sen. Kirsten Gillibrand (D-N.Y.), a member of the Senate Ag Committee. Gillibrand’s plan addresses the supply management issue by limiting it to regional supply and demand conditions, instead of a national balancing plan. She would also incorporate income insurance into the existing MILC program, using production limits to determine insurance payment eligibility, and asks USDA to evaluate changes to federal milk marketing orders.

Meanwhile, Dairy Profit Weekly reports that several dairy organizations sent a letter to House Agriculture Committee leaders, opposing supply management provisions contained in impending dairy policy reform legislation. The organizations urged lawmakers to reject the Dairy Market Stabilization Program, proposed in National Milk’s FFTF program and included in the legislation authored by Rep. Collin Peterson.

Co-signing the letter were the Dairy Business Assoc., a Wisconsin-based producer organization, along with its marketing co-op, Dairy Business Milk Marketing Cooperative; the board of directors of Bongards’ Creameries, Minnesota Milk Producers Assoc., First District Assoc., all of Minnesota; Alliance Dairies, Florida; Dairy Policy Action Coalition, Pennsylvania; High Desert Milk, Idaho; National All-Jersey, Inc., headquartered in Ohio; and the Northeast Dairy Producers Association.

On the other hand; the Holstein Assoc. USA’s board of directors confirmed their support of discussion draft legislation containing major components of the Foundation for the Future program, stating that “The Dairy Market Stabilization part of the program is key, and a major reason for the Association’s support of the program,” according to Holstein Assoc. President Chuck Worden. 

In yet another political issue, the National Family Farm Coalition and 56 allied organizations representing family farmers, ranchers, fishermen and advocates signed a letter to Congress condemning the pending free trade agreements (FTAs) with South Korea, Colombia and Panama. 

As the letter states, more FTAs will only accelerate the economic disasters in agriculture: industrial farms dependent on massive amounts of petroleum-based inputs, low-paying exploitative jobs in processing and packing plants, and increased consolidation throughout the agricultural supply chain. For complete details, log on to http://nffc.net/Pressroom/”Press%20Releases/2011/final

signon.tradeltr.Sept2011.pdf

While we’re talking about international markets; the Global Dairy Trade (Fonterra) auction index dropped to its lowest level in more than a year with large declines in anhydrous milkfat (AMF) and skim milk powder (SMP), according to the CME’s Daily Dairy Report. The weighted average price for AMF was $1.74 per pound, down 11.2 percent from the Sept. 6 auction and the lowest price since AMF came on the auction in November 2009. SMP was $1.47 per pound, down 6.2 percent from the previous event. Whole milk powder (WMP) and cheese were slightly higher. The WMP price was $1.52, up 1.1 percent. 

Cheddar cheese for industrial use received an average winning bid of $1.84 per pound, up 0.6 percent from the prior auction. The trade-weighted average price for all products was down 2.1 percent from the previous event, the seventh straight decline, according to the DDR.

Milk production patterns in Northeast were once again impacted by weather activity with the latest tropical storm creating the expected issues from the farm level to consumer buying patterns, according to USDA’s latest update on Sept. 16. 

Several processing plants were shut down due to water and utility problems. The farm level milk production impact was still being assessed. Milk was being shipped to other manufacturing plants for processing help. 

Midwestern milk production is mostly steady with recent weeks and processing plants are taking expected volumes. Milk production conditions in the Southwest are improving and reflect cooler weather conditions. Milk volumes are steady to slightly higher. In the Pacific Northwest, Utah, and Idaho, milk output is down marginally while component levels are increasing.

Weather is playing a role in contracting milk supplies across many countries in Western Europe. Hot and dry weather in recent weeks has lowered milk production and the rate of increase has narrowed. Season ending volumes are now closer to year ago levels. Currency declines have affected export potential, making products more likely to be exported at lower relative value. 

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.