FC Stone’s Jan. 24 eDairy Insider Opening Bell cited a story in the Wall Street Journal which reported that dicyandiamide (DCD), a product that farmers apply to pastures to reduce nitrate leaching and promote pasture growth, has been found in milk in New Zealand. 

New Zealand media reported that two fertilizer companies recalled their products containing the active ingredient. New Zealand media also quoted Fonterra sources saying that the product does not present a food safety risk. 

The New Zealand Ministry for Primary Industries issued a statement supporting the fertilizer companies’ suspension of sales and said that in December it had set up a working group to assess the impact of residues found in food. A ministry official said, “There is no food safety concern associated with the use of DCD.”

Interestingly; the Jan. 18 Daily Dairy Report (DDR) and the week’s Daily Dairy Discussion pointed out that since 2008, milk production in the top-five exporting countries or regions of the world, Argentina, Australia, the European Union-27, New Zealand, and the U.S., has grown about 1.5 to 2 percent each year. It warned that “This pace of growth, in tandem with higher growth rates in some developing countries, has culminated in a milk supply that has barely kept up with rising global demand for dairy products.” Listen to the Daily Dairy Discussion or subscribe to the DDR at www.dailydairyreport.com

The U.S. Dairy Export Council (USDEC) reported this week that Chinese and U.S. regulators have “approved a dairy certificate ensuring that the flow of U.S. dairy goods into the largest dairy importer in the world continues unabated.” 

USDEC president Tom Suber stated that “U.S. dairy exports to China are on pace to clear $400 million in 2012. With the certificate question settled, we expect U.S. dairy export value to China could more than double by 2017.” The issue dates back to early 2010 when China revised its dairy certificate as part of sweeping efforts to upgrade domestic food safety, according to USDEC.

National Milk (NMPF) praised the resolution calling it a measure that “provides certainty to U.S. dairy exporters in order to enhance U.S.-China dairy trade,” and NMPF praised Senate Majority Leader Harry Reid’s decision this week to put the farm bill near the top of the list of things to do in 2013. A NMPF press release called it “good news for America’s dairy farmers, who need leaders in the Senate and House to renew their push this year for a better farm bill.”

Sen. Reid introduced the 2013 farm bill as S. 10, making it part of a short list of priority pieces of legislation for action in the Senate. The Federation said Reid’s decision “recognizes that the dairy policy reforms contained in the bill, along with other provisions in the measure, passed with overwhelming, bipartisan support last summer. The bill’s Dairy Security Act will give farmers a better safety net while reducing taxpayer costs at a time when Congress is searching for ways to trim federal spending.”

Checking demand; USDA reports that 4.5 billion pounds of packaged fluid milk products is estimated to have been sold in the U.S. in November, down a half-percent from November 2011. After adjusting for calendar composition, November sales were off 1.7 percent. Total conventional fluid product sales were off 0.9 percent while total organic fluid milk products increased 9 percent.

Following a 12-day delay the California Department of Food and Agriculture (CDFA) announced its February Class I milk prices Jan. 22 at $19.83 per cwt., for the north and $20.10 for the south. Both are down 41 cents from January, but $1.31 above February 2012. That put the two-month average at $20.04 for the north and $20.31 for the south, both up 84 cents from a year ago.

CDFA stated on its website that Class prices for the months February to May 2013 include temporary price increases resulting from the Dec. 21, 2012 public hearing. “In order to calculate class prices for these months the additional temporary increases are added to the corresponding per pound price of fat, solids not fat, and fluid carrier after all other calculations of the current formulas have been performed.” 

Meanwhile, the International Dairy Foods Assoc.’s Jan. 23 SmartBrief cited an article from the Green Bay Press Gazette, which reports that sales of Wisconsin cheese could increase by $200 million if California increases the price of milk to make cheese. That’s according to David Fuhrmann, CEO and president of Foremost Farms, Wisconsin’s largest cheese-maker. “California cheese-makers currently pay less than Wisconsin cheese-makers do for milk, creating an uneven playing field, observers say.”

DairyBusiness Update (DBU) reports that USDA’s Farm Service Agency (FSA) released additional information regarding the Milk Income Loss Contract (MILC), promising a “start month” relief period for dairy farmers producing more milk than the MILC payment cap of 2.985 million pounds per year. The length of the relief period will be announced later, according to a notice sent to state and county FSA offices on Jan. 24.

Many of the details in the notice were already anticipated. Under the American Taxpayer Relief Act of 2012, signed into law by President Obama on Jan. 2, virtually all dates regarding MILC payment calculations, price triggers and adjusters and payment caps were changed from “2012” to ”2013”.

As a result of legislative changes, retroactive MILC payments were triggered for September and October 2012. The September 2012 payment is 59.44 cents per cwt. The October payment is 2.37 cents.

However, with the low October 2012 payment, the first month of fiscal 2013, of just over 2 cents per cwt., most larger producers would not have chosen to keep October as their “start month,” especially with MILC payments forecast to be higher in 2013. Because producers were not able to make timely “start month” selections for fiscal year 2013, FSA will authorize a “relief period” (to be announced), allowing MILC participants to select any “start month” month in fiscal year 2013.

Readers with questions or comments for Lee Mielke may write to him in care of this publication.