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Proposed dairy bill would modify margin insurance, supply program 
 
In dairy politics, DairyBusiness Update (DBU) reports that U.S. Sen. Kirsten Gillibrand (D-N.Y.) has introduced a new bill, the “Dairy Income Fairness Act,” that would modify the terms of the margin insurance and the supply/growth management programs proposed in National Milk’s Dairy Security Act (DSA).

According to the International Dairy Foods Assoc., the bill, S. 605, would replace current dairy programs with a version of the Dairy Producer Margin Protection Program and the Dairy Market Stabilization Program (DMSP) found in the Dairy Security Act (DSA). 
The Milk Income Loss Contract (MILC) program payment trigger would be raised from $16.94 per cwt. to $18.85 and phased out nine months after enactment of the bill.

Unlike the DSA, which offers producers free margin insurance at $4 per cwt., S. 605 would offer free margin protection at $6.50 per cwt. for all production up to 4 million pounds, and would exempt the first 4 million from the base quota  calculation under the DMSP. According to the latest USDA statistics, approximately 88 percent of dairy farmers produce less than four million pounds annually.
S. 605 has been referred to the Senate Agriculture Committee. It is unlikely the bill will be taken up until the farm bill process begins again in April, according to DBU.

DFA reaches $46M settlement
Updating a story from last week, DairyBusiness Update reported that Dairy Farmers of America (DFA) formally announced it has reached a $46 million settlement agreement in a portion of the class-action lawsuit regarding DFA’s trading activity on the Chicago Mercantile Exchange (CME) in 2004. Under the terms of the settlement with the class of direct purchasers of dairy products, filed this week, DFA made no admission of wrongdoing and will pay $46 million to the plaintiff class.

The lawsuit stemmed from activities by former DFA officials in 2004, alleging a conspiracy to fix cheese prices on the CME. Those prices are used to establish federal order Class I & III milk prices paid to dairy farmers.

The March 22 Daily Dairy Report says there were 10.9 million beef cattle in feedlots on March 1, according to USDA’s Cattle on Feed report. The beef cattle inventory is 7 percent lower than a year ago. But current beef supplies are only slightly smaller than a year ago as cattle are going to slaughter at very heavy weights. DDR analyst, Sarina Sharp also talked about it in the March 22 Daily Dairy Discussion.

Beef stocks in cold storage increased 20 million pounds, but beef producers placed only 1.48 million cattle in feedlots in February, according to Sharp, the lowest February placement figure since USDA began reporting the series in 1996. She adds that beef cattle placements were down 14 percent from February 2012 and “this suggests that there will be considerably fewer beef cattle ready for slaughter this summer and fall, and beef prices should move higher.” 

“Higher beef prices will allow dairy producers to cull large, less efficient cows and replace them with springers at a historically low net cost,” Sharp concluded. “The high beef price could encourage dairy producers to continue to cull aggressively, which could reduce milk cow numbers and support dairy product prices in the long run.”

Milk plunges in Australia

Last week you’ll recall I reported on the drought in New Zealand and its implications for dairy trade here and abroad. The March 27 DDR adds fuel to the shortage fire, reporting that February milk production in Australia plunged 6 percent, to 1.35 billion pounds, compared to last year and after adjusting for leap year. The DDR adds that, from July 2012 to February 2013, Australian milk output was 0.8 percent behind the 2011-12 season on a daily average basis, according to Dairy Australia. 

Australia and the U.S. are the only major exporting regions that have released February milk production data, and Australia’s decline “more than offset the gain in the United States,” according to the DDR.

The National Milk Producers Federation (NMPF) has joined the Center for Food Integrity and the U.S. pork sector to jointly launch what they term a “proactive demonstration of agriculture’s commitment to farm animal care.” The initiative empowers, and in fact, demands that if signs of animal abuse, neglect, mishandling or harm are witnessed, anyone working on a farm or in a farm setting has an obligation to report it immediately.

The program provides several options to enable employees to speak up to stop animal abuse, according to an NMPF press release, which adds; “Ultimately, empowering animal caretakers and giving them responsibility to report animal abuse immediately will help assure the best care for animals.”

Betsy Flores, NMPF’s senior director of animal health and welfare, stated, “care of animals could not be more important to farmers. Having a system in place to contact any of several authorities is imperative, and ‘See it? Stop it!’ provides that resource. The initiative demonstrates to the public that farmers are committed to good animal care and calls on anyone who witnesses abuse to stop it immediately.” 

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.

4/4/2013