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home : columnists : don wick July 20, 2017

4/10/2017 1:46:00 PM
Changes sought in MPP feed cost formula

Don Wick

The dairy risk safety net, known as the Margin Protection Program, has not worked as well as many had hoped. Associated Milk Producers, Incorporated President Steve Schlangen is a member of the National Milk Producers Federation economic policy committee and said the feed cost formula is not effective. "The first thing we looked at is getting the feed price formula right. Hopefully, using the price farmers pay for corn when they buy it, instead of what they get for corn when they sell it. There's a difference in price there by about 25 or 30 cents. A few other things would be settling it monthly, instead of bi-monthly. We think it would be more of a steady cash flow." Dollars are tight in Washington, but Schlangen said there was a big difference in what MPP actually cost rather than what was projected. In fact, there was a net gain for the government over the past two years. The biggest issue is the feed price formula, which is a priority for the 2018 Farm Bill. "If we can't get that done or something close to that, they might as well scrap the whole thing and start with something else."

Cheese supplies influence milk price outlook
The forecast for the milk check for 2017 is above last year and the five-year average. However, Blimling and Associates president Phil Plourd said an oversupply of cheese is hanging over this market. "It is hard to get your head around, but in a 12 billion pound market, a 1 percent change in demand is 120 million pounds. That's more than two million pounds of cheese per week looking for a home if demand is down from 3 percent to 2 percent. It's not a disaster on the demand side, but, we can't make 120 million pounds disappear easily."

Milk price forecast
In the new forecast from the Food and Agricultural Policy Research Institute, the all-milk dairy price was put at $17.76 per hundredweight. That's up $1.56 from the 2016 average.

The Midwest is made for dairy production
Associated Milk Producers, Incorporated co-president and CEO Donn DeVelder said 2017 is looking a lot like 2016. If this year is a repeat of 2016, milk prices should recover in the third and fourth quarters. DeVelder said the Midwest dairy industry is operating at full capacity. The region has become the leading place to dairy, especially with its strong dairy infrastructure. "Just take AMPI as an example with its 10 processing plants and its diversity, we produce anything from milk that goes to the bottle to cheese to non-fat dry milk to help balance those markets. Look at the price paid for milk in the Midwest versus California, we're typically $1.50 (per hundredweight) over them. We don't see that changing, if anything, that gap will get wider. The infrastructure here really helps."

Next step for Perdue
With a voice vote, the Senate Agriculture Committee has approved the nomination of Sonny Perdue for agriculture secretary. The former Georgia governor was the last person selected by President Trump for his cabinet. The confirmation still needs to go before the full Senate

Trade uncertainty with Mexico
Dairy industry leaders traveled to Mexico to talk trade. National Milk Producers Federation president and CEO Jim Mulhern said there is a level of anxiety and uncertainty in Mexico over the trade relationship. "The message we delivered was as we look at renegotiating NAFTA, the focus should be on how we strengthen the agreement, not tear it down or do anything to damage the relationship. Any agreement that's been in place for 20 years can be strengthened and modernized. That's the approach we're taking." Mulhern said the U.S. dairy industry has worked hard to build a partnership with Mexico.

IDFA reverses position on Dairy PRIDE Act
Previously, the International Dairy Foods Association supported the bill in Congress that would ban plant-based products, like soy milk or almond milk, from being labeled as milk. IDFA President and CEO Michael Dykes testified before the House Agriculture Committee and said his organization represents companies that market dairy milk and plant-based products. "The beverage market is very competitive, so we think this is probably an issue that needs to be resolved in the marketplace." The Food and Drug Administration defines milk as a product that comes from a cow and the bill would have 90 days to enforce that labeling standard.

Omnibus environment bill passes MN House and Senate
The omnibus environment and natural resources bill has now passed through both chambers in the Minnesota Legislature. AgriGrowth Executive Director Perry Aasness said this bill is good for agriculture. This bill makes changes to the Environmental Quality Board. "It changes up the composition of the Board so there is representation from each congressional district. The chairs have mentioned these boards often are metro-centric and this tries to spread that out to get input from throughout the state." The buffer initiative has been controversial and the omnibus bill would delay implementation. If that happens, Minnesota Governor Mark Dayton has promised a veto. Aasness said there needs to be room for negotiation and Dayton's approach has been unfortunate.

ABS Global granted injunction against Sexing Technologies
A leading A.I. firm, ABS Global, has been granted a permanent injunction against Inguran LLC, which is operating under the name Sexing Technologies. The court said Sexing Technologies cannot enforce research, marketing and non-compete restrictions regarding the use of sexed semen. ABS sought the injunction following a jury finding last year that Sexing Technologies had a maintained a monopoly in the sexed semen market since 2012. ABS plans to launch its own brand of sexed genetics this year. Dairy farmers use sexed semen in artificial insemination to produce more female calves.

Land O'Lakes announces acquisition
Land O'Lakes has purchased Vermont Creamery, which produces fresh and aged goat cheeses, cultured butter and fresh dairy products in Websterville, Vt. This business supports a network of more than 20 family farms and promotes a sustainable agriculture philosophy. Vermont Creamery will operate as an independent subsidiary of Land O'Lakes.

Farm broadcast giant passes
A legendary voice in central Minnesota has been lost. Cliff Mitchell died March 30, which was his 89th birthday. For nearly six decades, Mitchell was heard on the radio at KASM in Albany. During that time, Mitchell was on the barn radio providing news, weather and markets; having some fun with Aunt Sara's Partyline or the Dairyland Quiz or interviewing generations of FFA members and dairy princesses. Numerous honors came his way, including the National Association of Farm Broadcasting Hall of Fame, the Minnesota Broadcasters Hall of Fame and the Minnesota FFA Hall of Fame. Mitchell retired from farm broadcasting in 2008, but continued to volunteer in his community. From a personal note, Cliff Mitchell was my hero, mentor and friend.

Trivia challenge
Mozzarella is the most popular cheese in the world, with the largest market share. That answers our last trivia question. For this week's trivia, we're focused on FFA. What are the official colors of the FFA? We'll have the answer in the next edition of Dairy Star.

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