Dairyline: CWT launches another herd removal program
By LEE MIELKE
For the Capital Press
Citing a number of economic benchmarks like cull rates and cull cow prices, the Cooperatives Working Together program announced its 10th herd retirement on May 27. Bids will be accepted May 28 to June 25 and will be considered up to, but not to exceed $3.75 per hundredweight, according to NMPF CEO Jerry Kozak
"There is no guarantee that a producer who bids at the maximum level will be selected," he said.
As in previous herd removals, CWT has no set target for milk volume or number of cows removed. It will depend on the number of bids received and the price level of those bids, according to a CWT press release.
There will not be a bred-heifer option this time. CWT members whose bids were accepted in a previous CWT herd removal may not bid in this round. Producers whose bids are accepted will be paid in two installments. The website www.cwt.coop has more details.
April butter stocks totaled 207.6 million pounds, up 11.7 million pounds or 6 percent from March, but 32.4 million or 14 percent below April 2009, according to preliminary data in the USDA's latest Cold Storage report.
The April American cheese inventory, at 614 million pounds, was up 11.9 million pounds or 2 percent from March and 36.6 million pounds or 6 percent above a year ago. March revised estimates were raised 1.3 million pounds.
Total cheese stocks amounted to a record 1.012 billion pounds, up 17.2 million pounds or 2 percent from March and 63.2 million or 8 percent above a year ago.
Cash dairy trading in the final week of May saw block cheese close at $1.4650 per pound, down 3 1/2-cents on the week, but 31 1/4-cents above a year ago. Barrel closed at $1.43, down 4 3/4-cents on the week, and 33 cents above a year ago. Eight cars of block traded hands on the week and 14 of barrel. The lagging NASS-surveyed U.S. average block price gained 0.9 cent, hitting $1.3988. Barrel averaged $1.4155, up 1 1/2-cents.
Butter closed the week at $1.5575, down 2 1/4-cents but 29 1/4 above a year ago. Only one car was sold all week. NASS butter averaged $1.5837, down 0.6 cent.
Cash Grade A and Extra Grade nonfat dry milk held all week at $1.30 and $1.29 respectively. NASS powder averaged $1.2722, up 1.9 cents, and dry whey averaged 36.46 cents, down 0.1 cents.
The strength of the cash cheese market has analysts scratching their heads, according to the University of Wisconsin's Brian Gould. Gould said the strength is "very surprising," considering last week's April Milk Production report showing another year-over-year increase in output and increased cow numbers, plus the fairly large stocks of cheese and butter, according to Friday's Cold Storage report.
He admits that butter stocks are coming down, compared to a year ago, but pointed out that April American cheese stocks were up 7 percent.
"This has not been reflected," he said. "The higher milk production and the higher cheese stocks and, with schools closing down in the near term, I'm very surprised that the cheese market is reacting the way it is."
Gould said he thinks the market believes exports will continue to strengthen, but with the recent news about the European Union releasing interventions stocks onto the world market he's surprised that has not been reflected in the increases in the market. He admits the changes in the cheese price have been small the last few days. It remains to be seen how this will play out, he said, because details on the EU activity are not known yet.
"Once the details are known, that could impact the market," he said.
Some believe the impact will be less on butter than on powder. Gould says that's possible because U.S. April butter stocks were down about 13 percent from a year ago and "are declining in an appropriate manner seasonally."
Speaking of the world market, CWT accepted an export assistance bid from Seattle-based Darigold and one bid from Land O'Lakes to export a total of 239,000 pounds of cheddar and Monterey Jack cheese to the Middle East and Asia. The product will be delivered in June and July and raised CWT's cheese exports to 34.5 million pounds to 17 countries.
Energy and emissions
Farms are increasingly being recognized as places not only to produce food, but also energy. Aside from growing corn for ethanol production, more dairies are conserving and producing electricity on the farm. Dairy Profit Weekly editor Dave Natzke said there's activity on several fronts.
First, there's opportunity for energy conservation, according to Natzke. The USDA is making $2 million available to livestock producers in 29 states to conduct on-farm energy audits, helping farmers assess their energy use and identify places they can conserve energy.
Second, USDA concluded a nationwide survey this week of on-farm energy production and is expected to publish results in early 2011. The 2007 Ag Census showed there were about 20,000 farms producing renewable energy, using solar panels, wind turbines and anaerobic digesters. USDA will use the new 2010 On-Farm Energy Production Survey to get a better picture of agriculture's energy production potential.
Finally, USDA's Office of Rural Development is accepting applications for the Rural Energy for America Program, which will provide grants and loan guarantees to help farmers develop and construct renewable energy projects, such as anaerobic digesters. Part of the challenge for dairy farmers is that initial construction costs can be very expensive, Natzke said, but grants can provide up to 25 percent of eligible project costs, with loan guarantees capped at 75 percent of eligible project costs.
USDA's AgStar program says there are about 150 working anaerobic manure digesters in the U.S., led by Wisconsin, New York, California and Pennsylvania. Some estimates say about 2,600 dairy farms nationwide could economically operate digesters, producing not only energy, but addressing greenhouse gas emissions and generating additional income for dairy farmers, Natzke said.
Legislation has been introduced in the Senate to stop the Environmental Protection Agency from continuing its efforts to regulate greenhouse gas emissions under the Clean Air Act. National Milk's Chris Galen described EPA's involvement as "a train that is about to leave the station and could have bad consequences for dairy farms and other livestock operations if the EPA does regulate greenhouse gases from farms."
A bill introduced by Sen. Lisa Murkowski, R-Alaska, would prevent the EPA from moving forward on this, Galen said. It is supported by NMPF and just about every other livestock organization. The vote will take place in June, he said, and he urged DairyLine listeners to contact their senators and urge their support for the measure.
Galen also responded to yet another undercover video of animal cruelty this week, this time on a dairy farm in Ohio. Issued by the same group that made the video on a farm in New York that ABC's Nightline focused on, Galen said the video clearly showed animal abuse, which he quickly condemned.
"If we're silent on these types of things, it only means that some people think we agree with this, and clearly we cannot, and we have to roundly condemn anything that smacks of animal abuse," he said.
U.S. Rep. Candice Miller, R-Mich., introduced legislation in the House this week to direct the EPA to change its designation of milk as an environmental hazard. Currently EPA considers milk the same as oil resulting in "over-burdensome regulatory requirements on dairy producers," Miller said. "EPA must understand that spilt milk is not the same as oil."
I share a story from this week's Dairy Profit Weekly that speaks to an issue I covered here the last two weeks: "A Minnesota toddler remains hospitalized after being infected with E. coli from raw milk, one of four sickened in the outbreak."
The Minnesota Department of Health traced three of the four cases back to where the milk was sold, according DPW, but let's keep this toddler especially in our prayers and let's carefully weigh this raw milk issue before making it easier for this scenario to be repeated.
Washington State dairy producer Dave Boon is serving his third year on the Washington State Beef Commission and encouraged his fellow dairy farmers to be actively involved in the beef side of their business at the local level. He said it's important that they know where the Beef Checkoff dollars go and what they do. He said that a significant development in the recent past was the fact that there are 29 lean cuts of beef on cows and that has great implications for how beef is marketed.
Beef has come under attack by the vegetarians and animal rights activists, and Boon said it's important to have the Beef Checkoff to respond because beef is a vital part of our food supply and is an important industry.
He believes the Beef Checkoff is a good investment for dairy producers because "our animals are grain fed generally and is a great source of lean cuts."
About 20 percent of the U.S. beef supply comes from dairy cattle, according to Boon.
Lee Mielke is a syndicated columnist and farm broadcaster based in Lynden, Wash. Learn more at www.dairyline.com