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Weekly Digest: ‘Dairy states’ alfalfa hay production lower

Already faced with the highest prices for dairy-quality alfalfa hay on record, milk producers in several major dairy states won’t find much relief in last week’s USDA’s October Crop Production report. The report indicates acreage harvested for both alfalfa/alfalfa mixtures and other hay was up from 2021, but overall production was down primarily due to lower yields.

U.S. harvested area for alfalfa and alfalfa mixture dry hay was estimated at about 15.5 million acres, up 219,000 acres (1%) from 2021. Significant alfalfa hay acreage is harvested in most of the 24 major dairy states. Excluding Florida, Georgia and Vermont, acreage in the other 21 states was estimated at 10.5 million, unchanged from a year earlier. Nine of those states increased alfalfa hay acreage in 2022, while eight decreased acreage, and four were unchanged.

The most notable year-over-year harvested acreage increase was in South Dakota. That was offset by large acreage declines in Iowa and Colorado. Idaho topped 1 million acres for the first time; in contrast, California acreage fell below 500,000.

Based on conditions as of Oct. 1, the 21 major dairy states were expected to average 3.9 tons per acre of alfalfa/alfalfa mixture hay, unchanged from a year earlier. Largest yield declines were in drought-stressed Texas and Colorado. Oregon and Virginia posted largest yield increases.

With the lower overall average yield, total production of alfalfa and alfalfa mixture dry hay among dairy states is down 1.25 million tons from 2021 to 36.4 million tons.

Idaho, Minnesota and Pennsylvania had largest production gains. Colorado, Iowa and Wisconsin showed significant production declines.

For more information on alfalfa/alfalfa mixture and other hay production, read: Lower yields reduce 2022 hay production totals in Progressive Forage.

FMMO issues topic of Farm Bureau forum

The American Farm Bureau Federation (AFBF) was joined by representatives of the National Milk Producers Federation (NMPF), dairy cooperatives, processors, state dairy associations and dairy farmers from across the country for a first-of-its-kind industry-wide Federal Milk Marketing Order (FMMO) Forum.

Following the three-day event, the AFBF and NMPF agreed on a joint statement regarding the need for FMMO improvements:

“We support the federal milk marketing order (FMMO) system as key to fair market-based farmer milk pricing and recognize the importance of periodically updating the program to reflect changes in the dynamic U.S. dairy industry. With the last major update to the FMMO system occurring in 2000, we believe it is time to consider improvements that better reflect today’s milk markets.

“In addition, the pandemic-related market disruptions of 2020 also highlighted the need to modernize the program so that it can better mitigate the impacts on producers of disruptions in milk pricing such as occurred then. At that time, a combination of federal order price formulas, temporary market imbalances and sudden demand disruptions created disorderly marketing of milk, to the detriment of producers.

“We anticipate the prospect of a hearing conducted by USDA in 2023 that could address FMMO price formulas, including all four classes, as well as the Class I price surface. An amended pricing system should improve price discovery, improve the clarity of the program, continue to support timely payments to producers and reduce price incentives to depool milk.

“We are encouraged by the healthy discussion at this week’s Federal Milk Marketing Order Forum and look forward to continuing the discussion about promoting a healthy dairy industry through modernization of federal order pricing.”

Organizations participating in the event and endorsing the joint statement included: the American Dairy Coalition, National All-Jersey, Georgia Milk Producers, Indiana Dairy Producers, Missouri Dairy, Dairy Producers of New Mexico, Ohio Dairy Producers Association and the Virginia State Dairymen’s Association.

AFBF releases dairy policy priorities for 2023 Farm Bill

Separate from the FMMO Forum, the AFBF has released its 2023 Farm Bill policy priorities. Specific to dairy, those priorities include:

  • Dairy Margin Coverage (DMC) program: Retaining the current DMC program with supplemental and feed cost updates; increasing the 5-million-pound annual milk production limit for Tier 1 coverage; and updating production averages to a three-year rolling average, or current production, for payment calculations

  • FMMOs: Add transparency to milk checks, including listing the percentage of pooled and depooled milk by each processor, and producer price differential (PPD) calculations; modify block voting flexibility within co-ops on FMMO referendums, allowing farmers to vote independently unless a farmer opts out after being given notice of a referendum; and eliminating provisions on a “no” vote on a referendum causing elimination of the entire FMMO

  • Safety nets: All federal dairy margin/income insurance programs should take into consideration negative PPDs to ensure that farmers actually receive the margin that they insured.

  • Fluid milk: Promote whole milk for distribution through federal school, nutrition assistance and U.S. military programs, and oppose any regulations or legislation that will ban or limit flavored milk in school.

GDT product prices decline

The latest Global Dairy Trade (GDT) auction saw the overall price index drop 4.6%. Average prices in individual product categories were all lower in the Oct. 18 auction, including:

  • Skim milk powder was down 6.9% to $3,250 per metric ton (MT, or about 2,205 pounds).

  • Whole milk powder was down 4.4% to $3,421 per MT.

  • Butter was down 2.6% to $4,851 per MT.

  • Cheddar cheese was down 3.9% to $4,769 per MT.

  • Anhydrous milkfat was down 2.7% to $5,661 per MT.

  • The GDT platform offers dairy products from six global companies: Fonterra (New Zealand), Dairy America (U.S.), Amul (India), Arla (Denmark), Arla Foods Ingredients (Denmark) and Polish Dairy (Poland). The next GDT auction is Nov. 1.

Lawsuit seeks EPA Clean Water Act action on regulating CAFOs

A broad coalition of environmental organizations has filed a lawsuit to compel the U.S. Environmental Protection Agency (EPA) to move forward on manure and water quality regulation of concentrated animal feeding operations (CAFOs).

The lawsuit, filed Oct. 7, in the Ninth Circuit Court of Appeals, follows a 2017 rulemaking petition asking EPA to overhaul its regulations and permitting system for CAFOs under the federal Clean Water Act (CWA).

August fluid sales post uptick

Here’s an update on U.S. fluid milk sales data from the USDA Agricultural Marketing Service for August 2022.

  • Total sales: Sales of packaged fluid milk products totaled about 3.63 billion pounds, up about 0.8% from the same month a year earlier. At 28.55 billion pounds, year-to-date (January-August 2022) sales of all fluid products were down 2.2%.

  • Conventional products: Monthly sales totaled 3.39 billion pounds, up 0.7% from the same month a year earlier. Year-to-date sales totaled 26.64 billion pounds, down 2.3% from January-August 2021.

  • Organic products: Monthly sales totaled 241 million pounds, up 2.1% from a year earlier. At 1.91 billion pounds, year-to-date sales of all fluid organic products were down 1.5%. Organic represented about 6.6% total fluid product sales in August and 6.7% year to date.

The U.S. figures are based on consumption of fluid milk products in FMMO areas, which account for approximately 92% of total U.S. fluid milk sales and adding the other 8% from outside FMMO-regulated areas. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, nonfood stores, schools, the food service industry and home delivery.

CDFA awards methane reduction grants

The California Department of Food and Agriculture (CDFA) has awarded $37.65 million in grant funding to 41 methane reduction projects across the state. The projects, part of the Alternative Manure Management Program (AMMP) and the Dairy Digester Research and Development Program (DDRDP), are designed to reduce greenhouse gas emissions (GHG) from manure on California dairy and livestock farms.

The grants cover 27 AMMP projects totaling $18.94 million and 14 DDRDP projects totaling $18.71 million. The projects will contribute $74.1 million in matching funds.

The projects are anticipated to result in a total estimated annual GHG reduction of 233,393 metric tons of carbon dioxide equivalent (MTCO2e).

This latest round of grants brings the total of AMMP and DDRDP projects to 273 since 2015. Together, these projects are anticipated to reduce an estimated 2.56 million metric tons of GHGs per year, which is equivalent to removing more than 550,600 cars from the road.

DairyAmerica named U.S. Dairy Exporter of the Year

DairyAmerica was named the winner of the 2022 Tom Camerlo U.S. Dairy Exporter of the Year award. The award was presented at the U.S. Dairy Export Council’s fall annual membership meeting in Chicago, Oct. 11. DairyAmerica member co-ops include Agri-Mark (New England), California Dairies (West Coast) and O-AT-KA Milk (East Coast).

Dave Natzke

October 19, 2022

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