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February 2018 Issue No. 463

Inside this months issue …

OUR STORIES OF THE MONTH (Click below on the blue title to read "the complete story"):

Reasons for Improving Dairy Prices after 2018’s First Quarter (page 1)

Canadian Dairyman Explains Canada’s Milk Marketing/Pricing System (pages 8&9)


Reasons for Improving Dairy Prices after 2018’s First Quarter (p. 1 - STORY OF THE MONTH – CLICK ABOVE):
    Pete Hardin details his reasons why dairy commodity prices will start improving in early spring. One of our “Stories of the Month.”

75% of EU SMP Intervention Stocks 2-Yr. Old by June (p. 1):
     We analyze information that originally appeared in Barry Wilson’s Dairy Industry Newsletter about the age of the European Union’s intervention stocks.  By late June, three-quarters of the EU’s governments’ stockpiles of Skim Milk Powder will be more than two years old.  Not exactly fit for a king!

NAFTA Talks Drag On & U.S. Farmers Worst Fears Are Materializing (p. 2):
   Writer Nate Wilson reports on the challenges facing the NAFTA negotiations.  Mexico and Canada are increasingly turning away from the U.S. as a supplier of key agricultural commodities and goods.

Jan. ’18 Class III Price Nose Dives gain: $14.00/cwt. (p. 2):
  The value of cheese milk in USDA’s milk order system fell to $14.00/cwt.

EU Grappling with EMP Inventories: Tough Decisions Ahead (p. 3):
   What to do with nearly 900 million lbs. of aging Skim Milk Powder?  EU agricultural leaders face some tough decisions, including re

Legal Complexities Freeze Calif. FMMO Process (p. 3):
   Don’t ask.  Complex legal challenges to status of administrative law judges now before the U.S. Supreme Court mean USDA cannot proceed any further at this time with the effort to create a California federal milk order.

JBS Hopes to Divest U.S. Cattle Feeding Assets (p. 3):
The financially troubled and scandal-ridden Brazilian beef processor, JBS, SA, is trying to sell is U.S. cattle feed lots to investors.

New Tax Code, Section 199Q: What’s the Deal? (p. 4): 
Nate Wilson looks at the politics behind Section 199A of the new federal tax law.  That law allows co-op members to write down 20% of their sales of agricultural products to co-ops.  Somebody made a huge mistake on this one!

Breeding Product Temporarily Off Market Until Production Facility Re-opens (p. 4):
    Jan Shepel details how the reproduction veterinary drug Cystorelin® is in tight supply because the manufacturing plant has been shut down.

MD&VA’s Laurel MD Powder Dryer Goes Down (p. 4):
   In he second half of January, the milk powder dryer at Maryland & Virginia Milk Co-op’s Lauren, Maryland plant went down.  The co-op has been forced to dump large quantities of condensed skim milk, after removing the butterfat.

News Going into 2018 Not Great for Ag Commodities, Including Dairy (p. 5): 
      Jan Shepel summarizes dairy markets’ analyses by Dr. Mark Stephenson of the UW-Madison at that university’s recent Ag Outlook Forum.  Stephenson sees 2018’s milk prices running close to 2016’s lowball levels.

Rep. Peterson (D-MN) Not Optimistic About MPP-Dairy Changes in Farm Bill (p. 5):
The politician who sired the non-performing Margin Protection Plan-Dairy, Minnesota Congressman Colin Peterson, stated recently that he sees little chance for changes in that program in the next federal Farm Bill.  Does that mean dairy farmers are in for another four years of this protracted “Colin-oscopy”?

UW Madison Prof: Stanchion Dairy Barns Cannot Be Justified (Animal Health Reasons):
  UW-Madison veterinary school professor Dr. Nigel Cook recently spoke at a farm meeting in Pennsylvania’s Amish Country where he stated that stanchion dairy barns cannot be justified, due to animal health concerns.  Say what????

Whitewash: The Story of a Weed Killer, Cancer, and the Corruption of Science (p. 6):

     Paris Reidhead’s assignment this month was to review a new book about the human safety dangers associated with glyphosate – the active ingredient in Monsanto’s Roundup® herbicide.  The review will make concerned persons want to read the book.

Out-of-State Milk Displaces WI NFO at Emmi Roth Cheese in WI (p. 7):
  On February 1, the Wisconsin National Farmers Organization was cut from its long-term contract supplying farm milk to the Emmi Roth cheese plant in Monroe, Wisconsin.  Cheaper, out-of-state milk displaced some Wisconsin farmers’ milk at one of the state’s premiere cheese plants.  Emmi Roth uses the Wisconsin Milk Marketing Board’s “Wisconsin Cheese” logo on many of its cheeses.

Livestock Outlook for 2018: Growing Beef Production, Importance of Exports (p. 7):
    Jan Shepel summarizes the livestock outlook provided by UW-River Falls agricultural economist Dr. Brenda Boetel at the recent UW Ag Outlook Forum.  Dr. Boetel emphasized the need for expanded beef exports to maintain producers’ prices.

Canadian Dairyman Explains Canada’s Milk Marketing/Pricing System (p. 8 - STORY OF THE MONTH – CLICK ABOVE):
   A “Story of the Month:  At the early February annual convention of the Wisconsin Farmers Union, the vice chair of Dairy Farmers of Ontario – Murray Sherk – presented an overview of dairy industry structure for that province.  Sherk noted that Ontario producers received $27/cwt. (U.S. equivalent) in 2017 fo their milk.  It’s a different world for dairying in Canada.

U.S. Converted from MPC “Screwee” to MPC “Screwer” (p. 9):   
Pete Hardin traces to sordid history of Milk Protein Concentrates for the past two decades.  U.S. dairy farmers saw diminished demand for their production due to MPC imports in the late 1990s and early/mid-2000s.  Then, the U.S. got the bright idea to manufacture MPCs and sell them to Canada.  That’s how this nation went from MPC “screwee” to MPC “screwer.”

Organic Dairying’s Initial Promise and Producers’ Current Economic Catastrophe (p. 19-11):
   In this long report, Mark Kastel, co-director of The Cornucopia Institute, details the long evolution of organic dairy farming in the United States.  Unfortunately, at some point, the profits from organic milk production attracted the “big boys” and now family organic dairy farmers are struggling to survive financially.

Steps to Eliminate Organic Fraud, Make USDA Accountable (p. 12):
  John Bobbe, director of OFARM (a consortium of organic grain marketing co-ops), lays out his suggestions for restoring integrity to organic agriculture, with particular emphasis on grain.  We keep hammering on organic grain issues because cheap corn makes cheap milk – conventional and organic.

Dairy Commodities Hopefully at Low Ebb, Price-wise (p. 13):
  Pete Hardin makes his monthly dairy commodity analysis.  We see the most upside potential for butter.  But the EU problem with aging SMP inventories could surprise the industry by stoking stronger prices for current production of nonfat dry milk.

Bottom Falling Out of Dairy Livestock Prices (p. 14)::
  On February 7, the lowest-end Holstein springers sold for $300 at Michigan’s biggest monthly dairy livestock auction.  Baby heifer calves sold for $40 to $100.  At Kidron, Ohio on Feb. 8, baby calves went for $30 to a top price of $90.  There is no money available in dairy country to buy calves.

Organic Farmers Assn: For Organic Farmers, By Organic Farmers (p. 14):
  John Bobbe details the purpose of a relative newcomer on the organic scene – the Organic Farmers Assn.  He notes tha neighbors need to work with neighbors to improve the climate for organic agriculture.

Losing “critical mass” in dairy country … (p. 15):
  Pete Hardin takes a look at the dairy mess and offers short-term solutions to farmers to take the top off milk production.  We have a crisis on the farm.  And the silence among dairy co-op leaders for honest suggestions is deafening.

Meager resources devoted to promoting butter … (p. 15):
  The national dairy promotion check-off generates $300 million annually.  But only about $1 million is spent promoting butter.  No single commodity has the ability to improve dairy farmers’ milk prices faster than an uptick in butter prices.  Hardin suggests a $10-$15 million annual expenditure to promote consumer butter purchases.  Where’s he money to come from?  Take it out of the worthless “Fuel Up to Play 60” and GENYOUth wastes funded by dairy promotion dollars.

Global protein glut in the midst of global hunger ,... (p. 15):
  With all the hunger in the world, why are producers of dairy proteins facing such tough financial times?  We need to use surplus dairy proteins to address global hunger.

State of Antitrust in Agriculture:  Consolidation and Other Competition Issues in Agricultural Sectors (p. 16):
  The nation’s leading authority on agricultural and food anti-trust issues, Dr, Peter Carstensen, an emeritus professor at the University of Wisconsin-Madison law school, discusses critical issues involving competition.  He details his thoughts about the dairy industry, the Capper-Volstead Act, federal milk orders, and foreign ownership of food processing businesses.  

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