Monday, February 28, 2011


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World attention has been directed to Wisconsin's Gov. Walkers "Budget Repair Bill." Most of the attention has focused on the Governor's effort to bust the public sector unions.

The fact is when unions were strong, middle class America was strong - all data supports that conclusion. In 1977 the ILGW (garment workers) had an ad which ended with, " So always look for the union label, it says we're able to make it in the U.S.A!" Pretty hard to find a lot of things made in the U.S.A.

Two other features of the bill have received less attention. One is the health care plan known as BadgerCare. Here is a news story which mentions BadgerCare and dairy farm milk price:

According to statistics, 15% of those receiving BadgerCare are farmers. The reason is the driving down of farm prices at the same time jobs were being "outsourced."

Another part of the plan is to send more money to prisons. Wisconsin in 2008 spent 10% more than other states per inmate. The U.S.A which cannot make anything anymore, and cannot pay dairy farmers a fair price since parity was eliminated. The argument was the costs of government purchases were rising. Rising prison costs seems to not have been a problem. The U.S. has 5% of the worlds population and 25% of the worlds prisoners.

We have become a miserable nation since 1980. The idea of loving our neighbors seems to have vanished.

Sunday, February 27, 2011

Low Fam Price Explained


A new ERS food dollar series measures annual expenditures on domestically produced food by individuals living in the United States and provides a detailed answer to the question “For what do our food dollars pay?” This new data product replaces the old marketing bill series, which was discontinued due to measurement problems and limited scope. The new food dollar series is composed of three primary series, shedding light on different aspects of evolving supply chain relationships. The marketing bill series, like the old marketing bill series, identifies the distribution of the food dollar between farm and marketing shares. The industry group series identifies the distribution of the food dollar among 10 distinct food supply chain industry groups. The primary factor series identifies the distribution of the food dollar in terms of US. worker salaries and benefits, rents to food industry property owners, taxes, and imports. To provide even more information about modern food supply chains, each of the three primary series is further disaggregated by commodity groupings (food/food and beverage), expenditure categories (total food expenditures, food at home, food away from home), and two dollar denominations (nominal, real). The input-output methodology behind the new food dollar series and comparisons with the old marketing bill series are presented. Several key findings of the new series are highlighted and discussed.

The data behind the report--Food Dollar Series Data Set

Released Thursday, February 24, 2011


Unless I read it all wrong, farmers are getting less of the consumers food dollar because consumers are eating more meals away from home. So, now we know.

Saturday, February 26, 2011


NEW DELHI – The Indian government's annual economic survey has warned that the country could become a milk importer by 2022 if local production doesn't keep pace with growing demand.

India is the world's largest producer of milk, and according to earlier estimates by the government, its output in the last fiscal year ended March 31 was 112.5 million metric tons. The government informed parliament last year that its target for the current fiscal year was 116.2 million tons.

The economic survey for fiscal 2011, released Friday, said India's milk production is rising by about 3.5 million tons a year, while demand is growing by an estimated 6.0 million tons.

In case the country is unable to raise its production to 180 million tons by 2021-22 to meet its local demand, "India may need to resort to imports from the world market," the survey said.

Last year, Rabobank said demand from India and China, which account for more than a third of the world's population, has been the engine for global dairy growth in recent years.

India's food inflation, which had shown signs of declining after remaining stubbornly high for most of 2010, accelerated to 11.49% in the week to Feb. 12 from 11.05% in the previous week, mainly driven by a rise in milk prices.

Demand for high protein sources like milk, egg, meat and fish has grown with higher income levels.

"Recent hikes in prices of milk and milk products have been a matter of concern," the economic survey said, adding that a gap between local demand and supply of milk has put "upward pressure on milk prices in the country."

There are,at present three comments which are interesting. The third,correctly recognizes India cannot feed high priced grains to produce milk. India also has been able to produce a great deal of milk because there have been no "opportunity costs" associated with milk production. Now, there are jobs in the cities and the labor is not going to be there to produce milk.

India has a GDP per capita of $3,290. A total of 37% live below poverty levels. Hard to figure how the U.S. can feed grain at the present rates, and then ship dairy products to India at a profit.

Friday, February 25, 2011

Dry Product Prices

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Today's NASS price for nonfat dry milk (NFDM) is $1.3938 per pound - pitiful. Today's CME price for NFDM is $1.8325 (Grade A). The most recent, February 15, 2011, GlobalDairy Trade internet auction price for skim milk powder which is virtually interchangeable with NFDM was $1.78 per pound. Is there an explanation which relates to "market" economics. Probably not.

The good news is that all prices are heading upwardly, even whey.

Thursday, February 24, 2011

New Zealand Milk Checks

New Zealand dairy farmer are paid by kilograms of milk solids. The present forecasted price is $8/kg milk solids.

To convert to dollars per hundredweight:

1 kilogram = 2.2046 pounds. So, take the payout ($8) divided by 2.2046 ($3.63 per pound of milk solids). There are 8.4 pounds of solids per hundredweight of milk. Therefore, $3.63x8.4 equals $30.482 per hundredweight.

I see no reason to convert the New Zealand dollars to U.S. dollars, unless the milk check is being sent to the U.S. All costs are local and therefore all milk checks are local.

Virtually, all cows are milked seasonally in New Zealand. The season for this payout began in July 2010 and will end in June 2011. consequently, the payout is still subject to change.

Wednesday, February 23, 2011

New Zealand Payout

Most of the dairy areas of New Zealand have not been affect by the recent earthquake. Fonterra is projecting an increase in dairy farm payout. See:

Dairy giant Fonterra has boosted its forecast payout to farmers to record levels as international prices keep rising.

The farmers co-operative yesterday raised its forecast payout for this season by 60c to $7.90-$8 per kg of milksolids before retentions.

With milk production expected to be broadly in line with last season an $8 payout could be worth about $10.3 billion.

Chairman Sir Henry van der Heyden said the increased forecast milk price reflected strengthening international dairy prices during recent months.

More at link.

Fonterra's payout is approximately 40% more than the U.S All Milk Price for 2010. More power to them.

At exactly what point in time are U.S. dairy farmers supposed to reap the benefits of the global economy?

Tuesday, February 22, 2011


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USDA recently released its "Agricultural Long Term Projections" which are available at:

The latest, released this month shows milk price projection through 2020. You can go back tho the report issued in February 2008 and see how they did projecting the "All Milk Price" for 2009. Or you can just look at the graphs above.

At the moment the Class III futures for 2011 are all above USDA's projected "All Milk Price."

My problem is not with USDA's attempts at a rational projection. The problem is, who knows what a relatively small number of players are going to do about farm milk price? Neither USDA nor the chosen few are really able to think in terms of complexities. That is too bad.

Monday, February 21, 2011


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Recently, I had a graph on the ratio of heifers to cows. I received the following comment:

Is this data ACTUAL cow numbers or is this just extropalated from the 23 state guesstimate? #2 how do the changes in line correspond with CWT removals? Being that cows were removed that would increase heifer/cow over normal culling. Sexed semen is always dragged into the discussion but does anyone have any REAL numbers as to how much effect it is having or is it all speculations? DWCovert

This appears to me to be a legitimate question. I have doubted all the hoopla la about sexed semen but, as the graph above shows heifers only, the only reason explanation for the growing numbers seems to be sexed semen.

Certainly, the large numbers of heifers will devalue the herd as an asset. Who will be the real winners, as usual, remains to be seen.

Sunday, February 20, 2011

China & Milk - Again

In recent years, when I have spoken with people from China about food, the word greed always pops up. Here is the latest from the government of China:

Watchdog orders closer checks of dairy products

The General Administration of Quality Supervision, Inspection and Quarantine ordered its local branches on Friday to increase their scrutiny of fresh milk in response to public concerns.

The administration said in a statement posted on its website that it had paid closer attention to the quality of dairy products and increased the frequency of food inspections following a 2008 scandal in which the poisonous substance melamine was found in infant formula.

Since 2009, the administration has placed both melamine and hydrolyzed leather protein - substances that could make food appear to have a higher protein content - on a list of banned additives that must be tested for in fresh milk.

Later that year, the administration punished a company in Zhejiang province after finding the company had added hydrolyzed leather protein to its dairy products.

Even with those achievements suggesting the government has got closer to its goal, Friday's statement indicated that the supervision of fresh milk will be further strengthened in the future.

Li Yuanping, a spokesperson for the administration, said anyone who has concerns about the quality of a food product should call the General Administration of Quality Supervision, Inspection and Quarantine on the hotline number 12365.

The statement came a day after China's Ministry of Agriculture said that fresh milk on the Chinese market is "generally safe" and that no hydrolyzed leather protein or other prohibited materials had been detected in recent tests of that product.

In 2008, milk powder tainted by melamine killed at least six infants and sickened 300,000 children across the country.

Melamine and hydrolyzed leather protein are used as additives because they can make dairy products that have been watered down appear to contain normal amounts of protein.

In a notice posted to the website of the State Council, China's Cabinet, the Ministry of Agriculture said authorities will carry out 6,450 random checks of fresh milk this year - underscoring officials' concerns that dairy producers may still be trying to use illegal and dangerous methods to boost the protein content of milk.

All of the tests will be checks for melamine and 30 percent will be attempts to detect hydrolyzed leather protein.

The agriculture ministry said in a statement posted to its website on Thursday that spot checks performed on 7,406 batches of fresh milk last year yielded no evidence indicating the presence of melamine and signs of leather protein.

The main source of melamine contamination has been powdered milk, rather than the fresh variety. Last year, China seized 2,132 tons of melamine-tainted milk powder, all of it having been manufactured in 2008 or earlier.

Saturday, February 19, 2011

Assets Rising

Farm lenders "kept the walking dead alive" in the dairy industry the past two years, but that reprieve will end for many stressed operations as loans are renewed this spring, predicted Dick Gilmore, a financial consultant with 30 years experience in farm lending. The Charlton, Mass., consultant now works with some of the nation's largest ag lenders to appraise property and manage troubled farm accounts, including dairies.

"Lenders hesitated to shut down stressed livestock operations in 2009 and 2010 because the assets were worth only pennies on the dollar and were too far under water," Gilmore told a recent meeting of the Association of Agricultural Production Executives (AAPEX) here. Breathing room benefited pork and cattle producers as their margins rebounded last year, but during that same period, many dairies just narrowed their losses. Many drained their equity when the price of cows slipped from $2,500 at the peak of dairy profits to a mere $1,000 today.

When industry-wide calamity struck, a lot of the collateral securing loans just went "poof," Gilmore added.

One 3,000-cow Idaho dairyman in the audience said he averaged costs of $15 per hundredweight (cwt) in 2010, but Tier III prices have remained above that level for only a few months since mid-2008. "We've dug a very big hole the last few years," he said.

Full story at link.

Friday, February 18, 2011

Milk Production Increases - Naturally

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Today, February 18, 2011, USDA NASS released it "Milk Production" report. Naturally, or perhaps not, milk production increased. See:

There were, according to the report, 14,000 more cows in January 2011 than in December 2010. Technology may not offer greater choices, if it is not so much a choice as coercion.

Thursday, February 17, 2011


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The feature article in the latest Milkweed is available at:

The article has a table covering milk supply and "commercial disappearances" as reported by USDA. Keep in mind the "commercial disappearance" numbers do not include imported dairy proteins such as MPCs and caseins. Those powdered dairy proteins would equal about 10% of domestic production.

So, I added the "All Milk" price for the time period of 20 years. Dairy farmers have not stood up for fairness and a decent price. Naturally, those in a position do do something positive for American dairy farmers have simply taken advantage of the meekness.

"Where there is no vision, the people perish."

Wednesday, February 16, 2011

Dean Foods 2010 Earnings


The story begins:

Dean Foods Company (NYSE: DF) today announced that the Company earned $0.50 per diluted share for the full year 2010, as compared to $1.38 per diluted share for the full year 2009. On an adjusted basis (as defined below), the Company earned $0.80 per diluted share for the full year 2010, compared to $1.59 for the full year 2009.

For the fourth quarter 2010, the Company recorded a loss of $0.11 per diluted share, as compared to fourth quarter 2009 earnings of $0.27 per diluted share. The loss for the fourth quarter of 2010 includes a $20 million charge (net of tax) associated with an agreement in a previously disclosed legal matter, a $10.8 million write down of deferred tax assets, as well as $17 million (net of tax) of restructuring charges, and other one time or non-recurring items, as more fully described in the attached tables. On an adjusted basis, fourth quarter 2010 diluted earnings per share were $0.15, compared to $0.32 per diluted share earned in the prior year's fourth quarter.

"2010 was an exceptionally difficult year for Dean Foods, and our fourth quarter results reflect many of the same trends that have impacted the business all year," said Gregg Engles, Chairman and CEO. "At Fresh Dairy Direct-Morningstar, wholesale pricing for private label milk remained pressured during the quarter, and volume softened. As a consequence, Fresh Dairy Direct-Morningstar operating profit was little changed from the third quarter.

"We have, however, begun to see signs that the fluid milk category is stabilizing, albeit at historically low levels of profitability. Some retailers have taken early steps to reduce heavy private label promotions and our regional brand volume mix has begun to stabilize. Regional branded milk volumes outperformed private label on a year-over-year basis in the fourth quarter. Moreover, private label wholesale prices appear to have stopped declining, although we have not yet seen them rise. Volume, however, remains weak, which we believe will limit upward price mobility. The net result is an industry that appears to be stabilizing at a price and profit level meaningfully below historical norms. To move forward in such an environment means that we must continue to optimize our network to offset volume weakness and drive efficiency to rebuild profits, which is the path that we are on.

More at link.

Cheese - No Apples

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No one enjoys being told I am wrong more than I do. A commenter on the post for February 14, 2011, Dave, went to great trouble to accuse me of error.

His first comment stated:

"Numbers don't lie, please cite a source. Something smells real fishy with this one."

He then stated:

"Yes, I do. John's export price in comparison to CME Block prices is deceiving. His $/lb export price is for ALL CHEESES. Since CME Cheese is Fresh Only, why not compare Fresh Cheese Export Prices to CME BLocks?

The average Fresh Cheese Export Price for 2010 was $1.63/lb."

Next he stated:

"How does your export price (which includes COLBY, BLUE, PROCESSED, AND MIXT) compare to world CHEDDAR prices? It doesn't.

We're beating a dead horse. Careful with your numbers."

Dave's price of $1.63/pound for "fresh cheese" is correct for all kinds of fresh cheese, including some which may have more than 50% moisture. Cheddar has a moisture content of about 38%. The number is not exclusively limited to fresh Cheddar exports. Naturally then, the number for fresh cheese would be considerably lower than the number for fresh Cheddar cheese. The above graph shows that while there is some difference, it is not great. The statistical correlation between the "export" price and the "fresh Cheddar export price", is .72.

I used the "export" data for all cheese because I mentioned the Cooperatives Working Together (CWT) program which allows for a number of varieties. See:

Most of the cheese exported under the CWT program is Cheddar. The fresh Cheddar export price is actually a nickel higher than world price for Cheddar, as report by USDA's Dairy Market News.

The data, and I don't really think it matters whether you use only the fresh Cheddar data or the total cheese export data, really calls into question, what exactly the dairy farmers who throw money into CWT are getting in return.

Tuesday, February 15, 2011

Global Dairy Trade Prices Up - Mostly

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Today, Fonterra held another internet auction, the 38th. Prices were generally up with Whole Milk Powder up significantly, see above. Anhydrous Milk Fat was down but, not much.

On the CME butter, which is still short, is falling in price. The same outfit, Dairygold, which seemed to run butter up to $2.10 per pound is now dropping the price with offers. Rational, maybe, but not transparent.

Monday, February 14, 2011

Cheese Prices for 2010

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There is all kinds of chatter about dairy exports in 2010. The real question is not whether or not exports rose but who really gained?

Obviously, looking at the graph above, the dairy farmers were not the winners. In the above graph, Class III milk price per hundredweight is divided by ten, which represent the normal cheese yield.

To make matters worse, the export prices from the U.S. were higher than world Cheddar prices. Since the Cooperatives Working Together (CWT) "export enhancement" began in March, 2010, and amounted to, according to CWT, 22 % of exports, one might think that the U.S. export price would be lower than world price. After all, why pay into the CWT program for no gain?

Sunday, February 13, 2011

Food prices

Food prices to rise as Sysco invokes 'Act of God' clause for food supply

Americans can expect food prices to rise massively over the next few weeks to months as the harsh weather effectively destroyed the Mexican winter crops.

In a report from the USDA late last week, crated tomatoes alone have risen 3.5 times their normal cost, going from $6.95 per crate to $22.95.

On Feb. 8, the U.S. Department of Agriculture reported prices of $22.95-24.95 for two-layer cartons of 4×4, 5×5 and 5×6 vine-ripe field-grown tomatoes from Mexico, up from $6.95-9.95 the week before and $5.95-7.95 the year before.

Also in a report from February 4th, the publication The reported that from 80 to 100% of produce in the Mexican fields was destroyed.

“The early reports are still coming in but most are showing losses of crops in the range of 80 to 100%. Even shade house product was hit by the extremely cold temps. It will take 7-10 days to have a clearer picture from growers and field supervisors, but these growing regions haven’t had cold like this in over half a century.”

Sysco, which is one of the largest companies that purchases and supplies Mexican winter produce to restaurants and grocery chains through the country, wrote a letter this last week specifying that suppliers are invoking the 'act of God' clause in their contracts, and will be raising the prices on whatever can be harvested from their fields.

The bottom line to all of this is, food supplies, as well as this year's harvests, will be down to critical levels, if not dire ones. Last week we discussed the destruction of sugar and banana crops in Australia due to the cyclone that tore through that continent, and previously we spoke on corn and cotton shortages. Less than a week later we got another act of God, or act of nature, which did the same to produce on the North American continent.

Corn futures skyrocket as supply dwindles and the UN reports shortages

Banana prices set to skyrocket as cyclone destroys Australian crops

Sugar shortage leads to renewal of GMO Beet planting in the US

The revolts we just saw in Tunisia and Egypt by starving people could occur quickly all around the world, including in the United States, as food becomes scarce, and harvests become meager. Prepare now in any way you can, otherwise the recent price hikes in the futures market and on your grocery shelves will simply be a prelude to the prices yet to come very soon.

Missing from most of the rising food prices is a discussion of the devastation occurring to farmers throughout the world.

Most dairy farmers in the U.S. as facing massive rises in input costs with little or no access to credit.

Saturday, February 12, 2011

Backwards and Short on NFDM

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According to theory, prices move forward in capitalism. That is just the exact opposite in pricing raw farm milk from manufactured dairy products.

However, if wholesale manufactured prices are going to be used then why should skim milk powder (SMP)not be included? Lets just say, there is no test which can distinguish NFDM from SMP.

SMP is primarily made for export and when you look at the export prices, the answer becomes apparent - SMP is priced higher. The raw milk going to SMP is priced as if it were going to NFDM.

The difference is $0.102 per pound, using CDFA prices. Adds up to millions of dollars.

Friday, February 11, 2011

Dairy & Health

Interesting study:

Danish study finds calcium counteracts effects of dairy fat uptake
By Ben Bouckley, 08-Feb-2011

Related topics: Research, Dairy-based ingredients, Minerals, Cardiovascular health, Weight management

Calcium in dairy products could counteract the effect dairy fat has in raising total and LDL cholesterol levels, according to a new Danish study.

Despite intervention studies showing that saturated fat increases total and LDL-cholesterol concentrations – and resultant advice to avoid high-fat dairy product consumption – University of Copenhagen researchers Janne Lorenzen and Arne Astrup said that observational studies (such as Lin et al. 2000, Brooks et al. 2006) showed an inverse relationship between intake of high calcium dairy products and CVD (cardiovascular disease).

Several intervention studies also showed that dairy calcium, in particular, produces decreases in body weight and fat (Davies et al. 2000), and although others failed to discover an effect (Lorenzen et al. 2006), the current authors noted (Bendsen et al. 2008) that one mechanism by which calcium affects energy balance and thus “potentially body weight” is via increased faecal fat and energy excretion.

Does calcium content affect lipid profile?

Lorenzen and Astrup wrote:“There is a need for more studies that explore the potential role of calcium intake in lipid metabolism…the aim of the present study was to examine whether a concomitant intake of the calcium content of dairy products modifies the effect of dairy fat on the lipid profile.”

The study involved 9 male subjects, with a mean age of 32.8 years, allocated on a random basis to one of four isoenergetic (equal energy) 10-day diets in succession, with a break of at least one week and normal eating habits between each diet.

Approximate dietary values were as follows: (1) low calcium and low fat (700mg calcium per day, 25% fat) (2) high calcium and low fat (2,800mg calcium, 25% fat) (3) low calcium and high fat (700mg calcium, 49% fat) (4) high calcium and high fat (2,800mg calcium, 49% fat).

Dairy products were the main calcium source for participants, with dairy fat the main difference between low and high fat diets (90%). During the high calcium periods, subjects were given milk with each meal; the low calcium diet used a protein drink containing equivalent whey, casein powders and lactose to milk.

Dairy calcium decreased bad cholesterol

Blood variables were measured before and after each diet period, with lipid profiles in faeces and urine collected at the end of each diet period. The results showed that – independent of calcium intake – high fat diets increased LDL and HDL cholesterol concentrations by 9% and 13% against low fat diets.

But irrespective of fat intake, the high calcium diets decreased concentrations of total- (4%) and LDL-cholesterol (10%), although they did not affect HDL cholesterol concentrations, which the authors linked to a “protective effect” where CVD is concerned.

“The major finding is that dairy calcium attenuates the increase in total and LDL-cholesterol produced by increased dairy fat, without affecting the rise in HDL-cholesterol,” wrote Lorenzen and Astrup.

“This is probably, at least in part, due to an increased faecal excretion of fatty acids and bile acid excretion, and possibly also increased excretion of other hydrophobic components, including cholesterol. However, other unidentified mechanisms may also be involved.”

Calcium supplement warning

Calling for more research, Lorenzen and Astrup said the study’s limitations included variations between the diets (independent of calcium and fat content) that “may have confounded the outcome”, the trial’s short duration, and the possibility of adaption to long-term high calcium intake, which could reduce its effect on cholesterol concentration and faecal fat excretion.

They also cited Bolland et al. 2010, in warning that non-dairy calcium administered in supplements (without coadministered vitamin D, which was excluded from the trial), has "recently been shown to be associated with an increased risk of myocardial infarction [or heart attacks]”.

Source: British Journal of Nutrition, published online ahead of print, January 2011: 31:1-10

Title: Dairy Calcium Intake Modifies Responsiveness of Fat Metabolism and Blood Lipids to a High-Fat Diet.

Authors: Lorenzen, K. Astrup, A.

Thursday, February 10, 2011

Senate Judiciary Committee?

Leahy, Grassley press DOJ, USDA for follow up to agriculture competition workshops

By Press Release on February 9, 2011

February 9, 2011

Erica Chabot (w/Leahy)

WASHINGTON – Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and Ranking Member Chuck Grassley (R-Iowa) sent a letter Wednesday to Attorney General Eric Holder and Agriculture Secretary Tom Vilsack, seeking follow up on a recent series of competition workshops held by the U.S. Department of Justice (DOJ) and the U.S. Department of Agriculture (USDA).

The conferences, which were held in locations across the country from March 2010 to December 2010, focused on vertical integration, buyer power, market transparency, competition and retail pricing in several agricultural industries, including dairy, seed and poultry. In 2009, Leahy chaired a Judiciary Committee field hearing in Vermont about competition in the dairy industry, one of several hearings held by the Committee in recent years to examine antitrust issues in the agriculture sector. Now Leahy and Grassley are seeking information about DOJ and USDA plans for further action to promote competition in agriculture.

“With the conclusion of the last workshop on December 8, 2010, we would appreciate an update as to what the DOJ and USDA plans for its next steps,” the Senators wrote. “As Chairman and Ranking Member of the Committee on Judiciary, please provide to us an outline of any plans or further action items that DOJ and USDA intend to take in this area.”

The full text of the letter follows. A PDF is available online.

So, here is the link to the subcommitte on antitrust:

Jurisdiction: (1) Oversight of antitrust law and competition policy, including the Sherman, Clayton and Federal Trade Commission Acts; (2) Oversight of antitrust enforcement and competition policy at the Justice Department; (3) Oversight of antitrust enforcement and competition policy at the Federal Trade Commission; (4) Oversight of competition policy at other federal agencies.

The only question is where does the buck stop, if indeed, there is a buck left?

Oh yes, Patrick J. Leahy, Vermont, is the Senate Judiciary Chairman

Wednesday, February 9, 2011


Today USDA released its latest World Agricultural Supply and Demand Estimates (WASDE)report.

WASDE stated: “Milk production is forecast higher for 2011 based on higher-than-expected January 1 dairy cow and dairy replacement heifer estimates."
This seems to be an inability to connect the dots in this report. For corn, a primary component of dairy grain mix, WASDE stated:
“U.S. corn ending stocks for 2010/11 are projected 70 million bushels lower this month with higher expected food, seed, and industrial use. Corn used for ethanol is projected 50 million bushels higher on a higher-than-expected November final ethanol production estimate and weekly ethanol data that indicate record output for December and January.”

Corn trading on the Chicago Board of Trade (CBOT) and near or over seven dollars a bushel for all three trading periods. The July 2011 corn price was $7.12 per bushel.
Ethanol futures soared to the highest price since July 2008, March 2011 ethanol futures closed at $2.457 a gallon. One bushel of corn is required to make about 2.75 gallons of ethanol. Recently, in America's cornbelt, the average ethanol distillery has been losing about nine cents per gallon.
So, with grain prices rising with apparently no end in sight, the prediction of increased milk production for 2011 is questionable.

Tuesday, February 8, 2011

Cold Storage Data

From at least three different sources in the past ten days, I have heard there is no cheese to be had.

Apparently, all the cheese in inventory is either committed or aging.

Speaking with a friend this morning, he suggested the "Cold Storage" report would be much more useful if the report included data on committed and aging cheese inventories.

This seems like an excellent idea with only a slight change in forms required.
The entire dairy industry would probably welcome the improved data quality.

Monday, February 7, 2011

World Dairy

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One thing for certain, NMPF will never be serious about supply management in its Foundations For The Future plan because as long as CWT is exporting how can NMPF talk about limiting imports?

Another thing, why is CWT giving out export bonuses? Here is what Dairy Market News most recent overview of the Oceania export situation:

Oceania suppliers are stating that the tone in many buyers comments is one of desperation. Most are very concerned about supply availability and are often willing to pay the prices if supply is available.

Not all the cards are on the table face up

Sunday, February 6, 2011

Not Cheese

Not long ago the New York Times accused the USDA through the dairy checkoff of promoting obesity. Here's another view of the problem worth considering:

ScienceDaily (Jan. 24, 2011) — An Oxford University study suggests that people living in countries with 'free market' regimes are more likely to become obese due to the stress of being exposed to economic insecurity.

The researchers believe that the stress of living in a competitive social system without a strong welfare state could be causing people to overeat. According to the study published in the latest issue of the journal Economics and Human Biology, Americans and Britons are much more likely to be obese than Norwegians and Swedes.

Oxford researchers compared 11 affluent countries and found that those with a liberal market regime (strong market incentives and relatively weak welfare states) experienced one-third more obesity on average. Their analysis of nearly 100 surveys, carried out between 1994 and 2004, revealed that the highest prevalence of obesity reported in a single survey was in the United States where one-third of the population was classed as obese. By contrast, Norway had the lowest prevalence of obesity in a single survey at just five per cent.

The study compared 'market-liberal' countries (United States, Britain, Canada and Australia) with seven relatively affluent European countries that have systems that traditionally offer stronger social protection (Finland, France, Germany, Italy, Norway, Spain and Sweden). It concludes that economic security plays a significant role in determining levels of obesity. Countries with higher levels of job and income security were associated with lower levels of obesity.

In the past, the rise of obesity in affluent societies has frequently been attributed to the ready supply of cheap, accessible, high-energy, pre-processed food in fast food outlets and supermarkets. This cause is known by researchers as the 'fast food shock'. Oxford researchers measured the impact of fast food by using a price index, constructed by The Economist magazine*, showing the international variation in the cost of the McDonald's Big Mac hamburger. They found that the availability of fast food may not be as significant as previously thought, as they calculated it had half as much an effect on the prevalence of obesity as the effects of economic insecurity.

Lead author Professor Avner Offer, Chichele Professor of Economic History at the University of Oxford, said: 'Policies to reduce levels of obesity tend to focus on encouraging people to look after themselves but this study suggests that obesity has larger social causes. The onset and increase of large-scale obesity began during the 1980s, and coincided with the rise of market-liberalism in the English-speaking countries.

'It may be that the economic benefits of flexible and open markets come at a price to personal and public health which is rarely taken into account. Basically, our hypothesis is that market-liberal reforms have stimulated competition in both the work environment and in what we consume, and this has undermined personal stability and security.'

The Oxford research team based this study on observations in academic literature about animal behaviour. Animals, both in captivity and in the wild, have been found to increase their food intake when they are faced with uncertainty about their future food supply.

These latest findings suggest that obesity in affluent societies is a response to the stress of economic insecurity. The researchers found that the effects of economic security were considerably greater in causing obesity than other factors measured (the existence of a market-liberal regime; inequality, the price of fast food, and the passage of time).

Saturday, February 5, 2011

Big Is No Solution

Here is a link to dairy farms for sale:

The first dairy "Artesia" is a human tragedy. The former owner took his own life after working so hard to do what the "experts" advised. His widow struggled to carry on, without success.

There are many more victims of the status quo. Very few wish to examine primary causes, preferring to blame the victim.

Friday, February 4, 2011

It's Back

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FDA's "import Refusal" site was down for months, literally. The site is back:

You can search for products or countries. Under products dairy come in two categories. One for "milk butter, dried milk product" and another for "cheese and cheese products."

The U.S. has spent $375,101,508,758 in Afghanistan on the "war" effort. The above illustrates the possibility some of America's money might have been spent on dairy manufacturing. Probably they felt the need to export the product because no one in Afghanistan would eat it.

The Government Accountability Office (GAO) has produced repeated reports of imported food safety. A recent report:

Not a single GAO report has had high praise for this global food supply situation.

Thursday, February 3, 2011

Efficient Dairy Producing country

The price of a two-litre bottle of milk in Australia has been slashed to A$2 (NZ$2.58) just as Kiwi shoppers, who are paying up to $4.80, brace for another round of dairy price increases.

Any time dairy chiller prices rise, New Zealand dairy giant Fonterra, collector and controller of more than 90 per cent of the country's milk production and the world's biggest dairy exporter, blames the price it is getting for its products in international markets – if Fonterra and its farmers are doing well overseas, Kiwi shoppers pay more.

The retail price of milk in New Zealand is now over $9/gallon - that is NZ dollars. According to the Bureau of Labor Statistics (BLS) the average U.S. price per gallon in December 2010 was $3.318.

In NZ there are farms who provide milk for domestic consumption and they produce milk year round, at quite a premium over the milk used in products for export.

The export milk producers are seasonal. What I have yet to figure out is how can the dairy plants remain profitable while sitting idle during the season when cows are dry?

Wednesday, February 2, 2011

Corporate Power

(click on images to enlarge)

The first graph is similar to graphs in the past. The Consumer Price Index (CPI), Producer Price Index (PPI) for processors and the PPI for farm milk. The index is calculated by the Bureau of Labor Statistics (BLS) using 1982 -84 as the base period representing 100 or 100% of the base. Each year is then divided into the base.

As can be seen, prior to the elimination of parity, all three prices moved up roughly together. This is called efficient transmission of price signals.

When parity milk pricing was eliminated, all of the power to price farm milk was put into the hands of the corporations buying farm milk.

So, the second graph I constructed by taking the processor PPI and subtracting the farm PPI. In this graph 1982 represents zero as there was no difference. As anyone can plainly see, this was a massive transmission of wealth to the powerful by means of legislation.

Small wonder that dairy farm milk pricing is seen as complicated.

Tuesday, February 1, 2011

globalDairy Trade

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Here is a link to Fonterra's internet auction globalDairy Trade, latest results:

The trade weighted average increase 7.2% over the previous event held two weeks ago.

Above is a clip of the skim milk powder (SMP)data. Notice the price increases as time moves ahead. This should be a good sign for sustained dairy prices and farm milk price.