CWT What a Haul

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Above is the latest from CWT. Notice the quantity 39 million pounds?

Block Cheddar on the Chicago Mercantile Exchange has averaged $1.39 per pound, March 2010 through June 2010.

CWT enhances the deal at $1.40 per pound.

World Cheddar price has averaged $1.78 per pound in the same time period.

Do the math. Easy money.

Fonterra's Latest Auction

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As you can see from above all product prices in Fonterra's globalDairy auction fell.

Today, on the CME grade A NFDM lost tow cents to close at $1.21/lb. For comparison, the average Fonterra auction price for SMP was $1.39 per pound.

We continue to be way below world prices. How long ago were we told we need to produce at world prices?

Bickering System Going Nowhere

If you look at the recent DOJ hearings in Madison Wisconsin, you might note there is not one Republican politician in the lineup. See: http://www.justice.gov/atr/public/workshops/ag2010/wisconsin-agenda.htm

We are 18 months into a dairy farm milk price depression and there is really nothing out of DC.

Nobody really talks about the situation but, a two party system can be like a couple bickering. Not much discussion and nothing really changes.

NMPF has a program which it is promoting. FAPRI's analysis says there is little change. See: http://www.fapri.missouri.edu/outreach/publications/2010/FAPRI_MU_Report_05_10.pdf

Those on the gravy train try to keep their seats. In the 2006 election cycle the dairy PACs gave 34% to Dems / 66% to Repubs. In 2010 it is 56% to Dems / 44% to Repubs.

As you can see it is not the principle,it is the money.

Fourth of July

Today, we Americans celebrate July 4th without any apparent questions about the meaning of freedom. At the time of the American revolution 90% of the eligible voters, granted they were male and white,were self employed.

Today, most Americans are employees and I would hold that is an important thought to give pause as to the meaning of freedom.

Dean Foods has 25,820 employees and Kraft Foods has 97,000 employees. These corporations are top-down organizations, not democratic institutions. More
importantly, they are along with other big players in dairy, are bureaucracies - big business is essentially not much different from big government. They are big buddies.

So, I find it very strange when some people advocate what they call "free markets." What is called "free markets" is neither free nor a market. I am a big supporter of both but, lets call a spade a spade. We are today close, very close, to oligarchy.

Farm Picture

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The Federal Reserve regularly publishes a "Flow of Funds Report", which is available at:http://www.federalreserve.gov/releases/z1/Current/z1.pdf

There is a lot of meat in this report. For instance employee compensation fell in 2009. What is not shown is that men between the age of 25 and 65 have an unemployment rate of 22%, which does not include those working reduced hours or part time. And people wonder why farmers are still hanging on - there are no jobs.

What is shown in the above graph is that farms, all farms, lost net investment in two out of the four years prior to the financial collapse. Out of the six years shown, only two were positive.

For comparison the U.S. Bureau of Economic Analysis states: " Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $116.9 billion in the first quarter, compared with an increase of $108.7 billion in the fourth quarter."

Dairy Politics

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In 1939 the Supreme Court in the Rock Royal case affirmed dairy farmers should get cost of production. The actual words of the Court bear repeating:

By Section 2, 7 U.S.C.A. § 602, it is declared to be the policy of Congress, through the exercise of the powers conferred upon the Secretary of Agriculture, 'to establish and maintain such orderly marketing conditions for agricultural commodities in interstate commerce as will establish prices to farmers at a level that will give agricultural commodities a purchasing power with respect to articles that farmers buy, equivalent to the purchasing power of agricultural commodities in the base period.

In other words "parity."

Then in 1981, Ronald Reagan signed a bill eliminating parity. The hue and cry from all experts was that without the end of parity, dairy farmers would continue to overproduce. Processors and co-ops dumping dairy products did not have to prove anything. The government stood ready to buy dairy products, which met standards.

The only basis for the claim would have been linear projection of recent milk production. So, projecting out the data available in 1981 indicates production would have been 160 billion pounds in 2009.

Trim a fruit tree and you get more, not less, fruit. Dairy farmers took the only option left and produced more - 29 billion pounds more in 2009.

Beware of the scams conjured up by people in high places. Critical thing should not be optional for dairy farmers,there is a high price to pay for being a follower.

Butter Production Off

Today, USDA's "Dairy Products" was released. Butterfat test are still low and the butter production in May was minus 5.6% compared with May 2009. Butter production was even down from April 2010 - 1.3%.

The odd thing is where is all the butterfat coming from to increase cheese production? Something sneaky going on.