Restaurant Sales

http://www.restaurant.org/pdfs/research/index/201006.pdf

Industry Outlook Softened in June as the
Restaurant Performance Index Declined
for the Third Consecutive Month
As a result of a dampened outlook among restaurant
operators, the National Restaurant Association’s
comprehensive index of restaurant activity declined for the
third consecutive month in June. The Association’s
Restaurant Performance Index (RPI) – a monthly composite
index that tracks the health of and outlook for the U.S.
restaurant industry – stood at 99.5 in June, down 0.3 percent
from May and the lowest index level since February.

(more at link)

Generally the soft "eating out" sales would be bad news for dairy but, there is talk about a large increase in frozen pizza sales for home consumption.

Recession & All Milk Price

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We have had two recessions in the past ten years as indicated officially, by the National Bureau of Economic Research (NBER).

The first was the dot.com bubble. This seemed to have no effect on farm milk price. The most recent recession time period, seems to be very much a factor in farm milk price.

In spite of all the talk about supply/demand, this most recent recession was about finance. Credit tightened and the buyers of milk were able to "extract" their needs from dairy farmers.

Officially, according to NBER we are out of the recession. However, there are many who talk about a double dip recession. That is, a second following on the heels of the first.

The possibility of a double dip is a genuine cause for concern.

Although, officially we are out of the recession, to most people we may as well still be in recession. We are likely to have a "jobless" recovery. That will keep them down on the farm.

Legal Plunder

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It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.

Frederic Bastiat

The expression "All roads lead to Rome",comes down to the fact the elite of Rome plundered the rural areas and the roads conveyed wealth from the countryside to Rome.

In June, 2010 New York dairy farmers were paid a total of $177,505,300. According to USDA "Costs and Returns" the total costs were $261,960,900. There will be those who argue the "costs" numbers are not accurate because milk can be made cheaper - think slavery.

All of the arguments for the elimination of parity were bogus. Yes, the government bought a lot of product, but there was no "need test" at all. As noted in an earlier blog, elimination of parity actually increased milk production, while the profit from milk production went to "Rome."

There was absolutely no public benefit from elimination of parity. The Consumer Price Index (CPI) for dairy went right along with the CPI for all items - a .99 correlation.

Rural NY looks like a war zone. NY has been the third largest dairy state. Dairy is the most important economic factor in rural NY. The plundering of dairy farmers has left the rural areas decapitalized - to wit, plundered.

The same can be said of other states, I have just taken NY as an example.

Dairy Promotion

http://www.ams.usda.gov/AMSv1.0/FindaReporttoCongress

At the link listed above, you will find:

The enabling legislation of both the producer and processor dairy promotion programs (7 U.S.C. 4501 and 7 U.S.C. 6401) requires the U.S. Department of Agriculture (USDA) to submit an annual report to the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry by July 1. The producer and processor programs are conducted under the Dairy Promotion and Research Order (Dairy Order) (7 CFR § 1150) and the Fluid Milk Promotion Order (Fluid Milk Order) (7 CFR § 1160), respectively.

The report which should have been on July 1, 2010 available is for 2009. Instead, if you click on the latest listed report "2009" you actually will get the report for - you may have guessed it - 2008.

Most of the report relates to economic models. The assumptions, and they can only be assumptions because there is no experimental control, cause the conclusions.

Nothing New

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Ecclesiastes 1:9 (King James Version)

The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.


If you look in the bottom left corner of the above letter you will see it was written in 1938.

In my county, in 1938 you could buy an acre of farmland for eight hundredweight of milk - not so bad.

The cause of the letter is nothing new. Imbalance of power and failure of leadership bring on hurt.

Of course, solutions are the product of imagination. We need to imagine a better world and move, even if slowly, in that direction.

Lanco Annual Meeting

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Today I drove back from Lancaster, Pennsylvania. I was in new Holland yesterday for the annual meeting of Lanco-Pennland cooperative, usually known simply as Lanco.

Lanco is just over ten years old and has grown amazingly in an area where Dairy Marketing Service (DMS), a subset of DFA, has a great deal of power. The growth could not have occurred without delivering more than the competition.

A significant number of members are Amish, which means most farms are under 50 cows. Some might see that as a logistical nightmare but, Lanco continues to operate in a manner which returns value to their members.

The level of engagement of the board and the transparency of management is refreshing to say the least.

For the past year the cooperative's member milk has averaged 268,000 somatic cell count - that is real quality. The milk quality certainly helps sales and returns premiums to members.

Lanco's annual meeting was held at Yoder's, in New Holland, Pennsylvania. Members came in cars, vans, buses and buggies. With an estimated 500 attending, the room was packed to capacity.

Same Old Stuff

Today, July 27, 2010, the appearance of actual trading on the CME is misleading. Same buyer and seller for all the cheese.

Butter was a similar story. Except that, the seller appeared to be Daisy Brands. Here is a link to Daisy Brands product list: http://www.daisybrand.com/products/index.aspx

As anyone can plainly see, Daisy Brands would have to go out and buy butter to sell on the CME. This is not a rare event.

Obviously, Daisy Brands has an interest in the price of cream at the farm, and guess what, that is what brings Daisy Brands to the CME.