Dairy

Milk Markets Dive as Milk Production Increases 3% Over 2019

Thursday’s milk market moved sharply lower. Speculations continue on what is included in the Covid-19 aid bill being negotiated in Washington. We also got the USDA Milk Production report for November. Price has encouraged dairyman to produce milk and we see it in numbers from November. In November, 12,000 cows were added to the herd and October was adjusted 5,000 head higher, for a net increase of 17,000 head to the U.S. dairy herd. Milk production grew 3% over 2019, the largest increase year over year since 2014. Class III milk anticipated these bearish tones all day. December fell 14 to $15.63, January fell 49 to $15.64, and February fell 67 cents to $16.53/cwt. The balance of 2021 was 4-36 cents lower. Class IV saw small gains in a few months. Dec and January held unchanged at $13.42, and $13.91. February gained 7 cents to $14.32/cwt.   The CME spot trade was mixed though. Butter was unchanged at $1.45 ¼, Cheddar blocks unchanged at $1.65/lb, and Barrels fell 2 ¼ cents to 1.43 1/2/lb. Grade A Non-Fat Dry Milk gained a quarter of a cent to $1.15 ¼, withy Dry Whey falling ¾ of a cent to $0.45 3/4/lb. Grain markets witnessed our first close for soybeans over $12. January beans finished at $12.01 ¼, Corn at $4.32 ½, and soybean meal sitting at $397.90/ton.
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Mexico shipments surge in second quarter

Shipments of Mexican produce to the U.S. increased at a double-digit rate in the second quarter this year, a transportation report from the U.S. Department of Agriculture reveals. The USDA’s Mexico Transport Cost Indicator Report showed second quarter total reported shipments of fruits and vegetables from Mexico were 2.96 million tons, an 11% increase compared with the second quarter last year. The sum of the top five commodities shipped from Mexico (figured on an annual basis: tomatoes, peppers, cucumbers, avocados and squash) increased by 31,000 tons, or 6%, according to the report. Seedless watermelons shipped to the U.S. in the second quarter topped all fresh produce commodities for the quarter, the report said, with 297,000 tons shipped. Still, that was down 19% than the same quarter last year, according to the USDA.

Truck rates

The USDA report said truck rates for shipments of 501 miles to 1,500 miles from the Arizona border crossings averaged $2.55 per mile, up 1% quarter to quarter, but down 6% compared with the second quarter a year ago. Rates for shipments of 501 miles to 1,500 miles from the Texas border crossings averaged $2.25 per mile, down by 10% quarter to quarter and down by 1% year to year. Diesel fuel prices for border crossings through Texas averaged $2.21 per gallon for the quarter, compared with $2.60 per gallon for crossings through Arizona.  
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USDA offers web seminar on proposed rule on organic enforcement

A U.S. Department of Agriculture web seminar will provide an overview of proposed changes to enforcement regulations of organic agriculture. The web seminar is set for 1 p.m. Eastern on July 8 and will review the USDA’s National Organic Program’s Strengthening Organic Enforcement proposed rule, according to a notice from the agency. The proposed rule will be published soon in the Federal Register, according to the agency. Registration is free for the web seminar. A 60-day comment period will begin when the proposed rule is published in the Federal Register, according to the USDA.
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USDA releases plan on $2.1 billion in COVID-19 payments to growers

With up to $2.1 billion for specialty crop producers at stake, the U.S. Department of Agriculture has provided the first details of the Coronavirus Farm Assistance Program direct payment plan. The direct payments are the second part of USDA’s coronavirus relief. The first, the Farmers to Families Food Box program, announced $1.2 billion in contracts May 8 for food box deliveries of fresh produce, dairy, and pre-cooked meat. Funding for produce box sourcing and distribution was earlier estimated at $100 million per month for six months.

Direct payment plan

Under the direct payment program, payments will be based on losses where prices and market supply chains were disrupted. The compensation will help growers deal with lost demand and short-term oversupply during the 2020 marketing year as a result of COVID-19, according to a news release from USDA. “These payments will help keep farmers afloat while market demand returns as our nation reopens and recovers,” Agriculture Secretary Sonny Perdue said in the release. “America’s farmers are resilient and will get through this challenge just like they always do with faith, hard work, and determination.” Producers that fall into one of the following categories may be eligible to receive direct payments: Sales with a price loss of 5% or more between January 15 and April 15, 2020. Almonds, artichokes, beans, broccoli, cabbage, carrots, cauliflower, sweet corn, cucumbers, eggplant, lemons, iceberg and romaine lettuce, dry onions, peaches, pears, pecans, bell and other types of peppers, rhubarb, spinach, squash, strawberries and tomatoes are eligible; Shipments that left the farm by April 15 and spoiled due to no market or for which no payment was received. All specialty crops are eligible for this payment; and Shipments that have not left farm or mature crops that remained unharvested by April 15. All specialty crops are eligible for this payment. Beginning on May 26, growers of eligible commodities may apply for assistance through their local USDA Farm Service Agency Service Center, according to the release. Application forms and additional information is at farmers.gov/cfap. The USDA said there is a payment limitation of $250,000 per person or entity for all commodities combined, although the USDA said corporations, limited liability companies or limited partnerships may qualify for additional payments if members actively provide personal labor or personal management for the farming operation. Producers will also have to certify they meet the Adjusted Gross Income limitation of $900,000 unless at least 75% or more of their income is derived from farming, ranching or forestry-related activities, according to the USDA, and producers must also be in compliance with Highly Erodible Land and Wetland Conservation provisions. The USDA encouraged specialty crop producers to complete applications before May 26.

Program details

The direct payment funding comes from $9.5 billion in the Coronavirus Aid, Relief and Economic Stability (CARES) Act and $6.5 billion from the Commodity Credit Corporation Charter Act to compensate producers from market disruptions. Under the direct payment program, producers will receive 80% of their maximum total payment upon approval of the application. The remaining portion of the payment, not to exceed the payment limit, will be paid at a later date as funds remain available. The USDA first announced the $16 billion program for all farmers and ranchers in mid-April: The direct payments are going to:
  • $9.6 billion for the livestock industry ($5.1 billion for cattle, $2.9 billion for dairy and $1.6 billion for hogs);
  • $3.9 billion for row crop producers;
  • $2.1 billion for specialty crops producers; and
  • $500 million for other crops Direct Assistance for Farmers and Ranchers.

Produce Industry reaction

The following associations issued statements on the USDA’s direct payment plan. Florida Fruit & Vegetable Association President Mike Joyner: “We appreciate the administration’s efforts to help agriculture overcome many of the challenges we have faced during this pandemic. Florida specialty crop producers experienced devastating losses from the shutdown of the foodservice supply chain and slowdown at retail – losses far greater than the direct payment limits announced today will cover. We will continue to work with Congress and the administration to secure additional relief for hard-hit Florida growers of fresh fruits and vegetables.” National Potato Council CEO Kam Quarles: “Given the scope of this crisis, we knew the initial funding would be insufficient to meet the need of family farms. Based upon the limited resources announced today under this direct payment program, the potato industry is strongly urging Congress to act rapidly to provide more resources and flexibility to fill this huge gap and maintain producers’ livelihoods.” United Fresh Produce Association President and CEO Tom Stenzel: “We applaud the announcement of a direct payment program for fruit and vegetable growers, which can also help relieve some of the debts owed by distributors who lost the ability to pay when the foodservice sector was shut down. Combined with the Farmers to Families produce box program, these are steps in the right direction. But we still need to work closely with Congress to provide additional needed support to agriculture in the next round of legislation on Capitol Hill. It’s essential that administration and Congress focus on programs that target resources for growers, grower-shippers and others in the produce distribution supply chain that have had direct job losses and immediate financial impact from government mandated closures.” Western Growers President and CEO Dave Puglia: “The administration is doing what it can to help as many farmers as possible from a limited source of relief funds. The tough part of this is that even with the increased cap on relief payments to individual farmers, the actual losses are far greater for many. By way of example, the average sized lettuce farm in the West is 250 acres and requires about $5,000 per acre to grow the crop. The relief payment cap means the farmer who lost the entire crop when the food service industry was closed will have no relief for all but 50 acres of that loss. “We appreciate all the administration has already done, especially on regulatory and administrative challenges, to keep our industry operating through the crisis. I urge the president and (Agriculture Secretary Sonny Perdue) to closely monitor the full scope of economic damage done to fresh produce growers and other farmers and ranchers, and to work with Congress to close the gap in future COVID-19 relief efforts.”  
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House passes $500 billion Coronavirus Bill and oversight panel

The U.S. House of Representatives overwhelmingly approved a $484 billion coronavirus relief bill on Thursday, funding small businesses and hospitals and pushing the total spending response to the crisis to an unprecedented near $3 trillion.
The measure passed the Democratic-led House by a vote of 388-5, with one member voting present. House members were meeting for the first time in weeks because of the coronavirus pandemic. Lawmakers, many wearing masks, approved the bill during an extended period of voting intended to allow them to remain at a distance from one another in line with public health recommendations. The House action sent the latest of four relief bills to the White House, where Republican President Donald Trump has promised to sign it quickly into law. The Republican-led Senate had passed the legislation on a voice vote on Tuesday. But threats of opposition by some members of both parties prompted congressional leaders to call the full chamber back to Washington for the House vote despite state stay-at-home orders meant to control the spread of the virus. The House also approved a select committee, with subpoena power, to probe the U.S. response to the coronavirus. It will have broad powers to investigate how federal dollars are being spent, U.S. preparedness and Trump administration deliberations. Democratic House Speaker Nancy Pelosi said the panel was essential to ensure funds go to those who need them and to prevent scams. Republicans said the committee was not needed, citing existing oversight bodies, and called the panel's creation another expensive Democratic slap at Trump. The committee was approved on a vote of 212-182, along party lines.
The bill reserves $60 billion of the Paycheck Protection Program funding for small lenders and minorities, clarifies that farmers are eligible for the Economic Injury Disaster Loan program and provides funding specifically for rural hospitals. A handful of lawmakers opposed the legislation, including Democrat Alexandria Ocasio-Cortez, who represents a severely affected area of New York and believes Congress should do even more - and Republican Thomas Massie, known as "Mr. No" for his frequent opposition to spending bills. "This is really a very, very, very sad day. We come to the floor with nearly 50,000 dead, a huge number of people, and the uncertainty of it all," Pelosi said during debate on the bill. Congress passed the last coronavirus relief measure, worth more than $2 trillion, in March, also with overwhelming support from both parties. It was the largest such funding bill ever passed. TROUBLE AHEAD The next step will be harder. The two parties have set the stage for a fight over additional funding for state and local governments reeling from the impact of lost revenue after Republicans refused to include such funds in the current relief bill. Trump has said he supports more funding for states, and has promised to back it in future legislation. Congressional Republicans have resisted. Senate Majority Leader Mitch McConnell suggested in a radio interview on Wednesday that states could go bankrupt, but said later he did not want states to use federal funds for anything unrelated to the coronavirus. Democrats castigated McConnell for the remark. "Leader McConnell said to our cities and states, to our cops and firemen and teachers, he told them to drop dead," said Representative Max Rose, who represents a district of New York City. Thursday's voting took place under safety protocols that considerably dragged out proceedings. Lawmakers came to the House in alphabetical order in small groups and were told to stand in line, 6 feet (1.8 m) apart, before entering the chamber. There was also a half-hour break scheduled to clean the chamber between the two votes. But more than a dozen cleaners descended on the chamber with cloths and spray bottles and wiped it down in less than 10 minutes. Echoing Trump, many Republicans also want the country - including Congress - to reopen quickly. Republican Representative Ralph Norman of South Carolina said lawmakers should "get our businesses to open the doors and do what Americans have always been allowed to do, which is go to work." House Republican leader Kevin McCarthy said the latest aid package should have been passed at least two weeks ago after the Trump administration requested it. "Some people unfortunately got laid off because of this delay," McCarthy said. Democrats rejected the charge, saying lawmakers had improved on Trump's request by adding billions of dollars more for small businesses, hospitals and coronavirus testing.
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Detailed China Update from Chief Ag Negotiator

It's lonely being at the U.S. Trade Representative’s office lately, especially the fourth floor where top agriculture negotiator Gregg Doud said he's the only one on that portion of the building. The loneliness is not because he's like the Maytag repairman with nothing to do! Those quiet confines were an ideal setting to catch up with Doud on key trade issues, including an update on Phase 1 of the U.S./China trade agreement signed Jan. 15, 2020 and taking effect Feb. 14. First some background on China's purchases of U.S. farm products. China imported $5 billion worth of U.S. ag goods in the first quarter of 2020, according to Chinese data, including $3.1 billion of soybeans and $430 million of pork. China’s total U.S. ag purchases increased 110% in the first three months of this year. This week's USDA Weekly Export Sales report showed China continued making some purchases of U.S. ag commodities the week ended April 9, including net purchases of 165,000 tonnes of U.S. wheat (50,000 tonnes for 2019-20; 110,000 tonnes for 2020-21), net purchases of 137,750 tonnes of sorghum, 5,869 tonnes of soybeans, 1,489 tonnes of U.S. beef and 16,402 tonnes of pork (even after cancelling 6,072 tonnes of prior purchases). While China bought cotton this week, cancellations of prior buys meant a net reduction of 81,999 running bales of upland cotton to China.  The obvious question to ask Doud was whether or not China would live up to its Phase 1 commitment of purchases of U.S. farm products. “You know, the Phase 1 agreement with China and agriculture was just not about purchases, it was also about fixing a very significant number of unwarranted trade barriers,” Doud said, detailing there were “something like 57 different things that we agreed between the U.S. and China to remedy and fix.” Timeline of ag-related accords. Some of those ag-related agreements took place when the agreement took effect Feb. 14. Some of those were within five days, 10 days, 20 working days, one month, two months. “Here we are now at kind of the two-month point,” Doud said. “And so far, we're doing very, very well. We're in constant contact with China almost every single day... back and forth... making sure we are getting things fixed. And, you know, we're not perfect. There are still a few things that we're trying to sort out. But I will tell you, every single day, despite what's going on in China… we see the difficulty they've been going through for most of this year... despite all of that, they're working very hard. Our folks at USDA, FDA, etc. are working very hard to get all of this implemented.”
   
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Perdue Says All Ag Part of $16 Bln. Direct Payment Plan

All sectors of agriculture, including produce, specialty crops and horticulture, will be included in a $16 billion direct payment plan to be submitted to the White House this week by USDA Secretary Sonny Perdue. The secretary also told Farm Journal Live that the plan will also include $2-3 billion in food purchases to be send to the nation’s food banks. “This first tranche is probably going to 16 to 18 billion dollars, 16 [billion] in direct payments to our producers, really in all of our sectors, including cattle, livestock, cow-calf operations, hogs, as well as produce, specialty crops, commodities that have been hurt and then the dairy sector,” Perdue said. “And other extraneous things like horticulture. Any kind of ag producer will be available for direct payments. And then we're also going to have about a two to three billion dollar purchasing program trying to take this dislocated food out of our supply chain that had been going into food service institutions and move it back into our food banks and other non-profits to help provide the needed food for people who are staying at home.” Perdue said the administration will re-evaluate the direct payment and food purchase programs again later in the year to determine if a second tranche is needed.
   
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As Dairies Dump Milk, Frustration Mounts Over Retail Buying Limits

From Georgia to Pennsylvania, videos like this are flooding social media.  Dairy producers are facing a devastating scenario and being forced to dump milk down the drain. For some dairy farmers, this marks a first. “This is the first time in the 32 years I’ve been in business that we’ve had to dump milk in the fields,” says Arnie VanDieden, a dairy producer in Texas. The Texas producer isn’t alone. Paul Hartman in Reading, Penn. has also been in the business more than 30 years and faced a similar scenario earlier this week. “Our dairy processor told us on Monday,” says Hartman. “They gave a letter that the driver dropped off that said they were supposed to dump our milk for the next two days; they weren't going to pick it up. Right away when we heard it, we were shocked. All we hear is the milk is in demand, the stores are having trouble getting it, and then all of a sudden, they're asking us to dump our milk. So that was kind of confusing.” The Sudden Loss of Demand Hartman’s processor told him the reason is a backup in demand. As COVID-19 hit, and industries like restaurants and food services saw an abrupt halt I business, the crisis started to unfold. “We don't have an outlet for this milk,” explains Scott Brown, economist with the University of Missouri. “Even if we have plants able to try to process that milk, there's a little reason to do it at this point due to lack of demand.” From high-end restaurants to fast food chains, fewer people are eating out and instead, staying at home due to stay-at-home orders. In turn, those consumers are eating fewer pounds of key items like butter and cheese. Therefore, a portion of the nation’s milk supply is without a home.
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Senate Rescue Package Includes $14 Billion to Replenish CCC

Congressional sources confirm that the Senate rescue package includes $14 billion to replenish USDA’s Commodity Credit Corporation (CCC) and provides $9.5 billion for ag producers impacted by Covid-19, including livestock and specialty crops (fruit, veggies and nuts).
The CCC currently has about $9 billion to use. So, this brings CCC borrowing authority to $32.5 billion — not the $50 billion asked for and cited previously by Sen. John Hoeven (R-N.D.), but above the $30 billion normally available. However, the $9.5 billion “is a different pot of money,” one source said.
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Plants are Taking Root in the Dairy Case

If you’re wondering why domestic demand for U.S. fluid milk is down, look no further than your grocer’s dairy case. There, you’ll surely find traditional dairy products. But increasingly, the real thing is being crowded on the shelves by plant-based alternatives. What was once a near-sacred haven for real milk, butter, yogurt, ice cream and cheese has become a cornucopia of alternatives, with those same products mimicked by new, plant-based offerings manufactured from soybeans, almonds, coconuts, oats and peas. “Growing Roots in the Dairy Aisle: The Rise of Plant-based Alternatives,” is a highly comprehensive report released recently by Blimling and Associates, a Madison, Wis.-based dairy brokerage and economic consulting firm. The report compiled data from a wide range of sources, most of which points to the same conclusion: real dairy products face a steep climb to protect market share and grocer shelf space, in the wake of an unprecedented tide of changing consumer preferences that favor plant-based alternatives.
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