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‘We would have $38 milk...’

House Ag Committee Ranking Member Collin Peterson (D-Minn.) -- the architect and driver of National Milk Producers Federation’s Dairy Security Act that is incorporated into the proposed 2012 Farm Bill -- stated last Wednesday, Sept. 12 that if the “groundswell from the grassroots” does not materialize and push the Farm Bill forward by Sept. 20, it will get dragged into next year.

Peterson said that if the bill is not voted through the House before the Sept. 20 recess, it would be rescored by CBO for 2013 and the whole process “starts all over again.”

He said he opposes extension of the current Farm Bill and that a delay in passing the proposed 2012 version could lead to “writing a different kind of bill” next year.

But the real eye opener for those who haven’t followed closely what will happen in the absence of a new or extended Farm Bill is the underlying “affirmative law” would go back into effect on January 1, 2013 as certain titles of the 2008 Farm Bill would expire... namely Dairy.

“At that point, we would have $38 milk,” Congressman Peterson told “Farm Bill Now” organizers at their rally in Washington last week. “So, what do you dairy farmers think about that?”

Good question. I would wager most dairy farmers would think that sounds pretty good right now as they pay feed prices based on $10 corn and $500 soymeal.

The point is that Peterson, along with other ag leaders such as Senator Debbie Stabenow, chairwoman of the Senate Ag Committee, were gathered at the rally to make a plea to organizers to “energize their grassroots.”

Peterson stated that, “Throughout August, when members of Congress were in their home districts, they did not see or hear that groundswell of support or concern” for passing the proposed new Farm Bill that had previously passed the full Senate as well as a version having passed the House Ag Committee. But the process is stalled without a full House vote to send it to conference.

National Milk Producers Federation (NMPF) is the founding member of “Farm Bill Now,” which is a coalition consisting of around 80 organizations, including heavyweights American Farm Bureau and National Farmers Union.

It appears that the “dairy coop lobby” (NMPF, otherwise known as National Milk) is the primary driver for the “Farm Bill Now” coalition. But grassroots farmers are apparently unconvinced that the Dairy Title written by NMPF is what they want for their futures.

On Sept. 12 -- eight days before Congress leaves town for elections -- Rep. Peterson told the assembled Farm Bill Now organizers: “if nothing changes (as of Sept. 19 nothing has changed) the leadership will not bring the bill to the floor.

“What I mean is that the groundswell is not out there,” Peterson said. “It’s not happening at the grassroots level. It’s not happening in my district for sure... This rally is a good starting point, but what we need is 100 or 200 calls from people in their districts to these members. I’m here to tell you if you don’t do that, we’re not going to get a Farm Bill. It’s that simple.”

Peterson said the House would need two days to vote on the bill and then it could be worked on in conference committee in October. At this writing at the end of the day on Sept. 19, there is just one day of business remaining on the House calendar before recess, and no word of the Farm Bill being scheduled for any type of floor debate or floor vote.

It appears at this writing that full House consideration of the 2012 Farm Bill will be delayed until after the elections for consideration during what may-or-may-not be a “lame duck session” in November and December.

The grassroots have spoken, via their silence. The primary dairy and farm organizations in the eyes of the Congress -- such as NMPF, AFB, and NFU -- may want to revisit their policy positions to find out where their grassroots are standing. It appears probable that the process of writing a new Farm Bill could begin anew in 2013 because there is no groundswell of support from the grassroots for what is written in the 2012 proposed bill, which is now stalled.


Ethanol frenzy

Market analyst Ron O’Brien for FC Stone, noted in his daily market update Wednesday that ethanol stocks for the week ending September 14 stood at 19.3 milion pounds. This is 300,000 barrels higher than the previous week and reflects a current production level that has grown by 17,000 barrels per day. This demonstrates continued strong demand for ethanol in the face of high corn prices and in the overall climate of high oil and gasoline prices.

The increased production of ethanol may be helping to pressure crude oil prices lower, as crude oil has dropped by more than $5 per barrel this week for what mainstream media folks say is “no apparent reason.”

The U.S. dollar’s value also edged lower this week.


Aug. production falls below year ago

U.S. milk production fell 0.3% below year ago in August. The 23 major milk producing states fell by 0.2%. This marks the first year-over-year decline in milk production in 33 months and was attributable to aggressive culling, herd liquidations, and reduced milk output per cow.

The all-50-state dairy herd was pegged at 9.22 million head for August, which is 6000 head below July’s numbers. However, USDA also revised its July totals 1000-head lower than previously reported so the net decline is 7,000 head.

Pennsylvania’s milk production was 1.7% below year ago, while New York and Vermont were 1.9% and 0.9% higher, respectively. California’s production was off by 5.8%, while Wisconsin increased by 4.9%. Minnesota gained 2.7% and Michigan was up 5.4% (nipping closely at the heels of Texas, which was down 1.9%). Indiana was up 4.1%, Illinois up 4%, Iowa up 2.5% and Ohio up 2.8%. Idaho was down 0.2%. New Mexico and Arizona were down 2.9% and 3.8%, respectively. Colorado was up 6.2%. In the Southeast, Florida gained 3.6% and Virginia’s production was 1.4% below year ago.

 

October Class I ‘mover’ $18.88

USDA AMS announced the October Class I base price or “mover” at $18.88/cwt. This is $1.29 higher than September’s Class I mover and 68 cents below October a year ago.

Wednesday’s price announcement was based on advance pricing factors derived from weighted average USDA National Dairy Product Sales Report prices for the weeks ending September 7 and 14 as follows: Cheddar $1.85/lb, Butter $1.82/lb, Nonfat Dry Milk $1.37/lb, and Dry Whey $0.58/lb.

 

Editor's note: This "Market Moos" column first appeared in the September 21, 2012 print edition of Farmshine.