Dairyman sees Wagyu as ideal beef cross

No high energy diet, the key with this breed is to take your time,’ says Adam light (left). He and his cousin Ben (right) are partners in Lightning Cattle Company, Lebanon County, Pennsylvania. They raise Wagyu x Holstein crossbred cattle for direct beef sales. They say the full-blooded Wagyu and dairy crossbreds are quite docile. They leave the heifer barn at Adam’s dairy weighing around 500 pounds, come here to Ben’s father’s farm on grass and supplemental forage until 900 pounds, then finish back at Adam’s dairy to final liveweight 1450 to 1500 pounds. This is Part 2 of a Beef on Dairy series. To read the May 13 edition’s PART ONE, CLICK HERE. Photos and story by Sherry Bunting, Farmshine, May 20, 2022.

MYERSTOWN, Pa. — No, they don’t get massages, and they aren’t fed beer as the stories go about the intimate care of the Wagyu in Japan. 

However, at Spotlight Holsteins in Lebanon County, Pennsylvania, Wagyu is the beef-on-dairy crossbreeding fit, and the cattle are given the time they need to produce the outstanding beef characteristics the Wagyu are known for — doing so on a lower energy diet.

The whole thing started before 2020, the year Adam Light sold his 100-cow registered Holstein tiestall dairy herd in Jonestown and purchased the 240-cow robotic dairy farm and herd from Ralph Moyer in nearby Myerstown (above).

Today, Adam and his cousin Ben Light, a landscaper, are partners in Lightning Cattle Company.

They started with three Wagyu, two bulls and a heifer, purchased from the September 2018 dispersal through Hosking of the late Donald ‘Doc’ Sherwood’s Empire State herd he had bred over 17 years from imported genetics near Binghamton, New York. Doc Sherwood retired that year, and he and his herd were profiled in Farmshine (here)

Adam and Ben brought their investment home and had Zimmerman Custom Freezing collect the bulls. They also flushed the heifer for embryos.

Not only did they begin using those straws of Wagyu on some of Adam’s dairy cows, they also began making some available to other dairy farmers in return for first-dibs to buy the offspring, and they began leasing bulls to farms with beef cow-calf herds.

Today, they have two full-blooded Wagyu bulls, two full-blooded females, plus 34 crossbred animals in various stages of beef production, and they have sold almost a dozen finished beef.

“The key with this breed is to take your time. They need protein to grow, but on the energy side, they don’t need a whole lot. There’s no high energy diet in this. It’s really quite simple. Whatever the dairy heifers get is what the Wagyu crossbreds get, which is a kind of lower energy feed,” Adam explains.

The calves start in the nursery barn at his dairy, grouped with replacement heifers on automated Urban CalfMom feeders, where milk intakes can be customized. They also receive the same calf starter, calf grower and hay.

When they reach 400 to 500 pounds, the crossbreds are moved to Ben’s father’s crop and poultry farm near Jonestown, which is also home-base for Ben’s landscaping company.

There they become Ben’s responsibility until they reach 900 pounds on pasture with some supplemental forage as needed.

At around 900 pounds, the cattle come back to Adam’s dairy, where they are housed and fed the same mostly forage diet on the same steady growth plane of nutrition as the breeding age and bred heifers. 

They finish at 1450 to 1500 pounds at about 26 months of age and are sold as beef quarters, halves and wholes from pre-orders, with the buyers paying the custom butcher for processing.

Like the Wagyu breed, Holsteins are slower to finish out. The difference is a straight Holstein needs a push with a high-energy diet to reach a higher quality grade, whereas the Wagyu crossbreds do it on lower energy feed.

“You really want to raise them 26 months, that’s longer than for other crossbreds. For us, it’s not a problem because we have the facilities, and we can feed them economically — right with our dairy animals — and have a more valuable beef animal at the end,” Adam explains.

After those initial years of lead time, Lightning Cattle Co. sold nine animals for beef in 2021. They expect to sell 10 in 2022, which should put them even on their original investment and the cost to make embryos to keep their Wagyu seed stock rolling forward, and they project to double the number sold in 2023 based on calves started in 2021.

What they sell is known as American Wagyu beef — mostly F1 Wagyu x Holstein with a few Wagyu x Angus and Wagyu x Jersey. 

Having access to the crossbred calves from the dairy and beef herds that are using their Wagyu genetics helps ensure they can expand beef sales as demand grows, without tying up Adam’s dairy herd to make more crossbreds.

On his own cows, Adam turns to Wagyu after giving a cow two or three chances with Holstein. He’ll modify that decision based on visual appraisal and milk production, with an eye for the number and type of cows he needs and wants dairy replacements out of.

“They settle fast with Wagyu. The difference is evident under a microscope,” Adam reports.

Why Wagyu? Adam recalls his grandfather had some back in the early 2000’s. Half a dozen Wagyu cows and a bull were payment on a debt, which he added to the beef herd on his crop and livestock farm.

“No one really knew what they were back then,” Adam recalls, noting they aren’t beef show animals on-the-hoof. The outstanding meat characteristics are only seen on-the-rail as the flecks of fat are distributed evenly throughout the lean.

Almost 20 years later, Adam did the research. He learned about the breed from Japan, where there are different grades, names and regional identifiers for specific lines, and their tenderness transmissibility.

“The dairy industry was pretty ugly, and we were getting a bill instead of a check for our bull calves. Heifers weren’t worth much either, so we wanted to make a valuable animal to offset when other parts of the dairy industry are ugly,” Adam reflects back to 2018.

Wagyu won’t ring bells for average daily gain or fast finishing. While there are feedlots on the West Coast specifically dedicated to finishing F1 Wagyu dairy crosses, it’s different in the East and Midwest where they are mostly marketed into niche direct sales to consumers and restaurants.

Adam sees the Wagyu as a good fit for his dairy because he can optimize the assets he already has and feed them right with his heifers, instead of raising more heifers than his dairy needs. 

“We’ve had different repeat customers tell us the big thing they noticed is the roasts are so much better, with no dry spots,” Adam relates. “I didn’t think there could be that much difference, but there really is, and it seems the Wagyu x Holstein is a great cross for that.”

Even in Japan, the dairy cross is sought as an economical option of their preferred beef — owing to this compatibility. Holsteins deposit marbling in a manner similar to Wagyu — but the Wagyu genetics put the quality into overdrive.

Selling by halves and quarters is less work than selling by beef cuts. Buyers are getting a range of items with some options to customize how they get their portion processed. They can do a simple cut-and-grind or ask for special order items such as bologna.

Lightning Cattle Co. has been approached by restaurants in the area, but to serve them, Adam and Ben would need to use a USDA-inspected plant, not a state-inspected custom butcher. USDA plants are few and far between and booked well into the future.

“We’ve had no issue selling the meat, and we’ve not done any advertising,” Ben notes. “We figured if we advertised too much, we might not be able to meet the demand. We’re taking it step by step.”

To price the quarters and halves, Adam believes in being fair and reasonable.

“We go off what the steers are selling for at the New Holland auction,” he says. 

They look at the Choice and Prime steer price (not the dairy beef) and add a little to that for the Wagyu influence. The customer pays the liveweight price and the butcher’s fee. 

Adam and Ben help buyers understand what they are getting and their cost per pound of cut-and-wrapped beef by converting it on a dressed basis for an informational estimate. 

“It’s tough to create a market that doesn’t exist, but that’s what we’ve had to do,” Ben adds.

This is another reason the Lights have taken it step by step, giving themselves some growing room by spreading seed stock to other dairy farms for access to more calves.

Last fall (2021), they started their biggest group of crossbred calves that will finish out in 2023, double the number for 2022.

They have begun thinking about setting up a facebook page and had Lightning Cattle Co. T-shirts made, but they are still a bit cautious about advertising to be sure demand doesn’t get too far ahead of cattle coming up through.

The cousins like working with cattle, and they take pride in selling a finished product to others in their community. This also gives them opportunities for conversations with consumers about beef, dairy, and farming in general.

“Some people have heard of Wagyu beef from Japan. Some have heard you could pay $200 for a fancy 12-ounce steak, and some people don’t know much about it at all,” says Ben about the learning curve and the way crossbreeding makes this beef more economically accessible.

“What people really like is the idea of buying beef from farms, and that gets them interested in trying it,” he adds.

That’s the window of opportunity for the quality of the beef to sell itself into the future.

“It has been fun,” Adam admits. “It’s something different, and we don’t know where it will take us.”

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MILK MARKET MOOS — May 18-25, 2022

Market Moos is a weekly column in Farmshine by Sherry Bunting

US Apr. milk output off 1%, Georgia surpasses Florida

In its May 18 report, USDA pegged total U.S. milk production at 19.2 billion pounds — down 1% from a year ago. The report tallied 9.4 million milk cows on U.S. farms reflecting a 98,000-head decrease (-1%) from a year ago, with output per cow unchanged.

Among the 24 monthly-reporting states, output per cow fell 0.1%, and cow numbers were off 78,000 (-1.1%), pushing production 0.9% below year ago in those major states.

USDA’s May 18 GAIN report noted an even larger pull-back in Australia’s 2022 output, forecast to be down more than 4% for the year, and New Zealand’s first quarter milk production is reported to be running 6% below year ago and the lowest level since 2013. 

Milk collection in the European Union is also running behind first quarter 2021 by a smaller degree, down 0.3%, according to an EU milk situation report delivered in Brussels last week. And, milk deliveries are reported to be 4% below year ago in Great Britain for the first quarter of 2022 — 3.3% below year ago in Ireland in March.

Throughout the world, these reports note that farmers are exiting the dairy industry. “The slump in milk production (in Australia) is largely due to farmers continuing to exit the dairy industry through farm sales, and some dairy farms partially or fully transitioning to less labor-intensive beef cattle production,” the GAIN report said.

In the U.S., the national impact of this trend is being buffered by the large production growth in places like Texas and South Dakota offsetting reduced production almost everywhere else.

In addition to the U.S. milking 98,000 fewer cows in April compared with a year ago, dramatic movements of cows out of some regions and into others is occurring. Notable shifts are also occurring within regions. (See chart above)

One region — the Mideast — that had been growing rapidly is now going through a substantial pull-back. The Mideast lost 35,000 cows and 68 million pounds of monthly milk production in April compared with a year ago. That is a collective 3.6% year-over-year decline broken down as -3.4% in No. 6 Michigan, -3.8% in No. 12 Ohio and -4.1% in No. 15 Indiana. Technically, western Pennsylvania is included in the Mideast when we look at the Federal Milk Marketing Order map, and the Keystone state, as a whole, recorded a 2.2% decline in milk production in April.

The Northeast and Midatlantic region lost 15,000 cows and 31 million pounds (-1.3%) of milk production with most of the decline coming from No. 8 Pennsylvania, down 8,000 cows and 2.2% in milk output vs. year ago while No. 5 New York (-0.8%) and No. 19 Vermont (-0.9%) were just under the national average.

In the Southeast region, the big news is Georgia’s milk production outpaced Florida for the first time, moving the relative 24-state newbie into 21st place and Florida to 22nd. Georgia and Florida were dead-even in March.

Georgia’s 12.1% year-over-year milk increase in April eclipsed Florida’s 12.1% year-over-year decline, with Georgia producing 1 million more pounds of milk with 7,000 fewer cows compared to Florida. Georgia producers milked 91,000 cows in April — up 9,000 head from a year ago. Florida producers milked 98,000 cows in April — down 12,000 head from a year ago.

As noted last month, Texas surpassed Idaho in March as the No. 3 milk-producing state. However, even the 4.7% increase in year-over-year April production in Texas (up 63 million pounds) could not overcome the 12.9% decline in No. 9 New Mexico’s production (down 92 million pounds), for a net 1.4% loss of 29 million pounds of milk from the Southwest region.

Regions holding steady-ish — lower by less than the national average — are the Upper Midwest down 10,000 cows and -0.4% in milk output and the Mountain States / High Desert down 3,000 cows and -0.3% in production, with No. 4 Idaho unchanged in both cow numbers and production vs. year ago.

In the Upper Midwest, No. 2 Wisconsin was almost steady as production was down just 0.1% with 1,000 fewer cows in April, while No. 7 Minnesota milked 9,000 fewer cows and made 1.4% less milk than a year ago in April.

The West Coast showed a net-loss of 1% just like the U.S. average: No. 1 California had -0.6% production (but milked 2,000 more cows), and the 2.7% production increase in No. 18 Oregon was not enough to make up for the 5.4% loss in No. 10 Washington State.

The Central U.S. was the only region to see a net gain — owing to a 0.9% increase in No. 11 Iowa and the whopping 16.7% (48 million pound) increase in milk production in No. 17 South Dakota, where cow numbers are up by 25,000 head. South Dakota is nipping at the heels of No. 16 Kansas (-2.2%), despite Kansas overtly seeking dairies to fill expanded processing there according to dairy market podcast advertising messages at the International Dairy Foods Association website. Elsewhere in the Central U.S., in addition to production losses in Kansas, declines were also recorded to the east for No. 23 Illinois (-3.8%) and to the west for No. 13 Colorado (-1.1%).

All of this bears note as farmers face escalating costs and milk futures are hesitatingly recovering the past three weeks of losses but under market conditions that are again creating divergence between Class III and IV that could create producer price differentials (PPDs). When milk is de-pooled from Federal Orders in these circumstances, we see inequitable distribution of losses and of value that can contribute even faster to the way the milk production map is changing.

At the same time, the USDA World Agricultural Supply and Demand Estimates for May highlighted an expected increase in fat-basis exports as the world is tight on butterfat, but a decline in skim-basis exports, which could change if China resumes its earlier level of milk powder imports. 

On the flip side, the WASDE report forecasts 2022 U.S. dairy imports to run well ahead of previous years’ on both a fat- and skim-solids basis. The WASDE report stated this increase in dairy imports will be boosted by larger than expected importation of products that contain dairy.

WASDE: 2022 imports up

According to the World Agricultural Supply and Demand Estimates (WASDE) last week, the 2022 All Milk price is forecast to average $25.75, down a nickel from April’s forecast.

The May WASDE raised the 2022 milk production forecast on what it says are higher milk cow inventories more than offsetting slower growth in milk per cow. But it is important to realize the April milk production report this week (as reported above) showed otherwise.

Cheese and butter price forecasts are raised from the previous month’s report on strong demand, but non-fat dry milk and whey prices are lowered. The Class III price is unchanged and Class IV is lowered.

Some are suggesting that higher retail prices for butter and cheese and other dairy products are negatively affecting demand and that the food industry can shift from butter to oils. However, recent reports from many sources indicate the global supplies of food oils and butter substitutes are also in reduced supply and rising in price at wholesale and retail levels.

Biden orders Operation Fly Formula via Dept. of Defense

Operation Fly Formula was ordered by President Biden invoking the Defense Production Act on Wed., May 18, sending military planes abroad to bring infant formula home to America’s babies, especially the specialty hypo-allergenic formulas for babies with allergies to milk or special health needs. Parents currently face 45 to 60% out-of-stock shortages in infant formula and two military cargo plane loads of hypoallergenic specialty formula have arrived from Europe and the UK over the past 7 days.

Spot out-of-stock undercurrents in baby formula and specialized milk-based meal replacements have been mentioned in this column several times over the past few months, but the situation has worsened. The USDA announced WIC vouchers allowing participants to buy brands other than sanctioned low-bidders.

By Thurs., May 19, the American Academy of Pediatrics had issued a statement telling parents it is safe to switch to whole cow’s milk for babies over 6 months of age that are not on “special” formula, making sure they are consuming other iron-rich foods or talking to their own pediatricians about supplemental iron.

Discussion is rampant through social media about goat milk as a substitute for formula. There’s something to this because goat’s milk is A2A2 in its protein composition, as is sheep’s milk and human milk. There are A2A2 cow’s milk brands available now also. Parents are urged not to switch to plant-based beverages that do not have the nutrition of whole milk and to be cautioned that lactose free milks may not have sufficient carbohydrate for electrolyte balance since the lactose IS the carbohydrate in milk.

The FDA also struck a deal to get the Abbott plant back up and going by June 4 after product recalls and a plant closure related to bacteria tests occurred in February, in part because of a whistleblower’s report that was delayed for months by a “mail room disruption” according to FDA.

‘Confusion is real’

Anxiously waiting for the expected FDA decision on label standards of identity for milk and dairy, NMPF reported this recent exchange between FDA Commissioner Robert Califf and U.S. Senator Tammy Baldwin of Wisconsin at a recent Ag Appropriations Subcommittee hearing. Baldwin chairs the Senate subcommittee that sets spending levels for FDA. Baldwin asked the Commissioner for his thoughts on how plant-based beverages masquerading as dairy products should be labeled. His response noted that when people think about dairy vs. plant-based beverages, they “are not very equipped to deal with what’s the nutritional value” of the products. Yes, the confusion is real.

Milk futures flip higher, Class III and IV diverge

Green ink the past two weeks replaced three weeks of red ink as milk futures posted back to back gains despite some waffling on the Class III side due to a report this week showing record natural cheese inventories. By Wednesday, May 25, the Class III contract average for the next 12 months was 25-cents higher than the previous week and fully steady compared with the end of April at $22.96. The Class IV milk futures went roaring $1 to $1.50, spots $2 higher — tripling the spread between the two. On the close Wed., May 25, Class IV contracts for the next 12 months averaged $24.05 — up $1.03 from a week ago and 60 cents higher than the end of April. Class IV continues to top Class III, with the average divergence now at $1.10. Aug. through Nov. contracts on the CME futures board now diverge by more than the $1.48 threshold that suppresses the Class I mover value under the new averaging formula.

Dairy products rally higher

CME spot cash dairy product markets have reversed course to move higher for two consecutive weeks, capped by a strong rally on Class IV products (butter and nonfat dry milk) driven by a 22% decline in butter inventories. Compared with the end of April, the May 25 daily spot prices for the four commodities used in federal milk order pricing are: Butter up 28 cents at $2.89/lb after 12 consecutive days of gaining more than 2-pennies per day in active trade volume; Nonfat dry milk up 13 cents at $1.84/lb; Cheese steady compared with a month ago at $2.30/lb, Dry whey firming up the 8-cent loss at 50 cents.

April blend up $1-1.50

The April uniform prices across the 11 Federal Milk Marketing Orders (FMMOs) moved $1 to $1.50 higher, with the Upper Midwest closer to $2 higher than previous month. This is the 6th straight month of gains, reported as follows:

  • FMMO 1 (Northeast) SUP $26.07 PPD +$1.65
  • FMMO 33 (Mideast) SUP $24.91 PPD +$0.49
  • FMMO 32 (Central) SUP $24.65 PPD +$0.23
  • FMMO 30 (Upper Midwest) SUP $24.55 PPD +$0.13
  • FMMO 126 (Southwest) SUP $25.43 PPD +$1.01
  • FMMO 124 (Pacific Northwest) SUP $24.79 PPD +$0.37
  • FMMO 51 (California) SUP $25.08 PPD +$0.66
  • FMMO 131 (Arizona) uniform price $25.52
  • FMMO 5 (Appalachian) uniform price $27.17
  • FMMO 7 (Southeast) uniform price $27.35
  • FMMO 6 (Florida) uniform price $29.13

June Class I ‘mover’ $25.87

The June Class I base price, or ‘mover’, was announced Wed., May 18 at $25.87. This is 42 cents higher than the May Class I ‘mover’ and $7.58 higher than a year ago. This marks the 9th consecutive month of Class I mover gains.

The June 2022 Class I mover is 61 cents higher under the current average-plus formula than it would have been using the previous ‘higher of’ for the second consecutive month after being a loss under the averaging formula for the previous four consecutive months. In 2022, alone, the average-plus Class I mover formula produced no difference in January and was 51 cents below the ‘higher of’ method for February, 79 cents lower for March and 50 cents lower for April before turning 17 cents higher in May and now 61 cents higher for June.
Since implementation in May 2019, the new formula has been negative more months than positive (18 of 38 months) for a net loss in Class I value of over $725 million from May 2019 through June 2022.

NY launches state bills to put whole milk option back in schools, joins PA in tackling federal prohibition

‘Let’s get this done’All urged to contact New York Governor and state legislators to ‘put whole milk back in schools’

By Sherry Bunting, Farmshine, May 6, 2022

SHARON SPRINGS, N.Y. — It was a rainy, dreary Monday (May 2), but dairy nutrition advocacy was bright and sunny in the feed room at Ridgedale Farm. The Conard family hosted a press conference supporting New York State legislation to bring whole and 2% milk back to schools.

Patterned after the Pennsylvania bill that has already passed the state House and is expected to be voted on in the Senate this month, the New York bill would support schools in their desire to offer more milk options, including whole and 2% milk produced on New York farms. The bill includes provisions for the Commissioner of Education to notify school superintendents about the flexibility as well as for the State Attorney General to file civil suits on behalf of schools if the federal government withholds other-than-milk funding.

While some media outlets continue to point to the superiority of federal regulations, there is a groundswell of state lawmakers saying “enough is enough” when it comes to the children and the farmers being victims of regs based on false narratives that push young people away from the very nutrition they need, and the very nutrients the Dietary Guidelines committee admitted their government-sanctioned dietary patterns are not providing.

The movement to have state legislatures get involved is not – as some would say – ‘political theater.’ No, this is the reality of where ‘we the people’ get a voice in the very sustenance of farms, food, and future generations. 

In Pennsylvania, it began with U.S. Congressman G.T. Thompson (Dist. 15) with H.R. 1861 as well as State Rep. John Lawrence (Dist. 13) with HB 2397. In New York State, it began with Congressman Antonio Delgado (Dist. 19) a prime cosponsor of H.R. 1861 and Assemblyman Chris Tague (Dist. 102) introducing A9990 with 25 cosponsors. Within a week of Tague’s bill, State Senator George Borrello (Dist. 57) sponsored S8999 with cosponsor Peter Oberacker (Dist. 51).

The New York legislation has been referred to each chamber’s Education Committee. Tague and Borrello are Ranking Members of each chamber’s Agriculture Committee.

Tague and Borrello were joined Monday by other supporting lawmakers, government officials, nutrition and education experts, dairy farmers, FFA members, school superintendents, town mayors, school principals, discussing why it is so important and urging a public groundswell to contact all NYS lawmakers and the Governor’s office in support.

“We are going to get whole milk back in schools. We’re dispelling the myths propagated by many over the years,” said Tague.

“I ask every one of you to spread the word — to your friends, to your family, to your neighbors, even your enemies. Ask them to join us. Call, email and text every single member of the New York State legislature. Tell them: ‘Put whole milk back in our schools!” he exclaimed.

“Then call Governor Hochul and tell Kathy we want whole milk back in our schools,” Tague explained that the bill must go through committee, then to the floor, then get voted on, and then it would go to the Governor.

“Government and misinformed people need to stop biting the hand that feeds them,” he added. “We cannot live without good nutritious foods. No farms, no food. How does a young person today make a go at it? Farmers are not only ‘price takers,’ they take everything else that comes at them. There’s never anybody that stands up for them. That ends today. We’re here to stand up for you.”

Senator Borrello reflected on the problem, which he said is “based on false narratives. A long time ago, they convinced us that taking skimmed milk and pouring it on high sugar, no fat, breakfast cereal was somehow a good breakfast choice for kids, and they’ve taken whole milk out of our schools. The result has been more waste, it ends up in the garbage. And what have we told our kids to do? It’s okay to have energy drinks and other things that just aren’t good for your health. We’ve also seen a dramatic rise in obesity rates.”

The data for these dietary patterns just is not there, said Borrello.

“Now we know that having fat in the diet is not only good for kids, it helps with their growth, and the kids that do drink whole milk actually end up with less obesity. The science had changed, but unfortunately, our government has not,” he said. “We should give the children the choice. But most importantly, we should recognize this is a good choice. That’s why this is an important bill. Most people don’t understand, that even whole milk is 97% fat free.”

Borrello observed these current dietary rules have further impact, that they are “the beginning of the push to take us away from products like milk, that want to push us toward things like almond beverage, which is not milk, and other things. That’s the real agenda here. Let’s understand that whole milk is nutritious. It feeds your brain. It feeds your body. It is probably one of the best, most nutritious drinks that you can have. But instead of serving that, they want to push these artificially created products onto our children and tell them that’s okay,” he said.

“We need to give them this (whole milk) choice because it is the right thing to do and because it is also good for agriculture, the most important and largest industry in New York State. People forget that. We are here today from all points of the state standing united to say this is the right time to bring back whole milk into our schools,” Borrello stressed.

Nutrition expert agreed

Toby Amidor, registered dietitian, nutrition expert, food safety consultant, instructor, speaker and author in New York City, drove out from Brooklyn to give her thoughts on the bill and whole milk misconceptions.

She confirmed the 2020-25 Dietary Guidelines for Americans “pinpoint three under-consumed nutrients that are found in milk, that people of all ages, including school age children, adolescent children, even toddlers, they don’t get enough of,” said Amidor.

“Those nutrients are calcium, vitamin D and potassium. Milk is a vehicle that you can get all of this nourishment into children in order to grow and thrive like we want them to. It’s an important thing to give them a choice. Choose (the milk) you want,” she explained.

Amidor was joined by various school system superintendents noting the key concern of student access to nutrition.

“School is where many children get their nourishment. So that’s where you want to give them these choices,” said Amidor. “It’s okay to have the fat in milk… it’s a nourishing drink, the fat increases the palatability of that nourishment – more power to it!”

School officials were blunt

“We have a large food service system and are highly focused on farm-to-school initiatives. Milk is one of those,” said Anita Murphy, Capitol Region Board of Cooperative Educational Services (BOCES) superintendent, representing 24 districts and 80,000 schoolchildren across four NYS counties.

“On a personal level, I don’t drink skim milk. If that’s the only thing there, I pass,” said Murphy. “I think that’s what happens with our children. If you walk into our cafeterias, what you will see is kids passing on milk. A lot of these kids eat two meals a day at school, and that’s it. That’s what they get, so if we don’t give them those things that they need and that they want that are good for them, we are making a mistake. We are willing to lend any support you need to get this done.”

Representing 22 school districts and more than 30,000 students, Dr. Gladys Kruse, Questar III BOCES district superintendent concurred. She thanked the lawmakers for their efforts.

“We need more children to drink milk to get the nutrition they need. We know some of our students get two of their meals a day at our schools. When we hear students throwing away their lunch or their milk, or we hear of farmers having to dump the milk they cannot sell, it is time to reevaluate and reconsider the options and the policies. This legislation is a welcome step in expanding the availability and consumption of milk locally and across the state,” said Dr. Kruse.

Thanking Tague for his leadership, Kruse stated the bill would “provide the flexibility to have more milk options available to our students. This includes whole milk and 2% milk produced here and across the state. From our first beverage as a child to a staple in our daily school lunches, milk is fuel of our young people’s growth and development.”

From the Berne-Knox-Westerlo Central School District, superintendent Dr. Tim Mundell talked about partnership and collaboration, calling the day’s event a great example of that.

“The passage of this bill would help us bring local whole milk to our students, viable nutrition and real value,” said Mundell noting the need for flexibility. “Students get two meals a day from us. Many of our students live in very isolated and rural areas and access to nutritional foods, like whole milk… for their health and well-being, it’s scarce, and it’s scary.”

“When we put kids at the center of all of our decisions and all of our advocacy, great things happen, and the decisions are easy. This (should be) a very easy decision,” he said.

Mundell also observed the losses in enrollments and economic opportunity throughout rural regions of the state. He said FFA leadership learning is so important, and when students are able to see agriculture economically thriving, it gets their minds thinking about life and options after high school.

“Passage of this bill will enhance the capacity of all rural areas in New York State to re-engage in economic development. We are on board for collaboration in making this economic activity happen,” he said.

From the dairy farmer perspective, Ray Dykeman of Dykeman and Sons, Fultonville admitted that farmers prefer being in the field or with the cows and doing the work producing nutritious food, but, he stressed that this advocacy is vital for the future.

“This bill is extremely important for the kids in school (and) for the dairy farmers in the area,” said Dykeman with appreciation to the Conard family and their “beautiful cows” as hosts.

He challenged people to compare whole milk’s label to most other beverage options, “if you can even pronounce half of the ingredients that were made in a laboratory. We were using milk products as many as 10,000 years ago. Why not trust the cow, probably one of the most perfect animals in the world?”

Dykeman also thanked the lawmakers for taking on this issue to bring whole milk back to schools at a time when dairy farms are challenged. “This legislation will support our hard working dairy farm family businesses and get more milk into New York schools. This is very encouraging. Agriculture is our number one industry, and milk is our number one commodity.”

Among the panel of speakers, the New York Farm Bureau and the Northeast Dairy Producers Association (NEDPA), based in Geneseo, were represented. Behind the scenes and joined by 30 other farmers in the Ridgedale feed room were grassroots whole milk promoters Duane Spaulding and Ann Diefendorf. They brought the 97 Milk messages and signage used prominently throughout the event.

In fact, Tague thanked the grassroots efforts of farmers, of 97 Milk, and even mentioned Milk Baleboard originator Nelson Troutman in his opening remarks.

For Farm Bureau, Todd Heyn noted their “long advocacy for the return of whole milk to schools, giving districts the ability to provide this healthy and nutritious dairy product to school kids.”

Heyn reported the bill would “provide additional markets for whole milk, a Class I dairy product that earns dairy farmers a higher price.” 

Heyn said this would support New York dairy farmers and raise awareness to find a workable solution at the national level, explaining that Farm Bureau is formally asking USDA to “follow the science around nutrition and revise the school nutrition guidelines for dairy products in the school lunch programs.”

The energy was really high by the time NEDPA executive director Tonya Van Slyke got to the podium. She talked about dairy farmers are part of a global economy but take pride in what they do locally… especially in schools.

While Tague and Borrello held the sign taken from images at 97milk.com touting all the benefits of whole milk, Van Slyke — a mother and dairy farmer — recalled walking intop the school cafeteria and being asked by the director: “’Dairy farmer, how did you let this happen? Why are they taking the healthy fat away from my babies?’ Nutrition helps them have good brain power.”

As she turned to Tague and thanked him and his colleagues, Van Slyke said: “Let’s get this done,” and the room erupted in echoes and applause.

Tague, a former dairy farmer himself, noted he had actually milked a famous cow in the very barn where the event was held Monday. He worked years ago for Wayne Conard and his father Willis. He made a direct appeal to the farmers, encouraging farmers everywhere to get into the game.

“We have a lot of work to do. This press conference today is just the beginning… the squeaky wheel gets the grease. Sometimes as farmers, we are too proud and too busy to let our voices be heard,” he said. “But folks, it ends today. We’ve got to get up and scream it. We’ve got to make them hear us that enough is enough. 

“Let’s leave here today with one thing in mind: Whole Milk back in our schools!”

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A re-positioning of agriculture? Kohl tells farmers: ‘Get focused in an unfocused world’

By Sherry Bunting

EAST EARL, Pa. — While he sees a storm on the horizon via high inflation, rising interest rates, global unrest, Dr. David Kohl is positive on agriculture, believing agriculture is “in position for a re-positioning” and advising farmers to “get focused in an unfocused world.”

He sees the resources provided by farms with dairy, livestock and poultry will become more critical. He sees agriculture as the next big mover, the answer — if farmers are free to be creative, manage their businesses with intensity, and drive the bus. He said transparency is becoming more important for consumers, as well as for farmers.

The Virginia Tech professor emeritus engages audiences in lively discussions of economics and financial management. He also co-owns a dairy farm and creamery in Virginia, so he sees trends on a macro and micro level. He spoke recently at the Univest Bank meeting attended by 300 farmers in southeastern Pennsylvania.

“We’re already doing a good job in agriculture. We just need to be driving the train, rather than letting it run over us. If we have a food and fertilizer shortage, the importance of a safe food and fiber source will have even greater value, and we can market that,” said Kohl.

Sizing up the uncertain times ahead, Kohl urged farmers to get focused, think creatively, be innovative, be right on top of their business numbers, plan and prioritize, set goals, and work with a team of advisors.

U.S. agriculture has strategic advantages. It’s in the lifestyle, the work ethic, the soil. Kohl noted that in China, for example, there is real concern about food in the future because 23% of China’s soils have built-up metal toxicity that is unhealthy for plants and animals.

One of the most critical advantages U.S. farmers have is “return on relationship” – or ROR.

“This is a community that gives back. Too often what we see in the world is people just taking instead of giving back. That’s your advantage. You give back,” he told farmers.

On the geopolitical front, fueled by oil, Kohl observed the U.S. has “played right into the hands of OPEC and Mr. Putin. Think about it, 21 years ago, we had 9-11. The towers went down in New York City, Somerset, Pa. and the Pentagon. We said we’re going to become energy independent in 25 years, and we did it in 10. We became the number-one energy producer in the world,” he said.

The U.S. is now divesting its fossil fuels, talking about going to ‘green energy.’

“This has created a lot of instability, and 8 out of every 10 dollars you spend on your farm is connected in some way to energy,” said Kohl, adding that consumer buying behavior is also connected to energy.

“Now it’s going to be China and India — they’re going to be getting the cheap oil while we’re paying the higher price,” he said. “You’re going to have to think innovatively about what you’re going to do with that.”

The fallout from the Russian invasion of Ukraine is something that is not going away overnight. “It’s going to require a lot of management intensity. We can make it through, but we’re going to have to step-up our game plan,” he said.

Warning of recession on the backside of inflation through “demand destruction,” Kohl said every recession – except for one – was caused by an oil market shock.

When oil prices go up, people start questioning their trips. Consumers start questioning everything they buy. They start cutting back.

“These movies play over and over again because we don’t teach history, and so we’re doomed to repeat the mistakes,” Kohl declared, drawing parallels to the 1970s, when the Soviet Union said it needed wheat.

“Communist countries create these economic bubbles because they’re authoritarian, and then, all of a sudden, those markets disappear, and the American farmer is left hurting,” said Kohl. “The market can be given and taken away, and you have to be careful.”

In the 1970s, land values were spiking, and there was political and military uncertainty. The same thing is going on today, he asserted.  

“We had a very stagnant economy that was inflating, and wages weren’t keeping up with inflation. The same thing is happening now,” he said, noting inflation hit 8.5 on April 12th – the highest since 1981 when this similar pattern of events in the economy were precipitated by high energy costs and geopolitical factors and uncertainties.

What moved the U.S. forward then? The development of computer technology and the information age “brought us forward to years of wealth,” Kohl reflected.

What is going to be the ‘big mover’ this time? “Agriculture is one of the answers,” he said.

In the face of skyrocketing fertilizer price and tight availability (which he said will likely be as bad or worse next spring)… “Never has there been a time when manure was so valuable as it is today,” said Kohl, noting the “very real potential” for this to increase into the future as global impacts increase food insecurity.

“We have the solution right here,” said Kohl. “We can adjust to more manure, to poultry litter, to putting biologicals on the soil. We’re going to have to think outside the box, but we’ve got the resources right here to take care of it.”

On the labor front, Kohl noted that the current shortage of workers has every major company in the U.S. working on automation.

“Where we have people shortages now, we will have job shortages later because companies will automate,” he said.

Rising energy costs further complicate this picture as companies try to get back in the groove of work.

Supply chain disruptions will be dominant for the foreseeable future as 40% of China’s manufacturing is in cities that are locked down right now for the COVID variant, Kohl noted.

This is creating supply chain problems now, and when delayed shipments go out later, ports will be overcrowded again.

On the flip side, as China’s economy slows down because of being shut down, this also slows down oil price advances.

Regulations have also played into the issue. Kohl hears from truckers. They tell him they are retiring in droves due to so many additional regulations put on them by federal and state governments. This is leaving a shortage of truck drivers.

Everything stems back to the COVID pandemic. Prior to the pandemic, the U.S. had charted its longest monthly economic expansion in history, according to Kohl.

“Now, consumer confidence – which had been in the low-70s – is in the high-50s, showing our consumer is losing confidence, and that is what drives 70% of the U.S. economy,” said Kohl.

Another indicator Kohl looks at – and it is tied to interest rates – is the housing market. “That’s starting to crack in certain parts of the country,” he said. “We had wealth moving, cash coming out of New York and New Jersey bringing money to other parts of the country. Eventually, the shell game stops.”

Kohl also looks at the price of copper. “It’s still strong, and China is stockpiling it because they are anticipating an economic slowdown.”

So, what should farmers get ready for?

“Get ready for the economic flip,” said Kohl, “that 12- to 24-month period where your costs went up, but the costs don’t correct as fast as your price does.”

That’s what happens when inflation gives way to recession, so be aware and prepared.

Working lines of credit are getting higher right now, so when federal and state regulators all of a sudden want banks to tighten up on credit, that creates some fallout.

Whether talking about a country, a business, or a home budget, financial liquidity and the ability to generate cash is the pressure point. “Russia and China are having that problem right now,” Kohl observed.

As for Americans, “52% are living paycheck to paycheck with an average cash reserve for 13 days,” he related. “The ability to generate cash is your perseverance. Your perseverance is the thing that is going to be very very critical.”

Kohl offered business strategies to key-in on.

Position for a quick pivot to cash

“Working capital is queen on the chessboard,” said Kohl. Working capital and the ability to pivot quickly to cash and to manage debt service will be increasingly important. Cash earns flexibility.

Do cash flows and overestimate costs

Kohl said cash flows are 80% of a business plan. “You have to think about production, marketing, finance, to know your cost of production. This helps you visualize your operation,” he said, urging farmers to overestimate by a minimum of 25% in today’s inflationary time so there are better odds of good decisions. In times like this, bad decisions can be compounded.

Planning is essential

“Manage the controllables, and manage around the uncontrollables,” said Kohl. “We can’t manage what comes out of D.C., Moscow and Beijing. We can focus on the things that we can control. That’s where patience and perseverance comes in. Spend 5 to 10% of your time on planning. It’s that important.”

Just like the basketball player planning and training to spend 95% of his game time without the ball in his hands, Kohl said: “It’s the things you’re doing when the ball is NOT in your hands that help you to do something important when you get the ball.”

Work with a team of advisers.

He urged farmers to bring together a team of advisors if they don’t already do this. “Get your crop consultant, livestock consultant, lender together. Another set of ears and eyes is very important to keep you focused,” said Kohl. “Technology gets us unfocused. This is an unfocused world. Get focused in an unfocused world.”

Set goals

“Write down your goals,” he added. “This leads to better mental health and improved earnings.”

Prioritize the priorities

Life on the farm and managing the farm business can feel like a constant state of competing priorities. Kohl urged farmers to practice the art of “prioritizing your priorities.”

In other words, avoid overscheduling, and strive to achieve a work/life balance. “The best crop you’ll ever raise will be your children and grandchildren, your interactions with young people,” he said.

Kohl also urged farmers to take care of themselves, to make time each day for prayer or meditation, pay attention to diet and exercise, get enough sleep, and have a support network. 

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I am thankful for the folks who push for whole milk choice

And I am thankful, perhaps most of all, for the strong and stubborn big heart of retired agribusinessman and dairy advocate Bernie Morrissey.

By Sherry Bunting, Farmshine Editorial, April 15, 2022

Among the dairy bills moving in the Pennsylvania House and Senate, one rising to the top is the Whole Milk for Pennsylvania Schools Act

What appears to be a fast rise has really been the product of a long and exhausting process for those who have worked on and reported on the issue of school milk and school meals over the past 10 to 15 years.

Six years ago, the issue began heating up, and U.S. Congressman G.T. Thompson (R-15th) introduced his Whole Milk for Healthy Kids Act for the first time. Two legislative sessions later, that bill, H.R. 1861, still awaits action by the House Committee on Education and Labor, having 93 cosponsors from 32 states as of April 13.

A little over three years ago, a grassroots whole milk education movement was launched by volunteers and donations after Berks County dairy farmer Nelson Troutman painted a round bale, which led to the formation of the Grassroots PA Dairy Advisory Committee and 97 Milk LLC.

The painstaking process of working to pry federal bureacrats’ hands off the allowable school milk offerings for children has been ongoing and exhausting.

Now there is the Pennsylvania State bill, HB 2397 Whole Milk for Pennsylvania Schools, authored by State Representative John Lawrence, introduced with 36 cosponsors on March 17 and passed by the State House on April 13.

The progress would not be happening without volunteers — especially the tireless efforts of Bernie Morrissey. At 85, he doesn’t have to be doing any of this. He has shown that he cares about the future for dairy farmers in Pennsylvania, and as a grandfather and great-grandfather, he cares about school milk choices. He has continually worked to get the word out about the whole milk prohibition issue.

USDA’s own pre- and post-prohibition survey showed the significant decrease in students selecting milk and the increased throwing away of milk served — in just the very first year (2012) of the complete restriction of milk choices to be only fat-free or 1% low-fat. More recent studies show it has only gotten worse.

Dairy farmers have lost a generation of milk drinkers, and Class I fluid milk sales have declined even more dramatically since the federal ban.

In the pages of Farmshine, we’ve brought you the news each step of the way. The Dietary Guidelines debacle has been covered for over 10 years. The Congressional bills have been covered. The findings of investigative science journalist Nina Teicholz have been covered, and so much more.

Since Dec. 2018, Farmshine has covered the emerging story of Nelson’s painted round bale, how it got noticed and how that led to questions from neighbors, how more bales were painted, how Bernie took it to another level making banners and yard signs, paying to print some up and distributing them and asking other agribusiness leaders to do the same, and how folks in other states are making an impact also in the movement to get the message out of the pasture and onto buildings and by roads everywhere they can.

We’ve reported on Bernie’s efforts to do political fundraisers at the grassroots level — giving farmers and agribusiness leaders opportunities to join him in supporting lawmakers who care about these issues.

We’ve reported on the major ‘Bring Whole Milk Back to School’ petition drives (30,000 strong), visits with lawmakers, the progress of the 97 Milk education effort, and so forth.

All along the way, there have been fence-straddling skeptics parsing their words. Just one example came recently after Nelson received the Pennsylvania Dairy Innovator Award during the Dairy Summit in February. That evening, one state official said to me that he “never had a problem” with the whole milk signs, but he was quick to add that he didn’t like the way the painted bales and signs only promoted whole milk, when all milk should be promoted.

Yes, all milk should be promoted, but let’s face facts here. For the past 10 to 15 years, the mandatory dairy checkoff promotion programs have not promoted whole milk. They have repeatedly used the terminology “fat-free and low-fat milk” — in lockstep with USDA bureaucrats. They even promoted the launch of blended products where real milk and plant-based fakes were combined to make what was called a “purely perfect blend.” 

“Three-a-day low-fat and fat-free” has been the mantra. 

Some dairy princesses have even confessed being afraid to tout whole milk, others have pushed the boundaries. Some have picked up the 97 Milk vehicle magnets for their personal vehicles while towing-the-line on the fat-free / low-fat wording in their “official” capacity as princesses. 

Let’s face it, the industry has used farmers’ own mandatorily-paid checkoff funds to drill USDA’s low-fat and fat-free milk message into the minds of consumers.

Someone had to start thinking outside the box if a solution to this issue was ever going to get outside the box.

Volunteers have now taken up the slack to promote whole milk, and they are moving the needle. In fact, the whole milk movement is so successful even Danone’s new fake brand – NextMilk — is trying to capitalize by using whole milk’s signature red and white cartons and placing “whole fat” above the brand name. What does that tell us?

Now, as the Whole Milk in Schools bill gains ground in the state of Pennsylvania, we see some who are trying to pour cold water on the passion and progress by suggesting that the state bill, which uses the PA Preferred framework to assert state’s rights, could lead to retaliation by other states to try harming demand for Pennsylvania-produced milk.

This is intimidation. Bullying. We see the same argument every time efforts are made to close loopholes that keep the state-mandated Pennsylvania over-order premium from getting to Pennsylvania dairy farms as the law intended. We hear that Pennsylvania milk will be discriminated against if co-ops and processors can’t continue dipping into the premium cookie jar. 

Now, it appears the same intimidation angle is being applied to HB 2397, which defines the option of whole milk in schools as pertaining to milk that is paid for with Pennsylvania or local funds and produced by cows milked on Pennsylvania farms. The bill has no choice but to use the PA Preferred framework because it is defining a role for state action on a federal prohibition.

Remember the June 2021 Pa. Senate Majority Policy Committee hearing on ending the federal prohibition of whole milk in schools? At the end of that hearing, State Senators in attendance were interested in doing statewide school milk trials like the one done temporarily at two school districts in Pennsylvania two years ago “under the radar.” (In one trial offering all fat levels of milk, whole milk was preferred by students 3 to 1; student selection of milk increased 52% and the amount of discarded ‘served’ milk declined by 95%!)

Key lawmakers began to show stronger interest in finding a way to give schools this option and have them collect data about student consumption and not get penalized by USDA and the Dept. of Education in the process. HB 2397 does that!

A major reason why interest is surging for this bill is because more people are coming to the realization that this prohibition exists. Prior to the 97 Milk education effort, most parents, citizens, even lawmakers, did not realize whole milk is outright banned in schools, even banned as an a la carte beverage! That goes for 2% reduced fat milk also, by the way. 

HB 2397 is about choice. There is no mandate here. None, whatsoever. Just freedom for students to make a healthful choice that they are presently denied.

The Commonwealth of Pennsylvania has a state’s interest on two critical fronts: 1) Dairy farming is essential to our economy and 2) The health of our children and freedom of choice are of the utmost importance. Students receive two out of three meals at school during a majority of the year.

Shouldn’t states and schools and parents decide milk choices instead of federal bureaucrats? Shouldn’t children get to choose the best milk our farmers produce if that’s what they’ll drink and love and benefit from? Why should they be forced to choose only the industry’s leftover skim?

Bottom line, these are times to be bold and brave.

These bills are for the children and for the farmers.

As a mother and grandmother, and dairy enthusiast, I am thankful for all who are working to move these bills forward. I am thankful for the opportunity to work with so many people who care about this issue. I am thankful for the work of 97 Milk and the Grassroots PA Dairy Advisory Committee. I am thankful for the support of the Pa. Farm Bureau, Pa. Dairymen’s Association, Pa. Farmers Union, and other organizations supporting the Whole Milk in Pennsylvania Schools Act.

I am thankful for the agribusiness leaders making contributions to help farmers and other whole milk education volunteers get the message and milk facts out there. I am thankful for the 30,000 people who signed online and mailed in petitions on this issue two and three years ago. 

I am thankful for Pennsylvania lawmakers who are being bold and leading — bringing their colleagues along in a bipartisan way so that more states can be encouraged to do the same.

I am thankful for all who are standing up for our dairy farmers and our children. 

And I am thankful, perhaps most of all, for the strong and stubborn big heart of retired agribusinessman and dairy advocate Bernie Morrissey. He continually looks for every possible avenue to help dairy farmers be at the table to speak up about the policies that affect their futures. He knows what it means to them, and to children, to someday — hopefully soon — have the choice of whole milk in schools.

 -30-

Rep. John Lawrence supported, thanked for his ideas, action, humility

By Sherry Bunting, republished from FARMSHINE NEWSPAPER, April 8, 2022

NEW HOLLAND, Pa. — Dairy farmers, agribusiness leaders, current and former legislators and friends came out to Yoder’s Restaurant here Monday (April 4) to support Pennsylvania State Representative John Lawrence of Chester County. He was lauded by his peers as a respected and knowledgeable leader on ag and dairy issues, someone who understands what farmers and other small businesses face, someone who continually brings good ideas to the table.

The fundraising gala was attended by around 50 people and raised more than $30,000 for Friends of John Lawrence, according to retired agribusinessman and dairy advocate Bernie Morrissey. He and Berks County dairy farmer Nelson Troutman, known for his painted round bales that launched the whole milk movement, along with other members of the Grassroots PA Dairy Advisory Committee, helped raise some of these funds from individuals in the community.

Efforts to end the federal prohibition of whole milk in schools was very much front-and-center in the luncheon discussion with enthusiasm shared by state and federal lawmakers on the progress of Rep. Lawrence’s bill seeking to deal with the issue at the state level – a powerful model for getting action at the federal level.

“We are all here because of how much we love John Lawrence,” said Kerry Golden, who took a personal day from her work with the House Ag Committee to support a leader she and others respect as much for his knowledge and hard work as for his humility.

Lawrence, himself, could not attend his own gala as he was recovering in the hospital from a medical issue. His father led the group in prayer for John, and local agribusiness leader Don Hoover led the group in prayer for elected leaders at local, state, and national levels.

Rep. Lawrence is the author of three important dairy bills that passed out of the House Ag Committee last week (March 30) — the most popular being the Whole Milk for Pennsylvania Schools Act, H.B. 2397.

“John told me he got the idea for the bill while he was riding on his tractor,” said State House Ag Committee Chairman Dan Moul. Lawrence has said he does some of his best thinking while mowing.

“He sits down with us and goes over his ideas, before putting them into words… he brought us these bills a couple months ago, and last week, we had what I call ‘Dairy Day’ in Pennsylvania and passed them out of our committee with bipartisan support to the House floor,” said Chairman Moul.

In addition to the whole milk bill (H.B. 2397), the other two bills include H.B. 223, which provides for Keystone Dairy Opportunity Zones, where new and existing processors can receive tax credits for processing expansion, and H.B. 224, which provides the Pa. Milk Marketing Board with additional authority to collect and distribute the state-mandated over-order premium.

“Too many times, that premium does not find its way back to farmers,” said Moul. “We are losing way too many dairy farms in Pennsylvania. We have a great industry here, and we need to save it.”

When Moul got to the whole milk bill, specifically, the room erupted in applause.

“While John was on his tractor, he came up with this idea. He finally figured it out. We’ve been wanting to do something on this ever since whole milk was taken out of schools under the Obama administration,” he said.

Congressman G.T. Thompson lauded the PA-Preferred framework of the bill in his remarks as well.

Bottomline, if the entire transaction from farm to school is intra-state, then the federal jurisdiction does not apply because the U.S. Constitution is silent on education and agriculture except where interstate commerce (sales between states) are concerned. That’s the basis of the bill, reported in detail in previous editions of Farmshine.

“When he shared his idea, we knew he was on to something,” said Moul. “The federal government can’t withhold funding from schools if this (whole milk) is intra-state. I give John the credit. He really thought it through. There is a time and place for government… but when it comes to nurturing, raising and what we feed our children, that’s no business of the federal government.”

State House Speaker Bryan Cutler of Lancaster County thanked the event attendees for supporting John, and he described John’s “servant’s heart.”

He said John is someone who wants to get the job done rather than concerning himself with who gets the credit for it.

“Sometimes government is what gets in the way,” said Cutler, noting the federal prohibition of whole milk in schools as a prime example of getting in the way of parents and schools with “their definition” of what’s healthy.

“John is someone who consistently rises to that challenge. I hope you are all as proud of him as I am,” said Speaker Cutler.

“We’re blessed in Pennsylvania,” said Congressman Thompson. “We are coming up on a challenging year, an election year. We need a strong State House and Senate.”

At the federal level, the stakes are equally high. In fact, if Republicans take back the majority in the U.S. House of Representatives this fall, Congressman Thompson, representing the largest geographic district in Pennsylvania and serving as Ranking Member of the House Ag Committee, could make history as the first Ag Committee Chairman from the Keystone State since 1859.

Thompson shared a bit of his vision for the Ag Committee, noting how important agriculture is, everywhere, representing one in every seven jobs in Pennsylvania, for example.

“We have to make sure we are doing the right policies to restore robust rural economies, to create the conditions to rebuild, repopulate, and regrow our rural communities,” said Thompson. “Agriculture is really a bipartisan issue. With inflation at 42-year highs, we are seeing high prices for commodities, but things are not so peachy. It’s the margin that makes the difference.”

He expressed concern about EPA regulations, the return of Waters of the U.S. (WOTUS), and other areas of impact to agriculture where politicians make decisions that don’t often make sense and cost farmers plenty.

“The world needs American farmers to increase yields when we look at what is happening in Ukraine,” said Thompson. “We’ve got to love these people standing up for freedom. They are the breadbasket of Europe with 40 million people but growing food for 400 million. We are hearing the grim news that by fall, we may see massive hunger and famine, starting in the Middle East.”

Thompson reflected on the ‘Arab Spring’ in 2011, when food scarcity played a large role in a series of anti-government protests in the Middle East after international food prices shot up, unemployment rose, and frustration with political systems peaked.

He cited predictions right now that people will flee these countries facing famine and arrive at the U.S. southern border. He said farm productivity in the U.S. will be essential.

“Food security is national security,” said Thompson, thanking ‘the Pennsylvania farm team’ of legislators and agriculturalists. “Everything we rely on is provided by our hard-working farmers, who deserve to earn a good living.”

As prime sponsor of the Whole Milk for Healthy Kids Act (H.R. 1861) in the United States Congress, Thompson also lifted up what Rep. Lawrence has done at the state level in Pennsylvania with H.B. 2397.

“It’s brilliant,” said Thompson. “It’s a formula for PA-Preferred. Now we need to see New York, Ohio, California — all the dairy states — lead and model what Rep. Lawrence has started.”

He explained that if other key dairy states would put forward similar legislation for whole milk in schools, it would be powerful in getting Congress to act on his legislation at the federal level and for the federal government to “undo the insult” it dealt to children when removing flavor and health from school milk options over a decade ago.

“Everyone blames Michelle Obama, but it was really the Congress under Speaker Pelosi who demonized milkfat. That 3 to 3.5% milkfat is what their bodies need. We’re standing with the children,” he said.

Thompson sees this as becoming a truly bipartisan issue, including bipartisan support for his bill at the federal level and the bipartisan action on it in the Ag Committees of the State House and State Senate. He said Lawrence’s bill “sets a great precedent and a model to help us go forward.”

As of April 6, 2022, Congressman Thompson’s Whole Milk for Healthy Kids Act (H.R. 1861) at the federal level has 93 cosponsors from 32 states but has not yet been taken up by the House Education and Labor Committee.

In the Pennsylvania State Assembly, Rep. Lawrence’s Whole Milk for Pennsylvania Schools Act (H.B. 2397) was passed unanimously out of the House Ag Committee on March 30th and is expected to be voted on by the full House after April 11 when they return to session.

Meanwhile, the State Senate Ag Committee unanimously passed S.B. 1181 on April 5th. This bill was put forward rapidly by Sen. Michele Brooks, representing Northwest Pennsylvania counties, and it precisely mirrors Lawrence’s House Bill. It could be voted on by the full Senate as early as this week.

(Author’s Note: Stay tuned on these whole milk bills and join me in prayers of gratefulness for the efforts of leaders like Rep. John Lawrence and for his healing and continued strength for the important work ahead.)

-30-

Future of Federal Milk Pricing Forum got ‘wheels turning’

‘We need to figure out a way to get farmers’ voices incorporated into this discussion’

Table I reflects a decade of change in FMMO participation as total U.S. milk production grew 13.3% from 2011 to 2021, and the percentage of milk pooled on FMMOs fell from 82% in 2011 to 60.5% in 2021. California became an FMMO in 2018 after previously being a state order, so California’s production is not included in the 2011 pooling comparison so the pooling percentages are relative to production in FMMO and unregulated regions. Class I pounds as a percent of total production fell from 28.7% in 2011 to 18.6% in 2021. Figures for 2021 are shown both ways, including and excluding California to compare to 10 years ago when the number one dairy state had its own state order with different pooling and classification rules and incomplete data, but the percent of change is nonetheless eye-opening. Chart compiled by S. Bunting 

By Sherry Bunting, published in Farmshine, Feb. 18 and 25, 2022

GREEN BAY, Wis. — Do dairy farmers want to save the baby, save the bathwater, change the flow of the bathwater, or tighten the plug on the drain before the bathwater drains to the point of taking baby with it?

That’s a brutal take after 90 minutes and a lot of information, starting with the basics and hearing perspectives and questions during the American Dairy Coalition’s Future of Federal Milk Pricing Forum on Feb. 15.

It was a first step in what ADC sees as a continuing conversation and effort to engage dairy farmers to lead the process. They said the next forum will be in March.

Geared specifically for dairy farmers, the forum attracted 160 participants from across the country, representing every element of the dairy industry — including dairy farmers.

The virtual format was moderated by Dave Natzke, markets and policy editor with Progressive Dairy magazine. Featured presenters were Calvin Covington, retired co-op COO with 45 years of experience in federal and state marketing orders; Frank Doll, a third generation Illinois dairy farmer involved in American Farm Bureau’s dairy policy committee, and Mike McCully, industry consultant on the IDFA dairy ingredients board and economic policy committee.

Included were comments presented by attendees, who pre-registered for three-minute slots. Others typed into the queue.

“This is complicated, and many people say it can’t be fixed, but we have a great amount of expertise and value here. We covered a lot,” said Laurie Fischer, CEO of ADC at the end of the forum. “We can’t just let this drop. We need to continue to move forward.”

“We heard a lot of good information that has everyone’s wheels turning,” added ADC president Walt Moore of Walmoore Holsteins, Chester County, Pa. He encouraged producers to reach out and engage to tackle the hard topics.

The goal of this initial forum was to inform dairy producers on the Federal Milk Marketing Orders (FMMO) and pricing process to become engaged and have a greater voice in guiding future policies.

For its part, American Farm Bureau Federation spent the past couple years going through a similar working group with policy recommendations coming from states to national and back to states. 

Several commenters concurred with the position of ADC, Farm Bureau and other organizations that Class I pricing should return to the ‘higher of’ method until future policies can go through what could be a long hearing process of potential revision for the future.

In fact, one eye opener during the Forum was Doll’s confirmation that Farm Bureau policy now includes support for going back to the ‘higher of’ — plus adding 74 cents — in the calculation of the Class I mover price, while remaining open to other ideas.

Doll said consensus was hard to find in the Farm Bureau working group of 13 members from across the country due to regional differences in the makeup of processing. But general recommendations found agreement, including the reference to Class I as well as modified bloc voting where co-ops can vote for their members on Federal Orders, but farmers can cast their own votes and be encouraged to do so.

Several attendees cited the need for a vehicle for producers to have real input without fear of retribution, that farmers should collectively ask questions of their cooperatives, seek better representation and together, hold their cooperatives accountable to represent their interests. 

“We need to figure out a way to get farmers’ voices incorporated into this discussion. I hear from producers all the time, but there is fear of retribution, the threat that your milk is not going to get picked up. If you are on a board and speak up, you’re not there very long,” said Kim Bremmer, representing Venture Co-op in Wisconsin, a third-party ‘testing co-op’ qualified by USDA.

She addressed bloc voting, saying: “What’s the point of having a hearing if producers can’t vote? We don’t have great representation from some of the groups that say they represent us.”

Bottomline, said Bremmer: “We have to address how to get more of the producer voice and not just the processor voice — because they’re not the same.”

She asked: “Is it a conflict of interest if you’re a processor and you’re marketing milk and you’re also advocating for producers? I think that’s an important question that needs to be answered. We need to stay engaged in this and be able to ask the tough questions and demand some answers.”

ADC’s Fischer said the organization wants to work with farmers and their state and national organizations to provide a vehicle to bring farmers together and compose a list of pricing policy items to explore further with experts.

One clear change in the dairy industry formed the crux of the discussion: The growth of milk production in the U.S. — in concert with growing export sales and declining fluid milk sales — put export sales volume above Class I volume as a percentage of total milk solids in 2021.

McCully described this as “a seismic change.”

Covington confirmed that Class I sales — as a percentage of total milk production — fell below 20% in 2021. The percentage of Class I milk within the 137 billion pounds pooled on 11 FMMOs in 2021 was about 30%.

Contrary to the widely held belief that FMMOs regulate a majority of the milk, they simply do not. Covington confirmed that the 137 billion pounds of milk pooled on 11 FMMOs in 2021 represents only about 60% of U.S. milk production.

The FMMOs aren’t designed for this direction that the dairy industry is going toward global markets, according to McCully.

He said the world will look to the U.S. as the “go-to market,” claiming New Zealand and the EU are maxed out. He described the “white gallon jug” as being the most prime example of a low-margin commodity and predicted ‘value-added’ products will return more dollars to farmers in the future. These are recurrent themes heard from speakers at winter meetings this year.

(Author’s note: In contrast, current industry-wide discussion on the ‘sustainability’ side is for a ‘stable’ U.S. cattle herd to be an indicator of dairy’s climate neutrality. If exports grow, and the U.S. herd remains ‘stable’, then export milk will have to come from growth in output per cow and displacement of Class I production. One can see how geographic camps can set up, since fresh fluid milk sales are vital to the viability of dairy farms in areas outside of the earmarked growth areas for dairy manufacturing in the Central U.S. — the question is how to bridge it.)

At the same time, dragging feet doesn’t seem to be much of an option.

If dairy policy remains ‘status quo,’ leaving the FMMOs ‘as-is,’ they could eventually cover less and less milk and potentially collapse, according to McCully.

Covington also addressed this, noting that FMMOs “were designed for fluid milk, but today, fluid milk is a minority use. People used to drink their milk, now they are eating their milk.”

McCully noted the need for dairy innovation. He said make allowances have facilitated large-scale commodity plant construction supplied by large-scale farms, suggesting it is these built-in make allowance ‘margins’ that favor commodity production and deter innovation. 

“If end-product pricing continues, the make allowances will have to be raised,” he said, citing a new make allowance study “fresh off the press.”

In 2019, USDA commissioned Dr. Mark Stephenson, dairy economist at University of Wisconsin-Madison, to do the study. Stephenson recently announced it is complete and will soon be released by USDA. McCully’s glimpse at the report shows make allowance calculations to be “significantly higher” than the amounts embedded currently in end-product pricing formulas.

Western Pennsylvania dairy nutritionist Harry Stugart offered his concise, data-driven argument that the make allowances be removed from the formula for the ‘advance’ Class I mover price because these make allowances do not pertain to fluid milk. In January 2022, he said they amounted to $2.67 per hundredweight.

Another crucial part of the discussion was how FMMOs actually work and what they do, besides pricing.

Covington gave attendees a primer of key points to think about as discussions move forward. What he shared may be old news to some, but it’s surprising how many people do not know these facts:

— FMMOs are not required by law, they are simply “enabled” to exist by law. This means producers vote to have them (California in 2018) or to terminate them (Idaho 2004).

— Only Class I fluid milk plants are required to be regulated under FMMOs.

— Class II, III and IV plants participate voluntarily, and they tend to do so “when it’s economically feasible.” Rules of participation vary from Order to Order.

— FMMOs establish other things besides minimum pricing for regulated plants. This includes setting payment terms, providing market information and market services such as testing and auditing.

— The last FMMO reform (2000) was complicated and took four years. It was a combination of legislation (1995 Farm Bill) and an administrative rulemaking process.

— Today, there are four classes of milk, but that was not always the case.

— Today, the Class I mover (base price), as well as the Class II, III and IV prices are established to be the same in all FMMOs, but in the past different FMMOs had different mechanisms.

— Cooperatives are not required to pay FMMO minimum prices even if they own regulated Class I plants because cooperatives are viewed by the FMMOs as one big producer and can make their own decisions about distributing the revenue received to their farmer-members.

— Today, over half of the Class I fluid milk plants in the U.S. are either owned by cooperatives or by large retail supermarkets. Over the past 60 years of consolidation, FMMOs have gone from regulating 2250 fluid milk plants in 1960 to just 225 in 2021.

— Cooperatives balance the Class I market at a cost. Excess milk can go to unregulated buyers at a price that is several dollars below the minimum price. Some co-ops run their own balancing plants. These costs can result in paying farmers below minimum price.

“Milk pricing should return a fair cost to producers, processors and retailers. A chain is only as strong as its weakest link,” said Sherry Bunting, speaking on behalf of the Grassroots PA Dairy Advisory Committee. She also highlighted the Whole Milk for Healthy Kids Act, H.R. 1861, explaining how support for this legislation is essential — no matter how milk is priced.

“In the process of working on this legislation, our (Grassroots PA) committee has identified other concerns. It is hard for producers to advocate when even such a simple and good thing as whole milk in schools is rebuked,” said Bunting. “Farmers hear from leaders and inspectors: ‘If we sell whole milk in schools, do you think we can just stop making cheese and other products?’ Or ‘All you are doing is disrupting markets and creating a butterfat shortage.’ Or ‘Be careful what you wish for.’ These are veiled threats.”

Bunting highlighted the need for greater competition, accountability, transparency and timeliness of price reporting. 

“Dairy farmers have farms to run, cows to care for, and they become paralyzed by the complexity and lack of transparency in the system and their milk checks. They become overwhelmed and unconfident, even fearing retribution,” she said.

Bremmer specifically addressed milk check transparency.

“We have members with attorneys that cannot interpret their milk checks. That has to stop,” said Bremmer. “Why wouldn’t processors want to show farmers what they are paying them? What is the reason? To have attorneys and others looking at it and they can’t figure it out, that’s a real problem. We think they’re probably re-blending some things to make another ‘make allowance’. We know these things are happening all across the United States.”

Payment terms are critical in this conversation. Even the best-made plans for risk management mean nothing if farmers don’t receive timely and consistent payments for their milk due to the high capital costs and cash flow needs of running a dairy farm. 

One commenter said farmers want their income to come from consumers, not from the federal government. He wondered why Federal Milk Marketing Orders (FMMOs) are even needed to guarantee payment.

“Why? So you get paid,” replied panelist Covington. “The FMMOs all establish dates when advance and final payments are made. Having been a co-op manager working with fluid milk plants, I can’t emphasize enough how important this is.”

He also pointed out the important auditing, weights and measures, and market information the FMMOs provide.

McCully said these other services provided by FMMOs are “something we need more of going forward. We need less (price) regulation and more (market) information,” he added. “What’s not working is the milk pricing.”

Here’s where the crux comes into play: The FMMOs are not set up to regulate a global product market, and the industry has set its sights on exporting even more. This is leading the dairy industry to look at how other countries price milk as it relates to the U.S. pricing system and its ability to “be globally competitive.”

As the percentage of Class I sales have declined in relation to growth of U.S. milk production over the past decade, the percentage of milk pooled on FMMOs has also declined from 82% in 2011 to 60% in 2021 (See Table I).

Covington explained how pooling plays out within the FMMO system: “A regulated plant is required to pay its direct shippers and any co-op supplying milk a minimum blend or uniform price. Each Order takes the revenue from each class at the minimum price and pulls it together into one pool to come up with the uniform price.”

He said Class I differentials “have two purposes, to move milk to fluid use and to gain additional revenue for dairy farmers.” They range from $1.60/cwt in the extreme northern U.S. to $6.00/cwt in Miami, Florida and are added to the base Class I mover price. 

The regulated Class I plants pay the difference between the uniform price and the Class I minimum price into the FMMO. Other class plants voluntarily participate to take a draw from the FMMO to add to what they pay their producers. That’s how it has worked most of the time – until now.

Diminished Class I sales as a percentage of total milk flip this switch, and the 2018 Farm Bill change to averaging Class III and IV skim plus 74 cents — instead of the ‘higher of’ — along with the advance pricing element, have increased the de-pooling pressure on this system, especially during times of volatility.

When asked about wide price inversions that occurred in some months over the past two years, both Covington and McCully observed the impact on bottlers paying above minimum prices to attract milk away from then higher-value Class III.

In thinking about the future, Covington reminded attendees of the past. He said at one time some Orders had individual handler pools — not marketwide pools — a nod to the idea of how FMMOs could continue to regulate Class I, if handlers in the other classes lose interest in participation.

Back when California was a state order, virtually all milk was pooled. Plants had to make decisions about pooling annually by January 1. 

McCully contended that this scenario led to dumping of milk and inefficient transport to other areas. According to his analysis, the idea of making the pooling rules more restrictive and uniform across all FMMOs would lead processors to completely leave the system, and they can do that because their participation is voluntary, except for Class I.

Risk management was on the mind of several commenters, including Doll. He pointed out how the ‘holes’ in the Class I pricing change were exposed by the pandemic volatility. (Significant losses to Class I value are occurring again in the February and March 2022 Class I price.)

Joining Doll as a fellow Illinois dairy farmer was Bryan Henrichs. He said the class price inversions during the pandemic left many farmers on the losing end of what they thought were ‘safe’ $18 Class III forward contracts. The up to $9 negative PPDs kept them from achieving that price when the Class III price exceeded the contract level, but the farmer didn’t receive that price in the milk check — a double whammy.

Henrichs and others noted that milk should be priced competitively and simplified. Henrichs mentioned the idea of pricing milk at one price — no matter what it is used for — allowing market participants, including farmers, to manage risk and trade location basis, like for corn.

Arden Tewksbury’s comments from Progressive Agriculture Organization based in Meshoppen, Pennsylvania were presented by Carol Sullivan — highlighting the need for cost of production in the pricing equation, along with a realistic supply management program. 

Annual FMMO pooling decisions (instead of in and out), and his longtime support for whole milk in schools were other key points offered by Tewksbury.

One attendee stated that if processors are looking to raise their ‘make allowances,’ why not add a ‘make allowance’ for producers?

On cost of production, McCully pointed out that the range is wide between a 50,000-cow dairy in western Kansas and a 40-cow dairy in northern Vermont, for example. He said interstate movement of milk and the fact that FMMO participation is voluntary for over 80% of the milk outside of Class I creates issues for using a blanket national average cost of production.

McCully said ‘cost-plus’ contracts are being used today by some processors and producers, but this is only for milk sold outside of the FMMO system.

As confirmed by Covington, 40% of the U.S. milk supply was priced outside of the FMMOs in 2021. He said this could increase as Class I becomes a smaller slice of the growing pie, especially in areas of the country where Class I is already quite small.

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MILK MARKET MOOS: Jan. 2022 milk down 1.6%, licensed herd average falls below 30,000 in 2021, futures higher, spot commodities lower

Milk Market Moos, by Sherry Bunting, is a weekly feature in Farmshine. Portions are republished below with the prices updated to Fri., Feb. 25 after the print edition went to press Wed. evening, Feb. 23.

Milk production in all U.S. states collectively during January fell by 1.6% vs. year ago. In the 24 major reporting states, the decline was 1.4%. December’s production was also revised lower than the estimate last month.

January’s production decline came from a combination of reduced output per cow and 63,000 fewer cows compared with a year ago. Cow numbers in January are 5000 fewer than December.

This trend could go on for some time, as we noted recently in this column, that the Jan. 1 semi-annual All Cattle and Calf Inventory Report recently showed a 1% decline in milk cow numbers compared with Jan. 1 2021 and a whopping 3% decline in replacement dairy heifer numbers vs. year ago.

The 2021 production total for the U.S. was also released in the Feb. 23 USDA Milk Production Report showing last year’s U.S. milk production total was 1.3% above 2020.

At the same time, the average number of licensed herds in the U.S. during 2021 (not an end-of-year number) was reported at 29,858 — down 1,794 compared with the average number of licensed herds in 2020 and the first time the number fell below 30,000. This is a 5.7% decline in the average number of licensed dairy herds nationwide. In 2020, there was a 7.5% decline as the nation lost 2550 dairy herds that year.

In the Northeast and Midatlantic milkshed, among the major reporting states, Pennsylvania’s production was 2.9% below year ago in January with 6000 fewer milk cows on farms; 2021 production in the Keystone state was 1.6% below 2020 and the average number of cows on PA farms last year was 8000 fewer than in 2020.

January’s production in New York was down 0.6% with 5000 fewer cows; 2021 production in the Empire State was up 1.6% with the average number of cows on NY farms in 2021 numbering 1000 more than in 2020.

Vermont’s cow numbers fell by 1000 head in January 2022 vs. Jan. 2021 and milk production was off by 1.8%; 2021 production in the Green Mountain State was down 1.4% vs. 2020 with 2000 fewer cows as an average for the year.

The average number of licensed herds in Pennsylvania in 2021 was 5200, down 230 from 2020 (4.3% drop); New York 3430, down 220 (6% drop); and Vermont 580, down 60 (a 9.4% drop); Virginia 421, down 54 (11% drop).

In the Southeast milkshed among major milk producing states, Florida’s average number of herds was 75 in 2021, down 10 from 2020 (11.8% drop); Georgia 110, down 20 (15.4% drop). Production and cow numbers were mixed with Georgia growing output by 1.4% in 2021 vs. 2020 with 1000 additional cows; Florida’s production declined 5.1% with 5000 fewer cows, and Virginia’s production was down 3.4% with 2000 fewer cows.

Georgia’s production last month was up a whopping 5.1% as one of only 5 states to show a year over year production increase in January 2022 with 3000 more cows than a year ago even though the number of farms fell by over 15%.

By contrast, January’s production totals in Florida and Virginia were down 3.5% and 3.8% with 4000 and 3000 fewer milk cows, respectively.

Four other states gained production in January vs. year ago, (in addition to Georgia). They were: Iowa, up 1.7% with 3000 more cows vs. year ago; Idaho up 0.6% with 4000 more cows, Texas up 3.5% with 12,000 more cows, and South Dakota up a whopping 18.3% with 28,000 more cows.

The two largest milk production states saw a pullback in January: Wisconsin’s production was off fractionally while California, the largest producing state, saw a 1.9% decline in year over year production in January.

New Mexico’s trend deepened. 2021 production was 4.5% lower than 2020 with 12,000 fewer cows. In January 2022, production was below previous year by 12.1% with 42,000 fewer milk cows. New Mexico’s average number of licensed herds in 2021 came in at 120, down 20 (down 14.3%).

Texas also saw 20 fewer licensed herds last year, at 340 (down 5.6%). However cow numbers grew 27,000 in in the Lone Star State during 2021 with production beating 2020 by 5%.

Texas officially surpassed New York as the 4th largest milk producing state with 15.6 billion pounds of milk vs. New York’s 15.5 billion pounds in 2021. The January 2022 figures show 12,000 more cows and 3.5% more production vs. year ago in Texas.

South Dakota lost 15 herds at an average 165 for 2021 (down 8.4%). However, South Dakota gained 21,000 cows and 15.5% in milk production for 2021 vs. 2020. Neighboring Minnesota, the 7th largest milk producing state gained 13,000 cows and 3.7% in production in 2021 at 10.5 billion pounds — putting more daylight ahead of Pennsylvania, the 8th highest producing state at 10.1 billion pounds in 2021.

Look for more analysis of the yearend report in the next print edition of Farmshine and here at agmoos this week.

Cl. III and IV milk futures mixed,12-mo. Cl. III avg. $21.51, IV $23.25

Class III and IV milk futures were mixed when Farmshine went to press at midweek, Feb. 23 — before global reports showed a shrinking milk supply and before the Russian invasion of Ukraine commenced. Figures in the Farmshine print edition of Milk Market Moos have been updated using milk futures quotes at the close of Friday, Feb. 25 trade below.

Class IV split the trend with first half 2022 steady to lower, second half firm to higher, while Class III was mostly higher, except March and April contracts under downward pressure. In the Class III trading, new contract highs were set for August through December 2022.

The bullish USDA milk production report came out at the close of CME trade on Feb. 23 — prompting after hours trade to tick higher Feb. through Aug. by 25 to 65 cents on Class III, strengthening further at the end of the week on news of global supply deficits tempered by the uncertain impacts of war in Eastern Europe.

Class III milk futures recouped twice as much as was lost last week, averaging $21.63 for the next 12 months on the close of trade Wed., Feb. 25. This is 29 cents higher than the average a week ago,

Class IV futures averaged $23.46 for the next 12 months, generally steady at midweek compared with the previous week’s average, but gaining 22 cents Thursday and Friday on the average.

The average spread between the Class III and IV milk futures contracts for the next 12 months Feb. 2022 through Jan. 2023 stood at $1.83/cwt on Feb. 25 — 10 cents narrower than a week ago with Feb. through August contracts $1.80 to $2 apart and narrowing to right around the $1.48 threshold by September.

CME spot dairy commodities lose ground

CME spot dairy prices moved higher on Class III products (cheese and whey) before turning lower at the end of the week. For Class IV products (butter/NFDM) the trend started lower and continued lower through week’s end.

By Fri., Feb. 25, butter lost two-thirds of last week’s huge gain, pegged at $2.5785/lb with 2 loads trading. This was 20 cents lower than the previous Wednesday, with 8 cents of the loss occurring in a single session Friday.

Grade A nonfat dry milk (NFDM) lost 5 pennies this week then gained one back on Wed., Feb. 23 when the spot price was pegged at $1.86/lb — down 4 cents from a week ago with 12 loads trading. Thursday’s trade saw a penny and a half increase, which was lost Friday, to end the week at $1.86/lb.

On the Class III side of the ledger Wed., Feb. 23, 40-lb Cheddar blocks were firm at $1.99/lb, gained 3 cents Thursday, but lost 7 cents Friday, Feb. 25, when 40-lb blocks were pegged at $1.9450/lb, down 4 1/2 cents from a week ago with a single load changing hands; 500-lb barrels at $1.90/lb were 1 1/2 cents lower than a week ago with 2 loads trading Friday.

The spot market for dry whey gained a penny, at 81-cents on Wed., Feb. 23, with no loads trading, but then lost 3 cents in end of week trading, pegged Fri., Feb. 25 at 78 cents, no loads traded.

Grain market rallied

Corn rallied 10 to mostly 30 cents per bushel higher last Wed., Feb. 23 on the eve of the Russian invasion of Ukraine, most strength near term; soybean meal $10 to $30/ton higher with far off contracts $5 to $10/T higher than a week ago. Those levels followed wheat higher on the news in the wee hours of Thursday morning of the Russian invasion of Ukraine, a global exporter of wheat, corn and other grains and oilseeds, number one crop being sunflowers.

By Friday, Feb. 25, the run-up had tamped down, but with near-term contracts still much higher than a week ago — May corn closed at $6.55 down from highs over $7 the previous day; May soybean meal closed at $442.70 Friday.

Auction prices for market cows, calves, dairy fats backoff a bit after big gains two weeks ago

Market cows, fat dairy steers, and return to farm Holstein bull calves, especially beef crosses, jumped significantly higher two weeks ago and edged off a bit in the Feb. 17 to 22 auction market trade in Lancaster County. Choice and Prime Dairy steers averaged $115.00, Breaking Utility cows $81.10, Boning Utility $74.50, Lean cows $65.75. Holstein bulls 90 to 125 lbs averaged $143.00 with beef crosses bringing more than double, averaging $340.00; 80-100 lb $130.00, beef crosses $280.00.

Comments due March 24: Ask USDA to end its prohibition of whole milk in schools, give students milkfat choice

Photo credit (Top) USDA FNS website screen capture from https://www.fns.usda.gov/building-back-better-school-meals and (bottom) fat-free flavored milk and fat-free yogurt on a local school lunch tray.
Screen capture and lunch tray photo S.Bunting

By Sherry Bunting, published Farmshine, Feb. 18, 2022

WASHINGTON — As reported in the Feb. 11 Farmshine, USDA announced a ‘transitional standards’ rule on Feb. 4 for milk, whole grains, and sodium for school years 2022-2023 and 2023-2024. 

The transitional standards are only in place while USDA works with stakeholders on long-term meal standards through a new rulemaking. 

The proposed rule for the longer-term is expected to come from USDA in fall 2022 and will become effective in school year 2024-25. It will be based on the Dietary Guidelines for Americans 2020-2025, but USDA says it is conducting a public comment and review process related to the standards and to the “gradual implementation” plan it will develop based in part on stakeholder input. 

In the official transitional standards rule, USDA notes that full implementation of its 2012 meal pattern requirements for milk, grains and sodium have been delayed at intervals due to legislative and administrative actions. “Through multiple annual appropriations bills, Congress directed USDA to provide flexibility for these specific requirements.” 

Read the transitional standards rule here at https://www.regulations.gov/document/FNS-2020-0038-2936 where a comment button can be clicked to provide a public comment to USDA by March 24, 2022.

Now is the time to comment before March 24, 2022 and to call for an end to the prohibition of whole milk in schools. Request that USDA restore the choice of whole milk in schools by commenting at the online rulemaking portal https://www.regulations.gov/commenton/FNS-2020-0038-2936

Comments and questions can also be sent to: Tina Namian, Chief, School Programs Branch, Policy and Program Development Division—4th Floor, Food and Nutrition Service, 1320 Braddock Place, Alexandria, VA 22314; telephone: 703-305-2590. 
Include FNS-2020-0038-2936 in your correspondence. 

In a rare move Feb. 7, the American Association of School Superintendents (AASA) made a public media statement on the transitional standards — pointing out their concern that the long-term standards will be ‘more stringent’ due to the restrictive Dietary Guidelines that were approved by USDA and HHS in 2020. 

The Association of School Superintendents stated: “It is important to acknowledge that healthy meals are only healthy if students eat them.” 

Agreed! This applies to the milk also. Students miss out on 21 minerals, 13 vitamins, complete high quality protein, a healthy matrix of fat and several nutrients of concern when they don’t actually consume the milk offered or served at school. Those nutrients ‘on paper’ are then not realized. Many key nutrients of concern are also fat-soluble. A study at St. Michael’s Children Hospital, Toronto, showed children consuming whole milk had 2.5 to 3x the Vit. D absorption compared with those consuming low-fat milk, and they were at 40% less risk of becoming overweight! Details were presented in a June 2021 hearing in the Pennsylvania Senate, listen here

Milk consumption plummeted and waste skyrocketed since USDA’s 2012 fat-free/low-fat milk rules were set for both ‘served’ milk and competing a la carte offerings. Studies by USDA and others show milk is now one of the most discarded items at school. In fact, USDA did a plate waste study comparing 2011 to 2013 (pre-/ and post-change) They focused on fruits and vegetables, but saw milk decrease significantly, waiving it off as though it were due to an “unrelated policy change.” Technically, it was the smart snacks rules for beverages and it WAS related to the 2012 standards as both were implemented together.

See the losses in Tables 2 through 4 below in ‘selection’ and ‘consumption’ of milk from the USDA study reflecting a 24% reduction in student selection of milk (offer vs. serve) after the 2012 fat-free/low-fat implementation and 10 to 12% reduction in consumption among those students being ‘served’ or selecting the restricted fat-free/low-fat white milk option or fat-free flavored milk option. That’s a double whammy for childhood nutrition and for dairy farm viability. Since 2012, at least one generation of future milk drinkers has been lost.

Charts above are from a USDA study published in 2015 to assess school meal selection, consumption, and waste before and after implementation of the new school meal standards in 2012. Those standards impacted a la carte offerings as well as beverages, not just served meals. The method for the USDA study was: Plate waste data were collected in four schools in an urban, low-income school district. Logistic regression and mixed-model ANOVA were used to estimate the differences in selection and consumption of school meals before (fall 2011) and after implementation (fall 2012) of the new standards among 1030 elementary and middle school children. Analyses were conducted in 2013. The authors note that prior to the full implementation of new nutrition standards in 2012, a variety of fat levels of milk were offered to students and no restriction upon flavored milks. See the report here —– Additionally, a PA school trial offering all fat percentages, including whole milk, revealed a 52% increase in selection of milk and 95% reduction in discarded milk, netting a 65% increase in consumption of milk in 2019.

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Your milk check and fairness in contracts: Dr. Bozic urges transparency

Dr. Marin Bozic of Bozic LLC talked about his Milk Check Transparency Report at Pennsylvania Dairy Summit in Lancaster on Feb. 2. S.Bunting photo

By Sherry Bunting, published in Farmshine, Feb. 18, 2022

LANCASTER, Pa. — Aside from Federal Milk Marketing Order modifications, Dr. Marin Bozic talked about two other key pillars of reform during his keynote presentation at the Pennsylvania Dairy Summit February 2: Milk check transparency and fairness in milk contracts.

“Everyone prices milk differently depending on what they want you to do,” he said, showing a scattergram of milk check data from various coops and buyers. 

“It’s impossible to compare it,” Bozic declared, noting that in Australia, all milk pricing data are public so anyone can see how everyone compares in payment by region. In Ireland something similar is also done, where each buyer’s protein and butterfat price is published as well as a price for the liquid portion.

“They see what different processors pay. They don’t have Federal Orders. This transparency keeps everyone honest,” said Bozic. 

He knows about pricing around the world because — in addition to being an associate professor of applied economics at the University of Minnesota — Bozic is founder and CEO of Bozic LLC, a global provider of technology for commodity markets analytics and risk management, with around 100 clients on four continents. He is also an advisor to several dairy trade associations.

“While it’s not easy to switch (milk markets) today, milk check transparency would allow producers to hold boards accountable and hold management accountable,” said Bozic. “Having this information, seeing the patterns, a producer can ask the question: Are you doing everything you can to make sure I am successful?”

Bozic announced his new Milk Check Transparency Report, which he said will be a monthly report generated from producers submitting their milk checks to him. The purpose is to make milk checks easier to understand and to benchmark across processors to improve price discovery.

He has been working on this project with 12 processors, mainly in Wisconsin, so far. The first report is due out in the next few weeks, and the goal is to gain more input covering more buyers in more regions.

He said he hopes to have 90 to 95% of the processors included within the next six months to be able to generate a national Milk Check Transparency Report every month.

Specifically, all data is collected from producers’ milk check statements. The collaboration is confidential and a non-disclosure agreement is signed protecting the producer. Bozic and an assistant input the data. No one else sees the individual milk check submissions.

Once enough data are collected to have a high degree of confidence in the estimates, processors are contacted to offer them the opportunity to validate or comment before publishing.

Bozic has a multi-step process for standardizing the information at national average component levels (4.0F and 3.3P). He appreciates having a document describing how premiums are set by the milk buyer. Representative hauling is also incorporated and other formulas so price discovery comparisons can be made.

“Then we can work with any milk check,” said Bozic.

He said a large number of farms from Washington to Florida and from California to New York are or will be participating in this project, and he urged producers to get involved by writing to him at marin@bozic.io

Bozic was quick to point out there are other considerations and benefits a cooperative or private milk market may provide that go outside the scope of the report. He said the Milk Check Transparency Report is not meant for ranking. Instead, it is a way to look comparatively, so producers can have better market price discovery, input and accountability.

Another goal of the report is to eventually have a calculator option, where a producer can slide the pounds of volume or components, even milk quality, and see how it changes the pricing outcome.

“We are then better able to design risk management,” said Bozic, whose proprietary company owns the intellectual property he developed as the infrastructure behind risk management programs like Dairy Revenue Protection (DRP).

He believes with better information, even the Dairy Margin Coverage can be improved, and the calculators and sliders could allow producers to see how they are paid against a national index allowing them to make changes that would improve profitability and better inform how to manage the price risk they have.

Negative PPDs (producer price differentials) made headlines the past two years, Bozic acknowledged. 

“There’s an impression that all this milk was de-pooled and a feeling that processors could have their cake and eat it too,” he said. “The Milk Check Transparency Report puts everyone on notice that whether differentials are positive or negative, they are in there.”

In this way, he said, the report can “promote good behavior in an unregulated way.”

On the variation in how producers are paid, Bozic said a big problem is lack of clarity on how farmers can achieve a better price.

“It’s astonishing to me that processors do not have brochures detailing how their incentives are based so farmers know how to meet them,” said Bozic.

The Milk Check Transparency Report is something Bozic is doing, for free, on his own time. He is not relying on the University of Minnesota. He said he knows he’ll get some ‘hate mail’ but believes it is important. 

When asked why he is doing this, Bozic brought his reply to a personal level. He mentioned his mother, who is ailing, saying that she inspired him all his life to help people. He said it is hard for anyone to do this, but that he is fortunate to have built a technology company over the years and believes he is in a position to do something good.

On contract fairness, Bozic noted that Australia has required structures in their milk contracts, but they do not have regulated pricing.

“It’s their contracts that put them on an even keel,” he said. 

For example, no cooperative or milk buyer should be able to prohibit their producers from doing third-party milk weight and test samples. Contracts should protect farmers from being ‘failed’ in inspections simply because they are ‘prickly’ or ‘vocal’ producers.

He also noted that in countries, like Australia, milk buyers or cooperatives are not allowed to require exclusivity while also doing two-tiered pricing for base and over-base milk at the same time. 

“It’s one or the other,” said Bozic. “When those two lanes cross at the same time, we have a traffic accident.”

“Organizations like ADC and Edge are fighting for some of these interests of farmers, but they need more voices,” said Bozic.

He pointed out that the combination of exclusivity and base programs in the East may be insulating against production growth and surplus.

“That ‘insulation’ may be fine right now,” said Bozic. “But what about 10 years from now?”

What happens to dairy in the Northeast, for example, when processing has been built up everywhere else where production is being allowed, even encouraged, to grow?

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