Dairy Situation and Outlook, June 21, 2016
By Bob Cropp, Professor Emeritus. University of Wisconsin Cooperative Extension, University of Wisconsin-Madison


Despite relatively strong milk production, increasing stocks of dairy products and weak exports dairy product prices surprisingly have strengthened in June. On the CME, butter which average $2.0554 per pound in May is now $2.36. Barrel cheese and 40-pound block cheese which averaged $1.3529 per pound and $1.3174 per pound respectively in May is now $1.545 and $1.5125 respectively. Nonfat dry milk which averaged $0.7880 per pound in May is now $0.88. And Western dry whey has strengthened and is trading as high as $0.26 per pound. So we can expect the Class III price which was a low of $12.76 in May to be near $$13.25 in June, and the Class IV price which was $13.09 in May to be near $13.79 in June. 
  
Sales of butter and cheese have been good particularly in food service. But, exports have been weak with April exports compared to a year ago lower by 19% for nonfat dry milk/skim milk powder, 33% for cheese, 44% for butter, 13% for dry whey products and 22% for lactose. Compared to a year ago, April stocks of butter were 28.3% higher, total cheese stocks 11.8% higher, nonfat dry milk stocks just 1% higher, but 17.1% higher than the five year average for this date, and dry why stocks were 4.6% higher.  So the question is will these dairy product prices hold or even increase more? If so, milk prices will be considerably higher for the remainder of 2016 than what has been forecasted. USDA’s June forecast still had the Class III price averaging for the year $13.40 to $13.80 and the Class IV price averaging $13.15 to $13.65. Class III averaged $15.80 last year and the Class IV price averaged $14.35. 
  
Both Class III and Class IV futures have responded to higher dairy product prices. Currently Class III futures jump to $15.05 for July and then in the $16’s August through November with December in the high $15s. Class IV futures jump to $15.59 for July and then the $16’s for the remainder of the year. The price of corn, soybean meal and alfalfa hay have all increased. So these higher prices are much needed to improve margins for dairy producers. 
  
Whether these dairy product prices hold or improve even more and increasing dairy producer prices will depend a lot upon the level of milk production. Butter and cheese sales are expected to remain strong. USDA’s report of May milk production shows a continuation of relatively strong milk production with May being up 1.2% from May a year ago. But, the report shows milk cows have stop increasing and have been at 9.327 million head for the past three months, and were just 3,000 head higher than a year ago. The increase in milk production is being driven by more milk per cow. Last year milk per cow increased well below trend at just 0.6%. Milk per cow for May was 1.2% higher than last year. 
  
The regional pattern in milk production remains as it has last year and thus far this year. Milk production remains very strong in the Northeast with production up 4.9% in New York, 6.9% in Michigan, but just 0.3% in Pennsylvania. Milk production also remains strong in the Midwest with production up 2.3% in Iowa, 2.2% in Minnesota, 9.5% in South Dakota and 4.2% in Wisconsin. The picture is somewhat mixed in the West with California continuing to see milk production 2.8% lower, New Mexico down 3.8%, Washington’s production unchanged, and increases of 2.3% in Arizona, 1.8% in Idaho, 1.4% in Texas, 4.1% in Colorado and 2.2% in Oregon. 
  
This improvement in dairy product prices and milk prices is driven by expected strong butter and cheese sales, but also by an expectation that milk production could slow down due to lower milk prices, but also weather. Weather forecasts show that with La Nino conditions there is a high probability of hot and humid temperatures and dry conditions for the Central, Midwest and Northeast regions. Grain prices have also moved higher for the same weather conditions. These weather conditions would reduce milk per cow lowering milk production, lower milk composition, and reduce grain yields as well as forage supply increasing feed costs. There is also signs that world milk production may start to slow. Low milk prices appears to be affecting milk product in New Zealand and Australia and starting to do so in the EU. As world milk production slows world dairy product prices will improve. China may start to increase its imports of dairy products. So U.S. dairy exports could slowly improve during the second half of the year. 
  
So the dairy picture looks a little brighter now than it did just a month ago. 


Efficiency Vermont’s Agricultural Energy Efficiency Initiatives for the remainder of 2016 starting July 1. 

Ag Lighting & Equipment Form There are only a couple rebate changes to note for the July-December rebate form. Please see attached Agricultural Lighting and Equipment Rebate Form for more details.

  • Additional tier for larger Plate Coolers
  • Increased rebate for Milk Pump VFDs (now $1,125)
  • Ag LEDs added to form (see below)

Ag LEDs!! Now available on the Ag Lighting & Equipment form for agricultural facilities:

  • DLC qualified LED fixtures installed inside agricultural facilities (including dairy barns, sugar houses, horse arenas, etc.) are eligible for rebates. Customers can apply by using the NEW LED section on the Ag Lighting and Equipment Form
  • DLC qualified Mogul Based LEDs for HID Replacements may qualify through our Custom process. Contact Customer Support to learn more: info@EfficiencyVermont.com or 888-921-5990
  • DLC qualified LED replacement tubes installed inside agricultural facilities are eligible for rebates. Customers can apply by using the LED Replacement Lamps section of the Efficiency Vermont Commercial Lighting Form..
  • DLC qualified LED fixtures installed outside (including yard-lights, pole-lights, etc.) are eligible for rebates. Customers can apply by using the Exterior LED Lighting section of the attached Efficiency Vermont Commercial Lighting Form.
  • DLC qualified LED fixtures utilized for grow lighting will be assessed on a case-by-case basis. Contact Customer Support to learn more: info@EfficiencyVermont.com or 888-921-5990.

Ag (Dairy) Ventilation This initiative has changed only slightly from last year but no changes from the first half of the year. Please see attached Ag Fan Pre-Qualification Form for more details. Please note that projects must be completed by 8/31/2016.

Maple Reverse Osmosis (RO) Rebates This initiative has changed only slightly from last year but no changes from the first half of the year. Please see attached Maple RO Pre-Qualification Form for more details. Please note that projects must be completed by 11/30/2016.

Ag Custom Projects and Technical Assistance Per usual, ag energy efficiency projects that involve technologies that are not described in the initiatives above may be eligible for rebates. Contact Customer Support to learn more: info@EfficiencyVermont.com or 888-921-5990.

Ag Energy Loan Same low interest rates (as low as 3.25%) are still available. Please see attached Ag Energy Loan Inquiry Form for more details.


* * * MEDIA ADVISORY * * *

Dairy Farm Welcomes Public to VT Breakfast on the Farm: June 25th

WHAT: Vermont’s Breakfast on the Farm comes to Nea-Tocht Farm in Ferrisburgh.  This free, public event includes a Vermont-style breakfast, self-guided tours of the farm including 10 educational stations, and a peek into the life and business of dairy farming in Vermont. Although this is a free event, tickets must be reserved in advance atwww.VermontBreakfastOnTheFarm.com.

WHO: 1,000 visitors expected, agricultural leaders, educators and farmers including:

  • The Vander Wey family, owners and operators of the Nea-Tocht Dairy Farm
  • Representatives from the Vermont Agency of Agriculture, Food and Markets
  • Dr. Julie Smith, DVM, PhD, UVM Extension Department of Animal and Veterinary Sciences

WHEN:  Saturday, June 25, 2016; 8:30 a.m. - 1:00 p.m. Breakfast served on the hour 8:30 a.m. – 11:30 a.m. with self-guided tours after each seating. 

WHERE: Nea-Tocht Dairy Farm, 28 Vanders Way,  Ferrisburgh, VT                                  

VISUALS: Various aspects of the dairy farm will be open to visitors including:

o   Robotic milking machine & robotic cow feed machine

o   Wind turbine that generates electricity for the farm

o   Cows, calves, barns, tractors and farm equipment

o   Kids activities: smoothie bicycle, cow milking simulator, scavenger hunt, and more.

 BACKGROUND: Vermont Breakfast on the Farm is coordinated by the Vermont Agency of Agriculture and provides a first-hand look at modern agriculture and the farm families who work hard to produce safe, wholesome food for Vermont communities and the world. A second Vermont Breakfast on the Farm will be held on August 27, 2016 at Green Mountain Dairy Farm in Sheldon, VT. To learn more visit: www.vermontbreakfastonthefarm.com

Additional event sponsors include Bourdeau Brothers, Hall Communications, New England Dairy Promotion Board, Poulin Grain, and Vermont Feed Dealers & Manufacturers Association.


Vermont Farm Show Supports the 2016 Farm and Agricultural Resource Management Stewards (FARMS) 2+2 Scholarship Program

The Vermont Farm Show has announced it will support the Farm and Agricultural Resource Management Stewards (FARMS) 2+2 Scholarship program for the next 4 years.  The Farm Show has committed $43,000 to the FARMS 2+2 Scholarship program, which provides scholarships to young Vermonters who are pursuing dairy careers.

Founded in 2001, theFARMS 2+2 scholarship funds half tuitions for two years of study at Vermont Technical College (VTC) and full tuition for two subsequent years at the University of Vermont (UVM).  The fund is administered by the Vermont Agency of Agriculture, and the student recipients are selected by VTC and UVM.  The program also includes semesters at Vermont Tech Diary Farm and Teaching Lab in Norwich, Vermont and the Miner Agriculture Research Institute in Chazy, New York. Over 65 2+2 scholars have graduated in the past 15 years and are now active in agribusiness industries and on farms across Vermont.

“The FARMS 2+2 program provides a broad educational base for Vermont’s future dairy leaders,” said Chuck Ross, Vermont’s Secretary of Agriculture.  “The support from the Vermont Farm Show will enrich this important program, and provide a strong link between students and the industry,” he added.

The Vermont Farm Show is the premier venue for farmers to interact with the ag related businesses that keep the industry strong.  Several years ago, Farm Show vendors suggested a scholarship to assist young people interested in continuing their education in the agricultural sector.  Due to strong exhibitor support over the years, the Vermont Farm Show is in a position to do so. 

"The FARMS 2+2 Scholarship Program is a great investment in young agriculturalists and Vermont agriculture," said Dave Martin, Vermont Farm Show President.  "We are also going to offer our exhibitors an opportunity to support this program."

The Vermont Farm Show has been the state’s unofficial trade show for agriculture for over 80 years.  In 2012, the Show moved from Barre to Essex Junction and has grown into a three day event attended by more than 14,000 guests, featuring over 145 vendors and 15 organization meetings.  Always scheduled for the last week in January, the Show's visitors have also donated almost 2 tons of food and several hundred dollars to area food shelves in lieu of an entry fee since moving to the Champlain Valley fairgrounds.


Meeting Reminder

Public Hearings for the Agency of Agriculture’s Required Agricultural Practices Proposed Rule to begin June 21, 2016

Public Comment Period open until July 7, 2016.

 The Vermont Agency of Agriculture, Food & Markets (VAAFM) will host six public hearings on the Required Agricultural Practices (RAPs) Proposed Rule on June 21 in St. Albans, June 22 in Brandon, June 23 in South Royalton, June 27 in Manchester, June 28 in Newport, and June 29 in Brattleboro.

WHAT: VAAFM will host six public hearings throughout Vermont for farmers, stakeholders and the public to provide testimony and comment on the RAP Proposed Rule.  A public comment period on the RAP Proposed Rule is open until July 7, 2016.  The RAP Proposed Rule is available on the Agency website: www,agriculture.vermont.gov/water-quality/regulations/rap

As a result of Act 64—the Vermont Clean Water Act—signed into law in June 2015, the Agency of Agriculture was tasked with updating the Accepted Agricultural Practices (AAPs) to further reduce the impact of agriculture on water quality across the state. The RAPs are an updated version of the AAPs, the rules in place since 1995 which regulate farms in order to protect water quality, re-written to a higher level of performance.

To date, VAAFM has held more than 80 small stakeholder and large public meetings on the RAPs to solicit feedback from farmers, stakeholders and the public.  Over 1800 constituents have attended these meetings since October, 2015.  Summary outreach materials, including the recording of a webinar explaining the RAP Proposed Rule in detail, are available on the Agency website: www.agriculture.vermont.gov/water-quality/regulations/rap

These public hearings open to the public.  A print copy of the RAP Proposed Rule can be requested by e-mail, phone or in writing.  Email AGR.RAP@vermont.gov or call (802) 828-2431for more information. Written public comment can be submitted to the Agency’s RAP e-mail inbox at AGR.RAP@vermont.gov or by mailing comment to the Agency of Agriculture at 116 State Street, Montpelier, VT 05620.

WHO: Farmers, stakeholders and the general public can attend these public hearings to learn more about the RAP Proposed Rule and to share testimony and comment.

VAAFM was directed by the Legislature to draft the RAPs pursuant to Act 64, signed into law on June 16, 2015.  Act 64 of 2015 amended and enacted multiple requirements related to water quality in the State.  Act 64 requires that the revised RAPs include requirements for: small farm certification, nutrient storage, soil health, buffer zones, livestock exclusion, and nutrient management.

WHEN/WHERE: Required Agricultural Practices Proposed Rule Public Hearing: June 21, 2016 | 12:30–3:30 PM

St Albans Historical Museum | 9 Church Street, St. Albans City, VT 05478

Required Agricultural Practices Proposed Rule Public Hearing:June 22, 2016 | 12:30–3:30 PM

Brandon American Legion | 590 Franklin St., Brandon, VT 05733

Required Agricultural Practices Proposed Rule Public Hearing: June 23, 2016 | 12:30–3:30 PM

Vermont Law School | 164 Chelsea St., South Royalton, VT 05068

Required Agricultural Practices Proposed Rule Public Hearing: June 27, 2016 | 12:30–3:30 PM

Fraternal Order of Eagles | 2282 VT-11, Manchester Center, VT 05255

Required Agricultural Practices Proposed Rule Public Hearing: June 28, 2016 | 12:30–3:30 PM

Newport American Legion | 160 Freeman St., Newport, VT 05855

Required Agricultural Practices Proposed Rule Public Hearing: June 29, 2016 | 12:30–3:30 PM

Brattleboro American Legion | 32 Linden St., Brattleboro, VT 05301

CONTACTRyan Patch, Sr. Ag Development Coordinator. Agency of Agriculture, Food & Markets, Ryan.Patch@vermont.gov802-272-0323

For more information about the RAPs, and the Agency’s efforts to implement Act 64 of 2015, please visit www.agriculture.vermont.gov/water-quality/regulations/rap or contact the Vermont Agency of Agriculture, Food and Markets at (802) 828-2431.


Dairy Industry News Alert

Looking back: NMPF Chairman Randy Mooney told a congressional panel last Tuesday that current and future trade agreements must be carefully negotiated and continually enforced if they are to deliver ongoing benefits to America’s dairy farmers.  Mooney expressed concern that Canada is backsliding on its commitments to market access, even before the TPP agreement is finalized.

NMPF endorsed legislation introduced last week in the House of Representatives that will create new incentives for dairy farmers to adopt biogas and nutrient recovery technologies that will better the environment.  The Agriculture Environmental Stewardship Act, introduced Thursday by Reps. Ron Kind (D-WI) and Tom Reed (R-NY), will enable dairy farmers to find new ways to reduce their environmental footprint, both on their farms and in their communities.

Looking aheadSenate agriculture committee leaders are expected to continue their negotiations over legislation to preempt Vermont’s mandatory biotech labeling law, which is about to take effect July 1.

The House Agriculture Committee will hold two hearings this week: one Wednesday on nutrition education’s role in the food stamp program, and another Thursday on the impact of big data on future innovations in farming.

Dairy farmers say safety net on milk prices is not helping Associated Press – 6/19/16

Northeast dairy farmers who have been strapped for months by low milk prices say a voluntary insurance program that was supposed to be a safety net isn't helping. The margin protection program provides financial assistance to enrolled farmers when the gap between the price of milk and national average feed costs falls below the coverage levels picked by individual farmers. "It's a complete failure," said Les Pike, of Keewaydin Farm in Stowe, Vermont, which has been losing money for months. "If it doesn't pay in a year like this, it's completely useless."

 Low milk prices have left mark on area dairy farms Times-Tribune (Pennsylvania) – 6/19/16

Collapsing silos leaning toward crumbling barns that once housed Holsteins speckle the winding, narrow road leading to Brian Smith’s dairy farm. On thick, work-worn fingers toughened by 31 years of farming, Mr. Smith, 54, counts off five dairy farms that have closed along his road since he bought his farm in 1993 on 123 acres deep in the hills of Wayne County. Low milk prices and shrinking revenue caused by a number of complex factors have most farmers spending more to run their barns than they earn. Mr. Smith supplements the farm during down times with outside income.

For Triple Creek Farm, a struggle to maintain 'land and legacy' in changing times Baltimore Sun – 6/16/16

Clad in jeans and a salmon, button-down shirt, Teresa Stonesifer stands several feet from Midnight, as the cow rests in the green pastures of her farm. Stonesifer says she can feel her ears perk up. "She's been down. But I know she's okay," said Stonesifer. "I can feel it." The dark black cow is related to one of Stonesifer's first cows as a child, also named Midnight. One of her fondest memories is coddling that Midnight as a little girl when her father brought her to the barn. "It didn't matter whose it was. Midnight was mine."

Angst grows over agrochemical mega-mergers Agence France-Presse – 6/18/16

Three mega-mergers in the agrochemical sector, including Bayer and Monsanto, have raised concerns among farmers who fear higher prices and consumers more genetically-modified food. Even before Bayer successfully woos US-based Monsanto, German civil society has erupted in protest against a national champion acquiring a producer of genetically-modified seeds and Roundup, the world's leading but also controversial weedkiller that is suspected of being a carcinogen. Meanwhile ChemChina is tying the knot with Swiss-based Syngenta, and US companies Dow and DuPont are also finishing wedding plans.

Michael Froman: Where the TPP stands Wall Street Journal – 6/19/16

Trade has been battered in this presidential campaign, by the left and the right. To better understand what’s happening, Jeanne Cummings, political editor of The Wall Street Journal, sat down with U.S. Trade Representative Michael Froman, the White House’s chief negotiator on trade issues. Edited excerpts follow.

 On trade, Trump’s broadsides put Johnson in a bind Chippewa Herald (Wisconsin) – 6/19/16

Decrying global trade deals has become a rhetorical mainstay of the 2016 campaign, and Democratic U.S. Senate candidate Russ Feingold is part of that chorus — while his opponent, Republican Sen. Ron Johnson, has stayed mum. Presumptive Republican presidential nominee Donald Trump and Democrat Bernie Sanders have elevated the issue by unreservedly bashing free trade deals such as the proposed Trans-Pacific Partnership. Trump has said “we are killing ourselves with trade pacts” and described free trade with China as “stupid trade.” 

Fonterra chairman expects dairy market recovery in next six months to year Stuff.co (New Zealand) – 6/20/16

Fonterra chairman John Wilson is backing the Ministry for Primary Industries' prediction of a dairy bounceback in early 2017. Wilson said all indications were that the dairy market would balance out in the next six months to a year. The MPI's Situation and Outlook report predicted a dairy price recovery in the December quarter of this year. An all-company average farm-gate milksolids forecast was calculated to rise from an expected $4.25/kg milksolids to $4.85/kg for the year ending May. That price was expected to increase to $6.15/kg for the following year as global supply and demand rebalance, increasing further to $6.61/kg by 2020.

British farmers crave independence but fear cost of EU exit Associated Press – 6/20/16

Rob Warnock is a proud British farmer and the son of a proud British farmer, and he hopes his son will follow in his footsteps one day. He’s also a European Union farmer, but that is not a legacy Warnock wants to pass on to his 6-year-old son. Warnock plans to vote this week for Britain to leave the EU, even though it could cost his struggling dairy business dear. “As soon as I heard there would be a referendum, I knew I’d be ‘out’ without even thinking about it,” he said, as sheep and calves grazed in a field on his family farm. “It’s just what my heart says.”

Tom Maloney, cornell, talking with over a dozen farmers about human resource challenges on the farm

Tom Maloney, cornell, talking with over a dozen farmers about human resource challenges on the farm