November 19, 2021 MPC Friday Report

Updated: Feb 1

 

MPC Attends Western States Dairy Producers Association Meeting

By Geoff Vanden Heuvel, Director of Regulatory and Economic Affairs


A note from MPC General Manager Kevin Abernathy

Geoff does an excellent job in the article below capturing the key takeaways and issues discussed during this week's dairy meetings in Las Vegas. I want to take a moment to thank you, our members, for providing Geoff and me the tools and resources to engage with our dairy counterparts in the western states and industry policy professionals from across the nation.


After reflecting on the trip – and after nearly two years without in-person meetings – I was reminded just how important the role face-to-face collaboration plays in advocating for, advancing the positions of, our dairy families. MPC's investment and participation in these organizations and activities cannot be overstated: It helps staff stay on top of emerging issues, creates working coalitions built on trust – and perhaps most importantly – we're able to bring a California voice and perspective to policy positions the national dairy industry is trying to advance.


As cliché as it sounds, you have to be at the table to have your voice heard, and being at the table means being willing to work with others. Thank you for allowing us to represent your interests at the table. There's more work to do and we're excited to build on the progress MPC and our partners have made.


Board members Daryl Koops and Michael Oosten, along with Kevin Abernathy, and yours truly, represented Milk Producers Council at the Western States meeting in Las Vegas this week. It had been some time since the producer trade associations representing Washington, Oregon, Utah, Idaho, Arizona, New Mexico, Texas and California had gotten together in person. We do have twice monthly zoom calls to keep up with what is going on, but spending some time together was great.


The meeting coincided with the big dairy industry gathering of National Milk Producers Federation and the various national dairy organizations. This proximity enabled the Western States group to receive presentations and reports from experts working on a whole range of issues facing the industry.


The issue of sustainability is a hot topic right now. Juan Tricarico, from Dairy Management Inc. (DMI), spent some time educating us on the basics of greenhouse gas (GHG) emissions. The dairy industry emits three different GHGs, all of which combine to intensify the warming of the planet. Those three are carbon dioxide (CO2), nitrous oxide (N2O) and methane (CH4).


These three gases have very different properties. Carbon dioxide has the lowest warming impact per unit of the three, but once released to atmosphere it can last for hundreds of years, even up to 1,000 years, before naturally breaking down. Nitrous oxide has 300 times the warming impact compared to CO2 and lasts hundreds of years. Methane has 30 times the warming impact of CO2 but lasts only 10 years before nature breaks it down and eliminates its warming impact.


What this points out is that time is an important factor to consider in addressing climate change. Since methane is naturally destroyed in the atmosphere in 10 years, projects that reduce methane below the baseline have a cooling impact on the planet. What we learned from the presentation is that the scientific community is seriously considering this time related issue of GHG emissions right now. The goal has been described as “achieve carbon neutral or better”, but a better way to describe the goal would be “achieve Greenhouse Gas (GHG) neutrality”. The huge benefit of reducing methane can move the planet toward “achieving GHG neutrality” and the dairy industry has some of the most cost-effective methane reduction projects in the world.


We also received presentations on the current state of immigration policy. The Farm Workforce Modernization Act had passed the U.S. House of Representatives earlier this year and is awaiting action in the U.S. Senate. Very partisan debates over the social infrastructure bill in the Senate have prevented progress on the immigration bill. The Democrats have made several tries to include immigration provisions in the “Build Back Better” budget reconciliation package, but the Senate parliamentarian has ruled that those provisions would not be allowed in a budget bill.


There is great concern by dairy producers that if those very narrow immigration provisions passed in the budget bill, they will do nothing to address the ongoing need for additional immigrant labor to work on our farms. If the immigration provisions are not addressed in the budget bill, then after the budget reconciliation bill is dealt with, there is still significant bipartisan support in the Senate to address the Farm Workforce Modernization Act.


Dr. Scott Brown, a well-known University of Missouri dairy economist, came by and shared some interesting observations. He made the point that the dairy industry has been and is evolving and changing significantly. Changing consumer demands and comparative production costs have been major factors that far outweigh government dairy safety net policy changes in terms of influence. However, “Building a domestic dairy policy that addresses all of the issues that unfolded with the pandemic is impossible.”


Dr. Brown showed a chart that compared total cash receipts for milk in 2020 compared to 2019. This chart showed that in total, the cash receipts for milk were about equal, $40.5 billion in 2019 to $40.6 billion in 2020, with $3 billion additional dollars from CFAP in 2020. These payments were capped based on the size of the dairy. He acknowledged that while the total dollars in 2020 were higher, the impact of massively higher cheese prices in 2020, created significant disparities in price between what individual dairymen received for their milk. He closed with the following summary points:


• Payment limits have existed for decades in direct payment type programs.

• As a percentage of all farmers leaving the industry- small farmers are the majority.

• Federal dairy policy will continue to evolve.

• Federal dairy policy will continue to grapple with an adequate safety net without incentivizing too much milk production.

• There will need to be focus on the unintended consequences of new policies.


In the reports from the various western states, Dairy Producers of New Mexico shared with the group an analysis they have done of what the payment caps in all the various government programs have meant to their producers over the past 25 years. It is a staggering amount of money that on a per cwt. basis went to small farms but did not go to the New Mexico dairies because they are large and therefore capped out. This is a common theme from all the western states. As future farm bills get written, size bias in dairy policy will become an even greater issue of focus.


There were lots of side conversations that can occur only when the group gets together. There is a lot happening in the industry and being a part of Western States is a great opportunity for Milk Producers Council to both contribute to the conversation and learn from others. We really are better together.

 

Milk, Dairy and Grain Market Commentary

By Sarina Sharp, Daily Dairy Report


Milk output is down and prices are up. According to USDA’s Milk Production report, U.S. milk production dropped to 18.5 billion pounds in October, down 0.5% from October 2020. That’s the steepest year-over-year decline in milk output since March 2019. The agency also reported that September milk collections were steady with last year. The new estimate is 0.2% lower than USDA’s initial take.


At long last, U.S. dairy producers are milking fewer cows than they were a year ago. USDA dropped its estimate of the September milk-cow herd by 8,000 head from last month’s report, which already showed a sizeable decline. And producers trimmed the herd by another 14,000 head in October, according to USDA’s preliminary estimates. The US. dairy herd now stands at 9.4 million head, down 14,000 from October 2020 and down 107,000 from the peak in May.


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2021-11-19 MPC Newsletter
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