June 2009 Issue No. 359
Dairy Farmers Facing No Good Way Out (p. 1):
After six months of ruinous milk prices, U.S. dairy farmers
face some very difficult decisions about their future. But deteriorated dairy
livestock values are now in decline, making the option of selling the herd a
financially painful one. One auctioneer in the Southeast is advising: don’t
schedule a herd sale until at least September.
Vilsack: U.S. Agriculture “Incredibly Prosperous” (p. 1):
In late April, USDA Secretary Tom Vilsack wrote a
letter announcing nine NAIS “listening sessions” around the country. Vilsack’s
first sentence in that letter stated, “The United States has an incredibly
prosperous agricultural industry.” Does Vilsack know anything about current farm
economics?
May 2009 Class III Price $9.84 – Class IV $10.14 (p. 1):
Self-explanatory.
USDA Posts New DEIP Export Subsidies, Stirring Global
Complaints (p.2):
USDA has announced a new round of dairy export
subsidies, through the Dairy Export Incentive Program. Foreign dairy nations are
crying “foul.”
USDA Ignored Inquiries to Buy 200 Mil. Lbs. of Surplus Milk
Powder (p. 2):
Earlier this year, a Tennessee-based businessman had lined up
export buyers for all of USDA’s surplus milk powder. USDA paid no attention to
this request to move all that product out of the country and into international
feeding/nutrition programs.
Private U.S. Marketers “Locked Out” of DEIP Powder Sales?
DairyAmerica & Fonterra Look Like Prime Beneficiaries (p. 2):
The latest USDA dairy export incentives will
basically “lock out” many private exporters from nonfat dry milk exports. That’s
because the U.S. milk powder “cartel” – DairyAmerica – will sell no milk powder
for export except to its partner in crime, New Zealand-based Fonterra.
Angry Western Dairy Farmers Pull Back from Milk Dumping
Plan (p. 3):
A group of western dairy farmers – including some
of the nation’s largest producers – backed off from a planned, two-day,
milk-dumping to protest low milk prices. The group has strongly urged
California’s major dairy co-ops to develop strong restrictions on how much milk
farms may market.
Grupo LALA Paid $435 Million to DFA for NDH (p. 3):
Mexico’s largest fluid milk processor – Grupo LALA
– paid $435 million to Dairy Farmers of America in the May 2009 purchase of
National Dairy Holdings. The Milkweed urges DFA members to find out if DFA sold
future raw milk supplies to Grupo LALA on an el cheapo basis.
USDA Releases Details for “Dairy Import Assessment Fee” –
Dairy Farmers Will Be Mad (p. 4):
USDA’s newly released proposed rules for the
“Dairy Importers Assessment Fee” are out … and they’re goofy. What’s wrong? Our
National Dairy Board may no longer promote “U.S.-produced” dairy products! Dairy
importers may set up their own promotion program! Importers pay only half the
amount assessed U.S. dairy farmers! And importers may get a full refund of
promotion assessments!
Dairy Importers Plotting to Create Own “Qualified Program”
(p. 4):
Money attracts. The Cheese Importers Association
of America (CIAA) is already plotting to set up its own dairy promotion
“qualified” program, under rules for assessing dairy imports recently released
by USDA.
Fonterra’s Financial Position Has Eroded Dramatically (p.
5):
The dairy export giant – Fonterra – is New
Zealand’s biggest corporation. Down under, analysts are watching a serious
erosion of Fonterra’s financial wellness. Fonterra’s equities have eroded from
$4.5 billion to $3.8 billion over the past seven years.
Fonterra Netted 52% on U.S. Sales! (p. 5):
The New Zealand press has reported (in June 2008)
that Fonterra netted $1.3 billion on $2.5 billion in U.S. sales in a recent
fiscal year. Is Fonterra pulling an offshore tax scam? Nobody makes that much
money … unless something untoward is going on.
Strong NZ Dollar Hurts NZ Farmers’ Incomes (p. 5):
The strong value of the New Zealand dollar is
hurting efforts by Fonterra to export dairy products and return a good pay price
to New Zealand dairy producers.
DOJ “Relooking Foremost/Dean Foods Deal (p. 6):
A key test of antitrust oversight is shaping up
early in the Obama administration: the April 2009 sale of Foremost Farms’
consumer products businesses to Dean Foods. That deal – approved by DOJ – leaves
virtually zero competition for school milk contracts in eastern Wisconsin.
Sources indicate that DOJ is relooking its earlier approval of the deal, which
occurred before the new head of the Antitrust Division was appointed.
Did Dean Foods Pay $35 Million or $90 Million for Foremost
Farms’ Consumer Products Division? (p. 6):
Dean Foods’ 10-Q statement filed with the
Securities and Exchange Commission on May 1, 2009 lists two subsequent purchases
of dairy processing businesses that occurred early in the second quarter. Those
unidentified purchases are listed at $35 million and $90 million. Which purchase
was for Foremost Farms’ fluid milk business???
Feature Stories: DFA Joint Venture Sells
“Cheese Replacers and Extenders” & Jan.-April ’09: Massive Increases in
Milkfat-type Imports (p.7)
Read our two June feature stories
here.
El Paso Kids Paid Dearly for School Milk in 2007-2008 (p.
8):
When the local competition ceased bidding for
school milk, Dean Foods’ subsidiary in El Paso, Texas (Price’s Creameries)
jacked up the base price for school milk half-pints by almost 12 cents.
Breakdown of El Paso School Milk Costs: Dean Foods Didn’t
Pass Through All Milk Cost Reductions (p. 8):
We offer a breakdown of El Paso Independent School
District’s month-by-month school milk costs for the 2007-2008 academic year.
Despite contractual language, Dean Foods’ local subsidiary did not pass through
contractual reductions that occurred during the 2007-2008 school year.
Texas Dairies Use Aquifer Water for Irrigating Alfalfa (p.
9):
Sustainable? Green? The big new cheese plant at
Dalhart, Texas has spurred development of local dairies that require a massive
draw from aquifer ground water to grow alfalfa. Texas is making lots of milk.
But is the draw down of aquifer water a reasonable use of that depleting
resource?
Synthetic Sweeteners: Ticking Medical Time Bombs (pages
10-11):
Writer Paris Reidhead finishes his two-part series
on the human health concerns related to artificial sweeteners. He cites
scientists’ reports and human health anecdotes. Reidhead’s focus on this issue
is because two big dairy lobbying organizations want to allow “non-nutritive
sweeteners” in the standards of identity for 17 different dairy products.
Scandal Fuels Meltdown in Organic Dairy Industry; Farmers
Seek Justice form Obama, USDA; Consumers Headed Back to Court (p. 12):
The Cornucopia Institute’s Will Fantle updates the
ugly picture facing many organic dairy farmers. A judge has dismissed the
lawsuit filed by Cornucopia, among others, against Aurora Organic Dairy. That
lawsuit had claimed that Aurora’s numerous, documented violations of USDA’s
organic standards meant that Aurora’s fluid milk was not “organic.” The judge
disagreed.
Connecting the Dots: No U.S. Surplus (p. 12):
John Bunting takes a look at USDA’s “commercial
disappearance” data for 1990 to the present, and concludes that since 1996, the
U.S. has consumed more dairy products than it has produced. We’re a
“milk-deficit” nation.
Commodity Prices at CME Show No Spark (p. 13):
Few favorable trends at the Chicago Mercantile
Exchange’s cash dairy commodity markets.
Dairy Cattle Replacement Prices (p. 14):
Except for baby calves, U.S. dairy livestock
prices are dropping. Top-end Holstein springers are bringing not much more than
$1500 at auctions and private-treaty sales.
Weather and Crops – Look Out for Soybeans Shortages (p.
14):
John Bunting takes a look at weather forecasts,
USDA’s crop progress reports, and marketers’ analyses to conclude that soybeans
could be very short later this year.
Time for overdue changes (p. 15):
Pete Hardin lets fly with his ideas about what
dairy (and government) must do to restore a profitable, sound dairy industry.
Hardin sees the need for using consumer prices paid for cheese and fluid milk as
one basis in a completely revised federal dairy program.
NAIS: a losing proposition (p. 15):
Hardin’s opinion: USDA’s National Animal
Identification System is a completely foolish endeavor, best killed. Many of our
worst food-safety fiascos have come from imported foods – even the “Jack in the
Box” hamburger contamination back in the early 1990s.
Farmers to USDA Secretary: Ditch NAIS (Is Vilsack
Listening?)(p. 16):
Writer Mary Zanoni summaries results from seven of
the nine USDA “listening sessions” conducted in May 2009. Roughly 90% of persons
commenting at these meetings spoke against NAIS. The notion of
“computer-chipping” food producing animals (and horses) is apparently a
directive from the United Nations and USDA is promoting this bone-headed scheme
for compliance with global “Free Trade” rules.