Revenue Committee Kills Tax Reform Bills
Steve Nelson, President, NE Farm Bureau
“We have indicated from the beginning that we are open to conversations about Nebraska tax policy and reform and share an interest in creating jobs and growing Nebraska’s economy. We will continue to be open to dialogue on this issue and will focus our attention on ensuring property tax reform is a part of any tax reform conversations moving forward.”
“We greatly appreciate the efforts of the many farmers and ranchers who took the time and effort to share how these proposals would have harmed their family operations and rural communities. We also want to share our appreciation to the Governor and members of the Legislature for hearing those concerns and taking action to re-evaluate the starting point for this discussion.”
“The strength of Nebraska’s economy lies in maintaining a healthy agriculture economy, and it is critical that we continue to recognize that reality moving forward.”
Beef Demand versus Consumption, Explained
Cattlemen’s Beef Board CEO Polly Ruhland says building demand for beef clearly is one of the goals of the checkoff, but that goal often is misunderstood. Ruhland gives us an overview of beef consumption. Ruhland says, “Demand is not consumption. Now I’m no economist – that’s the disclaimer right up front – but I will tell you beef demand is commonly confused with beef consumption, although the two are very different. And here’s what I like to say: simply put, you can’t eat what you don’t make. So consumption is a measure of what we eat – it’s a measure of inventory in our business. Domestic production and imported supply of beef and beef products divided by the number of people eating. So if that’s the definition of consumption, what happens when supply decreases?”
Ruhland goes on to explain beef demand in a low supply situation. She says, “In demand, prices adjust to clear the market, whatever the supply. So if consumers are willing to pay more, the market reflects that in demand regardless of what the supply is doing. Does that make sense? Price adjusts to clear the market. So even when volume is low, as it is now, and through the next year or two at least we expect, demand and strength (strength of demand) can grow. Demand can grow when supply is low and that’s what we’re seeing right now. I understand demand is up 2 percent even though prices are up – because prices are up- in a low supply situation.”
So why does the checkoff care so much about demand rather than beef consumption? Ruhland says, “The key about demand is that it’s all about the consumer, right? Beef demand goes beyond a simple quantity and measures consumer desirability and consumer preference. Those are two things the checkoff knows very, very well – beef desirability and consumer preference for our product. The economy plays a factor – we can’t control the economy, we probably can’t control disposable income, but we can influence consumer’s desire to pay more for our product, thereby supporting and maybe even growing demand in a time when we have little product to offer them and prices are high.”
2013 Nebraska Cattlemen’s Classic Horned and Polled Hereford and Red Angus
Wednesday of the Nebraska Cattlemen’s Classic featured the “red” cattle for the week and the cattle breeders certainly turned out to watch the first day of cattle shows for the 22nd Anniversary of the NE Cattlemen’s Classic. The day started off with the Horned Hereford, Polled Hereford and Red Angus Shows followed up by the breed sales right about the time the snow started falling outside.
Horned Hereford Sale
Taking home Grand Champion Horned Hereford Bull was Lot 6, KJ 274S Benson 617Y, consigned by Jensen Bros, Courtland, KS. This bull is a 09/29/2011 son of KJ 380L Benson 661U and he sold to Alan Lawson, Agenda, KS, for $4,700.
Reserve Champion Horned Hereford Bull went to Lot 26, WCC LSW 9101 TG Davis 205, consigned by White Cattle Co. of Buffalo, WY. This bull is a 03/20/2012 son of LSW WCC About Time X06 and sold to Alan McConnell of Trenton, NE, for $4,000.
High-Selling Horned Hereford Bull was Lot 4, NH Moon Shine 130, consigned by Nelson Herefords, Broken Bow, NE. This bull is a 05/12/2011 son of SLDK Vendetta V-9 ET and he sold to Barry Burnham, Burwell, NE, for $5,250.
Grand Champion Horned Hereford Heifer was Lot 37, Hutch 0272 Miss Adv 1202, consigned by Hutchinson Farms of Chapman, KS. This heifer is a 03/28/2012 daughter of ECR7195 Domino 0272 EET and she sold to Roger Allen, Homer, IL for $1,400.
The Reserve Champion Horned Hereford Heifer was Lot 32, JC Miss Advance 168 consigned by JC Cattle Co. of Junction City, KS. This heifer is a 09/23/2011 daughter of JL Outbreak 0655 and she sold to Justin Brown of Junction City, KS for $1,500.
The 2013 sale featured 23 bulls averaging $2,757. 5 heifers sold for an average of $1,560 in 2013. Overall, in 2013, there were 28 cattle that grossed $71,200 and averaged $2,543.
Polled Hereford Sale
Judge was Roger Allen, Homer, IL. Auctioneer was Jim Birdwell of Fletcher, OK.
Taking home Champion Polled Hereford Bull honors and high-selling was Lot 27, VCR 993W Ultimate 236Z, consigned by Valley Creek Ranch of Fairbury, NE. This bull is a 03/08/2012 son of KJ 426T Vincent 993W and sold to Jerry Delaney, of Lake Benton, MN, for $8,000.
Reserve Champion Polled Hereford Bull went to Lot 22, Lambert Teddy 203, consigned by Lambert Family of Whitney, NE. This bull is a 02/15/2012 son of Lambert Big Rig 909 and he sold to John Schulte of Kearney, NE for $2,500.
Champion Polled Hereford Heifer was Lot 39, WCC LSW TDH 102X Addele 207 consigned by White Cattle Co. of Buffalo, WY. This heifer is a 03/24/2012 daughter of CRR About Time 743, and she sold to Jefferson Keller of Axtell, NE, for $4,500.
The Reserve Champion Polled Hereford Heifer and high –selling heifer was Lot 34, BBH 743 Sadie 204Z consigned by Blueberry Hill Farms of Norfolk, NE. This heifer is a 02/23/2012 daughter of CCR About Time 743 and she sold to Tyler Marotz, of Mead, NE for $5,500.
The 2013 sale saw 27 bulls average $3,198. 10 heifers sold for an average of $3,040 in 2013. Overall, in 2013, there were 37 cattle that grossed $116,750 and averaged $3,155.
Red Angus Sale
Judge was Brad Hanewich, Renssaler, IN. Auctioneer was Kyle Gilchrist, of Douds, IA.
Taking home Champion Red Angus Bull went to Lot 19, J6RA Red Red Finch 2200 consigned by J-6 Farms of Gibbon, NE. This bull is a 03/05/2012 son of WSF/Brylor Finch 68M 13W and sold to Kelly Jasnoch of Kearney, NE, for $4,750.
Reserve Champion Red Angus Bull went to Lot 20, IKE Mission 2112 consigned by Sonderup Charolais Ranch of Fullerton, NE. This bull is a 03/31/2012 son of Messmer Stimulus W055 and sold to Gordon Ganz, Alvo, NE, for $4,750.
High-selling Red Angus Bull went to Lot 5, HCC Conquistador 168Y consigned by Hein Cattle Co. of Osage, IA. This bull is a 12/28/2011 son of HXC Conquest 4405P and sold to Tom Durr of Colo, IA, for $5,000.
Champion Red Angus Heifer and high-selling honors went to Lot 24, Webr Dallas 1106 consigned by Whitney St. Clair of Smith Center, KS. This heifer is a 02/06/2011 daughter of Red Six Mile Sakic 832S and she sold to Rosie Wilson, West Fork Ranch of Loup City, NE, for $8,750.
The Reserve Champion Red Angus Heifer was Lot 27, MLS Rachel 204 consigned by J6 Farms of Gibbon, NE. This heifer is a 02/15/2012 daughter of WEBR TC Card Shark 1015 and she sold to Jennifer Svoboda, Sargent, NE, for $8,250.
The 2013 sale featured 20 bulls averaging $3,338. 8 heifers sold for an average of $4,931 in 2013. Overall, in 2013, there were 28 cattle that grossed $106,200 and averaged $3,793.
Due to the snow falling late Wednesday afternoon and impacting the show/sales for Thursday, it was decided to delay the start of the Angus, Simmental and Charolais shows until 2:00 PM on Thursday, February 21, 2013. All other events for Thursday were pushed into Friday and Saturday due to the major winter storm impacting the entire Midwest.
USDA Sees Record 2013 U.S. Corn, Soybean Output
U.S. farmers are likely to produce a record 14.53 billion bushels of corn and a record 3.405 billion bushels of soybeans in 2013, U.S. Department of Agriculture Chief Economist Joseph Glauber said Thursday.
Assuming normal weather conditions, the USDA expects a full recovery this year from severe drought that battered crops last year, Mr. Glauber said.
"A dry summer in 2012 has little implication for summer precipitation in 2013," Mr. Glauber said in a speech at the USDA's annual outlook forum, according to a copy of his prepared remarks.
Farmers are likely to plant 96.5 million acres of corn and 77.5 million acres of soybeans this year, he said. Last year, farmers planted 97.2 million acres of corn and produced 10.78 billion bushels. For soybeans, they planted 77.2 million acres and produced 3.015 billion bushels last year.
Last year's drought in the U.S., by some measures the country's worst since the 1930s, widely battered crops and sent corn and soybean prices soaring to nominal all-time records in the late summer. Soybean prices later eased as rains late in the growing season helped crops recover somewhat from the dryness, and corn prices eased as the high prices choked off demand.
This year, bumper crops will fill historically low stockpiles across the country, pushing down prices, Mr. Glauber said. He forecast prices paid to farmers for corn in the 2013-14 marketing year will average $4.80 a bushel, while soybean prices will average $10.50 a bushel.
Drought conditions have improved but are still present in the Midwest. Dryness is also severe in much of the southern Plains, where the drought will threaten wheat crops set to come out of dormancy this spring.
Mr. Glauber also said farmers would plant 56 million acres of wheat and produce 2.1 billion bushels of the grain. U.S. farmers planted 55.7 million acres of wheat and produced 2.27 billion bushels in 2012-13.
USDA: FY 2013 Exports Forecast at a Record $142 Billion; Imports at a Record $112.5 Billion
Fiscal 2013 agricultural exports are forecast at a record $142 billion, down $3.0 billion from the November forecast, but $6.2 billion above final fiscal 2012 exports. Grain and feed exports are forecast down $4.3 billion mostly on reduced corn prospects. Oilseed exports are up $1.0 billion due to strong soybean meal and oil shipments. Cotton exports are forecast up $400 million, primarily due to greater import demand from China. The forecast for livestock, poultry, and dairy is up $300 million with greater beef and poultry exports outweighing lower pork shipments. Horticultural exports are unchanged at a record $32 billion. Sugar and tropical products are forecast down $300 million on lower expected exports to Canada and Mexico.
U.S. agricultural imports are forecast at a record $112.5 billion, $2.5 billion lower than the November forecast, but $9.1 billion higher than in fiscal 2012. The reduced forecast is largely due to lower expected imports of sweeteners, coffee, and rubber.
The forecast trade balance in fiscal 2013 is lowered $500 million to $29.5 billion. This is down $2.9 billion from fiscal 2012.
Click here for the complete report... http://www.ers.usda.gov/media/1038778/aes77.pdf.
Indemnity Checks Flow to Farmers
(from NCIS)
As the claims come in from one of the worst droughts in decades, farmers and ranchers across the country are receiving indemnity payments for the losses they have incurred. As of February 18, 2013, more than $14.7 billion has been sent to farmers. Farmers will invest more than $4.1 billion to purchase more than 1.2 million crop insurance policies.
In 2012, farmers invested more than $4.1 billion to purchase more than 1.2 million crop insurance policies, protecting 128 different crops. Crop insurance policies protect more than 281 million acres of planted land. $28.6 billion: The amount of money farmers have spent out of their own pockets to purchase the protection of crop insurance in the past decade. Illinois has the highest loss ratio in the country at 3.23. 17 states have loss ratios exceeding 1.05 – meaning that for every $1 paid in premiums, companies are paying out $1.05 in indemnities. These states include: Illinois, Missouri, Kentucky, Nebraska, Iowa, Indiana, Kansas, South Dakota, New Mexico, New Hampshire, New York, Wisconsin, Texas, Colorado, Massachusetts, Tennessee and Wyoming. Nationally, the loss ratio is 1.33.
Drought Update
The 2012 drought – the worst this country has seen in decades – is now becoming the 2013 drought. In fact, 56 percent of the continental U.S. – including a good portion of the nation’s breadbasket – remains in some stage of drought, compared to roughly 38 percent a year ago, according to the February 12, 2013 U.S. Drought Monitor. In other words, many farmers are starting off 2013 in worse shape than they were at the start of 2012. Every county in the states of Iowa, Minnesota, Oklahoma, Kansas, Nebraska, South Dakota, Colorado, Wyoming, New Mexico, Arizona and Utah are either abnormally dry or in some level of drought.
Red Meat Production Up From Last Year
Commercial red meat production for the United States totaled 4.35 billion pounds in January, up 5 percent from the 4.12 billion pounds produced in January 2012.
Beef production, at 2.26 billion pounds, was 7 percent above the previous year. Cattle slaughter totaled 2.83 million head, up 4 percent from January 2012. The average live weight was up 27 pounds from the previous year, at 1,327 pounds.
Veal production totaled 10.5 million pounds, slightly above January a year ago. Calf slaughter totaled 70,900 head, 5 percent above January 2012. The average live weight was down 9 pounds from last year, at 253 pounds.
Pork production totaled 2.07 billion pounds, 4 percent above the previous year. Hog slaughter totaled 9.96 million head, 4 percent above January 2012. The average live weight was down 1 pound from the previous year, at 277 pounds.
Lamb and mutton production, at 12.4 million pounds, was 2 percent above January 2012. Sheep slaughter totaled 177,400 head, 8 percent above last year. The average live weight was 140 pounds, down 7 pounds from January a year ago.
By State Jan 2013 - (million pounds, % of Jan 2012)
Nebraska ...: 631.3 106
Iowa ...........: 599.4 105
Kansas ......: 459.0 109
“Safe and Efficient Transportation Act” Introduced in the House
In an effort to reduce transportation costs for agricultural producers, Rep. Reid Ribble (R-Wis.) and Rep. Mike Michaud (D-Maine) introduced the Safe and Efficient Transportation Act (H.R. 612) last week in the House of Representatives. The bill would modernize truck weight laws, which have not been updated in over 20 years, and bring relief to the nation’s agriculture sector, according to the National Cattlemen’s Beef Association (NCBA), which supports the legislation.
“The Safe and Efficient Transportation Act would give states the option to allow six-axle vehicles with a gross weight limit up to 97,000 pounds, an increase from the current weight restriction of 80,000 pounds on five-axle vehicles. This would not only increase efficiency for shippers to utilize more space inside the truck, but would also help keep our roads safer by moving heavier trucks off small, rural roads and onto federal highways, where truck related accidents are less likely to happen,” said NCBA’s Associate Director of Legislative Affairs Kent Bacus. “Also, since trucks would be required to add an additional axle, which decreases the weight per tire, road maintenance costs are reduced.”
Last Congress, NCBA and other agricultural groups worked hard to secure language in the “Highway Bill” that gave states the authority to increase truck weights on federal roads. However, that language in the bill ended up being replaced with a two-year safety study. Bacus said that safety is a top concern for the agriculture community.
“Dozens of objective, science-based studies show that increasing truck weights with an additional axle provides the same braking capacity as a five-axle truck, and has led to fewer truck related accidents in other countries which have implemented the same standard,” said Bacus. “Congress should not continue to deny states the ability to enact these provisions by requiring more studies, especially when the science shows this is a safe way to increase shipping efficiently.”
Bacus added that allowing states to increase weight limits helps the U.S. compete with major trading partners such as Canada and most of Europe, which allow six-axle trucks with a gross weight limit of 95,000 pounds or higher on highways.
Agriculture Secretary Tom Vilsack to Deliver Keynote Address at Commodity Classic
For the fourth straight year, farmers and other attendees to Commodity Classic will have the opportunity to welcome U.S. Secretary of Agriculture Tom Vilsack to the annual convention and trade show for corn, soybean, wheat and sorghum growers. The secretary will deliver a keynote address to an expected crowd of more than 6,000 during the event’s General Session, to be held March 1 in Kissimmee, Fla.
“Secretary Vilsack has been a steadfast supporter of agriculture, and it is an honor to welcome him once again to Commodity Classic as he begins his second term,” National Corn Growers Association President Pam Johnson said. “Agriculture will be facing many important topics over the next year including a new farm bill, expanded trade and the federal budget. We look forward to hearing the secretary’s remarks on these and other issues.”
“As we gather in Florida next week to explore ways to optimize farmers’ sustainability, profitability and impact in the larger American marketplace, we are excited to hear the secretary’s thoughts on how our farmers can better convey our relevancy to their urban and suburban counterparts,” said American Soybean Association President Danny Murphy. “Secretary Vilsack has been a wonderful voice for farmers, and we’re proud to have him again at this year’s Classic.”
Secretary Vilsack was appointed by President Barack Obama as the 30th Secretary of the U.S. Department of Agriculture and took office in January 2009. He was reappointed soon after the President’s successful reelection in 2012. Prior to his appointment, Vilsack served two terms as governor of Iowa.
ASA Expresses Strong Opposition to Administration’s Plan to Restructure Food Aid
The American Soybean Association (ASA) expressed its strong opposition today to a plan it understands will be proposed as part of the White House’s 2014 budget that would restructure the nation’s foreign aid programs by eliminating the Food for Peace and Food for Progress programs and replace them with a much smaller cash account managed by the U.S. Agency for International Development (USAID).
“The Food for Peace and Food for Progress programs provide nutritious foods to developing markets and have been a key priority for ASA for multiple years. We are expressly opposed to the replacement of in-kind food aid with cash aid, which takes a key market away from American producers, placing aid recipients at a potential risk by allowing them to purchase commodities from foreign suppliers whose safety and quality are unknown,” said ASA President Danny Murphy, a soybean farmer from Canton, Miss.
ASA’s World Initiative for Soy in Human Health (WISHH), the long-term market development arm of the soybean industry, works within both the Food for Peace and Food for Progress programs to help meet food and feed needs while developing long-term markets for U.S. soy. “The good work done by WISHH is a direct result of their productive partnership with these programs,” added Murphy. “A restructuring like the one proposed in the president’s budget would have a disastrous effect on that productivity and on the ability of WISHH to help the world’s hungry with American soy.”
ASA is among the leading drivers of a broad-based coalition to oppose the restructuring that includes representative groups in the agriculture, supply chain and logistics, labor, non-governmental organization (NGO), and development industries.
“The diversity of our coalition shows just how important these programs are to our development work overseas,” said Murphy. “It’s not just commodity agriculture that wants these programs protected; it’s everyone that has a hand in what has been throughout its history a very successful and impactful foreign aid program.”
The groups collaborated on a series of letters to President Obama and to Senate leaders expressing opposition to the plan and citing the positive impacts of both programs both at home and abroad. “Growing, manufacturing, bagging, shipping, and transporting nutritious U.S. food creates jobs and economic activity here at home, provides support for our U.S. Merchant Marine, essential to our national defense sealift capability, and sustains a robust domestic constituency for these programs not easily replicated in alternative foreign aid programs,” wrote the groups. “Overseas, Food for Peace has a strong track record of reducing child malnutrition and increasing incomes and food supplies for very poor and vulnerable populations. Food for Progress expands business and income opportunities along the agriculture value chain and improves the quality and quantity of food supplies. Both of those programs are proven models for addressing global food insecurity.”
State by State, US Ethanol Industry Creating Jobs & Economic Opportunities
Today, the Renewable Fuels Association (RFA) released a state-by-state update to the “Contribution of the Ethanol Industry to the Economy of the United States,” an economic impact analysis performed by Cardno ENTRIX. The original report, released earlier this month at RFA’s National Ethanol Conference, found that the industry has supported over 383,000 direct and indirect and induced jobs across all sectors of the economy last year. The industry contributed $43.3 billion to GDP and $30.2 billion in household income.
Commenting on the state-by-state breakout, Bob Dinneen, RFA’s president and CEO, said, “It is clear that the ethanol industry is a powerful economic driver. We are successfully creating job and economic opportunities in a tough economy. Not only are we helping revitalize rural communities across this country, we are positively impacting states outside of the Corn Belt. We are building ethanol refineries and hiring staff for newly operational plants across this nation. We are becoming an economic engine coast to coast, border to border. This economic momentum should not be jeopardized by tampering with the Renewable Fuel Standard (RFS). The RFS is a proven success when it comes to creating jobs, increasing American energy independence, and improving the environment. Don’t mess with the RFS.”
The top ten states experiencing the economic benefits of having ethanol plants operating locally are: (State, Jobs including Direct, indirect, induced)
Iowa - 63,532
Illinois - 54,083
Nebraska - 48,402
Minnesota - 34,784
Indiana - 25,350
South Dakota - 22,970
Wisconsin - 15,591
Ohio - 15,167
Kansas - 13,043
North Dakota - 7,810
Sample states falling outside the traditional Corn Belt include:
Texas - 5,696
Colorado - 4,829
Tennessee - 4,039
Pennsylvania - 3,263
New York - 3,210
California - 2,147
Weekly Ethanol Production for 2/15/2013
According to EIA data, ethanol production averaged 797,000 barrels per day (b/d) — or 33.47 million gallons daily. That is up 8,000 b/d from the week before and the highest rate of output in six weeks. The four-week average for ethanol production stood at 783,000 b/d for an annualized rate of 12.00 billion gallons.
Stocks of ethanol stood at 19.5 million barrels, unchanged from last week.
Imports of ethanol showed 21,000 b/d.
Gasoline demand for the week averaged 354.4 million gallons daily.
Expressed as a percentage of daily gasoline demand, daily ethanol production was 9.45%, the second -highest of the year.
On the co-products side, ethanol producers were using 12.084 million bushels of corn to produce ethanol and 88,948 metric tons of livestock feed, 79,298 metric tons of which were distillers grains. The rest is comprised of corn gluten feed and corn gluten meal. Additionally, ethanol producers were providing 4.15 million pounds of corn oil daily.
ACE says desperation motivating ‘Big Oily Food’ appeal to Supreme Court
The Executive Vice President of the American Coalition for Ethanol, Brian Jennings today was critical of the American Petroleum Institute’s (API) and the Grocery Manufacturers Association’s (GMA) effort to appeal rulings by the U.S. Court of Appeals that they groups did not have standing to sue over E15.
“Big Oily Foods’ cozy and self-serving relationship to do whatever it takes to stop consumers from access to safe and affordable E15 fuel is dripping with highly-saturated desperation. First these groups convince a couple Members of Congress to introduce legislation which would overturn EPA’s science-based decision to approve E15 for 2001 and newer model year cars. Now, after their lawsuits against EPA have been rejected by lower courts, they are appealing to the Supreme Court to help protect their profitable status-quo.”
“With gasoline prices on the rise for 35 days in a row, American-made E15 will help drivers save money at the pump. The gap between ethanol and gasoline prices has widened, making E15 a much more affordable and attractive option for retailers and consumers. As we have said before regarding the so-called study by CRC cited by API as a reason to stop E15: the definitions of “pass” and “fail” and the cars selected for testing were carefully chosen to produce the results the study’s funders wanted. The Department of Energy has pointed out that the CRC tests included engines with known durability issues, and that one of the engines even failed while running on straight gasoline with no ethanol. We expect that the Supreme Court refuses to hear this appeal.”
US Trade Pacts with Panama and Colombia Begin to Yield Benefits
According to an article in Latinvex, a Latin American journal, implementations of U.S. free trade agreements (FTAs) in Latin America have caused an increase of U.S. exports to the region by 9.3 percent in 2012, lowering the U.S. trade deficit by 24.7 percent. The United States currently has two regional and three bilateral FTAs in the Latin-American region. These 11 countries represent nearly 80 percent of U.S. trade with Latin America.
Among the countries that spearheaded this growth of U.S. exports were Colombia and Panama, which implemented FTAs with the United States last year. Both are in the top 5 percent of countries with the most growth in trade with the United States. In fact, U.S. exports to Colombia and Panama increased by 14.5 and 20.3 percent respectively, and are the fifth and sixth largest in the region for U.S. export growth.
"With the Colombian Price Ban System set to be adjusted in April 2013, there is an opportunity for U.S. corn to return to the Colombian market," said Kurt Shultz, U.S. Grains Council regional director in Panama. "This assumes the cost, insurance and freight price of U.S. and South American corn will continue to decline, allowing it to fall into the price ban mechanism."
If prices do decline, U.S. corn will have a 5.75 percent duty advantage over South American corn, allowing U.S. corn to begin benefiting from the recently signed free trade agreement.
"While U.S. corn exports to Colombia are currently low, U.S. producers and exporters should remain optimistic. The FTA has created a long-term advantage for U.S. corn imports and the future could bring rapid growth in the U.S. corn market share in Colombia."
Higher milk make allowance vote underscores pricing system inequality
As the Feb. 27 dairy producer voting deadline nears for a permanently-higher federal order make allowance level for processors, National Farmers Organization is calling into question the fairness of the issue.
The vote gives producers the choice to either permanently adopt changes to the manufacturing cost allowances (make allowances), or completely eliminate the Federal Order system in individual regions.
“This amounts to either accepting the fact that a guaranteed $3.17 per hundredweight in value goes to manufacturers, or throwing the entire milk pricing system into disarray in a given area,” said National Farmers Brad Rach, dairy marketing division director. That doesn’t give producers many choices.
“We believe producers could be asking themselves why manufacturers should be guaranteed an allowance to make their product, while dairy producers themselves do not enjoy such an allowance,” Rach said.
The higher make allowance vote is particularly difficult for dairy producers right now, because they are attempting to cope with drought-driven higher input costs and other negative industry conditions. Meanwhile, dairymen are losing chunks of equity in their operations.
Although some of the $3.17 value could find its way back into some farmer pocketbooks, the likelihood is greatly reduced now, because most processors are not farmer owned any more—instead owned by private and foreign companies. National Farmers supports of the Federal Order system, because it adds value for Grade A producers.
Rach said dairy producers also need to create their own make allowance, by working together to create higher and more stable milk prices.
“Producers can add value to what they produce by using programs that allow them to bargain for higher prices as a unit,” said Rach. “They themselves enjoy the right to create their own make allowance if-you-will, to escalate prices where they cover their costs, along with a reasonable profit.”
Welcome to the KTIC Agriculture Information blog!!! Check back here for the latest in ag news and information, from local events to international happenings and government reports that affect your operation. Please email with suggestions! -Chad Moyer, Farm Director, KTIC Radio
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