Digest Highlights

Negative PPDs: Links to webinars, papers

Progressive Dairy recently reviewed March 2021 Federal Milk Marketing Order (FMMO) negative producer price differentials (PPDs).

Natzke dave
Dave Natzke
Editor / Progressive Dairy

Read: March negative PPDs continue to climb out of 2020 depths.

The article included key points of a webinar featuring Marin Bozic, University of Minnesota dairy economist, hosted by the Minnesota Milk Producers Association (MMPA) and Wisconsin-based Dairy Business Association (DBA), April 13. To watch the YouTube video, click here. Future MMPA/DBA webinar topics will discuss FMMO pricing formulas, advance pricing, make allowances, creating a “hedgeable” milk pricing system and more.

Bozic and Cornell University dairy economist Christopher Wolf have also teamed up to produce a comprehensive working paper, Negative Producer Price Differentials in Federal Milk Marketing Orders: Explanations, Implications and Policy Options, and a shorter informational letter, Analysis of Producer Price Differentials for March 2021. Both are also posted on the Program on Dairy Markets and Policy website.

Additional FMMO information will be available via a Penn State Center for Agricultural and Shale Law webinar, scheduled for April 27, noon – 1 p.m. (Eastern time). The “Quarterly Dairy Industry Legal Update” webinar will feature Andrew Novakovic, Cornell University ag economy professor emeritus, discussing legal and regulatory developments in the U.S. dairy industry in the first quarter of calendar year 2021, with a focus on FMMO reform. To register for this webinar, go to the Penn State Center for Agricultural and Shale Law website and click on the events tab.

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USDA seeks bids for butter, yogurt, cheese

The Farmers to Families Food Box program may become history in May, but the USDA is seeking bids to deliver dairy products for use in the National School Lunch Program and other federal food and nutrition assistance programs, with deliveries scheduled between July 1-Sept. 30. Bids are being sought for:

  • 71,820 pounds of butter and 718,386 pounds of yogurt – bids close April 29.
  • 194,000 pounds of pepper jack cheese shreds and 343,760 pounds of sliced cheddar cheese – bids close April 30.

Global Dairy Trade index down slightly

The index of Global Dairy Trade (GDT) dairy product prices fell slightly in the latest auction, held April 20. The overall index was down 0.1%. A price summary of individual product categories follows:

  • Skim milk powder was unchanged at $3,365 per metric ton (MT).
  • Butter was down 0.6% to $5,736 per MT.
  • Whole milk powder was up 0.4% to $4,097 per MT.
  • Cheddar cheese was up 1.2% to $4,436.
  • Anhydrous milkfat was down 3.3% to $6,003 per MT.

The next GDT auction is May 4.

USDA to launch new electronic trade certification system for dairy

The USDA’s Agricultural Marketing Service (AMS) is launching the Agriculture Trade Licensing & Attestation Solution (ATLAS) on May 6, the first phase of an electronic trade certification system for the dairy industry.

The system is designed to streamline agriculture trade activities, using a single enterprise-wide portal that allows the secure exchange of trade data and documents needed for shipments to worldwide ports. Exporters will be able request and receive export certificate documents, communicate with USDA staff about specific certificates and review certificate billing information.

The USDA will hold training webinars to explain how to use the system on April 29 and May 4. An introductory video and information on how to attend the webinars will be available on the ATLAS web page.

Things you might have missed

  • The USDA issued a broad range of nutrition program flexibilities for schools and childcare institutions. Several provisions are now extended through June 30, 2022. Schools nationwide will be allowed to serve meals through USDA’s National School Lunch Program Seamless Summer Option (SSO), which is typically only available during the summer months. Schools that choose this option will receive higher-than-normal meal reimbursements for every meal they serve. This option also affords schools the financial flexibility to further customize their meal service design to fit their local needs. For a complete list of the waiver actions, click here.

  • The bipartisan Growing Climate Solutions Act was approved by the Senate Committee on Agriculture, Nutrition and Forestry on a voice vote, April 22. It now moves to the full Senate. Among its provisions, the legislation creates a certification program that would permit the USDA to informally endorse technical service providers to help farmers implement environmental stewardship practices that may generate carbon credits, according to the National Milk Producers Federation (NMPF).

  • Supplemental payments to eligible producers under the Dairy Margin Coverage (DMC) program may be moving closer to reality. In a notice to state and county USDA Farm Service Agency (FSA) offices, April 20, software program codes were created to facilitate payments. A COVID-19 relief bill, signed into law in late December 2020, allows smaller dairy producers to update their milk production history baselines and receive a supplemental DMC payment on a portion of the increased milk production. The law limits that payment to cover 75% of the difference between an eligible dairy operation’s actual 2019 milk production and its previous DMC milk production history, up to a maximum of 5 million pounds of annual milk production. Any increase in milk production history covered under DMC also means the producer will have to pay the additional margin insurance premiums on that milk. Read: Weekly Digest: COVID-19 relief bill includes DMC milk production history adjustment and Stimulus package and dairy: Some clarity, some questions.

In a weekly update, the USDA had issued nearly $223.2 million in indemnity payments on January-February milk marketings. Milk and feed price factors used to calculate the March 2021 DMC margin and potential indemnity payments will be released on April 30.

The USDA also continues to enter 2021 program enrollment data. As of April 19, 18,851 dairy operations (about 74% of those with established milk production history) had enrolled in the 2021 DMC program. Milk production enrolled for 2021 was estimated at 164.7 billion pounds, about 79.4% of the established milk production history.  end mark