Digest highlights

Natzke dave
Dave Natzke
Editor / Progressive Dairy

Agricultural loan interest rates highest since 2007

The Federal Reserve’s Open Market Committee (FMOC) adjusted its benchmark lending rate up another 0.25% in early February, boosting the rate in a range of 4.75%, the highest in 15 years. The eighth rate hike in the past year, agricultural lenders have increased rates alongside the rise in the federal funds rate.

Based on quarterly lender surveys from Chicago, Dallas, Kansas City and Minneapolis Federal Reserve districts, interest rates on all agricultural loans jumped in the fourth quarter of 2022 (Table 1).

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  • Chicago: Quarterly Interest rate increases on all variable-rate loans were the smallest among major Federal Reserve districts providing rate data, up less than 1% compared to the previous quarter. Nonetheless, nominal interest rates were the highest since the fourth quarter of 2007.
  • Dallas: Average interest rates on variable-rate loans were up 1.3% to almost 1.5% from the previous quarter; average rates topped 8% for feeder cattle and operating loans. Average rates on fixed-rate loans were up 1.1% to 1.25%. Overall interest rates were the highest since the fourth quarter of 2007.
  • Kansas City: District-wide, average interest rates on variable-rate loans increased 1.1% to 1.4% from the previous quarter, with highest rates on operating loans, topping 7.8% in Kansas and the Mountain states (Colorado, New Mexico and Wyoming). For machinery and intermediate loans, interest rates topped 7.5% in Missouri and Oklahoma. Interest rates on fixed-rate loans rose 1.1% to 1.3%, led by operating loan interest rates topping 7.8% or above in Kansas, Oklahoma and Mountain states.
  • Minneapolis: Average interest rates on fixed-rate loans were up at least 1.1% compared to three months earlier, with interest rates on variable-rate loans up at least 1.2%.

FDA provides recommendation for voluntary labeling plant-based ‘milk’

The U.S. Food and Drug Administration is recommending manufacturers and marketers of some plant-based beverages sold as dairy alternatives voluntarily label their products when nutrient values are lower.

The draft guidance, “Labeling of Plant-based Milk Alternatives and Voluntary Nutrient Statements: Guidance for Industry,” recommends that a plant-based milk alternative product that includes the term “milk” in its name, and that has a nutrient composition that is different than milk, include a voluntary nutrient statement that conveys how the product compares with milk. For example, the label could say, “Contains lower amounts of vitamin D and calcium than milk.”

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To support consistency across federal nutrition policies, the draft guidance recommends that industry use the USDA’s Food and Nutrition Service fluid milk substitutes nutrient criteria to determine if a plant-based milk alternative is nutritionally similar to milk.

The draft guidance does not apply to other plant-based dairy alternatives, such as plant-based cheese or yogurt alternatives. The FDA is in the process of developing a draft guidance to address the labeling and naming of other plant-based alternative products and will communicate updates when available.

Public comments on the proposal will be accepted until April 24. The draft guidance document and link to the Federal Register notice are available here.

‘Whole Milk for Healthy Kids Act’ introduced

U.S. Representatives Glenn “GT” Thompson (R-Pennsylvania) and Kim Schrier (D-Washington) introduced the “Whole Milk for Healthy Kids Act,” which will allow for unflavored and flavored whole milk to be offered in school cafeterias. Supported by 36 members of the House, the bill was previously introduced in March of 2021.

“Bad federal policy has kept whole milk out of our school cafeterias for too long,” Thompson said. “Milk is the number one source of 13 essential nutrients. In order for students to excel in the classroom, they must have access to proper nutrition. It is my hope the Whole Milk for Healthy Kids Act will give children a wide variety of milk options and bolster milk consumption – a win-win for growing children and America’s dairy farmers.”

24 state attorneys general file WOTUS lawsuit

Another lawsuit, this one from 24 state attorneys general, has been filed against the U.S. Environmental Protection Agency’s proposed “Waters of the U.S.” (WOTUS) regulation. The suit was filed Feb. 16, in the U.S. District Court for the Eastern Division of North Dakota. It seeks to block implementation of the rule that redefines the jurisdiction of the Clean Water Act.

Plaintiff states include Alabama, Alaska, Arkansas, Florida, Georgia, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Virginia, West Virginia and Wyoming.

Previously, a lawsuit was filed in the Southern District of Texas in Galveston. Ag organizations joining that lawsuit include the American Farm Bureau Federation, National Cattlemen’s Association, National Pork Producers Council, Texas Farm Bureau and the U.S. Poultry and Egg Association. A hearing is set for April 5.

Read: Timing, scope of WOTUS rule disappoints dairy 

NMPF, IDFA oppose WIC dairy cuts

Leaders of the National Milk Producers Federation (NMPF) and International Dairy Foods Association (IDFA) expressed opposition to a USDA proposal to cut milk and dairy purchases under the Special Supplemental Nutrition Program for Women, Infants and Children (WIC). Public comment on the proposal closed on Feb. 21.

According to IDFA, the WIC program provides electronic vouchers to more than 6 million low-income mothers and children, including an estimated 43% of all infants in the U.S. IDFA said the USDA proposal would cut the amount of dairy by the equivalent of up to 3 gallons or more of milk per month, depending on the participant. 

According to NMPF, the reduction was based on recommendations in the 2017 National Academics of Science, Engineering and Medicine (NASEM) report, which required all changes be budget-neutral, with cuts to dairy allowing for increases in other foods. However, the USDA rule is not budget-neutral, nor is it required to be.

IDFA previously published results of a survey showing 20% of WIC participants would choose not to re-enroll in the program should the USDA follow through with the cuts to milk and dairy. Three-in-four WIC participants (76%) said they were concerned with the USDA proposal, with one-third (35%) saying they will need to use non-WIC funds to cover purchases of milk and dairy and one-quarter (26%) saying the reduction will make their shopping for milk and dairy products harder.

Read Weekly Digest: Proposed WIC revisions disappointing for dairy

GDT index takes a powder

After an increase earlier this month, the latest Global Dairy Trade (GDT) price index declined in an auction, held Feb. 21. The overall index dipped 1.5%, with prices in individual product categories mixed:

  • Skim milk powder was down 2.4% at $2,769 per metric ton (MT, or about 2,205 pounds).
  • Whole milk powder was down 2% to $3,264 per MT.
  • Anhydrous milkfat was down 2.6% to $5,447 per MT.
  • Butter was up 3.8% to $4,922 per MT.
  • Cheddar cheese was up 1.5% to $5,086 per MT. 

The GDT platform offers dairy products from six global companies: Fonterra (New Zealand), Dairy America (U.S.), Amul (India), Arla (Denmark), Arla Foods Ingredients (Denmark) and Polish Dairy (Poland). The next GDT auction is March 7.