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Organic Milk Pay, Feed and Retail Price
Update for March 2016

By Ed Maltby, NODPA Executive Director

Added March 28, 2016. Data published by the USDA AMS continues to show slight reduction in retail sales of organic non-fat fluid milk for November and December 2015, and a small increase in sales of full fat and 2% fluid milk compared to 2014. The only Federal Milk Marketing Order to publish data on organic utilization is Order 1 (Northeast) and their data show that utilization of organic whole milk had increased by 20% to 13,659,363 lbs. in December 2015 compared to 11,306,595 lbs. in December 2014. Non-fat and Reduced Fat organic milk utilization only increased marginally by less than 1%. There is no tracking of the increasing sales of grass-fed milk and now certified organic grass-fed milk, both retail and manufacturing. With Danone (Stonyfield brand) moving away from purchasing all of its supply from CROPP it is expanding its direct purchasing of organic to include organic grass-fed, there is increasing competition for a limited pool of milk. Maple Hill Creamery selling to Danone should assist with their balancing and allow them to continue their active soliciting of producers who can meet their standards.

The PCO 100% Grassfed certification program establishes an optional additional certification scope for operations that are certified organic under the USDA National Organic Program regulations. The program standards apply to producers of ruminant livestock and to handlers of meat and dairy products derived from ruminant livestock. PCO has a ninety day transition period for those dairies adding the Grassfed certification to their organic certificate and require 100% dry matter to come from pasture of forage, with the use of grains in pasture or forage allowed while they are still in the vegetative stage. Molasses is allowed as is milk for calves and the use of vitamins and minerals. Unfortunately split herds are allowed which are always difficult enterprises to police, as is the grazing of corn crops in their vegetative state. PCO current regulations allow significant discretion by PCO on interpreting some regulations, especially the expansion of herds. This is one of the first organic plus certifications that is outside the governance of the NOP and other certifiers are looking at the commercial success of the PCO standards to assess whether they should adopt their own. It is in the best interest of the standard and producers who adopt the added certification that there is uniformity between certifiers across the country on Grassfed certification as there will be no appeal to a national governing authority and no ability to fine those that abuse the standards.

Unfortunately where there is an expanding market there will be abuse, as USDA found out in the labeling of meat from affidavit based self-certification.

On the grain front, organic growers are finding the market distorted by cheaper imports and are unable to obtain long term commitments. This is similar to the pressure on organic beef and organic milk powder and cheese from imports. The strength of the dollar obviously complicates any assessment of the situation but it’s a sign of the times that organic buyers of many commodities are treating producers as they would conventional producers. It’s no wonder that there is no rush by domestic growers to transition to organic, despite the price differential of $8 or $9 per bushel. Obviously, they are increasingly aware that the different price will soon get eaten away with the cost of transitioning, the resulting change in production practices and the change in market conditions. The Risk Management Agency (RMA) has recently announced an important update to the Contract Price Addendum (CPA) — transitioning to organic acres will now be eligible. The ability to use a CPA on organic crops is relatively new (first offered for the 2014 crop year), so many farmers in or adjacent to the organic movement have only just recently begun to investigate them as an option for their acres. Hopefully this will be a useful tool to assist with the risk involved with organic grain production and transition to organic production.


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