Organic Milk Pay, Feed and Retail Price Update
for July 2015
By Ed Maltby, NODPA Executive Director
Added July 21, 2015. Organic milk is part of the Federal Milk Marketing Order (FMMO) and use of organic milk is approximately 75% in Class 1, which means that processors pay into the pool that helps stabilizes non-organic milk. While processors are always complaining about the unfairness of still being part of the FMMO they do use it to balance their usage, especially with the spring flush, and being part of the order ensures that milk plants will process organic milk on schedule. Another aspect of the FMMO is the recording of data by an independent entity which can show how all milk is being used, including organic. The USDA AMS Dairy Market News has done a great job, with a limited budget, providing biweekly data on the state of the organic market, which is essential to producers negotiating individual contracts. In the last month, Federal Order No. 1 of the FMMO has released statistics on how many organic producers are shipping milk to plants in the region. These show that while consumer demand and production are increasing, the number of farms is dropping.
The FMMO also records that organic milk has higher butterfat tests by about .18% (organic at 3.91% and non-organic at 3.73%) while protein levels were about the same for both types of milk. The FMMO does not record all the information for those producing organic milk but this data is excellent at showing the trends in production and farm numbers. Whatever the reason, and there is no one reason, organic is going the way of conventional dairy, larger, but fewer organic dairy farms.
With many producers leveraging their option to move processors, we again want you to be aware of the resources at www.nodpa.com on what to look for in contracts/cooperative agreements, especially those that require more than just organic certification. You will find that they all have extra requirements, especially now with large customers like Whole Foods wanting more information on how their store brand products are produced. If your buyer is telling you that there are restrictions on what you can and can’t do as you move to another buyer, seek expert help from another producer or NODPA, as sometimes the buyers don’t have all the facts. NODPA has three publications, by Jill Krueger, available on NODPA’s website Resources page, to help producers in making decisions on their contracts: “Making the Most of Your Milk Check: What Dairy Farmers Need to Know About Assignments”, “When Your Processor Requires More than Organic Certification: Additional Requirements in Organic Milk Contracts”, and “Hushed Up: Confidentiality Clauses in Organic Milk Contracts”. They can be downloaded for free or we can send you copies if you do not have access to a computer.
Organic grain prices are steady and demand is light to moderate for organic grains now that many producers have finished their current planting season. Major concerns for the price and availability of organic grains surround the volume and price of imported grains and the ramifications both in the short term and long term to the domestic markets, as well as weather, potential yield qualities and quantities, and the possible market implications related to the ongoing avian influenza situation. According to USDA NASS’ Weekly Crop Progress Report, for the week ending June 7, 2015 conventional crop progress is as follows: 91% corn emergence, 79% soybeans planted, 64% soybean emergence, 56% sorghum planted, 69% sunflowers planted, 91% winter wheat headed, 4% winter wheat harvested, 97% spring wheat emergence, and 38% oats headed. In the northeast, pasture is responding quickly to the much needed rain and warm weather, although it might be too late for some first cutting of hay and silage.