By Ed Maltby, NODPA Executive Director
In April 2022, the USDA Agricultural Marketing Service estimated that sales of both conventional and organic milk fell in comparison to the same period in 2021, by 2% and 3.4% percent, respectively. Sales of organic Whole Milk and organic Fat Reduced Milk, in April 2022, saw a decrease over April 2021, with sales of 107 million pounds for organic Whole Milk, a drop of 3.3%, and sales of 131 million pounds of Fat Reduced Milk, a drop of 3.4%. The retail price of organic packaged milk has jumped, with a national average of $4.63 for half gallon, with a high of $6.39 and a low of $3.84. These prices may not be reflective of actual prices but are collected by the Federal Milk Marketing Order between the 1st and 10th of each month but brands, including Organic Valley and Maple Hill have said they would be raising retail prices to cover the business costs. The retailer sets the final retail price.
|
Product Name |
Sales of Organic Fluid Milk |
Change from |
||
|
Apr-22 |
2022 Year to date |
Apr-21 |
Year to date |
|
|
|
Million pounds |
Percent |
||
|
Organic Whole Milk |
107 |
440 |
-3.3% |
-1.4 |
|
Flavored Whole milk |
2 |
7 |
-9.4% |
5.6 |
|
Organic Reduced Fat Milk (2%) |
86 |
332 |
-0.1% |
-4.3 |
|
Organic Low Fat Milk (1%) |
24 |
100 |
-9.9% |
-11.8 |
|
Organic Fat Free Milk Skim |
14 |
59 |
-9.5% |
-6.1 |
|
Organic Flavored Fat-Reduced Milk |
7 |
25 |
-6.7% |
-16.9 |
|
Other Fluid Organic Milk Products |
0 |
0 |
0.0% |
0 |
|
Total Fat Reduced Milk |
131 |
516 |
-3.4% |
-6.7 |
|
Total Organic Milk Products |
240 |
964 |
-3.4 |
-4.3 |
In the Northeast Federal Milk Marketing Order 1, the utilization of organic fluid milk in April 2022 was 15 percent above April 2021, and in May 2022, the utilization of organic milk was 3% above May 2021. The utilization of organic milk in the first 5 months of 2022 was higher than 2021 and 2020, the years before and during the shutdown due to COVID restrictions. As we have written before, it’s increasingly difficult to estimate the real utilization of organic milk in the northeast because there are so few large manufacturers of organic yogurt in the order that it would be a conflict of proprietary knowledge for USDA to publish that data. Stonyfield/Lactalis yogurt and manufacturing dominates this area. There is still no reporting of the breakdown of organic milk that comes from outside the Federal Order, which would be significant information for producers in the Northeast.
|
UTILIZATION OF ORGANIC FLUID MILK PRODUCTS BY POOL PLANTS (Million pounds) |
|||||
|
|
Fluid retail Organic Milk 2022 |
Fluid retail Organic Milk 2021 |
Fluid retail Organic Milk 2020 |
Increase/Decrease of 2022 over 2021 |
Increase/Decrease of 2021 over 2020 |
|
JANUARY |
29.14 |
31.32 |
23.93 |
-7% |
31% |
|
FEBRUARY |
33.65 |
31.56 |
26.69 |
7% |
18% |
|
MARCH |
31.56 |
31.87 |
27.90 |
-1% |
14% |
|
APRIL |
33.23 |
28.97 |
29.35 |
15% |
-1% |
|
MAY |
30.49 |
29.72 |
28.25 |
3% |
5% |
|
JUNE |
|
28.41 |
26.90 |
|
6% |
|
JULY |
|
25.50 |
26.70 |
|
-4% |
|
AUGUST |
|
27.18 |
24.70 |
|
10% |
|
SEPTEMBER |
|
30.26 |
29.70 |
|
2% |
|
OCTOBER |
|
29.47 |
25.78 |
|
14% |
|
NOVEMBER |
|
31.07 |
24.47 |
|
27% |
|
DECEMBER |
|
31.36 |
28.13 |
|
11% |
|
ANNUAL |
158.07 |
356.68 |
322.50 |
|
11% |
The news from CROPP Cooperative that affects the northeast is that their reserve pool has been closed, meaning all farmers that were in it are now full members with the full regional pay. Those farmers that are scheduled to be starting up the agreement with CROPP on or about August 1st will be starting as full members with no reserve pool utilization pay. This is because CROPP has been able to utilize all their milk and the CROPP Board has decided that the risk is very low to current members. The strong utilization has enabled the Board and management to move more quickly than they anticipated with giving full membership to all new member-owners. Travis Forgues (Executive Vice President of Membership) commented: “We continue to work on returning dollars back to the membership, and the board is looking at our performance month-to-month, to see if there is room to move. At this stage, the board has decided to stay stable and not move price, as we are not outpacing our meager profit goals at the moment, and the risks outweigh the benefits. That being said, everyone is keenly aware of the challenges in the countryside and we continue to look for ways to move more dollars to our membership.”
Producers and Lancaster Farming have reported that Maple Hill is taking on some organic dairies in New York which are strategically placed to provide organic milk for the recently retooled infant formula facility, ByHeart Inc. The company purchased the Reading, PA, plant in 2019 and has an additional $26 million in plant upgrades. ByHeart’s proprietary formula is more than 70% dairy, with organic, grass-fed whole milk as its primary ingredient. The company was already a customer of Maple Hill.
Pete Hardin, publisher of Milkweed, reported further consolidation in the dairy industry with the purchase of eastern NY milk hauling company Greene Trucking, Inc.(GTI) by Dairy Farmers of America (DFA). It is uncertain what will happen to existing customers of GTI and how the new owners will support trucking of milk from non DFA members. Pete Hardin reports that non-members of GTI must join DFA or find another hauler by July 1, 2022.
Danone/Horizon continues on their trail of making life more difficult for small to mid-size organic family farms. In a letter dated June 13th 2022, they devoted 10 pages to explain the standards for milk quality and the process toward termination after first fining the producer for not meeting their standards. To receive any bonuses Danone still requires the producer to meet all its quality requirements which now number a total of 5: Standard Plate Count (SPC) <8,000/ml, PI Count (PI) <35,000/ml, Somatic Cell Count (SCC) <235,000/ml, and Lab Pasteurized Count (LPZ) <300/ml. The chart below shows the different tiers for paying quality bonuses – miss one and any bonus drops down to the lower bonus. The second chart is for a deduction for average to poor quality milk.
|
TEST |
Tier1 ($3.00/cwt total) |
Tier 2 ($2.00/cwt total) |
Tier 3 ($1.00/cwt total |
Tier 4 ($0.50 /cwt total) |
|
SPC |
<2,000/ ml. |
< 3,000 /ml. |
<5,000 / ml. |
<8,000 / ml. |
|
PI |
<10,000 / ml. |
< 15,000 /ml. |
< 25,000 / ml. |
< 35,000 / ml. |
|
SCC |
< 125,000/ ml. |
<160,000 / ml. |
<200,000 / ml. |
< 235,000 / ml. |
|
LPC |
< 300 / ml. |
< 300/ ml. |
<300/ ml. |
<300/ ml. |
|
TEST |
Result for the month |
Deduction/Calendar Month/cwt |
|
SPC |
>50,000/ml avg. |
-$0.50 / cwt |
|
PI |
>100,000 ml. avg. |
-$0.50 / cwt |
|
SCC |
>400,000/ml. avg. |
- $1.00 / cwt |
|
Cryoscope* |
>1 test or >-0.530 |
-$0.50 / cwt |
*Test for water in milk by freeze temperature
**Federal regulations require that bacteria and somatic cell counts of Grade “A” raw milk not exceed 100,000 Standard Plate Count (SPC) and 750,000 Somatic Cell Count (SCC), respectively.
Other standards that producers must meet are Grade A standards, be enrolled and in good standing with the Farmers Assuring Responsible Management (FARM), complete a third–party audit for Buyer’s Quality and Care Program, uphold and comply with the Humane Practice & Quality and Care Program, have a functional properly installed and calibrated temperature recorder, and, of course, be organically certified. While the contract of other buyers are not published, NODPA’s informed research shows that Danone contracts are the most difficult for producers to achieve and that the buyer is giving themselves plenty of opportunity to end the contract or deduct from the pay price.
In an article in the Dairy Reporter, Katy Askew quotes Stonyfield Farmer Relationship Manager Jason Johnson as saying, “We are facing a uniquely challenging moment for organic dairy farmers in the northeast, where the cost of production is at an all-time high and pressure on farms is further intensified through the lack of local processing in New England and the growth of large organic dairy farms in the west leading to an oversupply of organic milk.” The article further quotes Johnson as clearly outlining the problems for organic and conventional dairy industry in the northeast. As an answer to these very real problems, from generational transfer to capital for new entrants and the need for increased diversity, he is quoted as saying that Lactalis donated $100,000 to the Northeast Organic Family Farm Partnership for promotion of organic; they have extended contracts for better cash flow projections; and provide producers tech tools for collecting data and decision making related to soil health and reducing greenhouse gas emissions. He misses one of the key points: a pay price that is clearly many dollars short of breaking even. If the income does not match the expense there is no sustainability and no new entrants. I have no data but it is a rational conclusion that Stonyfield is the biggest consumer of raw organic milk in New England. Stonyfield is owned by Lactalis one of the largest dairy companies in the world. Given the size and market reach, Lactalis should be a leader in the market and pay a fair pay price for raw milk to their 34 farms and to the Northeast CROPP farms that supply them. It’s a little too simple but they are the good guys and seen by consumers as doing good works.
There is no encouraging good news on the feed front. Purchased feed continues to be expensive. Making your own forage is expensive in diesel and other inputs. If you are in an area that has had a good balance between rain and sun, then your grazing may be up to standard but many have had extremes of both with reports of muddy fields and drought conditions. Midwest soybeans are $39 FOB the farm and corn is a little better at $11.68.
Attached Files:
Posted: to Organic Pay, Feed & Grain Prices on Sun, Jul 31, 2022
Updated: Sun, Jul 31, 2022
