April 3, 2015
CapitalPress.com
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13
Dairy/Livestock
Wash. livestock bill focuses on dairy cows
Producers would
report transactions
over the Internet
By DON JENKINS
Capital Press
OLYMPIA — The state’s
experiment with self-report-
ing cattle sales will likely
begin with unbranded dairy
cows.
The House and Senate are
nearing agreement on legis-
lation to let dairy producers
report transactions via the In-
ternet, rather than call a field
inspector to oversee the trans-
action.
Originally, Senate Bill
5733 would have offered the
option to beef producers as
well. But the beef industry
first wants to see how the
Washington State Department
of Agriculture implements the
program and how well the
method works for dairy pro-
ducers.
“As an industry, we need
to know what kind of data it
produces, whether it’s to the
same level of rigor as a field
inspection,” Washington Cat-
tlemen’s Association Execu-
tive Vice President Jack Field
said.
No later than Jan. 1, dairy
producers must start report-
ing transactions involving 15
or fewer head of unbranded
dairy cows. The transactions
are currently exempt from re-
porting requirements.
Beef cattlemen and the
WSDA see the exemption as a
hole in the state’s preparation
to respond quickly to disease
outbreaks. Outgoing WSDA
Director Bud Hover has or-
dered the exemption eliminat-
ed by the end of the year.
An electronic system would
give tech-savvy dairies, faced
with new reporting require-
ments, an efficient way to dis-
close transactions, Washington
State Dairy Federation director
of governmental relations Jay
Gordon said.
“It really is geared toward
addressing the goals of the
dairy guys,” he said.
The WSDA’s Animal Ser-
vices Division assistant di-
rector, Lynn Briscoe, said the
agency supports the bill’s nar-
row focus.
“It was always our intent
to start out with just the dairy
industry,” she said. “At this
point, the beef industry hasn’t
really expressed an interest.”
Producers who opt for
electronic reporting over field
inspections would have to
apply for a license from the
WSDA and pay fees.
The WSDA would set the
fees high enough to pay for
the program. Gordon said he
hopes enough producers will
opt for electronic reporting to
spread out the costs.
Producers would be re-
quired to retain transaction
records for three years and let
WSDA onto their property to
inspect them. If the produc-
er denies the request, WSDA
could seek a search warrant.
Briscoe said the agency needs
to check whether transactions
are accurately reported.
SB 5733 passed the Sen-
ate with its original broader
scope intact. But it was nar-
rowed last week by the House
Agricultural and Natural Re-
sources Committee, with the
approval of the bill’s prime
sponsor, Sen. Judy Warnick,
R-Moses Lake. The slimmed-
down bill won bipartisan ap-
proval by the House commit-
tee.
2015 could be a break-even
year for Idaho dairy farmers
By SEAN ELLIS
Capital Press
BOISE — Idaho dairy farm-
ers expect 2015 to be a break-
even year, which is a significant
improvement over what they an-
ticipated a few months ago.
And their hopes for the future
are bright, in large part because
of the marketplace partnerships
the industry has entered with sev-
eral large companies, including
Domino’s Pizza, McDonald’s
and Coca-Cola.
That’s the message law-
makers heard when they were
briefed recently on the state of
Idaho’s dairy industry, which is
the No 1 farm sector in the state
when it comes to farm cash re-
ceipts.
In early January, it looked
like Idaho dairy producers would
go through 2015 with negative
margins, but the outlook has
improved since then, said Rick
Naerebout of the Idaho Dairy-
men’s Association.
“The market has come up
since then and we’re seeing bet-
ter milk prices today reflected
on the board than what we did in
January,” he said.
Milk prices this year won’t
come close to the record levels
reached in 2014, he said, but the
cost of production has also de-
creased, due in part to lower feed
costs.
While the average cost of pro-
duction for Idaho dairy producers
was $18 per hundredweight of
milk in 2014, it will be closer to
Photo courtesy of House Agriculture Committee
Michael T. Smith, right, special projects manager at Harris Ranch
in Selma, Calif., testifies March 25 at a House of Representatives
subcommittee hearing on the potential impact of retaliation by Can-
ada and Mexico for the U.S. country of origin meat-labeling law.
Congress in no hurry to
pass meat-labeling fix
By TIM HEARDEN
Capital Press
Sean Ellis/Capital Press
Dairy cows are shown at a dairy near Kuna, Idaho, in September. Most Idaho dairy producers should
break even this year, say industry leaders.
$17 this year, Naerebout said.
As a result, “For most of our
guys, 2015 will be about a break-
even year,” he said.
During a presentation to
members of the House Agricul-
tural Affairs Committee, most
of the questions from legislators
centered around a new premium
milk product called Fairlife that
was launched in February.
The product is a partnership
between Select Milk Producers, a
dairy cooperative that produces 6
billion pounds of milk annually,
and Coca-Cola, which markets
and distributes Fairlife.
The product is made using an
ultra-filtration system that filters
out sugars and lactose and en-
riches the milk with more protein
and calcium and other minerals.
United Dairymen of Idaho
chairman Tom Dorsey, a pro-
ducer in Caldwell, told lawmak-
ers that Coca-Cola has invested
$268 million in the product,
which is sold in sleek bottles.
“We think it’s going to be a
big boon to the industry,” he said.
“It’s the first new fluid milk ini-
tiative that has happened during
my lifetime and we’re very excit-
ed about it.”
UDI CEO Karianne Fallow
said similar partnerships with
other major companies make this
an exciting time for the domestic
dairy industry.
While fluid milk consump-
tion in this country continues to
decline, total milk utilization is
up in large part due to these mar-
ketplace partnerships that have
brought significant innovation to
the industry, she said.
That includes a partnership
with McDonald’s that helped
convince the company launch its
frappe line and include Go-Gurt
with happy meals.
Cheese, butter finish March higher
By LEE MIELKE
For the Capital Press
Cash dairy prices saw little
change in Chicago last week
with the exception of butter, but
this week appears to be a differ-
ent story.
Block Cheddar cheese
closed the last Friday of March
at $1.54 per pound, unchanged
on the week but 84 1/2-cents
below a year ago. The blocks
gained 2 1/2-cents Monday and
tacked on another penny and a
half Tuesday, hitting $1.58, the
highest level since Jan. 13, 2015.
The Cheddar barrels closed
Friday at $1.5450 per pound, up
2 1/2-cents on the week and 74
1/2-cents below a year ago, then
added 2 cents Monday and 3 1/2
on Tuesday, hitting $1.60, an
atypical 2 cents above the blocks.
Seven cars of block traded hands
last week and 10 of barrel.
Cash butter finished last
week at $1.7525 per pound, up
7 1/4-cents, buoyed perhaps by
last Monday’s somewhat bull-
ish Cold Storage report, but
still 24 3/4-cents below a year
ago. The butter was unchanged
Monday but jumped 3 1/4-cents
Tuesday, closing at $1.7850,
highest spot price since Feb.
6, 2015. Only two cars traded
hands last week.
Cash Grade A nonfat
dry milk held all week at 97
1/2-cents per pound and was
still holding there Tuesday.
Five cars were sold last week in
the cash market.
U.S. will be major
exporter again
U.S. dairy exports took us to
record high prices last year and
now the drop in those exports
is plunging prices well below
those of a year ago. Looking
ahead, there are a lot of chal-
Dairy
Markets
Lee Mielke
lenges the U.S. faces in the
global dairy market, including
the strength of the U.S. dollar
in relation to other currencies,
EU quotas ending, New Zea-
land has signed a trade agree-
ment with South Korea, which
is one of our valuable trading
partners. I asked FC Stone
dairy broker Dave Kurzawski
in Friday’s DairyLine radio
program whether the U.S. will
be a major dairy exporter again,
and when.
“Yes, we will,” Kurzawski
answered, “But not any time
real soon.”
He acknowledged that 2015
dairy exports, so far, have ac-
tually been a little better than
expected but are still down
about 40 percent, as of the Jan-
uary data. Kurzawski says we
exported about 17.5 percent in
January 2014 and that figure is
closer to 11 percent this year.
He agrees the challenges
will make exporting difficult
and he doesn’t see much of a
change in that dynamic in the
second half of the year.
“The dollar will continue to
provide a headwind to exports,”
he said, but while the major dis-
cussion is over exports, he em-
phasized how good domestic
demand for dairy products is
right now.
We also discussed the Rus-
sian embargo, which Kurza-
wski said could change this
year. His ear to the rail says
sanctions will be lifted in Au-
gust but that’s not assured.
However, “it would be a big
game changer for product that
is now competing with U.S.
product out of Europe.”
“There is the possibility that
the second half bears better ex-
port fruit than the first half,” he
said, “But some of these issues
that we’re dealing with will
keep a lid on exports at least
through Third Quarter of this
year.”
As to the free trade agree-
ment between New Zealand
and South Korea, Kurzawski
said it is a factor.
However, the U.S. is not
the only country with a trade
agreement with South Korea,
many countries do, and New
Zealand’s entry is really “late in
coming.”
You also have to look at
the product mix, according to
Kurzawski. The U.S. predomi-
nantly exports cheese to South
Korea and New Zealand would
likely export powder, but we’ll
have to wait to see what the
outcome of this will be but he
doesn’t see this changing U.S.
dynamics substantially.
down 80 cents from January
and a whopping $8.10 below
February 2014.
February corn, at $3.79 per
bushel, was down 2 cents from
January and 56 cents below
February 2014. Soybeans av-
eraged $9.92 per bushel, down
38 cents from January, and
$3.28 per bushel below Febru-
ary 2014. Alfalfa hay averaged
$172 per ton, down $2 from
January, and $18 per ton below
February 2014.
Looking at the cow side of
the ledger, the report shows
the February cull price for beef
and dairy combined averaged
$110.00 per cwt., down $2 per
cwt. from January but $14.60
per cwt. above February 2014,
and compares to the 2011 base
average of $71.60 per cwt.
The January price received
for milk cows was $1,990.00
per head, down $130 from Oc-
tober 2014 but $550 above Jan-
uary 2014, and $570 above the
2011 base.
Congress will apparently
wait for a World Trade Organi-
zation decision on the contro-
versial U.S. meat-labeling rule
before considering legislation to
stem potential retaliation from
Canada and Mexico against
dozens of American industries.
The effects of trade sanctions
that could harm major Western
commodities such as Califor-
nia’s $24 billion wine industry
and Washington’s $2.25 billion
apple industry were examined
March 25 in a hearing by the
House Agriculture Committee’s
Livestock and Foreign Agricul-
ture Subcommittee.
The hearing, which was
held in Washington, D.C., and
streamed online, featured testi-
mony from industry representa-
tives such as Michael T. Smith
of the Selma, Calif.-based Har-
ris Ranch, who said the 2008
rule has added extra work and
expenses for American produc-
ers while creating an uneven
playing field for foreign live-
stock.
“All segments of the U.S.
beef industry have been impact-
ed by COOL,” said Smith, Har-
ris’ special projects manager.
“Feeders and packers across the
country, and of all sizes, are ex-
periencing the same issues with
compliance costs and discounts.
As a result of the costs associat-
ed with the implementation of
COOL, we have seen discounts
paid on cattle which originate in
either Canada or Mexico. Those
discounts have ranged from $35
to $60 per head.”
However, no bill has been
introduced to either change or
repeal the labeling regulation
to avert tariffs on potentially
dozens of American agricul-
tural goods that could be put in
place later this year. Insiders say
lawmakers don’t want to under-
mine U.S. Trade Representative
Michael Froman’s appeal of the
WTO’s Oct. 20 ruling that the
labeling rule’s 2013 revision
gave an unfair advantage to U.S.
livestock.
National Pork Producers
Council spokesman Dave War-
ner said he hopes members of
Congress are working behind
the scenes to craft a bill in case
the U.S. loses.
“I guess they figure they
don’t need to do anything if the
U.S. wins the appeal,” Warner
said. “I guess that makes sense. I
think we need to be ready to go
as soon as the (decision) comes
out because we expect the Unit-
ed States will lose the appeal.”
A decision by the WTO’s
Appellate Body is expected later
this spring, and a ruling in favor
of Canada and Mexico would
begin “a 60-day clock” for the
U.S.’ two neighbors to quantify
the economic harm they’ve suf-
fered and start imposing tariffs.
“They just don’t move that
fast,” Warner said of Congress.
“But we need to avoid retalia-
tion, and it’s not just pork and
beef (that will be targeted). It’s
all kinds of other products.”
Canada has threatened to im-
pose retaliatory tariffs on more
than three dozen American
commodities, including beef,
pork, rice, corn, apples, cherries
and wine. Canada and Mexico
could also refuse to honor copy-
rights on intellectual property,
University of California-Davis
agricultural economist Daniel
Sumner has said.
The U.S. had revised its rule
in 2013 after the WTO deter-
mined that the original rule, en-
acted as part of the 2008 Farm
Bill, was discriminatory without
adequately informing American
consumers about the origin of
food. The WTO’s initial ruling
was upheld on appeal.
U.S. Agriculture Secretary
Tom Vilsack said in November
that Congress must change the
law or Mexico and Canada need
to negotiate a settlement with
the United States. He has said
no regulation could likely be
crafted that would comply with
the WTO’s decisions and still
uphold the law Congress passed.
February milk-feed
ratio slips
The February 2015 milk-
feed price ratio is 2.02, down
from January’s 2.09 and com-
pares to 2.59 in February 2014
and 1.52 in February 2013,
according to the Agriculture
Department’s latest Ag Prices
report, issued Monday.
The index is based on the
current milk price in relation-
ship to feed prices for a ration
of 51 percent corn, 8 percent
soybeans and 41 percent alfalfa
hay. In other words, one pound
of milk today can purchase 2.02
pounds of dairy feed containing
that blend.
The February U.S. aver-
age all-milk price dropped to
$16.80 per hundredweight,
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