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December 11, 2015 CapitalPress.com Subscribe to our weekly dairy or livestock email newsletter at CapitalPress.com/newsletters 13 Dairy/Livestock USDEC predicts another tough year for dairy By CAROL RYAN DUMAS Capital Press The U.S. Dairy Export Council predicts global dairy markets will be difficult for producers in 2016. “That pendulum between supply and demand has way over shot on the side of sur- plus. It’s going to swing back again the other way — the only question is how long it’s going to take,” Alan Lev- itt, USDEC vice president of communications and market analysis, said during US- DEC’s market outlook webi- nar on Dec. 1. China’s growing appetite for dairy had driven a 2 per- cent per year increase in milk production from the top five producing regions — New Zealand, the U.S., European Union, Australia and Argenti- na — since 2010. But even when that de- mand bubble burst in mid- 2014, milk production growth continued — almost oblivious to the demand drop-off, he said. In the 12 months prior to the sharp decline, China im- ported 14 million tons of milk equivalent. Over the next 12 Carol Ryan Dumas/Capital Press A cow gets up close and personal during a United Dairymen of Idaho tour of the Brubaker Family’s Knott Run Dairy in Buhl, Idaho. Analysts at the U.S. Dairy Export Council say lower margins in the second quarter of 2016 should begin needed production contraction to rein in global milk supply. months, that dropped to 9.5 million tons, down by about one-third, he said. Russia’s ban on dairy im- ports about the same time ex- acerbated the problem. China and Russia combined went from importing at a pace of 18 million tons milk equiva- lent for the year ending July 2014 to about 10 million tons today — a staggering decline, he said. “You had essentially 8 mil- lion tons of milk on the world market looking for a new home … about 11 percent of world imports essentially van- ished,” he said. To make it more problem- atic, milk production contin- ued to grow even as imports from major suppliers crashed. In the 12 months ending Oc- tober 2015, milk production from the top 5 suppliers was still up about 3.5 million tons year over year. During the same period, imports by China and Russia were down more than 6 million tons, he said. Even though there’s been some adjustments in supply and demand, that’s still an extra 10 million pounds of milk, almost 1 million tons a month, that the market has re- ally struggled to fully absorb, he said. “We don’t really expect that gap … to narrow much in 2016. Milk production growth certainly is starting to flatten out, but suppliers are still pushing the quantity that matches the booming lev- els of 2014, and that import demand just isn’t there any- more,” he said. Production just isn’t pull- ing back quickly enough to ac- count for the drop in demand. Milk production from the top 5 suppliers is still expected be up close to 1 percent in the fourth quarter, about half the five-year average, but it’s still more than the market needs, he said. Most of the production gains this year have come from Europe, which contin- ues to expand, particularly Ireland and the Netherlands. Production in those two coun- tries was up 10 percent since April, when quotas came off, he said. Production in the rest of the world has slowed quite a bit, but Europe’s production is raging ahead, he said. Global milk production is expected slightly lower in the first half of 2016, particularly in the second quarter, when lower margins begin to have an impact on the farm, he said. But product inventory is going to remain a “problem child” in 2016. There are heavy inventories in Europe and the U.S. and also in users’ hands throughout the world, he said. While imports in most places other than China and Russia did really well in 2015, it wasn’t enough to fill the huge hole left by those major importers, he said. And much of that stronger demand was buying forward to take advantage of favorable prices, which will diminish demand in the months ahead, he said. Powder, cheese and butter stocks in the EU are 230,000 tons more than the desired lev- el, and stocks of those prod- ucts in the U.S. are 100,000 tons higher that a typical year, he said. “All this product from both Europe and the United States is going to have to come back on the market, and that’s just going to delay the market recovery even after current supply and current demand realign,” he said. Ranchers back transparency Website seeks to correct chicken bill for legal fee reimbursement production misconceptions By TIM HEARDEN By JOHN O’CONNELL Capital Press Capital Press FORT HALL, Idaho — An organization formed by Idaho and Nevada cattle industry leaders is backing federal leg- islation to improve transpar- ency of taxpayer-funded legal fee reimbursements to plain- tiffs who successfully sue the federal government under the Equal Access to Justice Act. The ranchers believe the legislation is needed to shed light on a continuing trend of “outrageous” legal fees paid for environmental litigation, which they consider inconsis- tent with the original intent of the act. The law was created in 1980 to repay legal fees when court action against the federal government is “substantially justified.” The Equal Access to Justice Act changes — included in Section 108 of the Sportsmen’s Act of 2015 (S. 405) — would require a report to be made available online detailing fees, awards and payments provided under the act, along with infor- mation about each case. The Sportsmen’s Act passed out of the Senate Committee on Energy and Natural Resources on Nov. 19. A standalone Equal Access transparency bill, HR 3279, also passed the House of Representatives on Nov. 30 and will be moving on to the Senate. A group of cattle associa- tion leaders, including six past Idaho and Nevada presidents, The National Chicken Council has launched an on- line campaign to combat what it calls widespread misconcep- tions among consumers that broiler chickens are injected with hormones and steroids. A recent survey conducted by the council found that 77 percent of Americans believe chickens raised and sold in the U.S. contain those additives, when in fact none do, the group contends. In response, the council is stepping up its dialogue with consumers on social media and has launched Chicken Check In, a website that answers ques- tions about chicken production in the United States. The group is also encour- aging producers to engage in more discussions with consum- ers about where their chicken comes from. “Folks in general have a lot of misperceptions about mod- ern agriculture and animal ag- riculture,” council spokesman Tom Super said. “There’s so much conflicting information out there on the Internet and so- cial media, and too many times people are taking what they read on the Internet and think- ing it’s true. “We’ve been trying to move the industry toward being transparent,” he said, adding that the group has fa- cilitated tours of facilities for John O’Connell/Capital Press Idaho rancher Jennifer Ellis speaks about the Equal Access to Justice law Dec. 1 during Idaho Farm Bureau Federation’s annual meeting in Fort Hall. formed Western Legacy, largely to research and reform the act. Jennifer Ellis, an Eastern Idaho rancher who was among the founding members, said there was no single source of information about the cost of the act to taxpayers. But through exhaustive research, the organi- zation eventually tabulated the federal government had spent more than $4.7 billion from its Judgment Fund to repay legal fees for successful suits against the government between 2003 and July 2007. “Since 1985, environmental litigation has really ramped up, and we’re on the receiving end of it,” Ellis said. Since 2010, Ellis said, West- ern Legacy has made five at- tempts to get its transparency language approved. She believes this time will be successful. “The government is going to have to do the research into these expenditures to see if they’re OK with it, and I don’t think they will be,” Ellis said. Sen. Jim Risch, R-Idaho, is a co-sponsor of the Sportsmen’s Act, and his press secretary said he supported the Equal Access language in the current bill, as well as past reform efforts to “ensure the original intent of this act is not being exploited.” Ethan Lane, executive direc- tor of the Public Lands Council, believes the transparency lan- guage is just the first step toward providing relief for federal agen- cies that are “not functioning properly because they’re spend- ing all of their time and resourc- es on frivolous litigation.” Courtesy of Agricultural Research Service Broiler chickens mill around in a barn. The National Chicken Council has started a campaign to combat what it says are mis- conceptions among consumers that broiler chickens are injected with hormones and steroids. reporters and food bloggers. Among the survey’s find- ings, 78 percent of respondents said they believed chickens are genetically modified, 73 percent believe antibiotics are present in most chicken meat and 68 per- cent think most chickens raised for meat are kept in cages, ac- cording to the council. In reality, the majority of broiler chickens live in large, open structures and there are no genetically modified chickens, although chickens with the best growth and size have been se- lected for breeding, the council asserts. The industry has been phasing out all but the most critical uses of antibiotics in its flocks as McDonald’s and other food-service companies as well as school districts have begun to set policies against their use. New Food and Drug Ad- ministration guidelines issued in December 2013 have ef- fectively eliminated use of the drugs for growth promotion or feed efficiency in all livestock. Ionophores, a class of antibiot- ics not used by humans, could still be fed to birds to keep them healthy. The NCC’s Chicken Check In website — www.chicken- check.in — includes videos and a “frequently asked questions” section to give consumers a closer look at how chickens are raised, from the farm to grocery store shelves. “We wanted to have some- thing ... digitally that folks could go to to put themselves behind the barn door and see for them- selves,” Super said. “We wanted it to be factual and unemotional, to let people read for themselves and make up their own minds.” Dairy market prices mixed By LEE MIELKE For the Capital Press T he cash dairy markets started December mixed — or perhaps “mixed up.” The Cheddar blocks fell to $1.5250 per pound last Wednesday, regained 2 3/4s-cents Thursday, and then dropped 3 1/2 Friday, to close at $1.5175, the lowest price since Jan. 29, down 6 1/4-cents on the week and 6 1/4-cents below a year ago. They were down 2 1/4-cents Monday but inched up a half-cent Tuesday, closing the day at $1.50. The barrels fell to $1.4950 last Wednesday, gained back 1 3/4-cents Thursday, but lost 2 3/4-cents Friday, closing at $1.4850, down 6 1/2-cents on the week and 6 1/2-cents be- low a year ago. They rolled a penny and a half lower Mon- day but jumped 3 cents Tues- day to hit $1.50. Sixteen cars of block were traded last week at the CME and 13 of barrel. Dairy Market News says, “While cheese inventories are generally comfortable, the longstanding experience Dairy Markets Lee Mielke of strong seasonal sales into January still resonates with manufacturers and factors into current production. It will be- come more clear in the coming weeks whether that is true this year, or whether late year de- mand was pulled earlier in the year leaving retail and food service therefore less in need of cheese in December and January.” Export demand is light, DMN says, except to Mexico, which has remained active. Western cheese makers con- tinue to see good domestic re- tail and food service demand. Cheddar production is report- ed by some to be overwhelm- ing demand. Manufacturers are con- cerned that weak international sales, generally lighter demand for process cheese and increas- es in imported milk solids used in process cheese production may push cheese prices down- ward. 50-1/#4N