8 CapitalPress.com January 15, 2016 Dairy feed costs down in 2015 By CAROL RYAN DUMAS Capital Press U.S. dairies, cost of production (Dollars per hundredweight of milk) Feed costs on U.S. dair- ies were down an average of $1.37 per hundredweight of milk January through October compared with the same period in 2014, run- ning $11.93 compared with $13.30, according to the USDA cost of production re- port. Lower feed costs large- ly contributed to the $1.61 decrease in operating costs and a $1.45 decrease in total costs during that time period, according to the report. But milk prices were also down, with federal or- der Class III prices in all of 2015 averaging $15.80 per hundredweight, down $6.54 compared with an average of $22.34 in 2014. Income over feed costs for Class III milk from January through October was $4.05 Item Total operating cost Allocated overhead* Total cost October 2014 2015 $15.28 8.68 23.96 $14.83 9.05 23.88 Jan.- Oct. 2014 2015 $16.48 8.40 24.89 $14.87 8.57 23.44 *Includes hired labor, opportunity cost of unpaid labor, capital recovery of machinery and equipment, opportunity cost of land, taxes and insurance, and general farm overhead. Source: USDA ERS Capital Press graphic per hundredweight, less than half the $9.10 average for all of 2014. Lower feed costs are “ab- solutely helping, but it’s not enough to make up for the decline in milk prices,” said Sarina Sharp, market analyst for the Daily Dairy Report. The industry is nowhere near the bleak situation of 2009, when milk prices were several dollars lower and feed costs were substantially higher, she said. Markets vary and mar- gins are generally slim but adequate in the Midwest — with expansion limited by capacity rather than budget — and below break-even in the West, where producers are tightening their belts, she said. Cost of production de- clined consistently through- out 2015, which was some- what remarkable. Large global supplies of corn and soybeans saw prices continue to slip after harvest, she said. “Global supplies really are big,” she said. Back-to-back good pro- duction in recent years and higher expected production and exports in South Ameri- ca in 2016 should keep feed costs low in the year ahead, barring any weather issues or surprising uptick in de- mand, she said. Where milk prices will go is the million-dollar question. But given the large inventories of dairy prod- ucts and continued strong milk production in Europe, it could be a while before pric- es rebound, she said. Some analysts are saying prices could start to rebound in the second half of the year but there would have to be slower milk production growth in Europe and the U.S. — or an increase in demand, largely in China’s appetite for milk powder, she said. PVMI sees growth in potato royalties By JOHN O’CONNELL Capital Press BEND, Ore. — An orga- nization that handles licens- ing and royalty collection of potato varieties developed in the Northwest had its best year in 2015, and officials say it’s poised for greater growth in the next few years. The nonprofit Potato Variety Management Insti- tute gave royalties totaling $536,000 in December to the potato breeding programs of University of Idaho, Oregon State University, Washing- ton State University and the USDA’s Agricultural Re- search Service, said PVMI Executive Director Jeanne Debons. Formed in 2005 by the potato commissions of Or- egon, Idaho and Washing- ton state, PVMI collects a quarter per hundredweight in royalties for its varieties raised within the Tri-state region, 50 cents for varieties raised elsewhere in the U.S. and $1 for varieties raised abroad. Debons said royalties were down in 2014, when PVMI collected $326,000, compared with $408,000 during the prior year. PVMI, which wrote its first royalty checks in 2009, has contributed $1.686 mil- lion to breeding programs to date, plus more than $200,000 to support pro- grams such as the UI Potato Lab. The organization also covers its own operating costs — roughly $130,000 per year — and has more than $500,000 in reserves. PVMI’s top varieties for gen- erating royalties are Alturas, which has generated $1 mil- lion, Classic Russet, which has generated $417,000, and GemStar Russet, responsible for $259,000. During 2015, McDon- ald’s approved the PVMI va- riety Blazer Russet for use in making its fries in the East- ern region of North America. McDonald’s quality systems director Mitch Smith said Courtesy of PVMI Jurgen Bruer, an official with the German potato processor Agrarfrost, examines a new potato variety raised in research fields at the University of Idaho’s Aberdeen Research & Extension Center in August 2015. Bruer’s company has plans to conduct large-scale field trials of several Pacific Northwest potato varieties this season. during a speech at the Na- tional Potato Council’s 2015 Potato Expo, and the com- pany is considering PVMI’s Clearwater Russet. Smith said Clearwater is especially intriguing be- cause of its “sustainable at- tributes in terms of lower in- put use as well as low sugars and, in some cases, higher yields.” He said McDonald’s va- rieties must undergo a rig- orous approval process in- volving the supplier making a business case, careful anal- ysis of yield and attributes, screening by a sensory team in Oakland, Calif., further reviews by panels, reviews by management and a team of owners and operators from throughout the country and consumer testing. Smith said there are only four varieties that now meet McDonald’s “gold stan- dard,” and concerns about texture and flavor are the most common reasons why varieties fail to gain approv- al. “Typically what we see is the texture has been too smooth or pasty,” Smith said during the Expo. “We’re looking to get that nice baked potato texture. The other would be musty and old potato flavors, or too strong potato flavors.” Debons declined to com- ment specifically about Mc- Donald’s plans but said she expects an upturn in Blazer planting this season, espe- cially in Maine. Jonathan Whitworth, a potato scientist with US- DA-ARS in Aberdeen, Ida- ho, believes the breeding programs are better meeting the industry’s needs because processors have begun coop- erating much earlier in the breeding process. “We get more real-time feedback of specifications that are needed to make a va- riety successful,” Whitworth said, adding developing va- rieties that require less in- puts to raise is a top industry concern. Debons said PVMI is also poised to see growth in its varieties internationally. “We had calls from Tur- key. They wanted to try out Clearwater, so we’re or- ganizing that this coming year,” Debons said. She said Jurgen Bruer, an official with the German potato processor Agrarfrost who has large field trials of several PVMI variet- ies planned for 2016, also toured the Northwest potato industry last summer. Don Jenkins/Capital Press Steam rises from the KapStone Paper and Packaging Corp. plant in Longview, Wash. Gov. Jay Inslee’s administration has proposed capping and reducing greenhouse gases emitted by manufac- turers. The rule would apply to a fertilizer maker and two food processors in Eastern Washington. Inslee’s administration lifts lid on carbon cap plan Fertilizer maker, food processors on ‘polluters’ list By DON JENKINS Capital Press Washington Gov. Jay Ins- lee’s administration Wednes- day proposed capping and reducing greenhouse gas emissions from 70 oil refiner- ies, fuel importers and man- ufacturers, including a fer- tilizer maker in Kennewick and two food processors in Othello. The state Department of Ecology, which wrote the rule at Inslee’s direction, said the carbon cap would limit damage climate change to agriculture, coastal commu- nities and municipal water systems. “It’s important that we act now to protect our water supplies, infrastructure and economy for future genera- tions,” DOE Director Maia Bellon said in a written state- ment. DOE plans to circulate the proposal for public comment before adopting a final rule by summer. Todd Myers, environmen- tal director for the conserva- tive Washington Policy Cen- ter, called DOE’s plan the “most backward approach to this issue that can be imag- ined.” “Assuming you want to reduce carbon, regulation is the least rational and most expensive way to do it,” he said. When in full force by 2020, the rule would cap greenhouse gases from sourc- es responsible for 65 percent of the state’s carbon output, according to DOE. The rule would initially apply to businesses and two public institutions that emit at least 100,000 metric tons of carbon annually. They would be required to roll back their current emissions by 5 per- cent every three years. The threshold gradually would lower to 70,000 met- ric tons by 2035, potentially bringing more businesses into the program. Agrium Kennewick Fertil- izer and food processors J.R. Simplot and McCain Foods are among the operations that will be immediately affect- ed by the rule, according to DOE. Because the companies use lots of energy and do business internationally, all three probably would have until 2020 to prepare for op- erating under a cap. Agrium U.S. spokesman Paul Poister said the com- pany participated in several meetings with DOE last year and appreciates the depart- ment’s willingness to lis- ten to energy-intensive and trade-dependent industries. “We are equally commit- ted to reducing air emissions and share the governor’s goal to protect air quality as much as possible,” Poister said in an email. “We look forward to fully reviewing the draft with an eye toward its poten- tial impact on our facility and sharing our assessment with the administration.” Simplot spokesman Ken Dey said the company was reviewing the proposal, but had no further comment. Efforts to obtain com- ments from McCain Foods were unsuccessful. Companies that exceed their carbon caps could be fined $10,000 a day, accord- ing to DOE. Besides cutting their emissions, businesses could fulfill their obligations by buying surplus carbon cred- its from other manufacturers or pay for carbon-reduction projects, such as anaerobic digesters at dairies to convert manure into renewable elec- tricity. DOE energy specialist Bill Drumheller said the department wanted to give businesses multiple ways to comply with the rule. Myers said DOE’s plan would reward companies for suspending Washington op- erations and selling their car- bon credits. “Their plan actually pays for taking jobs overseas, but punishes for keeping jobs here. If you stay, your costs go up,” he said. DOE’s list of “carbon pol- luters” includes the Univer- sity of Washington’s Seattle campus and the military’s Joint Base Lewis-McChord. Inslee ordered DOE to write the carbon cap rule af- ter state lawmakers rejected his proposal to create a cap- and-trade program. DOE’s proposal would set a cap, but unlike Inslee’s leg- islative proposal, would not require businesses to bid for emission credits. Ecology cancels E. Wash. water quality meetings H-B SYSTEM 2000 HORIZONTAL BALE CUTTING SAW By MATTHEW WEAVER The heavy duty, hydraulically powered horizontal Bale Reclaim system, with “Vertical cut positioning” Capital Press SALVAGE ED BALES CONTAMINAT COST- QUICKLY AND EFFECTIVELY Ray Williams Milton-Freewater, OR Give us a call to place your ad this week! AD DEADLINES: Classified Display Ads, Weds. @ 10AM Classified Line Ads, Weds. @ Noon • The HB System 2000 comes complete with hydraulic cylinder and controls for powered cut depth adjustment through the cut. • Automatic bar oiler system is a standard feature on this unit. • This saw splits bales using an L-M DE-68 inch saw bar running .404 pitch chain designed for parallel cutting through any type of hay or straw. 3-1/#8 1-800-882-6789 FAX (503) 370-4383 www.capitalpress.com The Washington State De- partment of Ecology has can- celed three Eastern Washington meetings slated to discuss wa- ter quality, citing low response to its offers of technical and fi- nancial assistance. The department had planned agriculture water quality stake- holder work group information sessions Jan. 26-28 in Walla Walla, Wash., Fairfield, Wash., and Pullman, Wash.. Kelly Susewind, special as- sistant to the director for Ecol- ogy, said the department has been working closely with agri- culture partners to schedule and develop workshops to share information about watershed surveys in 2015 and anticipated in 2016. “The response rate to our 2015 technical and financial as- sistance offers was much lower than we anticipated.” Susewind said. “So rather than identifying new sites with additional water- shed surveys, we have decided to focus our energy on high priority sites identified in past years.” In an email to members of the department’s agriculture and water quality advisory committee, Susewind said the department decided against conducting a new evaluation and potentially adding new sites. Toni Meacham, a Connell, Wash., rancher and attorney, said she suggested Ecology offer outreach education meet- ings with technical service pro- viders instead of canceling the meetings. Agriculture stake- holders held a meeting in Octo- ber that was well-received and provided information based on peer-reviewed sound science, she said. “DOE is not basing their site visits on scientific evidence and they need to do that,” Meacham said. “As landowners become aware of what science shows, that good land management and good grazing plans actually improve water quality, they are less likely to accept DOE’s plan of fencing. Many have started working with technical service providers instead.” With the shift in focus, Ecology and its partners agree a change in approach to the workshops is “appropriate,” Susewind said. “We’ll continue to work with our partners to identify and connect willing landown- ers with the tools and resources available,” he said. “Our goal is to make real progress on the ground protecting clean water and supporting healthy farms.” Education remains critical, Meacham said, as does open communication between the department and the industry. “Water quality isn’t a goal that is exclusive to DOE,” she said. “Water quality is import- ant to landowners as well, but we ask for balance and sci- ence-based solutions.”