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CapitalPress.com
Friday, April 9, 2021
Dairy
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Expert takes close look at dairy sustainability
‘WHAT’S UNIQUE IS YOU CAN OF COURSE TRANSLATE A LOT OF THAT
INFORMATION INTO ENVIRONMENTAL OUTCOMES AS WELL.’
By CAROL RYAN DUMAS
Capital Press
Feeding a growing world in a
sustainable way is a top priority for
farmers and ranchers and their sup-
pliers. But what does that mean?
Sustainability is a word that can
have a lot of different definitions,
and it’s full of
value judgments,
said Sara Place,
chief sustainability
officer for Elanco
Animal Health.
“But there is
broad agreement
that it’s about Sara Place
balancing
envi-
ronmental, social and economic
issues, and it’s about a long-term
focus,” she said in the latest “Dairy
Download” podcast.
Zooming in on the dairy indus-
try, it’s about producing safe, nutri-
tious food with environmental
stewardship, economic vitality and
social responsibility from a long-
term perspective, she said.
Sara Place, chief sustainability officer for Elanco Animal Health
That’s a broad definition, but it
has to be because there are many
different ways to achieve sustain-
ability. The right mix and balance
can vary from operation to opera-
tion and over time, she said.
Elanco helps producers on a
day-to-day basis with technical
consultants, whether it’s issues
popping up or in evaluating their
business.
“What’s unique is you can of
course translate a lot of that infor-
mation into environmental out-
comes as well,” she said.
Looking at animal diets, feed
intake and milk production, for
example, can lead to measuring the
carbon footprint.
Elanco also provides educa-
tional opportunities to help pro-
ducers understand where they are,
she said.
The dairy industry is becom-
ing more and more interested in
the concept of net zero emissions
and trying to reduce emissions
substantially.
Net zero is “really thinking
about having no additional green-
house gas emissions added to the
atmosphere from the system,” she
said.
Those can be emissions that
come from the animal itself, the
manure, feed production and any
electricity or fuel used on the farm,
she said.
The industry is also aspiring to
increase carbon sequestration with
things like cover crops and no-till
systems, she said.
Research also shows that meth-
ane emissions actually don’t have
to equal zero to have no further
warming impact or new climate
impact, she said.
“And ultimately that is what we
care about when we talk about net
zero,” she said.
That terminology essentially
comes from the Paris Climate
Accord and trying to keep within a
certain level of warming, she said.
“That’s a really positive thing
from a standpoint of making the
goal of being net zero and hav-
ing no additional warming impact
with the dairy industry realistic. It
gives us key levers to pull from a
standpoint of methane digesters
and ways we can intervene with
enteric methane emissions and rec-
ognizing they don’t have to be zero
to have zero climate impact,” she
said.
Elanco is focused on how its
products and services can improve
animal health and productivity to
produce more high-quality pro-
tein for people while having a low
environmental impact, she said.
She’s definitely seen an evolu-
tion in agriculture’s willingness to
engage in the topic of sustainabil-
ity. Producer groups and agribusi-
ness companies are more comfort-
able talking about it although the
industry is still on a learning curve,
she said.
“I think what’s also changed
and evolved is really setting a stake
in the ground and different indus-
try groups setting goals,” she said.
That also changes the way agri-
culture talks about sustainability.
“Rather than saying as animal
agriculture essentially, ‘pardon us,
we’re not as bad as you think we
are,’ we’re forward-looking in say-
ing, ‘This is what we’re going to
do,’” she said.
Dairy group wants inclusive discussions on milk pricing
By CAROL RYAN DUMAS
Capital Press
The American Dairy Coalition
wants a seat at the table as the dairy
industry works through the complex
issues of milk pricing and the flaws
brought to light by the COVID-19
pandemic.
Some dairy farmers have lost
millions of dollars and weren’t able
to utilize risk-management tools,
Laurie Fischer, the coalition’s CEO,
told Capital Press.
Fischer said the culprit is nega-
tive PPDs — producer price differ-
entials — that show up as deductions
on milk checks for most farmers par-
ticipating in the Federal Milk Mar-
keting Order system.
Federal order milk pools include
milk for different utilizations —
Classe I, II, III and IV. Four of the
federal orders pay producers on a
weighted average based on the four
classes. But seven of the orders pay
based on components, such as but-
terfat and protein,
and pay all milk at
the Class III price.
Usually,
the
pool has more
money in it than
the total Class III
payments and pro-
Laurie
ducers receive a
Fischer
positive PPD. But
when Class III prices skyrocketed
during the pandemic and Class III
processors pulled out of the pool,
there wasn’t enough money in the
pool to pay the Class III price on all
milk in the pool.
Handlers had to take away a pro-
ducer’s price differential from the
Class III payments, resulting in a
negative PPD.
Negative PPDs in some orders
were as high as $8 per hundred-
weight, and producers could see
negative PPDs through the rest of
the year, Fischer said.
“Seventy percent of farms were
impacted at different levels,” she
said.
And farmers who purchased
risk-management tools were
unable to use them because the
programs are based on milk prices
and not necessarily on what pro-
ducers actually receive, she said.
For instance, a producer might
have insurance for $16 per hun-
dredweight on his milk. The proces-
sors pay price might be $16, but the
producer only received $10 if he had
a negative PPD of $6.
Based on USDA data, the coali-
tion estimates there has already been
a $2.7 billion shortfall in federal
order milk pools.
The industry needs to get together
and find long-term and short-term
solutions, she said.
To that end, the coalition is ask-
ing National Milk Producers Feder-
ation and International Dairy Foods
Association for a seat at the table
for a more balanced voice of dairy
farmers.
Both are large lobbying groups
and well respected. But National
Milk represents farmer cooperatives,
and the Dairy Foods Association
represents processors. She’s hear-
ing from farmers all over the country
who don’t feel their voices are being
heard, she said.
“We believe an expedited federal
order hearing should be requested
immediately, along with an imme-
diate solution to address the nega-
tive PPDs that are being passed onto
farmers,” the coalition stated in a let-
ter to the two groups.
The issue is two-fold — a change
to the pricing of Class I fluid milk
implemented in May of 2019 and
the depooling of higher value milk.
The change in Class I pricing is
in how the Class I price mover is
calculated. The mover sets the base
Class I price to which a location dif-
ferential is added. Beginning in Jan-
uary 2000, the Class I mover was the
“higher of” the advanced price for
Class III (milk for cheese) and Class
IV (milk for powder and butter).
That was changed in the 2018
Farm Bill to the average of Class
III and Class IV plus 74 cents per
hundredweight, which reflected the
average difference of Class III and
Class IV and the higher of the two.
Class III prices skyrocketed in the
pandemic — due mostly to govern-
ment cheese purchases — and rose
well above Class I under the current
mover.
In seven of the 11 federal orders,
all milk pooled — no matter its uti-
lization — is paid the Class III price
for components, such as butterfat
and protein. With the high Class III
prices, that took more money than
was in the pool in those orders and
producers saw negative PPDs on
their milk check.
Only Class I milk is required
to be pooled, and many Class III
processors opted out of the pool
rather than pay the elevated reg-
ulated price. So that high-value
milk was no longer contributing
to the pool.
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Capital Press File
DMC
margin falls
in February
By CAROL RYAN DUMAS
Capital Press
Lower milk prices and
higher corn and alfalfa hay
prices in February compared
to January shrank USDA’s
calculated margin between
milk prices and feed costs in
the Dairy Margin Coverage
Program.
The February margin is
$6.22 per hundredweight of
milk, 92 cents below Janu-
ary’s $7.14 margin.
Compared with January,
milk prices decreased 40
cents per hundredweight.
Corn prices increased 51
cents per bushel. Alfalfa
hay increased $4.50 a ton,
and soybean meal decreased
$11.96 per ton.
Dairy producers who
enrolled milk at a $6.50
margin or higher can expect
a payout for February. Cov-
erage at the $9.50 margin
would yield a payout of
$3.28 per hundredweight.
At the end of March,
USDA estimated payouts
for January and February
would total more than $93
million. The agency’s April
5 report puts total payouts
at $22.6 million.
A spokesperson from
USDA’s communications
team told Capital Press on
April 7 the total is approx-
imately $203 million —
about $85 million for Janu-
ary and about $118 million
for February.
“The vast majority
of DMC payments have
been made, and we don’t
expect the numbers to
change much for the Jan.
and Feb. payments,” the
spokesperson said in an
e-mail.