Friday, December 17, 2021
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Dairy
U.S. dairy exporters strained by shipping problems
By CAROL RYAN DUMAS
Capital Press
For the past year, U.S.
dairy exporters have had
problems securing contain-
ers and fi nding cargo space
on ocean carriers. Ships have
been returning empty con-
tainers to China and South-
east Asia to capture a pre-
mium, leaving some U.S.
exporters standing on the
docks.
As a result, shipping costs
for U.S. dairy exporters have
gone through the roof, and
detention and demurrage
fees are unprecedented, said
Tony Rice, trade policy man-
ager for National Milk Pro-
ducers Federation and the
U.S. Dairy Export Council.
Those fees were origi-
nally tools to create incen-
tives for effi ciency in the sys-
tem, he said during the latest
“Dairy Defi ned” podcast.
“But now, it’s more of a
revenue stream for these car-
riers that are somewhat being
abused at the detriment of
U.S. dairy exporters,” he
said.
A lot of dairy exporters
don’t know when the ship
is going to be in dock, when
they’re going to be able to get
a container or when they’re
going to be able to drop off
a container if they do secure
one, he said.
Normally the detention
and demurrage system pro-
vides good guidelines for
container movement, he said.
“But unfortunately, with
the unpredictability and lack
of transparency from the car-
riers, it’s really diffi cult for
our exporters to fall within
the guidelines — and then
they fi nd themselves slapped
with these excessive fees that
just pile up quite rapidly,” he
said.
USDA expands, improves
Dairy Margin Coverage
By CAROL RYAN DUMAS
Capital Press
Enrollment in the Dairy
Margin Coverage program
for 2022 will run through
Feb. 18, and USDA has
expanded it to allow dairy
producers to include supple-
mental production.
The agency has also
improved
feed
cost
calculations.
The supplemental DMC
will provide $580 million
to help small- and medi-
um-scale producers who
increased production over
the years but were not able
to enroll the additional
production.
Now they will be able to
retroactively receive pay-
ments for that supplemental
production for 2021.
It will require a revision
to a producer’s 2021 con-
tract and must occur before
enrollment in DMC for
2022.
The supplemental DMC
payments are limited to pro-
duction of less than 5 million
pounds of milk annually.
DMC covers the mar-
gin between feed costs and
milk prices at insured levels
between $4 and $9.50 a hun-
dredweight of milk.
USDA is also changing
the feed cost formula to bet-
ter refl ect the actual cost for
premium quality alfalfa hay.
It will calculate payments
using 100% premium alfalfa
rather than 50%. USDA
will make retroactive pay-
ments to producers based on
the new formula to January
2020.
The National Milk Pro-
ducers Federation said the
enhancements will make the
program even more valuable
to producers seeking protec-
tion against unforeseen mar-
ket risks.
“Signing up for DMC,
which off ers cost-eff ective
margin protection for small
and medium-sized produc-
ers as well as inexpensive
catastrophic coverage for
larger dairies, is a no-brainer
for 2022,” said Jim Mul-
hern, president and CEO of
NMPF.
“This year has illustrated
just how valuable this pro-
gram is for those producers
that can take advantage of
it, and DMC will once again
be an essential part of many
farmers’ risk management in
the coming year,” he said.
USDA expects to pay out
$1.1 billion in DMC pay-
ments for 2021, including
$106.4 million in Califor-
nia, $22.7 million in Idaho,
$21.7 million in Washington
and $12.3 million in Oregon.
The Midwest Dairy Coa-
lition said the supplemen-
tal program has been long
anticipated.
“Expansion of this safety
net program will ensure it
can bring much-needed help
to dairy farm families,” said
Steve Etka, the coalition’s
spokesperson.
EO Media Group File
Whey stacked at a warehouse. Shipping problems have
tarnished what was otherwise a good year for dairy ex-
ports.
Normally, the market
would correct itself, but it’s
just gotten worse over time,
he said.
“Part of that is due to the
fact that these ocean carriers,
they operate in a captive mar-
ket,” he said.
There are really only 10
carriers that carry about 85%
of the goods to and from
the U.S. Of those, it’s really
only three because they oper-
ate in alliances. In addition,
they’re all foreign-owned
and exempt from U.S. anti-
trust and anti-competition
laws, he said.
They’re not subject to
U.S. regulations, and they
don’t have the U.S. exporter
in mind. Their lack of trans-
parency seems to be inten-
tional, and they’re using the
detention and demurrage sys-
tem as an additional revenue
stream. They are using retal-
iatory measures and intimi-
dation whenever a complaint
is fi led, he said.
Despite all the issues, it’s
been a record year for U.S.
dairy exports. But it begs the
question of how much more
the U.S. could have exported
without the challenges —
which cost U.S. dairy export-
ers upward of $1 billion in
additional fees in just the fi rst
half of the year, he said.
“That’s not to mention the
number of lost sales, rolled
contracts, the loss of prod-
uct quality because of a lot
of these shipments of pow-
der and whey and lactose. …
They’re sitting in the dock
waiting on a ship, and then
that booking gets rolled,” he
said.
Some dairy export-
ers are reporting it’s taken
three months before product
reaches its fi nal destination,
causing them to lose sales to
foreign competitors, he said.
“With growing interna-
tional demand for all agri-
culture and dairy worldwide
… we really are missing
the boat in picking up those
potential sales that we could
be having, certainly in South-
east Asia,” he said.
NMPF and USDEC
have been working with the
administration and Congress
to fi nd solutions and have
some hope that with stronger
rules and guidelines on what
carriers can do, the problem
will be resolved within the
next year, he said, but it’s dif-
fi cult to say.
Scoular cuts ribbon on new feed plant
By CAROL RYAN DUMAS
Capital Press
JEROME, Idaho —
Scoular Co. on Dec. 7 cel-
ebrated the opening of its
new
15,000-square-foot
facility to produce Emerge,
a fi rst-of-its-kind concen-
trated barley protein.
Emerge was developed
to help meet the growing
demand for plant-based,
sustainable ingredients in
aquaculture feed and pet
food.
Scoular also operates a
livestock ingredient facility
in Jerome and several grain
handling facilities in Idaho.
“Scoular has a long his-
tory of success with our
Jerome, Idaho, teams and
customers, and we are
thrilled to make additional
investments in this region,”
said Paul Maass, Scoular
CEO.
The plant will process
Carol Ryan Dumas/Capital Press
Scoular offi cials J.C. Olsen, right, and Joe Andrus give
a media tour on Tuesday at the company’s new facility
in Jerome, Idaho. It will manufacture barley protein
concentrate for aquaculture feed and pet food.
1.7 billion to 1.8 billion
bushels of barley annually
with a capacity to consume
12,000 barley acres, said
J.C. Olsen, Emerge pro-
gram manager.
Emerge is the plant’s
No. 1 product, but the com-
pany will also convert
starch from the process into
syrup for a high-energy liq-
uid feed supplement for
livestock, he said.
With fi sheries around
the world being depleted,
plant-based proteins are
critical for the aquaculture
industry, he said.
“The world needs to
be more effi cient with its
resources,” he said.
Montana
Microbial
Products of Melrose, Mont.,
started developing the tech-
nology to create the product
15 years ago and was wait-
ing for a commercial oppor-
tunity. Scoular worked with
the company for that oppor-
tunity, and broke ground on
the new facility a year ago,
he said.
Joining Maass at Tues-
day’s ribbon-cutting cere-
mony in Jerome were David
Faith, Scoular board chair-
man; Laura Wilder, exec-
utive director of the Idaho
Barley Commission; and
Mike Williams, city admin-
istrator of Jerome.
USDA milk production
estimates lowered again
T
he Agriculture Depart-
ment lowered its esti-
mate for both 2021
and 2022 milk production in
the latest World Agricultural
Supply and Demand Esti-
mates report, for the sixth
month in a row, again cit-
ing lower expected dairy cow
numbers and slower growth
in milk per cow.
2021 production and mar-
ketings were estimated at
226.2 billion and 225.2 bil-
lion pounds, respectively,
down 200 million pounds on
production from last month’s
estimates and 100 million
pounds lower on marketings.
If realized, 2021 production
would still be up 3.0 billion
pounds, or 1.3% from 2020.
2022 production and mar-
ketings were estimated at
227.7 billion and 226.6 bil-
lion pounds, respectively,
down 400 million pounds on
both. If realized, 2022 pro-
duction would be up 1.5 bil-
lion pounds or 0.7% from
2021.
Butter, cheese and whey
price forecasts for 2021 were
raised from last month based
on current prices and strength
in demand. The nonfat dry
milk (NDM) price forecast
was unchanged.
The 2021 Class III milk
price forecast was raised on
DAIRY
MARKETS
Lee
Mielke
the higher cheese and whey
prices and projected to aver-
age $17.05 per hundred-
weight, up a dime from last
month’s estimate, and com-
pares to $18.16 in 2020 and
$16.96 in 2019. The 2022
average was put at $18.15,
up 40 cents from what was
expected last month.
The 2021 Class IV price
forecast was raised on the
higher butter price and
should average $16.05, up a
nickel from last month and
compares to $13.49 in 2020
and $16.30 in 2019. The
2022 average was projected
at $19, up 30 cents.
Cheese, butter, NDM and
whey price forecasts for 2022
were raised, based on lower
expected milk supplies.
The Agriculture Depart-
ment gave us the latest view
on U.S. dairy demand.
Starting with cheese,
October disappearance
totaled 1.18 billion pounds,
up just 0.7% from October
2020, with robust exports
overcoming weaker domes-
tic disappearance, according
to HighGround Dairy’s anal-
ysis. HGD says it was the
weakest October domestic
disappearance since 2017.
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S270396-1
By LEE MIELKE
For the Capital Press