NMPF President and CEO Jim Mulhern says the industry need a modernized Federal Milk Marketing Order that works better for dairy farmers, in an interview with the National Association of Farm Broadcasters. “We’re really excited that is a plan that will point a way toward a much brighter future for us dairy industry,” Mulhern said.
NMPF President and CEO Jim Mulhern explains the importance of modernization to the Federal Milk Marketing Order system and the benefits it hold from farmers to consumers in an interview with AgriTalk, a daily national conversation about the latest issues impacting agriculture and rural America. NMPF’s proposal to update the system, which governs milk pricing, is currently before USDA.
NMPF Senior Vice President of Communication discusses how the Federal Milk Marketing Order Modernization plan the organization submitted to USDA this week would create a firmer foundation for the U.S. dairy industry, with farmers being paid a price that better reflects the quality of their milk and sharing their price risk more equitably with processors. Ultimately, once needed updates are fully in place, everyone will benefit from milk that’s valued appropriately across the industry, he said. Bjerga speaks with Mike Pearson on the Agriculture of America podcast.
The Dairy Margin Coverage (DMC) program will pay $3.31/cwt for $9.50/cwt coverage in February, based on a margin of $6.19/cwt that month. This was $4.70/cwt less than the margin last November. A milk price drop of $1.50/cwt from a month earlier and a $0.25/cwt rise in the DMC feed cost formula combined to lower the February margin by $1.75/cwt from its level in January.
Available forecasts currently indicate that the monthly DMC margins are close to bottoming out for the year, at around $6.00/cwt in a month or two, followed by a slow rise that will not likely top $9.50/cwt until the fourth quarter. This year will return many times the cost of this very affordable means of managing margin risk.
Record milk prices seen in 2022 likely won’t repeat themselves, as production increases and consumers grapple with an economic slowdown, according to members of the NMPF and U.S. Dairy Export Council’s joint economics unit, in a Dairy Defined Podcast released today. But exports are on track to increase, and demand will likely be resilient as dairy remains must-have for buyers.
“Consumers around the world still gravitate towards dairy, even when they’re experiencing tighter economic situations,” said Will Loux, head of the team Vice President for Global Economic Affairs with NMPF and USDEC. “They ultimately view dairy as an essential item and will continue to consume it.”
Loux discusses the global and domestic dairy outlook with NMPF’s Chief Economist, Peter Vitaliano; Economic Research and Analysis Director, Stephen Cain; and the joint economic team’s newest member, Economic Policy and Global Analysis Coordinator, Allison Wilton. The full podcast is here. You can also find the podcast on Apple Podcasts, Spotify and Google Podcasts. Broadcast outlets may use the MP3 file below. Please attribute information to NMPF.
The U.S. average all-milk price rose $1.50/cwt in October from a month earlier, boosting the month’s DMC margin well above the $9.50/cwt maximum coverage level needed to trigger program payments, after two months of payouts.
The October margin was $10.71/cwt, $2.09/cwt higher than September’s margin. The DMC feed cost dropped by $0.59/cwt in October, driven entirely by a sizeable drop in the price of corn.
Another small payment for $9.50/cwt Tier 1 coverage may be triggered in December, based on current projects. Payments this year under the program, for August and September, together total the equivalent of about $0.19/cwt on an annualized basis and would be enough to cover the annual premium for a farmer enrolled in DMC at the $9.50 coverage level.
NMPF Senior Vice President Chris Galen reminds farmers of the upcoming Dec. 9 deadline to enroll in the Dairy Margin Coverage Program in an interview with the National Association of Farm Broadcasters. This year’s payments under the program — the result of high input costs eating into record prices — show the wisdom of DMC’s design, Galen said. “As we head into 2023, we know that milk prices aren’t going to be as strong,” Galen said. “We know that input costs are still going to be significant.”
