A44-Lmcaster Farming, Saturday, Saptambar 20,1986
Ike Milk
Cheek
TOM JURCHAK
County Agent
Prices Are Increasing
Increases in butter and cheese
prices last month have left a trail
of changes through the whole
marketing chain and finally
reached the farm in the September
milk check.
About 10 cents of the 16 cent
increase in the Chicago butter
price since March just happened
between July and August. Cheese
prices also advanced over six cents
but half of that also came in
August. These improved butter
and cheese prices translated into a
higher Minnesota-Wisconsin Price
Series that jumped 27 cents from
July to August. That was the best
monthly increase since September
1984 during the diversion program.
Since the M-W is the basis for
setting the Class prices of milk in
Federal Orders it means higher
milk checks to producers.
In addition to the increases in the
Class prices, that jump in butter
prices will also provide an increase
in your butterfat differential from
.160 in June to .177 in August.
Getting down to the bottom line,
you’ll find that the Uniform Price
in Order 2 for August was $12.46
which was 19 cents better than a
year ago but a hefty 60 cents better
than last month. That uniform
price or blend price does not in
clude transportation or butterfat
differentials so your check may be
higher but that’s the average for
all producers shipping to Order 2
handlers.
However, not all of that 60 cent
increase came from higher prices.
Included was a pay back of 36 cents
from the Louisville Plan to which
you contributed last spring but I’m
sure it will be welcome no matter
where it came from. This won’t be
the end of your price increases this
fall because that 27 cent increase
in the M-W in August won’t show
up in your Class I price until Oc
tober. So, even if there are no
further increases in butter and
cheese prices you’ll be getting the
benefits for the next few months.
Looking Ahead
Wholesale butter prices are now
10 percent higher than the support
price so the Commodity Credit
Corporation has already sold over
four million pounds from its stocks
of 240 million. Sales have slowed
down recently but the CCC has not
purchased any butter now for
about six weeks. However,
because of the opportunity for CCC
sales, the market price of butter
won’t go much higher until all the
government stocks are sold.
Any increases in the M-W will
have to come largely from in
creases in cheese prices and this
can happen this fall.
Milk production losses in some
areas this summer because of hot,
dry weather have started ship
ments from Minnesota and
Wisconsin earlier than usual. Even
though the weather has improved,
there were 113 loads of milk moved
from Wisconsin to southern areas
the first week of September
compared to 49 loads the same
week a year ago. In addition, the
reserve supply plants m the Upper
Midwest Marketing Area were
asked to share nearly 10 percent of
their milk to pool plants for fluid
use in September.
Mostly these are local problems
that will be adjusted but could
provide some effect on the M-W
and in turn your milk check.
The $64 question now is how high
will the M-W go this fall con
sidering all the local and national
situations. Earlier predictions
from USDA were increases of 40 to
70 cents from spring to fall.
Starting at $10.98 in May the 40
cent increase would have made it
$11.38 but we’re already up to
$11.33. The 70 cent increase means
$11.68 and that seems to be a more
realistic figure now with most
estimators settling for $11.60 by
November which would still be 40
cents more than last year.
However, that doesn’t mean that
increases over last year won’t
continue monthly into the new year
because you’re on a roll now of
lower production and higher prices
that started back in January and
has continued with the help of the
Dairy Termination Program;
decreasing production; increased
Class I differentials; some help
from the weather man and a lot of
help from increasing commercial
sales of dairy products.
Yon Can Do Better
There’s no question that dollar
wise, because of assessments,
producers are worse off this year
than last year but improvements
market wise are still worth looking
at not only to see what’s happening
to prices but how your position as a
producer may be strengthened in
relation to your handler.
We can only use averages to
show trends and changes but in
dividually handlers are affected
much differently just as all
producers are not affected the
same as the average. For instance
we can show that the Minnesota-
Wisconsin Price Series has im
proved monthly compared to the
year before from a minus $1.28 in
January to a plus 25 cents in
August. That’s an increase of $1.53
in eight months compared to last
year. Or, looking at the blend price
in Order 2 compared to 1985 it went
from a minus $1.42 in January to a
plus 19 cents in August for a total of
$1.61 in August.
Nationally, production has
changed from a plus 8 percent over
the previous year in January to a
minus 1 percent in July. This
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decreasing protection is what has
handlers concerned because they
only make money when they’re
handling milk. The less milk they
handle the less money they make
and with processing capacity in
creased to handle the peak
production of last year, they don’t
want to lose too many producers
because of lower prices or their
idle plants will also cost them
profits.
In other areas of the country
producers and handlers have used
over-order pricing to maintain a
balance in supplies when Federal
Order minimum prices weren’t
high enough to do it. Here in Order
2 we now have the opportunity with
decreasing production and in
creasing prices to start over-order
pricing to provide more farm in
come and keep more producers in
business. However, all of the
producers from Maine to
Maryland have to cooperate to
make it effective because of the
over lapping between Order 1 in
New England and Order 2 in New
York and between Order 4 in
Philadelphia and Order 2 in New
York.
Producers in New York and New
NEW YORK - Dairy fanners
who supplied milk plants regulated
under the New York-New Jersey
marketing orders during August
1986 will be paid on the basis of a
uniform price of $12.46 per hun
dredweight, 26.8 cents per quart.
Market Administrator Thomas A.
Wilson also stated that the price
was $11.86 in July 1986 and $12.27 in
August 1965. The uniform price is a
marketwide weighted average of
the value of farm milk used for
fluid and manufactured dairy
products.
The seasonal incentive fund
returned a total of $3,478,234.15, or
$.364 per hundredweight, to the
dairy farmers’ uniform price for
August. This fund was generated
by reducing the uniform price paid
to producers during the high
production spring months.
A total of 15,758 dairy farmers
supplied the New York-New Jersey
Milk Marketing Area with
957,253,993 pounds of milk during
August 1986. This was a decrease
of 1.6 percent, or 16 million pounds,
from last year. The gross value to
dairy farmers for milk deliveries
was $120,240,484.19. This included
differentials required to be paid to
dairy farmers but not voluntary
premiums or deductions
authorized by the farmer.
Regulated milk dealers used
372,772,423 pounds of milk for Class
I, 38.9 percent of the total. This
milk is used for fluid milk products
England have been working at this
for over a year and organized the
Regional Cooperative Marketing
Agency to give all producers a
chance to get higher prices without
any assessments or deductions
from their milk check. The Order 4
cooperatives are now forming the
Mid Atlantic Cooperative Milk
Marketing Agency that will be
negotiating over-order pricing
with RCMA representing Order 2
and Order 1 producers. With the
addition of Order 4 cooperatives
which represent 90 percent of the
producers in that Order there are
now estimated to be 78 percent of
all the producers in the three
Federal Order areas committed to
over-order pricing. The largest
gap to be filled now is the group of
Order 2 producers, mostly in
Pennsylvania, who have not
participated yet.
So far a statewide steering
committee representing Penn
sylvania Farmers Union, Penn
sylvania Farmers Association and
the Grange has been named and
they are in the process of naming
county chairmen and committee
members in each county. These
county committees will provide the
opportunity for producers to join
Order 2 Milk Set At $12,46
such as homogenized, flavored, milk.
low test, and skim milks. For The uniform price is based on
August 1986, handlers paid $13.55 milk containing 3.5 percent but
per hundredweight, 29.1 cents per terfat. For August 1986, there was
quart, for Class I milk compared a price differential of 17.7 cents for
with $13.45 a year ago. each one-tenth of one percent that
The balance, 584,481,570 pounds the milk tested above or below the
or 61.1 percent, was used to 3.5 percent standard,
manufacture Class II products All prices quoted are for bulk
including butter, cheese, ice tank milk received from farms in
cream, and yogurt. Handlers paid the 201-210 mile zone from New
$11.43 per hundredweight for this York City.
USDA Buyout Report
WASHINGTON, D.C. An The purchases of meat in ad
estimated 23,300 head of dairy dition to normal purchases are to
cattle were slaughtered in help offset the effects of the DTP
federally inspected plants during on the domestic meat market,
the week ending Aug. 30, as a These purchases, reported bi
result of the Dairy Termination weekly as of Sept. 13, totaled 12.7
Program, the U.S Department of million pounds. The cumulative
Agriculture announced Wed- purchases total 289 million pounds.
. nesday. Dairy cattle reported for export
This total includes all cows, under the program for the period
heifers and calves identified as April 1 to Sept. 13 totaled an
dairy animals designated for estimated 32,747 head,
disposition in compliance with the Live cattle exported under the
program requirements. program are expected to increase
The cumulative total of cattle as countries develop tenders to
slaughtered under the program participate in the export enhan
from April 1 through Aug. 30 is an cement program,
estimated 737,200 head.
RCMA without any cost or changes
in their milk check but allow them
to collect ahy over-order
premiums that RCMA can
negotiate. They only have to join
for a year and all non co-op
members will be represented
proportionately on the board of
directors in RCMA.
If you’re interested in learning
more about RCMA or over-order
pricing contact any of the local
officers of your farm organization
or your state director. By the end
of September county committees
will have been named and
meetings scheduled so you can join
RCMA.
This is not a referendum or a poll
to determine if producers are in
favor of higher prices. This is a
marketing organization that has to
include every producer in the
market so when your directors are
negotiating with handlers for
higher prices they can be speaking
for all the producers not just a
majority. It has to be all or it will
be nothing. As long as you have the
leadership to do the negotiating
without cost to you I would hope
that you would have the initiative
to participate by joining RCMA.
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