Dairy Management Column
BY TOM JURCHAK
County Extension Agent
Blastoff
SCRANTON (Lackawanna)
Fueled by higher prices for powder
and cheese the Minnesota-
Wisconsin Price Series finally
ignited and went into orbit jump
ing 46 cents in August to a yearly
high of $10.98.’ From a low of
$10.33 in April it took three
months to gain 19 cents, but now it
finally got off the ground. There
hasn’t been a single month’s
increase to match this in the last ten
years, at least, and there’s more to
come. This is the highest M-W
since December and 65 cents over
the support price of $10.33 for 3.5
milk.
It wasn’t the drought that
brought the higher prices as much
as the increasing demand for
cheese. Production in the two state
area was as good as last year and
the out of state demand was up
only slightly. One thing that the
hot weather did was to lower the
fat and solids in the milk so cheese
and butter yields were low. With
better yields the M-W may have
gone up as much as 60 cents,
according to some analysis.
Monthly averages on cheese prices
have increased 12.6 cents from
May to August and were up
another three cents in September
and still climbing. At $1.30 a
pound cheese prices are now 15
cents above the support price.
Powder prices are up 5.5 cents
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from their spring low and are now
nearly six cents above the support
price. Higher export prices have
accounted for most of the increases
in powder prices. Butter has
gained less than powder and
cheese but still managed to go
three cents above supports last
month. It has lost some ground in
September and may have peaked
already. '
All of this is reflected in Com
modity Credit Coiporation purch
ases that have nearly disappeared.
Butter purchases the first week of
September were the lowest in sue
weeks. Cheese purchases were the
lowest in nine years and no powder
has gone to CCC for the la;t two
months—and it’s only the middle
of September. The drought really
hasn’t begun to take its toll on milk
production. Nationally you pro
duced slightly more than last year.
Of the top five dairy states only
Pennsylvania and Minnesota were
lower. However, it’s expected that
production will drop below last
year’s level until the benefits from
the Disaster Assistance Act begin
to flow back to the farm.
In Order 2
In order to appreciate the effect
on your milk check of a 46 cent
increase in the M-W you’re going
to see a blend price for August
milk in Order 2 of $12.03 and
that’s 72 cents higher than July.
Again, the biggest increase you’ve
seen in 10 years. But only half of it
came from the M-W. In August
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you g6t your first pay back from
the Louisville Plan and that was 35
cents or about half of your 72 cent
increase. The other half came from
a 53 cent jump in the Class II price
that did come from the M-W. The
Class I price will increase in
October when it goes to $13.53.
However, while you’ve made
some outstanding gains this month
you still haven’t closed the price
gap from last year. The $12.03 is
still 41 cents less than last year but
that’s better than the 65 cent differ
ence in July. The best news is that
prices have finally taken hold and
there’s more to come in the months
ahead.
Also to come in the months
ahead are the benefits from the
Drought Assistance Act of 1988.
Latest USDA crop reports indicate
that, nationally, loss estimates this
month are nearly unchanged from
August so the worst is behind us
and in some regions production is
better than expected. However, the
relif machinery is already in
motion and county ASCS offices
are ready to talk especially. If you
have crop losses that need to be
documented or verified while the
evidence is still in the field. When
in doubt, call. There are actually
three different programs in the Act
that relate to milk producers and
you should be aware of all of them
to providing help this winter. No
program is perfect and none of
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them are designed to replace all
your losses but only to help you
maintain your herd to the next
growing season.
Three Way
Stretch
There will already be three dif
ferent programs available but you
need to understand each of them
because there are payment limita
tions that cut across all three
programs.
The Drought Aid program deals
only with crop losses and covers
every crop from com to forest
trees. Not all of the regulations are
in place for this part of the prog
ram. Price supported crops like
com and wheat are pretty well cov
ered but more work is needed on
non program crops like hay and
vegetables. However, that’s no
reason to ignore it because you still
need to know what information
ASCS will want to verify your los
ses and what records they need
from you on past production of non
program-crops. Such losses can
cover about everything that’s
weather related not. only losses
from drought and losses will be
covered for each crop.
The second program is the
Emergency Feed Program which
will consider your total feed supp
ly both raised and purchased and
balance that against your mini
mum needs to maintain your herd.
The difference will be made up in
payments you can use to buy addi
tional feed. The third program is
the Emergency Feed Assistance
Program that is somewhat similar
s
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*
to the Emergency Red Assistance
Program that is somewhat similar
to the Emergency Feed Program
except that in place of feed pay
ments you can buy feed grains at
75 percent of the county loan rate
delivered to the farm.
Regulations on the feeding
programs are completed and
ASCS can give you the details.
Explore all three programs and
decide what best suits your needs
within the payment limits.
PMMB
Authority
The Pennsylvania Milk Market
ing Board sent out a letter to all
handlers clarifying their authority
to set prices of Class I milk. The
Board can set minimum prices for
Class I milk produced in Pennsyl
vania and sold to handlers located
in Pennsylvania whether or not
those handlers are regulated under
federal orders. If you think about
it, that can account for much of the
variation in over order premiums
we will see in the northeastern
counties. Nearly all of the Order 2
plants buying milk here are located
outside the state and are not
included. Plants located outside
Pennsylvania but selling milk here
would have the best deal or plants
located here but buying out of state
milk would also benefit. Of course,
the mere fact of mandated over
order premiums to producers shifts
the whole pricing scene so all
handlers will be affected to main
tain their supplies.
However, the problem remains
of how to get comparable pre
miums for milk shipped to out of
state handlers and what happens
after the PMMB premiums end in
February. PMMB prices for Class
I milk in October is now the $14.73
compared to the Order 2 price of
$13.53 that month. That’s even
higher than the $14.45 target price
set by RCMA and MCMMA last
year. If it works then we’re back to
the original idea when RCMA was
first organized—why not have it
for everyone if they are willing to
participate in a cooperative? The
PMMB premiums are for drought
relief and could disappear in the
spring but something more reliable
could take their place if Order 2
producers are willing. Many are
already tempted by high premiums
to jump in the fire but may be try
ing to get back in the frying pan
when market conditions change.
Allflex Begins
Producing Ear
Tags In Texas
DALLAS, TX. Allflex/
Industrial Thermoform, the newest
member of the Allflex Group of
Companies in North America, has
begun full production molding of
livestock identification eartags for
Allflex/Vet Brand, Inc. Mike
Scott, Allflex 'technical director,
recently certified the tag produc
tion at Industrial Thermoform
meets the Allflex high standard of
quality.
Established in 1972, Industrial
Thermoform fast earned the repu
tation as a specialist in custom
injection molding. With high tech
equipment on site, and more to
come, the newly acquired com
pany will supply Allflex/Vet
Brand with substantial inventory
for the North American market.
While Allflex livestock identifi
cation products have been manu
factured in the U.S.A. since 1980,
the modem 17,000-square-foot
Dallas plant will assure the availa
bility of Allflex products
nationally.