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Feed and Pay Price September/October, 2022

By Ed Maltby, NODPA Executive Director

The Agricultural Marketing Service (AMS) reported in May 2022 that estimated fluid product sales of organic milk increased by 4.4% over May 2021, but a negative 0.5% in June 2022 over June 2021, with a minus 2.3% for the year-to-date 2022 over 2021. Organic whole milk sales, at 116 million pounds in May, and 111 million pounds in June, showed the greatest growth with a 1% growth year to date. Reduced fat milk (2%) sales were 78 million pounds, falling 2.1 percent from the previous year and down 3.7 percent year-to-date.

Product Name

Sales of Organic Fluid Milk

Change from

May-22

2022 Year to date

May-21

Year to date

Million pounds

Percent

Organic Whole Milk

114

561

5.0%

1

Flavored Whole milk

2

9

13.8%

7.3

Organic Reduced Fat Milk (2%)

80

405

6.5%

-4

Organic Low Fat Milk (1%)

26

126

0.7%

-9.5

Organic Fat Free Milk Skim

14

74

-10.6%

-7

Organic Flavored Fat-Reduced Milk

7

33

20.7%

-10.6

Other Fluid Organic Milk Products

0

0

0.0%

0

Total Fat Reduced Milk

127

637

3.8%

-5.8

Total Organic Milk Products

244

1,208

4.4

-2.6

Product Name

Sales of Organic Fluid Milk

Change from

Jun-22

2022 Year to date

Jun-21

Year to date

Million pounds

Percent

Organic Whole Milk

109

671

0.9

1.0%

Flavored Whole milk

2

11

133.6

16.60%

Organic Reduced Fat Milk (2%)

78

483

-2.1

-3.7%

Organic Low Fat Milk (1%)

25

151

-4.1

-8.6%

Organic Fat Free Milk Skim

13

87

-7.3

-7.1%

Organic Flavored Fat-Reduced Milk

7

40

9

-7.6%

Other Fluid Organic Milk Products

0

1

0

0.0%

Total Fat Reduced Milk

124

761

-2.4

-5.2%

Total Organic Milk Products

234

1442

-0.5

-2.3%

The Northeast Federal Milk Market Order 1 reports that the utilization of types of organic fluid milk by pool plants for June and July. In June 2022, utilization of organic milk was down 11% from June 2021, During June 2022, organic Whole Milk utilization totaled 15.33 million pounds, down 1.2 million pounds from the prior year. Meanwhile, butterfat content, 3.28 percent, dropped compared to 3.29 percent the previous year. Utilization of organic Reduced Fat milk was 16.19 million pounds, down from 18.90 million pounds a year ago, while the butterfat content of 1.39 percent is down when compared to the previous year. In July 2022, the utilization of organic milk was a total of 29.44 million pounds, up by 15% on 2021. Utilization of organic Whole Milk in July 2022 was 14.42 million pounds, up by 3 million pounds from 2021. Utilization of organic Reduced Fat milk was 15.02 million pounds, up approximately 1 million pounds from 2021.

UTILIZATION OF ORGANIC FLUID MILK PRODUCTS AND CREAM BY POOL PLANTS (Million pounds)

Fluid retail Organic Milk 2022

Fluid retail Organic Milk 2021

Fluid retail Organic Milk 2020

Increase/Decrease of 2022 over 2021

Increase/Decrease of 2021 over 2020

JANUARY

29.14

31.32

23.93

-7%

31%

FEBRUARY

33.65

31.56

26.69

7%

18%

MARCH

31.56

31.87

27.90

-1%

14%

APRIL

33.23

28.97

29.35

15%

-1%

MAY

30.49

29.72

28.25

3%

5%

JUNE

31.53

35.47

26.90

-11%

32%

JULY

29.44

25.50

26.70

15%

-4%

AUGUST

27.18

24.70

10%

SEPTEMBER

30.26

29.70

2%

OCTOBER

29.47

25.78

14%

NOVEMBER

31.07

24.47

27%

DECEMBER

31.36

28.13

11%

ANNUAL

219.04

363.74

322.50

13%

Mercaris supplies data on the average pay price for organic milk over the spot price. Anecdotally producers report that organic milk is short in the northeast.

Spot Fluid Milk Price

Fluid Milk Pay Price

Mar-22

$ 33.21

$ 28.54

Apr-22

$ 32.72

$ 29.59

May-22

$ 33.88

$ 28.77

Jun-22

$ 35.88

$ 29.05

Jul-22

$ 35.88

$ 30.32

AMS reports organic milk retail prices for selected U.S. cities. The data is collected by Federal milk order market administrators based on a survey conducted one day between the 1st and 10th of each month (excluding Fridays and weekends) in selected cities or metropolitan areas. One outlet of the largest and second largest food store chains are surveyed. The price represents the most common brand in nonreturnable containers. The August 2022 in-store retail surveys of selected supermarkets in twenty-nine U.S. cities show the retail prices of organic whole milk in the half gallon container. The August 2022 simple average price increased to $4.68, up 2 cents from the previous month. The producer receives $1.33 for a half gallon of milk and consumers pay an average of $4.68, with Pittsburgh, PA paying up to $6.79 per half gallon while Seattle WA pays only $3.74 per half gallon.

The organic dairies in the northeast need emergency aid due to the catastrophic conditions caused by dramatic and unprecedented increase in input costs that have been aggravated by regional drought. CROPP Cooperative/Organic Valley have raised pay price by 75 cents per cwt and Lactalis/Stonyfield by one dollar/cwt, but no buyers are offering more and definitely no Market Adjustment Premiums (MAPs) to cover the increase cost of inputs.

Northeast organic dairies share many of the same problems that organic dairies in California and the west are experiencing. Large losses face small to mid-size organic dairies across the country with many facing the prospect of going out of business; some already have.

According to a comparison survey completed by NOFA VT of the first 5 months of the 2022, fuel expenses have increased by up to 75% in 2022, over 2021, with an average diesel price still double what it had been in 2020. The same survey showed milk sales are down, and there was a 50% drop in net farm income, perhaps because there has not been any Dairy Margin Coverage Program money in 2022, but also because of variable pastures and feeding less grain to save money.

Auctioneers have reported higher organic dairy farm sales and increased culling of organic cows. Producers are anticipating heavy culling to get through the winter, some up to 25% of their herd. Multiple dairy producers, who are not near retirement age and have a long history in organic, have developed exit plans rather than run down what is left of their equity. Some dairies are looking to diversify their operations, perhaps moving into growing crops for cash sale, but that takes time and infrastructure.

Organic dairy does not have any existing Federal safety net or margin protection programs, unlike conventional dairy, to assist when inputs increase and pay price is below production expense. The reliance on the conventional program, DMCP worked to assist organic dairies in 2021, as did the COVID payments. But in 2022, there might be a small payout of DMCP towards the end of the year but nothing of significance.

NODPA, Maine Organic Farmers and Gardeners Association, NOFA-Vermont, NOFA-New York, NOFA-New Hampshire, and Organic Farmers Association have sent a letter to USDA Farm Service Agency (FSA) directly to Deputy Administrator for Farm Programs, Scott Marlow and Zach Ducheneaux as Administrator of the Farm Service Agency, asking for ‘a short-term targeted solution using federal funds to offset the increase in inputs.’

For organic feed corn delivered to the elevator prices averaged $12.18/bu. over July, down $0.57/bu. from last month, but still holding strong above the $12/bu. mark. For August and September, the average price was $11/bu. Prices were up $2.93/bu. from 12 months prior and the highest since 2015. Organic feed corn for July and August FOB was $11.30 and $12 per bushel compared to $8.40 and $9.35 /bushel in 2021. For the month of July 2022, total corn imports reached 887,863 bushels, an increase of 335% versus prior month and an increase of 1% versus prior year. Year to date, total imports have reached 3,524,513 bushels which is an increase of 24% versus last year. If the current pace continues throughout the year, imports could reach 7,526,619 bushels compared to 6,080,350 last year. For the 12 months ending July 2022, the top three exporting countries to the U.S. for organic corn were Argentina, Canada and Romania.

Organic feed soybean delivered to the elevator prices averaged $36.91 per bushel over July, up $0.42 after an over $3.00 drop off in June. August and September prices are averaging $39-$40 per bushel. Organic prices remained significantly above 12 months prior, up $6.71/bu. y/y. Organic feed soybeans for July and August FOB was $39.66 and $40 per bushel compared to $29.00 and $28.66 per bushel in 2021. Currently, the price is $39.66 per bushel. For the month of July 2022, total soybeans imports reached 1,820,814 bushels, an increase of 387% versus prior month and an increase of 16% versus prior year. Year to date, total imports have reached 7,066,250 bushels which is an increase of 24% versus last year. If the current pace continues throughout the year, imports could reach 10,384,536 bushels compared to 8,361,563 last year. For the 12 months ending July 2022, the top three exporting countries to the U.S. for soybeans were Argentina, Ukraine, and Turkey.

The growth of imports has had a supply-stabilizing impact on U.S. organic markets. This has been particularly true for the U.S. organic soybean. Through the 2020/21 marketing year, the U.S. supply of organic soybean meal - the principal source of protein for organic livestock and poultry feed rations - nearly doubled from 2014/15, following an 80% increase in demand for protein feeds for organic livestock feed rations. The ability of supply to grow at this pace was largely supported by escalating imports, which reached 83% of U.S. organic soybean meal supplies over the 2020/21 marketing year.

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