By Ed Maltby, NODPA Executive Director
The Agricultural Marketing Service (AMS) reported March and April 2023 estimated organic fluid product sales. Sales of organic fluid milk products in March 2023 were 256 million pounds, up 1.3 percent from March 2022, and in April 2023 they were 219 million pounds, down 8.8 per cent from April 2022. In March 2023, fluid organic whole milk sales of 122 million pounds were up 5.2 percent compared to a year earlier. Reduced fat milk (2%) sales were 132 million pounds, down 1.6 percent from the previous year. April 2023 organic whole milk fluid sales were 110 million pounds, down 3.2 percent from April 2022. The organic reduced-fat milk fluid sales in April 2023 were 108 million pounds, down 13.3 percent from April 2022. The average retail price for organic milk in April 2023 was $4.79 per half gallon, and in April 2022 it was $4.49 per half gallon.
|
Product Name |
Sales of Organic Fluid Milk |
Change from |
||
|
|
Mar-23 |
2023 Year to date |
Mar-22 |
Year to date |
|
|
Million pounds |
Percent |
||
|
Organic Whole Milk |
122 |
353 |
5.2% |
6.0% |
|
Flavored Whole milk |
1 |
3 |
-30.5% |
-49.6% |
|
Organic Reduced Fat Milk (2%) |
83 |
238 |
-4.3% |
-3.0% |
|
Organic Low Fat Milk (1%) |
26 |
74 |
2.6% |
-1.5% |
|
Organic Fat Free Milk Skim |
15 |
41 |
-4.5% |
-10.7% |
|
Organic Flavored Fat-Reduced Milk |
8 |
22 |
24.4% |
18.9% |
|
Other Fluid Organic Milk Products |
0 |
1 |
-47.9% |
154.9% |
|
Total Fat Reduced Milk |
132 |
375 |
-1.6% |
-2.6% |
|
Total Organic Milk Products |
256 |
732 |
1.3% |
1.1% |
|
Product Name |
Sales of Organic Fluid Milk |
Change from |
||
|
|
Apr-23 |
2023 Year to date |
Apr-22 |
Year to date |
|
|
Million pounds |
Percent |
||
|
Organic Whole Milk |
110 |
463 |
-3.20% |
3.6% |
|
Flavored Whole milk |
1 |
3 |
-70.90% |
-55.10% |
|
Organic Reduced Fat Milk (2%) |
69 |
307 |
-12.80% |
-5.4% |
|
Organic Low Fat Milk (1%) |
20 |
95 |
-17.00% |
-5.3% |
|
Organic Fat Free Milk Skim |
13 |
54 |
-5.70% |
-9.6% |
|
Organic Flavored Fat-Reduced Milk |
6 |
27 |
-21.80% |
7.5% |
|
Other Fluid Organic Milk Products |
0 |
1 |
374% |
206.8% |
|
Total Fat Reduced Milk |
108 |
483 |
-13.30% |
-5.2% |
|
Total Organic Milk Products |
219 |
951 |
-8.80% |
-1.40% |
The report from retail surveys of selected supermarkets in 30 US cities by USDA, shows that the retail prices of a half gallon of organic Whole Milk and Fat Reduced milks was $4.82 in May and $4.85 in June 2023. The prices ranged from a low of $3.99 in multiple cities to a consistent high of $6.49 in Pittsburgh, PA. The simple average price for the year-to-date 2023, was $4.81, compared to an average in 2022 of $4.58, an average for 2021 of $4.13 and an average of $4.07 in 2019.
In recent reports from a NOFA-New York certified livestock auction in New York, organic cull cows traded slightly higher than conventional cows in May and June 2023. The average price for the conventional cull cows was $8.7 per hundredweight in May, compared to an average price of $1.11 per hundredweight for organic cull cows. The average price for conventional cull cows in June 2023 was $8.0 per hundredweight, compared to an average of $103 per hundredweight for organic cull cows. A report from a Pacific Northwest livestock auction noted organic cull cows traded somewhat lower than conventional cull cows. The average price for the top 10 organic cows auctioned was $101.85 per hundredweight, compared to the average price of $116.18 per hundredweight for auctioned top 10 conventional cows.
Federal Milk Market Order 1, in New England, reports utilization of types of organic milk by pool plants. During April 2023, fluid organic whole milk utilization totaled 16.59 million pounds, up from 16.53 million pounds the previous year. The utilization of fluid organic reduced fat milk, 14.92 million pounds, decreased from 16.68 million pounds a year ago. In May 2023, the fluid whole milk utilization totaled 18.58 million pounds, an increase of 4.16 million pounds from May 2022. For fluid organic reduced fat milk, the 17.66 million pounds in fluid utilization in May 2023 was an increase from the 16.07 million in May 2022. Year-to-date, 2023 compared with 2022, shows 2023 at 173.77 million pounds and 2022 at 158.07 million pounds, an increase of approximately 10% year over year. Organic fluid milk utilization is approximately 4.7% of the total fluid milk utilization in FMMO 1.
|
UTILIZATION OF ORGANIC FLUID MILK PRODUCTS AND CREAM BY POOL PLANTS (Million pounds) |
||||||
|
|
Fluid retail Organic Milk 2023 |
Fluid retail Organic Milk 2022 |
Fluid retail Organic Milk 2021 |
Fluid retail Organic Milk 2020 |
Increase/Decrease of 2023 over 2022 |
Increase/Decrease of 2022 over 2021 |
|
JANUARY |
37.00 |
29.14 |
31.32 |
23.93 |
26.97% |
-7% |
|
FEBRUARY |
31.65 |
33.65 |
31.56 |
26.69 |
-5.94% |
7% |
|
MARCH |
37.37 |
31.56 |
31.87 |
27.90 |
18.41% |
-1% |
|
APRIL |
31.51 |
33.23 |
28.97 |
29.35 |
-5.18% |
15% |
|
MAY |
36.24 |
30.49 |
29.72 |
28.25 |
18.86% |
3% |
|
JUNE |
|
31.53 |
28.41 |
26.90 |
|
11% |
|
JULY |
|
29.44 |
25.50 |
26.70 |
|
15% |
|
AUGUST |
|
32.12 |
27.18 |
24.70 |
|
18% |
|
SEPTEMBER |
|
35.00 |
30.26 |
29.70 |
|
16% |
|
OCTOBER |
|
34.83 |
29.47 |
25.78 |
|
18% |
|
NOVEMBER |
|
31.13 |
31.07 |
24.47 |
|
0.18% |
|
DECEMBER |
|
33.78 |
31.36 |
28.13 |
|
8% |
|
ANNUAL |
|
385.90 |
356.68 |
322.50 |
|
8% |
Update on DMC
The USDA National Agricultural Statistics Service (NASS) released its latest Ag Prices report on June 30th, including factors used to calculate May 2023 Dairy Margin Coverage (DMC) margins and indemnity payments. Once again, a declining U.S. average milk price more than offset lower average overall feed costs, shrinking the milk income margin to its lowest level since inception of the DMC program and its predecessor, the Margin Protection Program for Dairy (MPP-Dairy). The May 2023-announced U.S. average milk price fell $1.40 from April, to $19.30 per cwt, the lowest since September 2021.
DMC program margin factors compared to previous month:
At $4.83 per cwt, the May DMC margin triggers Tier I indemnity payments at all coverage levels, from $5 to $9.50 per cwt, with a top payment of $4.67 per cwt at the maximum $9.50 coverage level. According to National All Jersey’s Erick Metzger, each 1 million pounds of milk production history covered at the Tier I $9.50 per cwt level will receive $3,488.10 in May indemnity payments. Year-to-date indemnities total $12,414.63 per 1 million pounds enrolled at the highest level of Tier I coverage.
On May 19, 2023, the USDA Farm Service Agency’s (FSA) announced the details of their Organic Dairy Marketing Assistance Program (ODMAP), which has funding of $100 million from the Commodity Credit Corporation (CCC). FSA began accepting applications for ODMAP on May 24, 2023. Eligible producers include certified organic dairy operations that produce milk from cows, goats and sheep. The payments will be paid in dollars per cwt based on 2022 milk production, and FSA will be using USDA’s AMS estimated marketing dollars on a per-hundredweight basis with a 5-million-pound cap. The costs include estimates of milk haulage, check-off dollars, and other deductions based on conventional data provided by the Federal Milk Marketing Order (FMMO) because there is a shortage of organic data. Producers will receive approximately 82 cent/cwt. To receive the money, producers will need to visit their local FSA office with proof of organic certification and 2022 production records. The local FSA office will upload the information and verification of organic status to the FSA database, with payment following ‘quickly’. Reports from producers vary as to the speed and simplicity of the process in working with district FSA offices that, sometimes, may not understand the process and the very few requirements that are required to qualify for payments. We have been working with the FSA in DC and regionally, and the Secretary of Agriculture’s office, to report back on some of the problems that producers are finding. They have been very helpful in working to solve issues and as of this writing (7/5/2023), some producers are receiving money. The closing date for applications is July 26th, 2023.
NODPA and many other organizations have signed the letter below addressed to the Secretary of Agriculture asking for payment of the remaining 25% of the ‘marketing costs’ as evaluated by USDA AMS. The letter states that:
“Given the recent estimate that under 50% of the $104 million awarded to the program will be used in the first round, we respectfully request that the remaining 25% of estimated marketing costs be immediately distributed through an automatic process, bringing payments up to $1.10/cwt without requiring producers to re-apply.” The rationale behind the request is: “In the absence of reliable independent data, USDA had to use the data from the conventional marketing of milk to calculate the producers’ cost of marketing milk for the ODMAP. Some of that increased cost is required by regulation, while other costs reflect the relatively low volume of organic milk produced as compared to conventional milk. The major cost of marketing milk is the expense of transporting raw milk from the farm to the processor.
The following are reasons why organic dairy producers’ cost of marketing organic milk are more than those that market non-organic milk:
By regulation certified organic milk cannot be co-mingled with non-organic milk and certified Grass-Fed organic milk cannot be co-mingled with certified organic milk. Trucking routes for on-farm pick-up of organic milk are not as efficient as conventional milk, and the movement of product from the farm to the processing plant can only be done in a segregated tanker(s). Additionally, there is a requirement for washes in between milk pickups if a hauler is hauling organic & non-organic product. A hauler can transition from hauling organic to non-organic product within 24 hours per PMO (Pasteurized Milk Ordinance) without requiring a wash but if a hauler is hauling non-organic product first, they are required to have an organic wash before picking up organic to ensure the integrity of the product. This increases the cost per cwt of marketing organic milk.
Organic dairy farmers are under contract or cooperative agreement with their buyers. Those buyers have chosen to keep their milk separate from each other and contract their own hauling to keep their product separate and unique. This adds to the inefficiency and increases the number of tankers picking up the milk from farms and causes tankers to run some of the same routes but pick up from different farms.
The average herd size for organic dairy farms is 89 cows, according to CROPP Cooperative (Organic Valley), which has the largest number of organic dairy farms within their cooperative. The average size of a non-organic dairy is 337 (USDA Milk Production Report). That equates to 3.7 more farms to pick milk up from to get the same volume. The cost per cwt of picking up organic milk is therefore higher because the milk truck must travel to more farms to complete its load. Sometimes, the trucker has a straight truck that covers its farm route and then aggregates the organic milk by transferring it to a designated tractor trailer for delivery to the processing plant.
The majority of processing plants are not certified organic, which limits the choice of milk plants available in an industry whose infrastructure has declined over the last two decades. Organic milk buyers need a certain volume of organic milk to be able to maximize their input and generate enough components to be able to sell them at an organic premium. Sometimes, there is not a large enough volume, putting some organic cream, for example, into the conventional line. Most supermarkets now require organic milk to be packaged as Extended Shelf Life (ESL) products, which also limits the number of plants available. For example, one milk buyer was transporting fresh milk from California farms to Texas. Another buyer is transporting milk from Maine to Winchester, Virginia, about 600 miles. Organic milk also travels from California to Texas and from Idaho to Arizona.”
USDA AMS reports that organic feed corn was $10.42 /bushel FOB the farm in May 2023 and $9.63 in June 2023. Mercaris reports that Argentina did not send any whole organic corn again in May, but 26,000 MT from Romania pushed organic whole corn imports to their highest level since February 2022. There were no other maritime imports of organic whole corn in May. Organic cracked corn imports doubled from April to 14,000 MT in May, all of which was sourced from Turkey. Combined U.S. imports of organic whole and cracked corn reached 261,000 MT through May of the 2022/23 Marketing Year (MY). Organic feed soybean was trading at $22/bushel in May 2023 and 20.07 in June 2023 FOB the farm. USDA AMS reports that organic soybean meal is averaging $1,072 per short ton (ST) in spot transactions in May 2023. Mercaris reports that Organic Feed Soybean delivered prices averaged $28.03/bu. over May, up $4.73 from the prior month and down $11.96/bu. from 12 months prior. They also report that organic Soybean Meal imports in May totaled 17,000 MT, which is up 147% from the prior month but down 42% from the prior year. The largest source of organic soybean meal was Turkey with 10,000 MT. The next largest source was Africa with 5,200 MT. Ethiopia and Togo accounted for 2,500 MT and 2,400 MT respectively with the balance coming from Nigeria and Ghana. The rest of the imports were made up of 1,300 MT from India and 400 MT from China. Total organic soybean meal imports through May of the 2022/23 Marketing Year (MY) were 150,000 MT, which is 6% below the prior 2021/2022 MY.
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