By Ed Maltby, NODPA Executive Director
Increase in Maple Hill Pay Price in July 2024; increase in packaged organic product sales nationally and regionally; producers moving away from CROPP Cooperative as supply tightens in the northeast and Horizon and Wallaby businesses sold. The Agricultural Marketing Service (AMS) reports of estimated organic fluid product sales nationally for September and October 2023 show a continued increase in the sale of Whole Milk packaged fluid products of 4% percent over 2022 year-to-date, with a 5% reduction in Reduced Fat Milk over the same period.
US sales of organic fluid milk products in September 2023 were 228 million pounds, effectively level sales from September 2022, and in October 2023 they were 242 million pounds, down 1.10 percent from October 2022. In September 2023, fluid organic Whole Milk sales of 113 million pounds were up 3.6 percent compared to a year earlier. Reduced Fat milk sales were 114 million pounds, down 5.6 percent from the previous year. October 2023 organic Whole Milk fluid sales were 124 million pounds, up 4.0 percent from October 2022. Organic Reduced Fat milk fluid sales in September 2023 were 116 million pounds, down 5.3 percent from August 2022. The average retail price for organic milk in September and October 2023 was $4.88 per half gallon; in November 2023 it was $4.86 per half gallon and $4.81 per half gallon in December 2023. In the same period in 2022 it was $4.75 per half gallon. The average retail price nationwide for a half gallon of organic was $4.83 in 2023, $4.58 in 2022, $4.13 in 2021 and around the $4 mark for 2019, 2018 and 2017, when there was a surplus of organic milk. Anecdotal reports suggest that supply of organic milk is short in the Northeast and Pennsylvania, and that spot milk is equally short.
|
Product Name |
Sales of Organic Fluid Milk |
Change from |
||
|
|
Sep-23 |
2023 Year to date |
Sep-22 |
Year to date |
|
Million pounds |
Percent |
|||
|
Organic Whole Milk |
113 |
1044 |
0.2% |
3.6% |
|
Flavored Whole milk |
1 |
7 |
82.2% |
-46.4% |
|
Organic Reduced-Fat Milk (2%) |
77 |
692 |
-2.4% |
-3.3% |
|
Organic Low-Fat Milk (1%) |
21 |
204 |
-16.0% |
-8.0% |
|
Organic Fat-Free Milk Skim |
10 |
111 |
-23.2% |
-12.9% |
|
Organic Flavored Fat-Reduced Milk |
6 |
58 |
-21.3% |
-8.9% |
|
Other Fluid Organic Milk Products |
0 |
3 |
112.9% |
154.1% |
|
Total Fat Reduced Milk |
114 |
1064 |
-8.5% |
-5.6% |
|
Total Organic Milk Products |
228 |
2118 |
-4.0% |
-1.5% |
|
Product Name |
Sales of Organic Fluid Milk |
Change from |
||
|
|
Oct-23 |
2023 Year to date |
Oct-23 |
Year to date |
|
|
Million pounds |
Percent |
||
|
Organic Whole Milk |
124 |
1168 |
7.00% |
4.0% |
|
Flavored Whole milk |
1 |
8 |
100.30% |
-41.10% |
|
Organic Reduced-Fat Milk (2%) |
75 |
766 |
-5.80% |
-3.5% |
|
Organic Low-Fat Milk (1%) |
22 |
226 |
8.30% |
-6.6% |
|
Organic Fat-Free Milk Skim |
12 |
123 |
-7.80% |
-12.4% |
|
Organic Flavored Fat-Reduced Milk |
7 |
65 |
7.90% |
-7.3% |
|
Other Fluid Organic Milk Products |
0 |
3 |
-31% |
100.5% |
|
Total Fat Reduced Milk |
116 |
1,180 |
-2.80% |
-5.3% |
|
Total Organic Milk Products |
242 |
2359 |
2.10% |
-1.10% |
Federal Milk Market Order 1, in the Northeast, reports utilization of types of organic milk by pool plants but is only authorized by Congress to separate organic fluid milk (Class 1) data into organic and non-organic. Data on milk in the other classes are not separated by production practice; for example, there is no record of how much organic milk is used by Stonyfield, a Lactalis US Yogurt brand as yogurt is Class 2, and the New Hampshire plant is classified as a NonPool/Unregulated Supply Plant. We still have no movement from USDA Dairy Program on separate data on the Class I out of Marketing Area category into organic or conventional, which means we have no accurate data on how much package fluid milk is sold in the Northeast; they already have that data separated by what they call “Organic Production Practice.” We also cannot report any updates on the increase in the number of Federal Orders that report separated data on organic and non-organic, with only 3 out of 11 currently doing so.
FMMO 1 reports that in October 2023, fluid organic Whole Milk utilization totaled 18.10 million pounds, up from 18.09 million pounds the previous year. In October 2023, the utilization of fluid organic Reduced Fat milk, 15.44 million pounds, decreased from 16.74 million pounds a year ago. In November 2023, the fluid Whole Milk utilization totaled 16.90 million pounds, an increase from the 15.31 million pounds in November 2022. For fluid organic Reduced Fat milk, the 14.30 million pounds in fluid utilization in November 2023 was a decrease from the 15.82 million in November 2022. Year-to-date, January to November 2023 compared with 2022 for organic fluid milk in FMMO 1, shows 2023 at 365.91 million pounds and 2022 at 352.12 million pounds, an increase of approximately 4% year-over-year. This increase is driven by a 9% increase in Whole Milk against a 2% decrease in Reduced Fat utilization. Organic fluid milk utilization is approximately 5.00% of the total fluid milk processed and utilized within FMMO 1 for November 2023, not including the packaged Class 1 milk coming into the area.
Approximately 19% of Class 1 milk utilized in FMMO is from packaged milk outside the area. Assuming that organic is the same percentage of the packaged milk coming into the order that is processed in the order would add another 7.3 million pounds to the organic number. In all likelihood, the amount of organic milk coming into the order in Extended Shelf-Life packaging would be a higher percentage than conventional milk. Why is this important? If we want to attract some competition into the region, whether as a processor or a milk aggregator/buyer, they need to know more clearly what the potential is. The mission of the FMMO is to “(1) promote orderly marketing conditions in fluid milk markets, (2) improve the income situation of dairy farmers, (3) supervise the terms of trade in milk markets in such a manner as to achieve more equality of bargaining between milk producers and milk processors.” (Federal Milk Marketing Orders: An Overview- Congressional Research Service, https://crsreports.congress.gov R45044) Surely, regular publication of organic data that is already collected fits into their mission designated by Congress, especially considering that organic dairy farmers have individual contract/agreements with milk buyers and very little information on which to base decisions.
|
UTILIZATION OF ORGANIC FLUID MILK PRODUCTS AND CREAM BY POOL PLANTS (Million pounds) in FMMO 1 (Northeast) |
|||||||
|
|
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 |
Increase/Decrease of 2021 over 2020 |
|
JANUARY |
37.00 |
29.14 |
31.32 |
23.93 |
26.97% |
-7% |
31% |
|
FEBRUARY |
31.65 |
33.65 |
31.56 |
26.69 |
-5.94% |
7% |
18% |
|
MARCH |
37.37 |
31.56 |
31.87 |
27.90 |
18.41% |
-1% |
14% |
|
APRIL |
31.51 |
33.23 |
28.97 |
29.35 |
-5.18% |
15% |
-1% |
|
MAY |
36.24 |
30.49 |
29.72 |
28.25 |
18.86% |
3% |
5% |
|
JUNE |
34.59 |
31.53 |
28.41 |
26.90 |
9.71% |
11% |
6% |
|
JULY |
30.75 |
29.44 |
25.50 |
26.70 |
4.45% |
15% |
-4% |
|
AUGUST |
33.75 |
32.12 |
27.18 |
24.70 |
5.06% |
18% |
10% |
|
SEPTEMBER |
28.32 |
35.00 |
30.26 |
29.70 |
-19.09% |
16% |
2% |
|
OCTOBER |
33.54 |
34.83 |
29.47 |
25.78 |
-3.69% |
18% |
14% |
|
NOVEMBER |
31.19 |
31.13 |
31.07 |
24.47 |
0.22% |
0.18% |
27% |
|
DECEMBER |
0.00 |
33.78 |
31.36 |
28.13 |
8% |
11% |
|
|
ANNUAL |
365.91 |
385.90 |
356.68 |
322.50 |
8% |
11% |
|
Central Federal Order (FO) 32 is the only order that reports the breakdown as to the volume of Class 1 organic milk that is used in the Order and what is used outside the Order. FO 32 includes reporting from both Aurora plants in Colorado and Missouri which sell packaged products in many parts of the country including the Northeast and California. The chart below shows a consistent volume of organic packaged milk marketed out of the Order, although there is less sold as Class 1 in 2023 than there was in 2022. As usual, we are asking for greater detail to define how much Class 1 organic milk is brought into any individual FO, especially FMMO 1 and 51.
|
UTILIZATION OF ORGANIC FLUID MILK PRODUCTS AND CREAM BY POOL PLANTS (Million pounds) in FMMO 32 (Central) |
||||||
|
Month |
2023 |
2023 in order |
2023 out of order |
2022 |
2022 used in order |
2022 used out of order |
|
March |
52.73 |
|
|
|
|
|
|
April |
49.18 |
5.64 |
43.53 |
51.93 |
5.54 |
46.39 |
|
May |
48.21 |
5.40 |
42.78 |
51.13 |
5.84 |
45.29 |
|
June |
45.20 |
5.57 |
39.63 |
51.58 |
5.62 |
45.96 |
|
July |
48.45 |
5.70 |
43.64 |
49.67 |
6.04 |
43.64 |
|
August |
48.47 |
5.63 |
42.85 |
52.16 |
6.20 |
45.96 |
|
September |
48.75 |
5.58 |
43.18 |
51.04 |
6.31 |
44.73 |
|
October |
49.73 |
5.48 |
42.48 |
52.06 |
5.86 |
44.53 |
|
November |
49.60 |
5.48 |
42.48 |
52.31 |
5.96 |
46.35 |
In recent reports from NOFA-New York certified livestock auctions in New York, organic cull cows traded, on average, above conventional cows in November and December 2023 and January 2024. The average price for conventional cull cows ranged from a low of $73 per cwt to a high of $82 per cwt. The average price for organic cull cows ranged from a low of $82/cwt in October 2023 to a high of $118/cwt in December. Organic milking cows were selling well at an average of $1,500-$1,700 each in January 2024. The auctions that are reporting on organic sales are Empire Livestock Auctions at Vernon, Pavilion and Dryden, and Hoskins Sales.
Signed into law in November 2023, the “Further Continuing Appropriations and Other Extensions Act, 2024” provided continuing fiscal year (FY) 2024 appropriations for the Dairy Margin Coverage (DMC) program through the end of 2024. USDA has not announced a date for sign-up for the 2024 year, yet. A USDA spokesperson said implementation of the DMC program for 2024 requires a program rule amendment and FSA staff was working on the amendment. There will not need to be any determination of any payments from the program until February 29th when they announce the margin for January 2024.
With a margin of $9.44 in October 2023, there was a $0.60 DMC payment. In November, there was no payment, and it is estimated that there will be a payment of $0.75 in December 2023. The All-Milk price for October and November 2023 stayed at $21.70 and $20.37 respectively and in December it dropped slightly to $20.37. Premium Alfalfa dropped from $278/ ton in October 2023 to $247 in December 2023/ton. Corn dropped in price in October 2023 to $4.93/bushel and $4.66/bushel in November and December 2023. Soybean meal saw the most variation rising by $52/bushel to $464/bushel in November 2023 from an October 2023 price of $416/bushel. In December 2023 the price dropped to $440.60/bushel.
The DMC kept many organic dairy producers in business in 2023. The situation without that subsidy, or for those that don’t apply for federal insurance programs, is dire. NOFA VT spokesperson was quoted in an American Agriculturist article on 12/20/2023 giving a preview of their 2022 cost of production survey, “A 2022 survey of 19 organic dairy farms by Northeast Organic Farming Association of Vermont showed an average pay price of $33.27 per cwt but expenses at $29.25 per cwt equivalent.” It is no surprise that New England is losing producers with these figures and only CROPP as a buyer, with Stonyfield, a Lactalis U.S. Yogurt brand, having limited capacity to take raw milk direct from the farm at their New Hampshire plant.
Organic Milk Exports: The Foreign Agricultural Service (FAS) releases monthly export data which includes export volumes and values for organic milk categorized as HS-10 code 0401201000. Recently released data for November 2023 indicated organic milk exports were 164,032 liters, down 34.64 percent from the month prior, but up 3.98 percent from 2022. Year-to-date exports of organic milk were reported as 42.32 percent higher than during the same timeframe a year ago.
As the major buyer in the Northeast and the only buyer in some areas, producers welcomed CROPP Cooperative informing them there has been a change in the pay price. The letter to member/owners of the dairy pool states that the CROPP Board has been carefully “watching the impact that competitive pricing in certain regions has had on members and the cooperative.” The letter further states the obvious that: “These challenges have been particularly impactful in the West and New England regions, resulting in significant attrition in those areas and putting our ability to fulfill future demand at serious risk.” The letter states that:
2. The following base pay price increases will go into effect January 1, 2024, and will be applied equally across butterfat, protein, and other solids, based on a cooperative-wide total solids average of 13.07%:
a. Midwest, Mideast, Northeast, Southeast, and New England: $0.50/cwt (this is equal to an increase of $0.0383/lb. on Butterfat, Protein and Other Solids).
b. West Division (Washington, Oregon, California, Idaho, Utah, Colorado): $1.00/cwt (this is equal to an increase of $0.0765/lb. on Butterfat, Protein and Other Solids).
The increase in the CROPP pay price, which is shown in the table below starts to bring their pay price into line with other milk buyers in the area who have already increased pay price, for example, Upstate Niagara and Lactalis/Stonyfield:
|
|
Nov-Dec 2023 Total MAP's |
2024 base pay increase |
2024 MAP's |
2024 Total Pay Price Increase |
|
West Division |
$ 1.50 |
$ 1.00 |
$ 1.00 |
$ 2.00 |
|
Midwest |
|
$ 0.50 |
|
$ 0.50 |
|
Mideast |
|
$ 0.50 |
|
$ 0.50 |
|
Northeast & Southeast |
$ 0.50 |
$ 0.50 |
$ 0.50 |
$ 1.00 |
|
New England |
$ 1.50 |
$ 0.50 |
$ 1.50 |
$ 2.00 |
There is currently a $0.50/cwt MAP in place for the West region through December 2023. This new decision increases the West MAP to $1.50/cwt for November and December 2023
The letter from Board President Dave Hardy states that “Lastly, I want to restate our commitment to engaging members to create farmer-determined pay price guiding principles in 2024. We're in the middle of transitioning into a new phase of how we operate, and these discussions will be so important for guiding when and how we make pay price changes in the future. You've been asking for action for many months, and we're glad to put this in place now. If you have questions about this decision, please contact any member of the board.” Note to CROPP – please publish the names and contact details for your Board.
In a highly publicized announcement, CROPP Cooperative announced that it “has brought 84 family farms into its fold in 2023, demonstrating a robust response to the trend of farm loss and agricultural consolidation. In 2023, Organic Valley built a stable market for another 84 organic family farms.” Of the 84 farms that joined in 2023, 26 were from Pennsylvania, 22 in New York, a dozen from Wisconsin, six from Ohio, and others came from Indiana, Iowa, Maryland, Michigan, Minnesota and Vermont. About 43% of all members are part of the Plain Sect community. “We are looking to add approximately 1% of milk supply, overall, to our cooperative because of what we’re seeing from growth within our markets,” said Shawna Nelson, executive vice president of membership in a Lancaster Farming article. Organic Valley is supplied by farms in 31 states, including 270 in Pennsylvania. Reports from producers are that these are smaller operations with under 50 milking cows. This announcement was followed by CROPP launching a new brand in a press release which stated: “the expansion of its fluid milk portfolio with Organic Valley® Family First™. New Organic Valley Family First milk has all the goodness of the standard 12 essential nutrients in Organic Valley milks, with added DHA Omega 3 to support brain health. This new milk is meant to be enjoyed by milk lovers of all ages and comes from pasture-raised cows on Organic Valley's small family farms.”
In a letter to their producers, Maple Hill informed them of a $1.00 pay increase beginning in July, 2024; the increase will be split – $.50 on the base, and $.50 as a market adjustment premium.
There are different views about the current market for organic raw milk. Some producers view the current pay price as the limit of what buyers will pay and see the need to lower costs and expectation to maintain the market in the northeast. Others cannot survive on the current pay price and are looking for a greater share of the retail dollar. Producers and their families have many different cultural and financial needs and have to define their own goals, but all agree on the need for more information and competition. The reality is that more producers are moving to different milk buyers as the supply market is tightening. Reports from producers in New England, New York and Pennsylvania are that there is a lack of confidence in CROPP, and they are moving to other buyers or retiring. Existing buyers who have historically responded more quickly to changes in costs of production with dollar increases in Pay Price rather than cents have attracted both transitioning and established operations away from CROPP. Producers have also been attracted to other buyers who have programs that are paying producers incentives for their environmentally beneficial practices and have a less restrictive attitude to any prohibition of selling dairy products off the farm.
In the Northeast, cooperatives are generally getting a bad name due to the actions of AgriMark, which is using large deductions from conventional producers’ milk checks to sustain the business. Similarly, is CROPP’s priority its business or its producer owners? The question of the future of CROPP being able to continue to supply Stonyfield with a regional supply is just one of the concerns that producers have, along with very limited alternatives to selling their milk at a price they can survive on. Stonyfield is a Lactalis U.S. Yogurt brand, and producers are questioning their commitment to continue manufacturing in NH or whether they will move to their other plants in Buffalo, NY, WI, or even to Canada where their Siggi’s yogurt is made. Expensive milk and limited manufacturing make growth more difficult, as well as having to satisfy the requirements of their parent company to return a substantial profit.
National data from USDA has organic feed corn delivered to the elevator prices averaging $8.10/bu. in December 2023 and $8.26 in January 2024, down approximately $2.00/bu. from 12 months prior. Organic feed soybean delivered prices averaged $19.71/bu. in December and $20.37/bu. in January 2024, down approximately $10.00/bu. from 12 months prior. Soybean meal is currently trading at $943/ton, about $516/cwt. lower than 2022. These take no account for the cost of transport.
Mercaris reports that organic whole and cracked corn imports totaled about 40,000 MT in December, up 13% y/y. Turkey supplied 36,000 MT of organic cracked corn and Canada supplied 3,000 MT of organic whole corn. Organic whole and cracked corn imports for the 2023/24 marketing year (MY) through December totaled 140,000 MT, which is 35% above 2022/2023. Organic soybean imports in December 2023 are estimated at 11,000 MT, down 63% y/y. Turkey was the majority supplier with 8,000 MT, followed by Paraguay supplying 1,000 MT. Organic imports through December of the 2023/24 MY are estimated at 79,000 MT, which is down 22% y/y. Organic soybean meal maritime imports in December totaled 32,000 MT, up 225% y/y. Turkey was the largest single supplier with 13,000 MT. As a whole, Africa sent nearly 16,000 MT, with 5,000 MT from Togo, 4,000 MT from Nigeria, 3,000 MT from Ethiopia, and 2,000 MT from Kenya. India also sent 3,000 MT. Total organic soybean meal imports through December of the 2023/24 MY were 80,000 MT, which is up 27% compared to the prior marketing year. New sources of trade disruption have emerged in the Red Sea and Panama Canal, both of which could impact the import of organic commodities. In recent months, the cost of organic soybean meal imports has moved closer to domestic organic soybean meal, so increases in shipping costs could further eat into the discount for imports. This may increase domestic consumption over imports and reduce the current long position in the market.
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