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Feed and Pay Price, March, 2024

By Ed Maltby, NODPA Executive Director

In response to our requests and advocacy, ther are now 5 of the 11 Federal Orders that report on organic fluid sales in their order, 2 of whom also report the volume of Class I packaged product that is sold outside of the Order. Our thanks to the Market Administrators that now publish these expanded reports and to the Deputy Administrator for Dairy Programs, Dana Coale, for leading the way forward. The Agricultural Marketing Service (AMS) reports have estimated organic fluid product sales nationally, for November and December 2023, show a continued increase in the sales of Whole Milk packaged fluid products of 4.9% percent over 2022 year-to-date, with a 4.9% reduction in Reduced Fat Milk over the same period. US sales of organic fluid milk products in November 2023 were 231 million pounds, effectively, level sales from November 2022; and in December 2023 they were 245 million pounds, up 6.8 percent from October 2022. In November 2023, fluid organic Whole Milk sales of 119 million pounds were up 7.0 percent compared to a year earlier.

In November 2023, Reduced Fat milk sales were 111 million pounds, down 6.4 percent from the previous year. December 2023 organic Whole Milk fluid sales were 125 million pounds, up 12.3 percent from December 2022. Organic Reduced Fat milk fluid sales in December 2023 were 119 million pounds, up 1.3 percent from December 2022. The average retail price for organic milk has not changed throughout the year and averaged $4.88 per half gallon for 2023, and in 2022 it was averaging $4.58. In January 2024 the average organic retail price for a half gallon of organic milk was $4.73 and in the same period in 2022 it was $4.80 per half gallon. Sales of organic whole milk increased by 5 per cent over sales in 2022 despite an average increase in retail price of 30 cents per half gallon (or $6.98 per cwt) and an average increase of $2 per cwt on Pay Price. Anecdotal reports suggest that supply of organic milk is short in the Northeast and Pennsylvania, and that spot milk is equally short at over $40 per cwt.

Product Name

Sales of Organic Fluid Milk

Change from

Nov-23

2023 Year to date

Nov-22

Year to date

Million pounds

Percent

Organic Whole Milk

119

1286

7.0%

4.2%

Flavored Whole milk

1

9

26.4%

-38.6%

Organic Reduced-Fat Milk (2%)

74

840

-2.8%

-3.5%

Organic Low-Fat Milk (1%)

20

247

-12.2%

-7.1%

Organic Fat-Free Milk Skim

11

134

-9.1%

-12.1%

Organic Flavored Fat-Reduced Milk

5

70

-22.8%

-8.6%

Other Fluid Organic Milk Products

1

4

163.4%

114.6%

Total Fat Reduced Milk

111

1291

-6.4%

-5.4%

Total Organic Milk Products

231

2,591

-0.4%

-1.0

Product Name

Sales of Organic Fluid Milk

Change from

Dec-23

2023 Year to date

Dec-22

Year to date

Million pounds

Percent

Organic Whole Milk

125

1,412

12.30%

4.9%

Flavored Whole milk

1

10

23.00%

-36.5%

Organic Reduced-Fat Milk (2%)

81

921

5.80%

-2.7%

Organic Low-Fat Milk (1%)

21

268

-11.1%

-7.4%

Organic Fat-Free Milk Skim

11

145

-12.6%

-12.2%

Organic Flavored Fat-Reduced Milk

6

76

28.7%

-6.5%

Other Fluid Organic Milk Products

1

5

50.1%

100.2%

Total Fat Reduced Milk

119

1,410

1.3%

-4.9%

Total Organic Milk Products

245

2,836

6.8%

-0.3%

Annual Estimated Fluid Organic Milk Sales 2006-2023

Year

Fluid milk sales (million pounds)

Change year to year

Whole Milk

Low Fat products

2006

1,062.00

244

818

2007

1,413.00

33%

321

1,092

2008

1,676.00

18%

389

1,287

2009

1,602.00

-4.60%

371

1,231

2010

1,799.00

11.00%

432

1,367

2011

2,074.00

13.30%

349

1,575

2012

2,157.00

3.80%

499

1,607

2013

2,267.00

4.90%

617

1,650

2014

2,491.00

9.00%

742

1,702

2015

2,438.00

-2.20%

881

1,614

2016

2,573.00

5.20%

951

1,624

2017

2,577.00

0.20%

1,012

1,564

2018

2,594.00

0.70%

1,062

1,523

2019

2,604.00

0.25%

1,139

1,465

2020

2,880.00

10.59%

1,270

1,605

2021

2,901.00

0.73%

1,320

1,562

2022

2,846.00

-1.90%

1,350

1,484

2023

2,836.00

-0.35%

1,412

1,410

Two points of note from the above summary. First, is the growth of whole milk sales which now match those of non-fat products and second, the steady growth in sales (except the drop in sales in 2015) from 2008-2021 with a slight drop in 2022 and 2023. The peak during the COVID pandemic is illustrative of consumer preference, as products were purchased directly by consumers rather than through restaurants and institutions.

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. FMMO 1 reports that in December 2023, fluid organic Whole Milk utilization totaled 17.70 million pounds, up from 16.67 million pounds the previous year. In December 2023, the utilization of fluid organic Reduced Fat milk, 15.86 million pounds, decreased from 17.11 million pounds a year ago. In January 2024, the fluid organic Whole Milk utilization totaled 19.10 million pounds, an increase from 17.64 million pounds in January 2023. For fluid organic Reduced Fat milk, the 15.83 million pounds in fluid utilization in January 2024 was a decrease from the 19.36 million in January 2023. In December 2023 there was 143.77 million pounds of milk marketed as Class 1 in FMMO 1 from outside the FMMO 1 marketing area, approximately 18.62%, and in January 2024 there was 147.66 million pounds of Class 1 milk from outside the marketing area utilized as Class 1 in the marketing area, approximately 18.98% of the total Class 1 utilized in FMMO 1. The annual 2023 total of organic fluid milk utilized and packaged in FMMO 1 was 399.47 million pounds compared with 385.90 million pounds in 2022 for organic fluid milk processed and sold within the Order, an increase of approximately 3.5%. This does not include any packaged organic milk from outside the order that is sold in the order, for example some of the 500 million pounds of organic fluid packaged organic milk exported from FMMO 32 Central Region which includes plants in Il, CO, MO, IA, NE, FS. Organic fluid milk utilization is approximately 4.50% 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.

UTILIZATION OF ORGANIC FLUID MILK PRODUCTS AND CREAM BY POOL PLANTS (Million pounds) in FMMO 1 (Northeast) not including organic Class 1 milk packaged out of order

Month

Fluid retail Organic Milk 2024

Fluid retail Organic Milk 2023

Fluid retail Organic Milk 2022

Fluid retail Organic Milk 2021

Fluid retail Organic Milk 2020

JANUARY

34.93

37.00

29.14

31.32

23.93

FEBRUARY

31.65

33.65

31.56

26.69

MARCH

37.37

31.56

31.87

27.90

APRIL

31.51

33.23

28.97

29.35

MAY

36.24

30.49

29.72

28.25

JUNE

34.59

31.53

28.41

26.90

JULY

30.75

29.44

25.50

26.70

AUGUST

33.75

32.12

27.18

24.70

SEPTEMBER

28.32

35.00

30.26

29.70

OCTOBER

33.54

34.83

29.47

25.78

NOVEMBER

31.19

31.13

31.07

24.47

DECEMBER

33.56

33.78

31.36

28.13

ANNUAL

399.47

385.90

356.68

322.50

Central and California Federal Orders (FO) 32 and 51 are 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 32, although there is less sold as Class 1 in 2023 than there was in 2022. Interestingly most of the organic milk produced and packaged in CA, stays in CA with only 7.31% of the fluid organic milk packaged in CA being exported as opposed to an average of 87% from Central Order 32. 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

2024

2024 in order

2024 out of order

2023

2023 in order

2023 out of order

2022

2022 used in order

2022 used out of order

January

56.23

6.41

49.82

55.21

6.51

48.70

February

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

December

54.17

6.08

48.10

55.94

6.29

49.55

Total

549.70

57.06

437.37

467.823

53.66

412.40

In recent reports from NOFA-New York certified livestock auctions, organic cull cows traded, on average, above conventional cows in January, February and March 2024. The average price for conventional cull cows ranged from a low of $84 per cwt to a high of $95 per cwt. The average price for organic cull cows ranged from a low of $85/cwt to a high of $118/cwt. Organic milking cows were selling well at an average of $1,500-$1,800 each in the first three months of 2024. The auctions that are reporting on organic sales are Empire Livestock Auctions at Vernon, Pavilion and Dryden, and Hoskins Sales. In reports from USDA AMS from a Pacific Northwest livestock auction, organic cull cows traded higher than conventional cull cows. The average price for the top 10 organic cows auctioned was $132.90 per hundredweight, compared to an average price of $120.00 per hundredweight for auctioned top 10 conventional cows. The average weight for the top 10 conventional cows was 1466.5 pounds compared to

1524.0 pounds for the top 10 organic cows. Producers and auctions are reporting high prices for Angus cross dairy calves. Reports during February are that beef cross calves brought $6.50 to $8 per pound at some auctions. Considering a week-old animal may weigh around 100 pounds, the profits have never been better for farmers. The price for Holstein bull calves has also skyrocketed, climbing from an average of $1.50 per pound a couple years ago to a high of $5 per pound today.

News on Organic Dairy

Organic Valley members are watching the negotiations between their cooperative and Lactalis closely. CROPP Cooperative is in the process of renegotiating their contract with Lactalis to supply raw organic milk, fluid organic milk and milk equivalents (e.g., cream, condensed, or powdered organic milk) to their Stonyfield branded product. CROPP supplies approximately 80% of organic milk requirements for Lactalis’s Stonyfield organic yogurt brand and licenses the exclusive right to produce Stonyfield-branded fluid organic milk. This is the biggest market for CROPP producers in Vermont, Maine and eastern New York and product is delivered directly from farms to the Lactalis plant in New Hampshire. Under Danone, some of the Stonyfield products were co-packed at some of their other plants. There is no information on whether these same products are co-packed at some of the Lactalis owned plants. CROPP is also trucking milk into the region to supply Stonyfield. It is reported by producers that CROPP has reassured them that the terms of a new contract will have no effect on their overall market. CROPP has regularly answered questions about a low Pay Price with a response that they are tied to their contract with Lactalis. Producers see this as a test for their new CEO on whether he can deliver a contract that can boost their bottom line in difficult times and with many organic dairies leaving the industry. Currently, the CROPP Pay Price in New England and New York is reported to be at least $2 under that of other buyers in the area. A few CROPP producers have started shipping directly to Stonyfield and many have expressed interest in joining those producers that sell directly to Stonyfield or becoming a member of Upstate Niagara in New York, as the Pay Price from CROPP is at least $5 per cwt below their costs of production.

In other news, Byrne Dairy in New York is reportedly looking for a buyer, following rumors that have been circulating for months. In 2019, they sold some of their plants to Upstate Niagara.

Update on DMC Program

Dairy producers have been able to enroll for 2024 Dairy Margin Coverage (DMC), since the end of February 2024. This year’s DMC signup began February 28, 2024, and ends April 29, 2024. For those who sign up for 2024 DMC coverage, payments may begin as soon as March 4, 2024, for any payments that triggered in January 2024. USDA’s Farm Service Agency (FSA) has revised the regulations for DMC to allow eligible dairy operations to make a one-time adjustment to established production history. This adjustment will be accomplished by combining previously established supplemental production history with DMC production history for those dairy operations that participated in Supplemental Dairy Margin Coverage during a prior coverage year. DMC has also been authorized through calendar year 2024. Congress passed a 2018 Farm Bill extension requiring these regulatory changes to the program. USDA FSA has revised DMC regulations to extend coverage for calendar year 2024, which is retroactive to Jan. 1, 2024, and to provide an adjustment to the production history for dairy operations with less than 5 million pounds of production. In previous years, smaller dairy operations could establish a supplemental production history and receive Supplemental Dairy Margin Coverage. For 2024, dairy producers can establish one adjusted base production history through DMC for each participating dairy operation to better reflect the operation’s current production.

For 2024 DMC enrollment, dairy operations that established supplemental production history through Supplemental Dairy Margin Coverage for coverage years 2021 through 2023, will combine the supplemental production history with established production history for one adjusted base production history.

For dairy operations enrolled in 2023 DMC under a multi-year lock-in contract, lock-in eligibility will be extended until Dec. 31, 2024. In addition, dairy operations enrolled in multi-year lock-in contracts are eligible for the discounted DMC premium rate during the 2024 coverage year. To confirm 2024 DMC lock-in coverage or to opt out in favor of an annual contract for 2024, dairy operations having lock-in contracts must enroll during the 2024 DMC enrollment period.

DMC offers different levels of coverage, even an option that is free to producers, minus a $100 administrative fee. The administrative fee is waived for dairy producers who are considered limited resource, beginning, socially disadvantaged, or a military veteran. DMC payments are calculated using updated feed and premium hay costs, making the program more reflective of actual dairy producers’ expenses. These updated feed calculations use 100% premium alfalfa hay.

January 2024 DMC margin is $8.48 per cwt and February is predicted to be $9.49 per cwt. The USDA National Agricultural Statistics Service (NASS) released its Agricultural Prices report Feb. 29, which includes feed costs used to calculate January Dairy Margin Coverage (DMC) program margins and indemnity payments. While average feed costs were lower than December 2023, another month of lower milk prices brought the average milk income margin to $8.48 per hundredweight (cwt). DMC program margin data compared to the previous month shows Alfalfa hay at $274 per ton, down $1 from December 2023; Corn at $4.74 per bushel, down 6 cents; Soybean meal at $378.40 per ton, down $62.20 and milk price at $20.10 per cwt, down 50 cents.

The USDA price predictor shows that the January payment will be the only one for 2024. Let’s just pray we don’t have a drought or any disruptions in the supply of feed in 2024.

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 January 2024 indicated organic milk exports were 116,554 liters, down 39.6 percent from the month prior, and down 27.4 percent from 2023.

Feed

National data from USDA has organic feed corn delivered to the elevator prices averaging 7.62 per bushel in January 2024, to $7.10 in March 2024 down approximately $4.10/bu. from 12 months prior. Organic feed soybean delivered prices averaged $20.50/bu. In January 2024 and $19.86/bu. in March 2024, down approximately $4.73/bu. from 12 months prior. Soybean meal is currently trading at $862/ton, about $4.13/cwt. lower than 2022. These take no account for the cost of transport.

Domestic corn and soybean growers are reporting that this is the first year they have had to worry about storing product and dealing with cancelled contracts as processors move to buying imported grain at a cheaper price, which is below the domestic costs of production. Organic feed commodities, including corn, wheat, and soybean meal, have started flowing into the US market via unnecessarily complex and often opaque supply chains. The commodity quantities and geopolitical origins increase the probability of organic import fraud, undermining US farmers and their ability to capture this premium market. A single cargo ship of cracked corn can represent 1 million bushels or 10 million dollars. Organic Farmer Association and the National Organic Coalition are working on including some provisions within the next Farm Bill in 2025 to increase testing of all imported grains.

Mercaris/Argus reports that Organic whole corn imports are on track to surpass their estimates for the 2023-24 marketing year of 106,000 MT. Halfway through the marketing year, US organic whole corn imports have already hit 148,000 MT. Argentina, Canada, Turkey and Romania are the main source of organic whole corn.

Organic Soybean Imports in February are estimated at 36,000 MT, up 44% y/y. Ghana was the largest source with 21,000 MT, followed by Turkey with 12,000 MT. Ukraine was the third largest supplier with 1,000 MT. Argentina and Togo both also sent small volumes. Organic soybean imports through February of 2023-24 Marketing Year are estimated at 122,000 MT, which is down 4%.

Organic Soybean Meal Maritime Imports in February totaled 34,000 MT, a 900% increase y/y. Turkey was the largest single supplier with 12,000 MT. Most other volumes came from Africa with 8,000 MT from Togo, 5,000 MT from Ethiopia, 3,000 MT from Benin, and volumes of about 1,000 MT from Nigeria, Ghana, and Kenya. 2,000 MT was also sourced from India. Total organic soybean meal imports through February of the 2023-24 marketing year were 129,000 MT, which is up 21% compared to the prior marketing year.

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