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By Ed Maltby, NODPA Executive Director
In this issue we have the Vermont Study on the Cost of Production from 2017 when the pay price average was $36.24 and the average cash expense per cwt, with only dairy income and expense, was $31.03. Fast forwarding to 2019 when the average pay price year-round is predicted to be $31.00, there is not much relief for organic dairy farm families, especially with a very average cull cow price, little demand for replacement heifers and purchased feed averaging at a reason-able price right now but with an uncertain future due both to the weather and reduced level of imports. Grass Fed producers are in no better shape with an average cash expenses per cwt in 2017 at $32.82 per cwt and a projected pay price for 2019, hopefully looking to be $32 per cwt. Hopefully, it will be a good year for maple syrup and other non-dairy income.
What the many years of this study have shown is the economic difference between organic and conventional production, although the outcome for a sustainable pay price is very similar. The organic pay price should never be seen as a premium as the economics of production are so different and to do so is misleading. But in 2019, we see both conventional and organic pay price dictated by the low cost of production of mega dairies. Large scale organic dairies have the added benefit of poorly enforced organic regulations by certifiers and the NOP. Without a dramatic change in that implementation, small to mid-size organic dairies will disappear unless they can find significant non-dairy income.
As Congress winds down for the year, there was some significant language in the Senate Fiscal Year 2020 Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Bill. This is only the start of the appropriations process, so don’t get too excited as we have to go through continuing resolutions and Government shut downs before we might see a full appropriation bill passed. The bill includes a provision to level the playing field for organic dairy producers. It would require USDA to issue a final regulation on ‘Origin of Livestock’ within 180 days. The bill also boosts funding for the NOP from $14 million, annually to $18 million, annually. With $52 billion in annual sales in the U.S, 42,800 organic farms and operations in 148 countries, the amount the NOP gets to administer the program is .0346% of US sales, not taking into account the sales in those other 148 countries. And we wonder why the NOP is so ineffective and subject to so much political interference in ensuring the integrity of the NOP standard when they have such a herculean task to perform? The political interference and lack of support from the Trump administration was highlighted by Laura Batcha from the Organic Trade Organization in an article by Chuck Abbott: “Batcha noted that the USDA has been extremely slow to approve recommendations from the National Organic Standards Board, the body that reviews organic regulations. She said that during the past decade, the NOSB has reached “20 consensus recommendations” — that is, recommendations approved by at least a two-thirds of the board — and the USDA has acted on none of them.”
We also had the introduction of the Food and Agribusiness Merger Moratorium and Antitrust Review Act of 2019 which would initiate a moratorium on large agriculture, food and beverage manufacturing and grocery retail mergers to allow time to assess the impact corporate consolidation has on farmers, workers, consumers and communities. It also recommends improvements to antitrust enforcement. The bills were also introduced in the House and Senate in 2018. To quote ex-organic dairy farmer and now President of the National Family Farm Coalition Jim Goodman: "For too long, corporate consolidation in the food and agriculture sectors has been ignored despite alarms raised by family farmers and rural communities of the negative, anti-democratic impacts of this trend. Corporate domination of our rural economies and agricultural markets has undercut independent producers, exploited the workers who grow and process our food, forced rural businesses to close, and degraded our ecosystems.”
The 2018 Farm Bill authorized the Dairy Margin Coverage program (DMC), which offers financial protection to ALL dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer. This is not calculated on the individual farm margin but on the average, so can be used very effectively by organic farmers. It replaces the program previously known as the Margin Protection Program for Dairy. Sign-up for this USDA Farm Service Agency (FSA) program opens on June 17 providing coverage retroactive to January 1, 2019, with applicable payments following soon after enrollment. Payments at the $9 level were triggered in January, February, March and April. Some states are subsidizing the insurance and administration payment.
A new web-based tool has been developed in partnership with the University of Wisconsin to help dairy producers evaluate various scenarios using different coverage levels through the DMC, https://www.fsa.usda.gov/programs-and-services/farm-bill/farm-safety-net/dairy-programs/index . The tool helps producers calculate total premiums costs, administrative fees associated with participation in DMC and the level of coverage under a variety of conditions. It also forecasts payments that will be made during the coverage year. Please do not immediately dismiss this program as it can be useful. Its more paperwork and trips to the FSA office but there will be money at the end of it.
Posted: to Industry News on Wed, Jun 12, 2019
Updated: Sun, Jun 16, 2019