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VOLUME XVIII, NO. 11 |
TEXAS DAIRY REVIEW |
NOVEMBER 2009 |
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For independent thinkers, Dairy Direct may soon be coming your way Producer-handlers react to new USDA recommendation Federal Milk Marketing Improvement Act (S-1645) steals spotlight Sen. Cornyn reviews new dairy legislation Dairy producers disappointed in latest CWT retirement Twist of fate lands deer hunter “the big one”
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For independent thinkers, Dairy Direct may soon be coming your way |
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Hold onto your milk tanks. Dean Foods recently announced it has ended current supply agreements with Dairy Farmers of America (DFA) at eight plants in the southeast and Pennsylvania. The multi-million dollar company is recruiting additional dairy farmers for their Dairy Direct program to supply milk directly to these plants beginning Jan. 1, 2010. Although Dean Food representatives said it is yet unknown how Texas producers will be affected by this news, information is soon to be provided. “This decision does not affect supply agreements with other cooperatives, such as Foremost, Maryland & Virginia, Lone Star, and Southeast Milk Inc. or other Independent producers who presently supply these plants,” said Marguerite Copel, a spokeswoman for Dean Foods. Copel said Dean believes its Dairy Direct program is good for its customers and consumers because it further strengthens confidence in the quality and security of the milk supply. “It is good for farmers because we believe they can earn more dollars over the long run by selling directly to us,” Copel said. “It is also good for our plants because it allows them to establish, or in some instances expand, a direct relationship with their milk suppliers.” Cople added the company will be moving the procurement services previously handled by Dairy Marketing Services (DMS), in-house. Dairy Direct, an expanded direct sourcing program, includes: Barber’s Dairy in Birmingham, Alabama; Dean’s Dairy in Louisville, Kentucky; Dean’s Dairy in Sharpsville, Pennsylvania; Mayfield Dairy in Athens, Tennessee; Mayfield Dairy in Braselton, Georgia; Purity Dairies in Nashville, Tennessee; Trauth Dairy in Newport, Kentucky; and PET Dairy in Spartanburg, South Carolina. |
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Producer-handlers react to new USDA recommendation |
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Editor’s note: the producer-handlers in this story have asked their names be withheld because of the nature of the subject matter. To honor their requests, we refer to their statements in this article as “sources” or as “a source.” Please read entire story. Sherry Webb, publisher Although not finalized yet and still requiring a 60-day public comment period, a recent USDA recommendation to limit a long-sought after producer-handler exemption by National Milk Producers Federation (NMPF) may soon come to fruition. Reactions from producer-handlers range from the expected responses to inferences that suggest recommendations are sometimes reached through influence, rather than fairness. Even conventional producers feel compelled to share this view. NMPF represents most of the dairy marketing cooperatives serving the nation and is regarded by the USDA as “the principle voice on dairy issues.” NMPF’s long-term objectives to close producer-handler loopholes prompted the USDA decision to end what has been deemed by many as an out-of-control marketing bonanza for unorthodox producer-handlers. In effect, the new USDA recommendation amends all producer-handler definitions in all Federal Milk Marketing (FMMOs) orders so that “those with sales of more than three million pounds per month” (approximately a 1200 cow dairy) “will be treated the same as other bottling operations and must share with other farmers their Class I profits in their respective Federal Order regions.” This is primarily viewed by producer-handlers as another case of the US government’s intervention in the dairy industry, eating away another slice of free enterprise and the right for them to market their milk as they see fit. “But, besides government interference, it dramatically clears the way for cooperatives to deplete diversification and kill competition in the milk market, as well,” they said. Other sources suggest ”if cooperatives were doing their jobs, informing their members honestly and taking care of their needs, there would be no reason for the federal government to keep getting into the milk industry.” NMPF states that limiting the pricing advantage for producer-handlers is an effort to stop “about a half-dozen large producers from ‘cherry picking’ the Class I milk sales at the expense of other producers in the Federal Order pools.” Under present rules, a milk bottler of any size can avoid paying into the Federal Order pools in its market if it produces all of its own milk. This regulatory exemption provides a large pricing advantage to producer-handlers but reduces average pay prices for other producers who lose out on shared Class I revenue. Producer-handlers admit it is true that other producers get less money for their milk. “But, we are operating legally under the present exemption rule. What other producers do not realize---their cooperatives, in many cases, are selling them out. “They are digesting the premiums and not working for their members 100%, as they should be. It is much easier for cooperatives to blame producer-handlers for poor milk prices paid to their members than to blame their own bad management and own lack of leadership.” Another source turned to his favorite motto: Dairymen milk cows---cooperatives milk dairymen. “We’re not to blame for what the cooperatives do to their own members,” he added. NMPF’s efforts to remedy the exemption came at a pressing time. The dairy industry, historically, is on its shakiest ground ever and cooperative members across the nation are frustrated, angry, and ready to find alternative methods for marketing their milk. “NMPF and cooperatives are afraid their members will soon do the same thing as we’re doing,” a source said. “We are definitely a threat.” One conventional cooperative member said he respects the spunk it takes for producer-handlers to go out on their own. “It’s a dairyman’s ultimate dream,” said Pete Schouten, owner of two Central Texas dairies. “Don’t let anyone kid themselves. Every dairyman would be doing the same thing, if he could. Those guys are to be admired.” Producer-handlers point out the overall benefit of their pricing advantage ultimately goes to the consumer who pays about 20 cents per gallon less for milk at stores where their products are marketed. This deed pleases the consumers’ pocketbook, presents a good public image, and as one would expect, the general public could care less about this marketing marvel is achieved. “We are glad to give the consumers a better price and there’s nothing wrong or illegal about the way we’re able to do this,” they said. “We are inspected and tested properly in every way. But, they’re sending the wolves out on us.” One source said his milk supply from his own producer-handler operation cannot compare to large cooperatives, such as DFA. He said he produces about one-eighth of one percent of the nation’s milk supply. DFA, on the other hand, supplies more than one-third (34%) of the nation’s milk supply. “So, basically, a very small percentage of producer-handlers supply the nation’s market. The main thing co-ops fear is competition and lack of control over our operations.” Producer-handlers will have a tough fight ahead of them in a war against USDA’s decision. Some or most will likely bide their time and eventually end up paying their competitors and into their respective FMMO pools to put the case to rest. NMPF, the cooperatives and USDA are bound tightly. NMPF’s board of directors and board members is comprised of top-notch influential cooperative executives. The NMPF Board is comprised of four Southwest Marketing Agency founders. Mike McCloskey, of Select Producers and Continental Producers serves as assistant treasurer on the NMPF Board of Directors. Jim Baird of Lone Star Milk Producers and Frank Schezarski of Zia Producers are also NMPF Board members. DFA top executives and members who serve on the NMPF Board are Tom Camerlo, chairman of DFA Board of Directors; Rick Smith, DFA president and CEO; and 10 additional DFA members. Southwest Marketing Agency that combines the above-mentioned four cooperatives is currently criticized by its members for ending competition when the milk marketing agency was formed a few years ago. Dissatisfied members said the agency has outlived its original purpose to balance the milk supply in the southwest. DFA has drawn major criticism lately from angry dairy farmers in the northeast and southeast who have filed antitrust lawsuits against DFA and Dean Foods for monopolizing the fluid market in those regions of the US. Other NMPF board members catching headlines is NMPF’s assistant treasurer McCloskey whose cooperative, Select Milk Producers, plans to build a new fluid bottling plant in Central Texas that would handle both conventional and organic milk. Although a Select board member commented last month the membership is excited about the plant, other central Texas producers said it could wreck milk prices for all of those not in with the Select group. It does seem ironic that so many of NMPF’s Board members who help to make national dairy policy are making less-than-flattering headlines in industry news, as one producer-handler pointed out. He said maybe NMPF should take a longer look at what their own board members are doing in comparison to the producer-handler situation and not willingly push aside conflicts of interest that may be present. “It just stands to reason why they would come after us---but not go after anybody on their own board,” he said. |
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Federal Milk Marketing Improvement Act (S-1645) steals spotlight |
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If there is only one good thing that has come from these months of impending doom in the dairy industry, it is the efforts by producer groups or individuals from coast to coast who have moved forward to come up with both short-term and long-term solutions. But, some solutions, in the form of proposals, have captured more attention than others. Gary Genske, owner of two dairies and a CPA with Genske and Mulder, Costa Mesa, CA., is relentless in his continued efforts to strive for dairy industry solutions. Genske targets certain inequities in the large cooperatives and addresses problems with the pricing system, CME and Milk Protein Concentrates (MPCs). (See MPCs editorial on Page 10 of the printed paper. If you don't normally receive one Click Here). While the Holstein Association USA has come up with their dairy industry solutions in the form of the Dairy Price Stabilization Proposal, a new federal pricing system entitled, the “Federal Milk Marketing Improvement Act” (S-1645), has lately been stealing the spotlight. This proposal estimates producers would receive an average of about $22.50 per cwt---a far cry from the $11 or $12 per cwt. milk they received this year. Arden Tewksbury, initiator of the improvement act proposal, is manager of Progressive Agriculture Organization (PAO), Copenhagen, PA., founded in 1991. The federal bill (S-1645) is sponsored by Senators Arlen Specter and Robert P. Casey, Jr., both Pennsylvania Democrats. Although different in scope, all proposals are targeting ways dairy producers can get their fair share of the milk market. The proposal initiators agree the money is “out there” but it is the method for getting it that differs. S-1645 proposes all US-produced milk will be based on the national average cost of production while prohibiting dairy manufacturers from levying any operational costs onto farmers, normally referred to as “make allowances.” Adjustments would be made to reflect regional differences in production costs. The bill requires the milk price be adjusted four times per year by the US agriculture secretary and all provisions of the bill should be carried out, leaving no loose ends. The bill will create an inventory management program providing lower prices to farmers on one to five percent of their production if the domestic milk supply gets too high and if dairy exports exceed imports. The bill mandates the US agriculture secretary must be sure the imports of dairy products do not exceed the amount of dairy exports before he can use the inventory management program so that dairy farmers will not be required to balance the national milk supply if there is interference from an accelerated amount of dairy imports. This includes imported milk protein concentrates (MPCs) and casein. The bill will eliminate the Chicago Mercantile Exchange (CME) as a method of determining milk prices paid to dairy farmers; continue all federal and state milk marketing orders; encourages new dairy farmers to enter the dairy business and to be exempt from costs of inventory management up to the first 3 million pounds of production. The bill allows also for appeals from dairy farmers who endure extreme hardships regarding the inventory management program. Tewksbury points out his organization’s concerns about the Dairy Price Stabilization Proposal. He said the proposal offers no new milk pricing formula for dairy farmers and proponents of this program are “evidently still supporting the use of the CME to start the milk price.” Tewksbury said the proposal completely ignores the dairy farmers’ cost of production and the difference of the price of milk in unregulated areas; does not allow dairy farmers to recover their milk hauling or any hauling costs; and does not address the real problem of imported dairy products, especially MPCs and casein. Tewksbury said the proposal mandates a new start-up fee producers must pay anywhere from $2 to $3 per cwt on all milk he produces. “This will certainly not encourage new farmers in most parts of the US,” he said. He pointed out the proposal allows all producers to increase their production by 2% to 3% each year. ”Any production produced by any dairy farmers over the allowable amount will trigger a penalty that will obligate the farmers to pay up to $3.00 per cwt on all their production. This could mean that large, corporate-backed farms might be the only ones who could afford the increased production,” Tewksbury said. Tewksbury said the proposal makes no determination of who will be responsible for purchasing extra milk and the program seems to indicate the “MILC” program will still be used. He summed up saying, “the proposal is definitely a ‘base’ program. For more information on all proposals email Tewksbury at: proagorg@gmail.com . The Dairy Price Stabilization Proposal may be seen in its entirety at www.holsteinusa.com . |
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Sen. Cornyn reviews new dairy legislation |
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US Senator John Cornyn (R-TX) is reviewing new dairy legislation through his position as a member of the Senate Agriculture Committee. He welcomes input from Texas dairy farmers on industry issues while looking for fair and accurate resolutions to the problems. “He understands dairy farmers are caught in a textbook ‘cost-price squeeze’ and, as a member of the Senate Agriculture Committee, will work with his colleagues to find solutions for Texas dairy farmers,” said Tina Gray, spokeswoman for the senator. Dairy farmers can reach Sen. Cornyn’s Washington, D.C. office at : 202-224-0703 Fax: 202-228-2856 or on the web at www.cornyn.senate.gov . |
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Dairy producers disappointed in latest CWT retirement |
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By Sherry Webb The numbers for the past 12 months in the Cooperatives Working Together (CWT) herd retirement may sound great with total cows removed reaching 252,000, but it does not change the disappointment expressed by several dairy producers who apparently expected more. With 154 bids accepted and only 26,000 cows removed equaling 517 million pounds of milk in this newest round of 2009, dairy producers are wondering if the program has outlived its purpose and is slipping. But, according to CWT managers, National Milk Producers Federation (NMPF), the program’s goal has been reached. The latest retirement combined with CWT’s three previous retirements since December 2008 equals a total milk reduction capacity of five billion pounds. Jerry Kozak, NMPF president and CEO said CWT economists estimated that coming into 2009, the program would need to remove between five and six billion pounds of milk, the production of approximately 250,000 cows, through herd retirements. “2009 has brought us to our goal of aligning supply with demand, and hastening the recovery of farm-level milk prices that plunged because of the global recession,” he said. |
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Twist of fate lands deer hunter “the big one” |
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Hunters never know what circumstances await them when participating in Texas’ all time favorite sport of deer hunting. But, when a fluke occurs, it leaves one baffled and still wondering why things happen the way they do. Ricky Caudle, a native of Stephenville, can certainly attest to that when recalling one of his most memorable deer hunting experiences.
Caudle is a nice, laid-back, down-home country-kind-of guy anyone would want to meet. He has hunted all over the state of Texas and New Mexico but his biggest thrill is hunting with his son, Jody, 34, and daughter, Candiss, 30, and her husband, Tony Territo, who he also considers to be one of his kids. But, when it comes to deer hunting, Caudle said his first thought is the great anticipation. “I really enjoy the entire hunting experience----the excitement and everything. If by chance you happen to get an animal, it is always extra,” he laughs. The “extra” was certainly not what Caudle was anticipating a few months ago when not far from his home, he noticed some wild boar down by his deer feeder, scaring away the deer. The next day was rainy, drizzly, and foggy. With a little extra time on his hands and because it was the opening of bow season, he decided to go down by himself and hunt for awhile. His intention was to get rid of the hogs that kept running off the deer. He thinks to himself that maybe if he sees the right deer—“oh boy!” how great that would be. But, his high hopes do not exceed his sense of reality. But, just in case----he went ahead and “camoed-up” in his hunting attire, grabbed a bow, and started off down the trail across the creek through the brush and scattered Mesquite. When he got to a spot, he said he was doing everything a bow hunter should not be doing: he was not in a stand; he was sitting flat on the ground with no range finder and not seriously hunting, just trying to get rid of a hog or two. Suddenly there’s movement. Caudle looks toward the sound and sure enough, to his left, is one of the pesky boars he had seen earlier in the week. With no range finder, Caudle guesses the boar to be about 35 yards away. He slowly pulls back his bow and takes a shot---overestimating, he misses. Oh well, it’s just a hog. A short time later, Watching and waiting, he spots a doe and a young 8-point making their way toward him. “I usually won’t take the young ones. I just enjoy seeing them walk by,” he said. But, when an older ten-point came into his view and lingered behind a tree, Caudle knew he would take the shot. So, he drew back and waited for the ten-point to step out. All of a sudden, there was more movement to his left. That’s when he saw the “big one” appear out of the brush, in much closer ranger than the other deer. Caudle put his sights on the closer deer. “When the deer stopped and looked at the ten-point, that’s when I took my shot---at about 22 yards. I didn’t know at the time how big he really was. I just knew he was a good one. It had all happened so fast, I didn’t have time to really get nervous. After the shot, all the other deer scattered. He laughs and thinks aloud, they always look bigger running away from you. Then the realization of just what he may have shot sets in. “That’s when it hit me, and my knees got weak.” I found the arrow, and it had good blood on it, so I stopped and went back up to the house. “If you shoot a deer that looks that big, you don’t really want to take the chance to run him any more than necessary. Just let him lay because you sure don’t want to lose him. “When I got to the house, I began pacing the front porch, so I got on the telephone to call someone----anyone---I could tell my story to. Guess what? No answer!” Caudle laughs to himself thinking, that’s just my luck! “Then, I got hold of a good friend, Scott Stephens and two sons, Cody and Brandon. Scott said “don’t move! I’ll be right there!” Scott shows up with his two boys and we all went down to where I found the arrow and began searching for the deer. A short time later, Scott finds the deer. Laughing, Caudle said, “you know, that is the first deer I ever shot that was actually bigger when I got to it. Usually, when you get to them, they shrink a little bit,” he said, still chuckling. “So, Scott and his boys helped me load him up and take it to the house. I was thinking it was such good luck that I didn’t have to sit in a blind---just sat on a trail. That’s what made it special--- and, I got it with a bow. “But, what really made it special and a little nostalgic, too, was the place I was hunting on was my wife’s old family place. When I was 21 years old, I shot my first deer there, with a bow, in nearly the same spot. Now, 32 years later, I have shot the biggest and best deer of a lifetime with a bow not less than 20 yards from where I shot my first deer.” Caudle said he does not know if you can call it a coincidence, a twist of fate, or what. But his wife, Sandra, was quick to remind him that ‘’all the time and money you’ve spent going away from home to try and kill your biggest deer and you get it in your own backyard!” “That was a hard one to explain to her,” Caudle laughs. |
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