Visser milks 3,200 Jerseys and Holsteins near the Canadian border.
**Extended comments are highlighted in blue.
I have been doing a lot of flying the last couple weeks. One of my recent trips was to Omaha for NMPF’s National Dairy Producers Conference (NDPC). I made this trip with my wife and two little boys. I was continually amazed at how all my planes were completely full, not a spare seat on any of them. The flight attendants, when asked, told me that is the norm now because the airlines have cut back the amount of flights because they have fewer travelers. What a concept: to reduce supply to meet market demand. Of course, airlines are an oligarchy and we dairy producers are in a more competitive market.
At the NDPC, we were exposed to many panelists who were very bullish the export market and its many possibilities.
I am surprised that most within the dairy industry who speak out against some aspects of FFTF are in love with the idea of the export market but are unwilling to invest in needed product innovation to better serve the export market. In fact, many who speak so glowingly of exports have no intention to ever be involved in the export market. It is very risky to be in the export arena. There must be protections provided to those who service either the domestic market or the export one.
I am very excited by the prospect of eliminating end-product pricing and dairy price supports. It’s important to eliminate them to ensure that we make products that are in demand for real markets and not have the option of making sales to the government.
The removal of the MILC program will be a blessing to many farm families who work together and pool resources on a larger farm. Under MILC, they are comparatively punished for being over the cap. Additionally, the market signals are not received by those who are fully subsidized by MILC. I have no problem with people collecting whatever subsidies they can from the government, (you must take care of your family and business). I just have a problem with the government policy that mutes market signals to farmers.
Many people seem to be up in arms about the Dairy Market Stabilization Program (DMSP) and the margin insurance program. The margin program will assist farmers when the margin falls and is nationally weighted for price.
It will probably function much like the corn LDP and pay all dairy producers who sign up for it for 90% of historical milk produced. You can buy additional margin from the program if you desire. There is no insurance company involved--USDA will be self-insuring this program.
Sounds like a great program, right? The problem with this program is twofold. First, you can’t shut cows off quickly. If the market presents us with poor margins, we could be using a lot of it. Second, the margin program will allow people to continue making milk at a loss while collecting margin insurance. This will be problematic, because dairies will be less likely to reduce supplies to match demand. The solution is DMSP.
DMSP will allow the margin program to not drain the federal budget because it is quick-acting, and it will eliminate the time spent in periods of low margins. If 2009 taught us anything, it is that we will produce as much milk as we can all the time. There are even some of us who will try to convince ourselves we don’t need return on assets, equity, value opportunity or depreciation costs.
DMSP will put more control back on the side of the producers, which is why some processors are so adamant against the proposal. Would you prefer a milk price that is 97% acceptable and 3% nonpay, or 100% poor returns on milk and then turning to the government to try and get additional subsidy money to pay the bills?
Maybe we can get past our competitive nature and cooperate to get FFTF in place to help us all. More than likely, we will just continue to bicker among ourselves, saying your region gets more help than mine, or vice versa. Hopefully, we can get together and set aside our various phobias and differences and bring about real change for our great industry.
|Visser's April Prices
|Milk (net mailbox) (3.5% bf, 3.0% prt)
|Alfalfa hay (milk cow)