California Ag Network

Category: Ag Economics

  • February Income over Feed Cost Margin Triggers Second 2019 Dairy Safety Net Payment

    USDA’s Farm Service Agency (FSA) announced that the February 2019 income over feed cost margin was $8.22 per hundredweight (cwt.), triggering the second payment for dairy producers who purchase the appropriate level of coverage under the new but yet-to-be established Dairy Margin Coverage (DMC) program.

    DMC, which replaces the Margin Protection Program for Dairy, is a voluntary risk management program for dairy producers that was authorized by the 2018 Farm Bill. DMC offers protection to 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.

    Sign up for DMC will open by mid-June of this year. At the time of sign up, producers who elect a DMC coverage level between $8.50 and $9.50 would be eligible for a payment for February 2019.

    For example, a dairy operation that chooses to enroll an established production history of 3 million pounds (30,000 cwt.) that elects the $9.50 coverage level on 95 percent of production would receive $3,040 for February.

    Sample calculation:

    $9.50 – $8.22 margin = $1.28 difference$1.28 x 95 percent of production x 2,500 cwt. (30,000 cwt./12) = $ 3,040DMC premiums are paid annually. The calculated annual premium for coverage at $9.50 on 95 percent of a 3-million-pound production history for this example would be $4,275.

    Sample calculation:3,000,000 x 95 percent = 2,850,000/100 = 28,500 cwt. x 0.150 premium fee = $4,275

    The dairy operation in the example calculation will pay $4,275 in total premium payments for all of 2019 and receive $6,626.25 in Dairy Margin Coverage payments for January and February combined. Additional payments will be made if calculated margins remain below the $9.50/cwt level.All participants are also required to pay an annual $100 administrative fee in addition to any premium, and payments will be subject to a 6.2% reduction to account for federal sequestration.

    Operations making a one-time election to participate in DMC through 2023 are eligible to receive a 25 percent discount on their premium for the existing margin coverage rates. For the example above, this would reduce the annual premium by $1,068.75.

    “The Dairy Margin Coverage program will provide an important financial safety net for dairy producers, helping them weather shifting milk and feed prices,” FSA Administrator Richard Fordyce said. “We continue to work diligently to implement the DMC program and other FSA programs authorized by the 2018 Farm Bill.”

    On December 20, 2018, President Trump signed into law the 2018 Farm Bill, which provides support, certainty and stability to our nation’s farmers, ranchers and land stewards by enhancing farm support programs, improving crop insurance, maintaining disaster programs and promoting and supporting voluntary conservation. FSA is committed to implementing these changes as quickly and effectively as possible, and today’s updates are part of meeting that goal.

    Additional details about DMC and other Farm Bill program changes can be found at farmers.gov/farmbill.

  • Undeniably Dairy to Boost Milk Sales with Consumer Engagement

    Remember the old got milk commercials that got consumers excited about dairy?  Today, the big dairy campaign is known as “Undeniably Dairy”.  This is funded through the National Dairy Checkoff program, managed by Dairy Management, Inc (DMI).  Watch this brief interview with DMI Chair, Marilyn Hershey, and read more about DMI’s efforts to promote the industry in California Dairy Magazine.

  • Financial Incentives for New Sustainable Dairy Technologies

    Free Money!  That’s what people want to hear.  Although nothing is free, there are a lot of great new government incentives available to dairy farmers to modernize their facilities with newer sustainable technologies that may not otherwise be affordable to invest in.  Watch this brief interview with Paul Sousa from Western United Dairymen as he shares, and read more about it in California Dairy Magazine.  Don’t currently receive the magazine?  Subscribe for FREE at: https://malcolmmedia.com/california-dairy-magazine-subscriptions/

  • State of the California Tomato Industry with Bruce Rominger

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    California processing tomato growers had a disappointing season in 2018, not because of their crop (they had a great crop), but because of the low returns due to a less than ideal market. Watch this brief interview with Bruce Rominger, Chairman of the California Tomato Growers Association, as he shares the current State of the Tomato industry, and read more in the coming issue of Vegetables West Magazine. Don’t currently receive Vegetables West? Subscribe for free at https://malcolmmedia.com/vegetables-west-magazine-subscriptions/

     

  • California Tomato Growers Association Perspective on Industry’s Future

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    Processing tomato growers gathered in Modesto recently for the California Tomato Growers Association (CTGA) Annual Meeting. It was a great opportunity for the industry to get together between seasons and discuss current needs and challenges of the industry moving forward. Watch this brief interview with CTGA President Mike Montna as he shares association insights and future prospects for the industry. Read the full proceedings of the annual meeting in the coming issue of Vegetables West Magazine. Don’t currently receive Vegetables West? Subscribe for free at https://malcolmmedia.com/vegetables-west-magazine-subscriptions/

  • California Final Grape Crush Report 2018

    The 2018 crush totaled 4,506,583 tons, up 6.2 percent from the 2017 crush of 4,241,945 tons. Red wine varieties accounted for the largest share of all grapes crushed, at 2,447,930 tons, up 8.8 percent from 2017. The 2018 white wine variety crush totaled 1,833,755 tons, up 3.8 percent from 2017. Tons crushed of raisin type varieties totaled 82,508, down 12.5 percent from 2017, and tons crushed of table type varieties totaled 142,391, up 8.0 percent from 2017.

    The 2018 average price of all varieties was $831.63, up 6.8 percent from 2017. Average prices for the 2018 crop by type were as follows: red wine grapes, $1,019.03, up 5.5 percent from 2017; white wine grapes, $634.84, up 8.0 percent from 2017; raisin grapes, $299.48, up 18.4 percent; and table grapes, $192.01, up 7.6 percent.

    Leading Grape Varieties and Districts

    In 2018, Chardonnay continued to account for the largest percentage of the total crush volume with 15.8 percent. Cabernet Sauvignon accounted for the second leading percentage of crush with 15.1 percent. Thompson Seedless, the leading raisin grape variety crushed for 2018, was only 1.5 percent of the total crush.

    District 13, (Madera, Fresno, Alpine, Mono, Inyo Counties; and Kings and Tulare Counties north of Nevada Avenue (Avenue 192)), had the largest share of the State’s crush, at 1,370,068 tons. The average price per ton in District 13 was $318.38.

    Grapes produced in District 4 (Napa County) received the highest average price of $5,571.44 per ton, up 6.6 percent from 2017. District 3 (Sonoma and Marin counties) received the second highest return of $2,817.92, up 0.3 percent from 2017. The 2018 Chardonnay price of $970.76 was up 5.1 percent from 2017, and the Cabernet Sauvignon price of $1,683.25 was up 8.3 percent from 2017. The 2018 average price for Zinfandel was $600.21, up 1.5 percent from 2017, while the Pinot Noir average price was down 0.9 percent from 2017 at $1,674.62 per ton.

    Don’t miss the May issue of American Vineyard Magazine for a full analysis of the 2018 California grape crush.  Click on the image below to view the entire Grape Crush Report from USDA.

  • Emergency Funds to Address Virulent Newcastle Disease in California

    USDA secretary Sonny Perdue is making available an additional $45 million to the Animal and Plant Health Inspection Service (APHIS) and its partners to address the ongoing virulent Newcastle disease (VND) outbreak in Southern California.  This funding will allow APHIS and the California Department of Food and Agriculture (CDFA) to strengthen their joint efforts to stop the spread of this disease and prevent it from affecting additional commercial flocks.

    “Virulent Newcastle disease is a serious concern for our nation’s poultry industry and we need to step up our response in order to keep this disease out of additional commercial flocks,” said Greg Ibach, USDA Undersecretary for Marketing and Regulatory Programs.  “At this point, the trade impacts of this outbreak are minimal because APHIS has negotiated agreements with many countries to promote the principle of regionalization, or limiting trade restrictions to areas affected by outbreaks rather than entire States or the entire country.  However, if VND were to spread into additional commercial flocks – in California or other states – the impacts could increase substantially.”

    “I want to thank Secretary Perdue and USDA for making additional resources available to fight this highly-contagious poultry disease,” said Karen Ross, Secretary of the California Department of Food and Agriculture. “The strong partnership between USDA and CDFA, local government, industry and homeowners is the united stand we need. With everyone’s full effort we can eradicate this disease, just like we did in 2003.”

    It is vital that USDA and CDFA put more responders on the ground to increase surveillance and detection in backyard flocks; ensure rapid euthanasia of likely-exposed birds; implement wider mandatory surveillance on commercial farms and help ensure that they are enhancing biosecurity in light of the increased threat; and increase outreach to backyard flock owners.

    USDA will also work with CDFA on several steps tostrengthen the response and prevent additional disease spread.  These include:

    • Ensuring any poultry, poultry products and poultry materials that move out of affected areas will be done with a permit;
    • Enforcing the quarantines and mandatory fallow periods for backyard locations to ensure the disease is eliminated before new birds are allowed onsite; and
    • Rapid euthanasia of likely-exposed birds.

    The $45 million USDA will use for these efforts is being reallocated from emergency funds transferred to USDA, but not used during the highly pathogenic avian influenza outbreak response in 2014-2015.  USDA will routinely reassess this plan and readjust tactics as needed. The goal remains to rid Southern California of VND, while protecting the rest of the country’s poultry from the disease.

    Link to CDFA’s VND information page.

    Regional Quarantine Map

  • What US Dairy Producers can Learn & Benefit from the Canadian Dairy Industry

    Bennett Water Systems

    Not only in California, but the entire US dairy industry has been in an economic slump for a while, and it’s time for a change.  Lynn McBride, Executive Director of the California Dairy Campaign is rallying with other dairy organizations across the country to look to the prosperity of the Canadian dairy industry all these years, and begin to model US dairy policy after the Canadian system.  Watch her brief interview, and read more about it in California Dairy Magazine.

  • Record High Pistachio Acreage Planted in 2018

    Along with record high pistachio production in the western United States in 2018, a record number of acres were planted to pistachios as well last year. Is this good news or bad news for the pistachio industry? Watch this interview with American Pistachio Growers’ Executive Director Richard Matoian to find out, and read more about it in Pacific Nut Producer Magazine.

  • US Pistachio Exports Increase Despite International Trade Issues

    After the US pistachio industry brought in a record high pistachio crop last season, there were concerns as to how recent international trade issues would impact movement of this record crop; however, at the annual conference of American Pistachio Growers, Executive Director Richard Matoian shared positive news on recent domestic and export shipments. Watch Matoian’s brief interview and read more about it in Pacific Nut Producer Magazine.