California Ag Network

Category: Ag Legislation

  • Synergy between Biotech and Classical Control Tactics Rid U.S. of Invasive Pest

    Genetically engineered cotton and classical pest control tactics combined to rid the United States and Northern Mexico of a devastating pest, according to a new study by Agricultural Research Service (ARS) and University of Arizona (UofA) scientists published in the Proceedings of the National Academy of Sciences.

    For most of the past century, the pink bollworm was the major cotton pest in the Southwest. For decades, cotton growing in Arizona, California, Texas, and New Mexico was only possible because farmers sprayed pesticides an average of 12 times a year, nine specifically against pink bollworm. Some farmers sprayed as often as 25 times a year without reaching control. In 1990, pink bollworm cost cotton growers $48 million in Arizona alone.

    A coordinated and multitactical list of areawide and integrated pest management strategies were developed over the years in hopes of putting down this pest while replacing expensive and environmentally hazardous chemical pesticides, explained research entomologist Jeffrey Fabrick, one of the authors of the study. Fabrick is with the ARS-USDA Pest Management and Biocontrol Research Unit in Maricopa, Arizona.

    “By analyzing computer simulations and 21 years of field data from Arizona, we proved that genetically engineered cotton and release of billions of sterile pink bollworm moths acted synergistically to suppress this pest,” Fabrick said.

    Both the computer simulations and what was seen in the field from 2006 to 2010 showed neither of the two tactics would have worked if used alone, he added.

    “Collaboration among farmers and scientists from government, industry, and academia was essential for the remarkable success of the pink bollworm eradication program,” said Bruce Tabashnik, lead author of the study and regents professor in the UofA Department of Entomology.

    In the late 1960s and 1970s, ARS scientists first began powering up the fight against pink bollworm. They helped create the artificial pheromones that allowed precise tracking of the pest as well as the first synthetic diet and methods for raising sterile pink bollworm moths to disrupt mating. Releasing synthetic female sex pheromone in cotton fields also was used to confuse males and disrupt mating Another important tactic required farmers to plow down cotton residues after harvest to reduce overwintering survival of pink bollworm.

    Enter genetically modified Bt cotton in 1996. Bt cotton is engineered to produce one or more proteins from the bacterium Bacillus thuringiensis (Bt for short) that kills pink bollworm and other related caterpillar pests and are harmless to people and most other insects, unlike broad spectrum pesticides. Growing mostly Bt cotton knocked the pink bollworm population down by 90 percent in 10 years. At the same time, farmers continued employing other techniques.

    By 2006, for the first time, eradication became a practical reality. With an eye to finishing off pink bollworm, detailed cooperative plans were developed by a coalition that included cotton farmers, grower organizations, ARS researchers, USDA’s Animal and Plant Health Inspection Service (APHIS), the biotech industry, the Arizona Department of Agriculture, the Arizona Cotton Research and Protection Council, and UofA extension and research scientists. Many of these groups’ counterparts in Northern Mexico were also were also recruited.

    APHIS also scaled up production of sterile pink bollworm moths so that billions of them were unleashed by airplanes to overwhelm any field populations of the pest.

    Removal of pink bollworm saved U.S. cotton farmers $192 million from 2014 to 2019 alone, according to the study. Pink bollworm suppression has also facilitated integrated pest management for all other cotton pests. Overall, this reduced insecticide use by 82 percent, avoiding application of 25 million pounds of insecticides in Arizona alone during the past two decades. It improved the overall environment and brought back beneficial insects as the ecology returned to a more natural balance.

    The Agricultural Research Service is the U.S. Department of Agriculture’s chief scientific in-house research agency. Daily, ARS focuses on solutions to agricultural problems affecting America. Each dollar invested in agricultural research results in $17 of economic impact.

  • Top 20 Wins (And Fights!) For Sustainable Agriculture In 2020

    The end of the year is just around the corner – and what a year it has been! In these times of pain, uncertainty, reflection, and action, two things are certain: (1) our country and our world as we know it will never quite be the same, and (2) the National Sustainable Agriculture Coalition (NSAC) will not stop advocating for our nation’s small-scale, diversified, beginning, underserved, conservation-minded and local/regional farmers – even through a global pandemic.

    As we get ready to ring in a new year (and welcome in a new Congress as well as a new Administration with it), it is time to reflect on what policy wins and fights the sustainable agriculture movement has borne witness to throughout this trying year.

    Without further ado, here is NSAC’s list of Top 20 Wins (and Fights!) of 2020:

    WINS

    COVID-19 Response and Appropriations

    1. Numerous COVID-19 Farmer Relief Bills Introduced –  NSAC worked with champions in the House and Senate to introduce over a dozen COVID-19 relief bills to support small-scale producers impacted by the pandemic. Bills like the Local Farmer Act (H.R. 896) and the Food Supply Protection Act (S. 3840) would both provide meaningful support to impacted farmers, ranchers, and critical local and regional food systems businesses, while the Strengthening Local Processing Act (H.R. 8431 and S. 5066) would address the failure of the concentrated meat supply chain exposed by the pandemic.
    1. Direct COVID-19 Relief Secured for Small-Scale, Sustainable Farmers – NSAC mobilized to improve the U.S. Department of Agriculture’s (USDA) Coronavirus Food Assistance Program (CFAP) when funding proved inadequate for farmers who market locally, regionally, or direct-to-consumer and for farmers of color hit hard by the pandemic. CFAP 2.0 was better, available to more farmers and covered more products. The explicit inclusion of local food in the CARES Act, championed by NSAC and our members’ grassroots mobilization, made these improvements possible. Additionally, Congress is on the verge of passing another historic round of COVID-19 assistance which includes additional funds for local food, beginning and underserved farmers.
    1. Direct Outreach Efforts for COVID-19 Aid Access – With relief funding secured, NSAC partnered with several member organizations to provide direct support to farmers on the ground who could benefit from CFAP aid. These outreach efforts centered farmers that may otherwise not receive support in the application process, including beginning farmers and farmers of color, due to lack of experience accessing USDA programing or the legacy of discrimination at the Farm Service Agency (FSA).
    1. Farmer Fly-In, Pandemic-Style – NSAC held our first virtual fly-in this spring, where farmers held conference calls with Senators and Representatives from their home states to discuss the benefits of federal sustainable agriculture programs and how Congress could support farmers and local food systems during COVID-19. We are hopeful that this represents a shift in how constituents may continue to engage with their representatives in the future, as taking time off the farm to fly to our nation’s capital is not accessible for most farmers.
    1. Appropriations Process Yield Wins – Following months of waiting, the final Fiscal Year (FY) 2021 appropriations bill includes a number of big wins for the sustainable agriculture community! Thanks in large part to NSAC’s advocacy, the Sustainable Agriculture Research and Education (SARE) Program will receive $40 million – the highest funding level ever for the program. The bill also provides increased funding for farmers markets and the Office of Urban Agriculture, among other investments.

    Conservation, Climate Change, and Organics 

    1. Farmers Commit to Be Part of the Climate Solution – NSAC delivered its Farmer Climate Letterto Rep. Castor (D-FL) and Rep. Brownley (D-CA) of the House Select Committee on the Climate Crisis. The letter was signed by over 2,100 farmers and ranchers across the country expressing their commitment to being part of the climate solution and calling on Congress to provide the tools and resources they need to be active partners in our climate mitigation efforts.
    1. Groundbreaking Agriculture Resilience Act Introduced – The Agriculture Resilience Act (ARA, H.R. 5861) is the most comprehensive piece of legislation on climate change and agriculture, setting an aggressive but achievable plan for agriculture to reach net zero carbon emissions by 2050. NSAC helped to craft this bill and outlined many of the provisions in ARA in an in-depth blog series.  Additionally, the vast majority of the bill’s provisions were included in the Congressional Action Plan on Solving the Climate Crisis published by the House Select Committee on the Climate Crisis this summer.
    1. Congress Listens to Climate Stewards – NSAC’s comments, recommendations, and publicationson the climate crisis have been incorporated into major reports published by the Climate Crisis Committees in both the House and the Senate this year. NSAC submitted comments to the House Select Committee on the Climate Crisis, the Senate Democrats’ Special Committee on the Climate Crisis, and to USDA on its Agricultural Innovation Agenda (Round 1, Round 2), outlining the steps Congress and USDA can and must take to equip farmers and ranchers to mobilize around and cope with the climate crisis.
    1. Stewards of Conservation Abound – NSAC published the Farmers’ Guide to the Conservation Stewardship Program (CSP), the country’s largest private lands conservation program. The guide provides farmers and ranchers looking to enroll or renew contracts in CSP with helpful, comprehensive, and accurate information about the program. We promoted CSP signup dates in numerous states, too, and saw growing interest in the program as a result.
    1. Organics Get a Boost – Results of the NASS 2019 Organic Production Survey, which NSAC helped secure funding for, indicate a 31 percent increase in organic sales since 2016 – showing that demand for organics continues to defy expectations as consumers recognize its many benefits. Federal programs must expand to help farmers keep up with this growing demand, to which end we also celebrated NRCS defining organic assistance as part of the Environmental Quality Incentives Program (EQIP) Final Rule.

    Farming Opportunities and Racial Equity

    1. Racial Equity Centered in Presidential Transition Recommendations – NSAC published over two hundred actionable policy recommendations for the Biden-Harris Administration to act on as soon as they are sworn into office. At the core of the plan is a call for a dedicated agenda to address inequities in agriculture and support the rights of Black, Brown and Indigenous farmers in the pursuit of climate crisis mitigation, regional food supply chain infrastructure, antitrust enforcement, and public research investments.
    1. Black Farm Cooperatives Celebrated – NSAC co-facilitated a virtual panel alongside the Cooperative Food Empowerment Directive (CoFED) to celebrate the accomplishments, history, and challenges of Black farm cooperatives in the United States. Together, participants and experts shared tools, resources, and examples of how to build sustainable economies through cooperative farming.
    1. Allocation of USDA Programs Tracked and Measured – NSAC analyzed the implementation of numerous USDA programs utilizing an equity lens according to race, region, and organization-type. These included reports on CSP enrollment, the 2501 Program, the Beginning Farmer and Rancher Development Program, the Food Safety Outreach Program, and the Farmers Market and Local Food Promotion Program.
    1. Beginning Farmer Coordinators Deployed Across Country – USDA announced a new team of State Beginning Farmer Coordinators to ensure there is a dedicated advocate for beginning farmers in every part of the country, as mandated in the 2018 Farm Bill and long championed by NSAC. This will help first generation farmers, young farmers, urban producers, immigrant and refugee farmers, and farmers of color to tap USDA resources to build successful and sustainable farming operations.
    1. Access to Crop Insurance Expanded for Local Food – For the 2021 crop insurance year, Whole Farm Revenue Protection (WFRP) will now be available for producers who sell to direct markets. The update is intended to reduce the paperwork for direct market producers, and will prove a helpful tool that increases access to WFRP for the small-scale and diversified farmers the program was designed to serve.
    1. Inaugural Urban Agriculture and Community Compost Funding Opportunities – USDA finally stood up the Office of Urban Agriculture this year, with programs to support urban agriculture and innovative production activities as well as compost and food waste reduction projects. The office was created in the 2018 Farm Bill with support from NSAC, but it was not fully implemented because no money was allocated by Congress. NSAC, however, along with many urban agriculture advocates, secured funding in the Fiscal Year (FY) 2020 agriculture appropriations bills – allowing its creation to move forward!

    FIGHTS

    1. Farmers and Ranchers Suffer from Undue Preference Final Rule – USDA published a final ruleon the Packers and Stockyards Act of 1921 to create criteria for determining whether meat packers give undue or unreasonable preference or advantage to one producer over another, as mandated by the 2018 Farm Bill. The published criteria provide a blanket defense for anticompetitive practices by corporate integrators in the poultry, hog, and beef markets at the expense of small-scale or contracted producers, in direct contrast to the Farmer Fair Practice Rules celebrated by NSAC at the end of the Obama Administration (promptly withdrawn by the Trump Administration). NSAC calls on the Biden-Harris Administration to revoke this final rule, which fails to protect growers and respect the intent of Congress.
    1. Reversal on Payment Limits Sold Out Farmers – The Trump Administration issued a landmark final rule on payment limitations and eligibility this summer to limit tax-funded subsidy recipients to family members who are actively engaged in farming (not just on paper) as mandated by Congress – then abruptly reversed course. NSAC urges the incoming Biden-Harris Administration to revisit this rule, which will perpetuate farm consolidation at the expense of young and beginning farmers and farmers of color.
    1. CSP Final Rule Misses the Point, Fails Farmers and the Environment – The Conservation Stewardship Program (CSP) final rule, published in October, directly contradicts decisions made by Congress by putting conservation-focused small farmers and ranchers at a disadvantage. NSAC blasted the Trump Administration’s blatant disregard for statute and urged the incoming Biden-Harris Administration to revisit this rule and bring it in-line with the intent of Congress.
    1. Funding For 2501 Program Cut and Diverted – The Outreach and Assistance for Socially Disadvantaged and Veteran Farmers and Ranchers Program (or 2501 Program) saw its funding shrunk as the Trump Administration diverted funds to a separate, administratively created initiative. This means that fewer BIPOC-serving organizations will receive less funding for critical technical assistance at a time when farmers of color are disproportionately impacted by the COVID-19 pandemic. NSAC worked with partners and congressional champions to provide critical oversight on the Trump Administration, demanding transparency and accountability. We will work with the incoming Biden-Harris Administration to ensure the impacts of this misuse of funds are rectified.

    This year has been difficult, but we have pulled through it together. It is time to channel the hard lessons that we learned this year and apply them to our shared fights ahead… but first, just for a moment, celebrate! We could not have achieved all of the important wins listed above without the continuous support and hard work of our members, allies, champions, and supporters – without you. Thank you and happy new year! — National Sustainable Agriculture Coalition

  • Walnut Prices: What Growers Can Expect in the Near Future

    California walnut growers are not happy with current global market trends for their industry.  How long will the market remain in a slump? Will prices ever return to the record highs of 2014? Watch this brief interview with Jon Field, General Manager of the Walnut Bargaining Association, as he shares his projections for the future of the industry, based on his recent State of the Walnut Industry presentation at the annual Grape, Nut & Tree Fruit Expo.
    Please thank this video’s sponsor Suterra for their industry support.

  • New Almond Board Programs Assist Growers with Pollination


    As almond pollination costs have gone up in recent years, the Almond Board of California has engaged in studies to help growers reduce costs and developed strategic partnerships with other organizations to provide some new services that almond growers should take advantage of.  Watch this brief interview with Josette Lewis from the Almond Board as she explains and read more about it in Pacific Nut Producer Magazine.

    Please thank this video’s sponsor Suterra for their industry support.

  • GSA Expands Farm Worker COVID-Prevention Training Program to Yuma

    Replicating another of its Salinas Valley programs, the Grower Shipper Association of Central California (GSA) has established a COVID-19 training prevention program for food facility and farm employees in the Yuma in cooperation with the Regional Center for Border Health clinic. The program brings health professionals directly to work sites to provide multi-lingual information on virus prevention practices while on the job and at home as well as answer any questions employees may have, including about the availability and safety of the new vaccines.

    “This program was very popular among both employers and employees throughout last spring and summer and we are fortunate to bring this to the Yuma growing region where many of our members have farms and operations during the winter months,” says Christopher Valadez, GSA President.

    In addition to the onsite prevention training, GSA also replicated its programs to establish a quarantined housing programas well as virus testing for farm workers in this region. GSA’s quarantined housing program became a model for California Governor Gavin Newsom’s “Housing for the Harvest” program. GSA’s housing provides daily deliveries of meals and necessities as well as health checks by nurses for those workers who have been exposed to the virus, tested positive or are symptomatic.

    “As we have learned over the last several months and while we await the availability of the vaccine, prevention training, adequate testing and effective contact tracing combined with isolation alternatives through quarantined housing are needed to target the spread of this virus” Valadez says. “Bringing these programs to the desert growing region was a priority for GSA members to protect the farm workers who are essential to our industry and provide a consistent supply of healthy foods to consumers.”

    Farmers who want more information on the prevention training, expedited testing for employees or housing should contact Christopher Valadez.

  • USDA Dairy Roundtable Delivers Record Exports to Indonesia

    The USDA-sponsored “U.S.–Indonesia Dairy Roundtable” event, held in Jakarta on September 30, 2019, has delivered record results for U.S. dairy exports. In the year since the seminal event concluded, U.S. exports of dairy products to Indonesia surged to more than 160,000 metric tons, valued at more than $346 million. Moreover, U.S. market share of Indonesia’s nearly $1.4 billion dairy import market dramatically increased from 14 percent to 25 percent. In calendar year 2020, as of September, the U.S. had already exported a record volume of dairy products to Indonesia and is on track to reach a record value by the end of the year. The event was an excellent example of FAS collaboration with host government officials, local importers, and U.S. industry stakeholders to increase U.S. exports.

    Background

    Held at the Grand Hyatt Ballroom in Jakarta on September 30, 2019, the U.S.–Indonesia Dairy Roundtable was a groundbreaking event designed to increase trade in dairy products between the U.S. and Indonesia. Led by USDA Undersecretary for Trade and Foreign Affairs, Ted McKinney, U.S. Ambassador to Indonesia, Joseph R. Donovan, and Indonesia’s Minister of Trade, Enggar Lukita, the gathering brought together key stakeholders from both countries for day-long discussions on dairy trade and policy. In addition to hearing from senior level officials from both governments, participants engaged in one-on-one business meetings designed to expand importer knowledge of U.S. dairy products and exporter knowledge of Indonesian buyers’ requirements. Arranged by the U.S. Dairy Export Council (USDEC) and FAS Jakarta, industry representatives from 13 dairy exporters and producers met directly with buyers from 60 Indonesian companies representing importers, processors, and retailers. FAS Jakarta collaborated closely with USDEC to organize and manage this USDA- sponsored event. The event was an excellent example of how FAS can join with host government officials, local buyers, and U.S. industry stakeholders to increase U.S. exports.

    Ambassador Joseph R. Donovan speaks at the U.S. – Indonesia Dairy Roundtable event alongside Agricultural Counselor, Chris Rittgers (center) and USDA Undersecretary for Trade and Foreign Affairs, Ted McKinney (right).

    Results

    In the immediate months following the roundtable, exports of U.S. dairy products to Indonesia accelerated across key product categories including Non-Fat Dry Milk (NFDM), Whey, Lactose and Cheese. This strong performance in the final quarter led to a record quantity of U.S. exports to Indonesia in 2019. Despite market and demand disruptions related to Covid-19, strong demand for U.S. dairy products continued throughout 2020. Far outpacing the record 2019 year, in the year since the roundtable concluded (October 2019 – September 2020), U.S. exports of dairy products to Indonesia surged to more than 160,000 metric tons, valued at more than $346 million.

    Source: USDA – GATS

    Importantly, the gains for U.S. dairy were not solely derived from Indonesia’s growing dairy consumption. Global trade data in the year following the roundtable demonstrates the vast majority of growth in U.S. exports were a direct result of increasing market share. The U.S. market share for Indonesia’s $1.4 billion dairy import market increased nearly 80 percent in the year following the roundtable. This impressive growth, from 14 percent to 25 percent market share, came almost exclusively at the expense of dairy exports from the EU.

    The gains in U.S. exports have made Indonesia the fourth largest market for U.S. dairy by volume and the sixth by value. Significantly, this achievement is not the result of increased exports for any one particular product, but rather an upsurge across various dairy product categories:

    Top Destinations for Key U.S. Dairy Products by Value and Volume

    Seizing Opportunity

    The success of the U.S.–Indonesia Dairy Roundtable can in a large part be attributed to the fast response by U.S. Ambassador Donovan, FAS Jakarta, and the dairy industry to seize an opportunity to expand U.S. exports. Upon hearing reports of trade tensions between the EU and Indonesia related to palm and palm- derived products spilling over into trade of other commodities, FAS Jakarta and the dairy industry moved quickly to mobilize a high-level event that could capitalize on the changing trade environment. Ambassador Donovan spearheaded the engagement with the Ministry of Trade, which ultimately brought together U.S. exporters and Indonesian importers together at an opportune moment when Indonesia sought to diversify trade in dairy products away from the EU.

    Following the roundtable event, both FAS Jakarta and USDEC have continued to work aggressively to link U.S. dairy exporters with Indonesian buyers. This collaboration is perhaps most clearly demonstrated in the successful efforts to register new U.S. dairy facilities for export to Indonesia. Since concluding the roundtable, over 30 new U.S. dairy facilities have submitted applications to the Ministry of Agriculture seeking approval to export. Accordingly, USDEC has expanded its counseling to members on the application process and halal product requirements for Indonesia, while FAS Jakarta has actively engaged U.S. exporters to review and troubleshoot applications before submission and continually advocate with the Ministry of Agriculture for expedited review of U.S. applicants. As a result, 13 U.S. dairy facilities have been approved for export to Indonesia in 2020 and an additional 19 are undergoing the review process. Currently, 114 U.S. dairy facilities are approved for export to Indonesia, more than double the number of any other country. — By Garrett Mcdonald, USDA Foreign Agricultural Service

  • COVID-19 Impact on the Almond Industry & Future Prospects

    Many have heard initial projections as to how COVID-19 might impact the California almond industry, especially at such a critical time with growers expecting their largest crop ever this year. But how has the market actually been impacted up to this point?  And are evolving consumer habits beneficial to this growing industry?  Watch this brief interview with Emily Fleischmann from the Almond Board of California to find out and read more about it in the coming issue of Pacific Nut Producer Magazine.

    Please thank this video’s sponsor Suterra for their industry support.

  • Trump Administration Advances Plan to Create New Water Storage in Northern California

    The Bureau of Reclamation today released the final feasibility report for the North-of-the-Delta Off-stream Storage Investigation. The report documents the potential costs and benefits of the Sites Reservoir Project. As part of a continuing effort to increase storage capability throughout California, Reclamation and the Sites Project Authority worked together to evaluate new off-stream surface water storage north of the Sacramento-San Joaquin Delta. The Final Feasibility Report was transmitted to Congress on December 22.

    Located 81 miles northwest of Sacramento, Sites Reservoir would store water diverted from the Sacramento River for future releases to beneficiaries throughout the state. The proposed project includes an off-stream reservoir located north-of-the Delta where the majority of California’s rainfall occurs.

    “California is in dire need of additional storage, and projects like Sites Reservoir will provide operational flexibility and more reliable water delivery to benefit farms, communities, and the environment,” said Commissioner Brenda Burman. “The Sites Reservoir Project is an important opportunity for additional storage in northern California.”

    The proposed reservoir would provide additional water supply for agriculture and municipal and industrial purposes, CVP-operational flexibility, anadromous fish benefits (migrating fish that return from the ocean to spawn), wildlife refuges, Delta ecosystem enhancement, flood damage reduction, and recreation.

    “We are pleased to partner with Sites Project Authority on this unique off-stream storage project to create much needed water storage in California,” said Regional Director Ernest Conant. “The multi-beneficial Sites Reservoir would increase northern California’s water storage capacity by up to 15% and provide water supply, flood protection, environmental, and recreation benefits for generations to come.”

    “Environmental water has always been at the heart of the Sites Reservoir Project,” said Fritz Durst, Sites Project Authority chairman. “Partnering with Reclamation will help restore flexibility, reliability, and resiliency to our statewide water supply – especially in dry years – and will create an environmental asset for the state by providing water and dedicated storage for environmental needs that do not currently exist.”

    “We are grateful for the partnership with the Bureau of Reclamation on this one-of-a-kind water storage project,” said Sites Project Authority Vice Chairman Jeff Sutton. “Sites Reservoir will serve to greatly enhance the operational efficiency of our existing statewide water delivery system and significantly improve drought resiliency for our participating water agencies—who collectively represent over 24 million Californians and more than 500,000 acres of farmland from all parts of the state.”

    The Sites Reservoir Project is a joint investigation between Reclamation and Sites Project Authority, authorized by Congress in 2003. The diversity of potential participants includes local, state, and federal interests as a collective of investors. As the project advances, it will be optimized for current conditions and affordability of all participants, while maintaining flexibility to adapt to changing conditions.

    For additional information contact Project Manager Ryan Davis, Bureau of Reclamation, at 916-978-5083 (TTY 800- 877-8339) or rdavis@usbr.gov.

  • Mailbox Milk Prices Expected to Normalize in 2021 Following Year of Extreme Volatility

    The pandemic in 2020 caused unprecedented market volatility in dairy prices, leading to lower milk checks for dairy producers. However, the price spread is expected to realign in the first half of 2021, bringing normalcy to producer price differentials (PPDs) and mailbox milk prices, according to a new report from CoBank’s Knowledge Exchange division.

    Extreme volatility in cheese and milk prices resulted from supply chain disruptions, government purchasing, and changes in consumption habits during the COVID-19 pandemic. Record-high cheese prices lifted Class III milk prices disproportionately higher than Class IV milk prices, which were held in check by low butter and milk powder prices.

    Because of higher Class III milk prices, cheese manufacturers were incentivized to depool milk from Federal Milk Marketing Order (FMMO) marketing regions. The loss of higher-priced Class III milk from the pool resulted in negative PPDs for dairy farmers and lower mailbox milk prices.

    “The coronavirus pandemic broke the relationship between monthly mailbox milk prices and monthly Class III milk prices,” said Tanner Ehmke, manager of CoBank’s Knowledge Exchange. “But the spread between Class III and IV milk prices is expected to realign in the first half of 2021, bringing normalcy back to PPDs and mailbox milk prices.” 

    Pooling and De-Pooling

    While most Class I processors are legally obligated to pool milk in an order, handlers of other classes of milk have the option to participate based on certain order performance requirements and the financial incentive.

    Between June and November 2020, cheese processors mostly found themselves in a disincentivized position. The cost of milk would be higher if processors had pooled milk in the order. As a result, cheese manufacturers have in many cases chosen to “de-pool” milk.

    The effect of de-pooling has been most dramatic in California, where the FMMO pool consisted of an average of just 0.8% Class III milk between June and October 2020. This followed an average of 29% of the order in the same period in 2019.

    De-pooling is incentivized when the blend or uniform price in an order pool falls below either Class III or Class IV prices. Historically, de-pooling also tends to coincide with a negative producer price differential.

    Future of PPDs

    Negative PPDs occur when milk in a federal milk pool is less than the Class III price. This tends to happen when the Class III price is at a significant premium to Class IV milk prices.

    New cheese manufacturing plants coming online and expanding in Iowa, Michigan, Minnesota, South Dakota, and Wisconsin will increase annual production of American-type cheese by an estimated 8% by June 2021. When at capacity, the addition in manufacturing will utilize approximately 4.6 billion lbs. of milk annually—roughly equivalent to 1.5 years of increases in annual U.S. milk production.

    The increase in plant capacity, combined with the slowing of government programs like the Food Box Program, should contribute to Class III and Class IV milk prices returning to more historical price spreads in the second quarter of 2020, resulting in positive PPDs.

    Read the report, When the Pandemic Breaks Milk Prices: A Study in Returning to Normal.

    About CoBank

    CoBank is a $148 billion cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 70,000 farmers, ranchers and other rural borrowers in 23 states around the country.

    CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.

  • Dairy Manure and Methane Recovery

    For most of us, 2020 can’t be over soon enough. Yet, in the digester development world, each day from today through 2024 is precious time to identify facilities, procure funding, and install digesters. Why? To capture methane and use it as valuable renewable compressed natural gas (RCNG) and meet ambitious manure methane reduction targets.

    How is the California digester portfolio doing? Since 2015, 119 dairies have installed, or are installing, digesters to capture and utilize manure methane. The number of dairy projects receiving funding by year and developer are shown in Table 1. The 2015 projects used methane for electricity. Only two digesters since then use methane for electricity. Almost all facilities use biogas for renewable compressed natural gas. Digesters are being developed in six counties within the San Joaquin Valley. The success of these projects and others yet to come will help California dairies meet the ambitious goal of 40 percent reduction in manure methane from 2013 levels by 2030.

    For more information on funding, see the CDFA website. — By Deanne Meyer – UC Davis Department of Animal Science & UCANR