2006 Cooperative Activities
by Jerry Kozak
Last year marked the beginning of a noticeable period of transition in the dairy sector, on a variety of fronts. The future outlook for several key issues affecting both producers and processors alike has become much murkier in the following areas.
Dairy Policy: It looked like last year that Congress would smoothly, quickly and deliberately begin the writing of a new Farm Bill in 2006, and maybe complete the process by year’s end. Nearly halfway through 2006, it’s now increasingly clear that the next Farm Bill won’t be written this year, and the process may take longer than anyone anticipated (there’s already considerable talk of a year-long extension).
The USDA held a series of listening sessions in the past year all across the country, with the goal of obtaining input from different entities affected by federal farm legislation. What they ended up with was a whole bunch of different perspectives, and how that results in anything coherent remains to be seen.
For its part, NMPF itself conducted its own regional listening sessions earlier this year, through our Dairy Producer Conclave meetings in Sacramento, Chicago and Washington. The resulting input from hundreds of dairy farmers, from 30 states and 41 different organizations, will guide our organization’s policy development efforts, both as the Farm Bill moves through Congress, and as our legislators deliberate on other major policy issues including immigration and the environment.
Trade: After a tough slog through Congress, the Central American Free Trade Agreement was passed a year ago, thanks in part to efforts of our organization and other processor groups. The Bush administration is currently working on bilateral trade pacts with other countries, including South Korea, but the real question is what the fate will be of the WTO Doha round negotiations.
The transitional period I mentioned at the outset is clearly evidenced in trade policy by the uncertain path the Doha round is taking. What is clear is that if a formal method for reducing trade barriers, export subsidies and domestic farm supports among all the major players is not reached by the end of this summer, expectations of a final WTO deal are slim indeed.
Economics: Perhaps the biggest transitional aspect of the past year has been where dairy prices are concerned. After two-and-a-half straight years of strong, above-average (and even record high, in some months) farm-level prices, the pendulum swung back to the other direction at the beginning of 2006. Commodity prices right now are barely above price support levels, and those prices have been relentlessly pressured by the huge surge in milk output in the past 12 months.
The good news is that demand appears strong, not just for cheese, but also for fluid milk. The U.S.’s commercial skim solids exports have made a big difference in the past year, and in the past six months, CWT’s export assistance efforts have helped move 9 million pounds of butter and anhydrous milk fat, 5 million pounds of cheese and 3 million of whole milk powder to foreign markets.
Those exports have made the difference between a price collapse (along the lines of what we experienced in 2002 and 2003) and a merely difficult period that we expect will be rectified by the end of this year.
Jerry Kozak is president and chief executive officer of the National Milk Producers Federation.
Top 50 co-ops marketed 140 billion pounds of milk
The nation’s top 50 cooperatives handled 82 percent of the nation’s milk supply in 2004. Collectively, they marketed 139.8 billion of the 170.5 billion pounds produced that year. While the total U.S. milk supply increased by 0.1 percent from 2003, pounds of milk produced by the top 50 co-ops rose over 1.8 percent.
With few surprises in the top 10, Manitowoc Milk Producers did move up two notches to tie with Associated Milk Producers for No. 7. Members of the top three co-ops – Dairy Farmers of America, California Dairies and Land O’Lakes – produced 62.9 billion pounds, more than one-third of the nation’s milk.
Making the biggest jump is Milwaukee Cooperative Milk Producers, moving from No. 21 to No. 16 with 1.73 billion pounds.
A new co-op, Lanco-Pennland Quality Milk Producers, made its debut on the list at No. 31 with 623 million pounds (Lanco-Pennland split off from Allied Federated Co-op in 2004). This accounts for Allied making the biggest dive on the list, dropping nine places from No. 17 to No. 26.
After falling from the list last year, Country Classic Dairies made its way back to No. 49. These two additions bumped off Calhoun Cooperative Creamery, Lansing, Iowa, and Hastings Cooperative Creamery Association, Hastings, Minn. But there will be another opening next year as No. 39 on our list, Central Valley Dairy, has recently disbanded.
Number of member farms of the top 50 co-ops dropped by 2,292, or 4.3 percent. This was compensated for by the 6.5 percent boost in milk volume per member farm, up to 2.8 million pounds.
Two New Mexico co-ops, Continental Dairy Products and Select Milk Producers, handled the most milk per member with 55.9 and 46.8 million pounds, respectively. Another New Mexico co-op, Zia Milk Producers, was third, producing 42.2 million pounds per member farm.
Information for our Top 50 Co-op List is provided by Hoard’s Dairyman based on data collected the previous summer. Each cooperative is contacted and asked to provide the previous year’s information. Since some co-ops end their fiscal year on a date other than December 31, milk volume and member farms may not necessarily represent the 2004 calendar year.