September 5, 2017 at 3:32 p.m.

Vilsack champions MPP, other risk management efforts

By Don Wick- | Comments: 0 | Leave a comment

During his visit to the National Association of Farm Broadcasting annual meeting, Agriculture Secretary Tom Vilsack reviewed his eight years at USDA. Vilsack touted the Agriculture Department's work in conservation, market development, risk management and the farm safety net. "The ARC and PLC programs are now available to 1.7 million farming operations and that's more participation than in the direct payment program," he said. Vilsack also said $11 million in payments to dairy farmers. "The interesting fact about that is it could have been $40 million if producers had simply kept the same level of coverage they had under the dairy margin protection program from the previous year. For whatever reason, dairy farmers decided to scale back their commitment to that program and purchased the catastrophic coverage. Had they stayed where they were in 2015, they would have received four times what was actually paid out."

Ag Bankers Discuss Dairy Outlook
Current milk prices are about 40 percent less than just two years ago. Mike DeLong, who is an agricultural banker at Bremer Bank in Menomonie, Wisconsin, is a member of the American Bankers Association ag bankers committee. DeLong says there are some positive factors. "One good thing is we're sitting on pretty good feed inventories." During the Ag Bankers Conference in Indianapolis, the government's Margin Protection Program was scrutinized. DeLong also said dairy farmers would be helped if regulatory agencies did their jobs better. "Having that producer be able to move on things on a timely manner is very beneficial for their business and if they start piling stuff on and delaying projects it takes a toll on their business and we have loans that may not be performing as well as they should."

It Won't Be Business-As-Usual
In the current price environment, it isn't business-as-usual. Virginia Tech Professor Emeritus David Kohl is encouraging farmers to become better borrowers. "December through April is going to be ground zero, particularly, when we consider new operating lines of credit. You have to remember, these lenders are under severe pressure from regulators and examiners." When discussing the farm economy, Kohl used a baseball analogy, saying we're in the middle innings and more time is needed before agriculture comes out of this downturn. Kohl said the good managers can still make money in a tight economy.

Interest Rates Increases Ahead
An interest rate hike is expected next month. American Bankers Association director of economic research Brittany Kleinpaste believes more interest rate increases will happen in 2017. "We are still looking and hoping for one rate increase in December, two in 2017 and two in 2018," says Kleinpaste. "If you look at the Fed funds futures market though, they don't expect that to be a case: less than three raises in the next year and a half." Interest rates have not changed in nearly a year. Kleinpaste says interest rates have to be normalized sooner-or-later and she thinks it would be good for the farm economy.

Not the Same as 1980s
The current downturn in the farm economy is not the same as the farm crisis of the 1980s. Speaking at the National Agricultural Bankers Conference, Purdue economist Jason Henderson said it is important to pay attention to history. "It's not off the table; it's just not the most likely event to happen." Henderson expects some inflation, which would likely be helpful for agriculture. "When you look out there, what's the black swan for agriculture? Inflation comes on stronger than what most people expect. That's one risk."

Milk Production Increases
In October, U.S. milk production increased 2.7 percent from year earlier levels. Wisconsin production went up 2.2 percent and California was up 1.8 percent.

Who Will be the Next Ag Secretary?
President-Elect Donald Trump is beginning to fill his new cabinet. For the agriculture secretary post, numerous names have been circulating. Chuck Conner, who is the president and CEO of the National Council of Farmer Cooperatives, is on that short-list. Mike McCloskey, who founded Fair Oaks Farm in Indiana, is another possibility. Former Kansas Congressman Tim Huelskamp, former Texas Governor Rick Perry, former Indiana Farm Bureau President Don Villwock and Kansas Governor Sam Brownback have also been identified as potential choices for the USDA job.

Aussie Dairy Industry Review
The Australian Competition and Consumer Commission has launched a year-long investigation into its dairy industry. This inquiry comes after a big drop in the price paid to farmers. The investigation will evaluate competition between milk processors, contracting and the availability of market information. A final report is due in November of next year.

Dean Foods/CROPP Joint Venture Announced
Dean Foods has entered into a 50-50 joint venture with the farmer cooperative known as CROPP. CROPP, which operates under the Organic Valley brand name, will process milk at plants operated by Dean Foods. Organic Valley products will be added to the Dean Foods lineup of branded products and will be sold in supermarkets and convenience stores.

Dairyline Has New Ownership
Farm Journal Media has acquired 'Dairyline' from HFW Communications. The radio broadcast is heard on nearly 60 radio stations nationwide. Mike Adams, who is the host of 'AgriTalk,' will take over as the host of 'Dairyline.'

WMMB Names New CEO
Chad Vincent is the new CEO for the Wisconsin Milk Marketing Board. For the past seven years, Vincent has been a senior vice president and chief marketing officer for Sartori Cheese in Plymouth, Wisconsin. In April, WMMB parted ways with longtime WMMB CEO James Robson.

Brooks Farms to Receive Leopold Award
Brooks Farms of Waupaca is the winner of the Leopold Conservation Award. Ron Brooks and his family will be recognized at the Wisconsin Farm Bureau annual meeting in December. The Brooks family will be given a $10,000 cash prize and a Leopold crystal for their stewardship and management of natural resources.

WDE Adds Miller to Staff
World Dairy Expo has added Cassi Miller of Mount Horeb to its staff. Miller will be a program assistant and will help coordinate school tours, provide customer service and work on the Expo Recognition and Friends of Expo programs.

Trivia Challenge
Ghee is a clarified butter that is popular in India. That answers our last trivia question. For this week's trivia, how many dairy farms are there in the U.S.? We'll have the answer in the next edition of Dairy Star.
Don Wick is a partner and broadcaster for the Red River Farm Network, based in Grand Forks, North Dakota. Wick has been recognized as the National Farm Broadcaster of the Year and served as president of the National Association of Farm Broadcasting. Don and his wife, Kolleen, have two adult sons, Tony and Sam, and five grandchildren, Aiden, Piper, Adrienne, Aurora and Sterling.[[In-content Ad]]


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