July 25, 2022 at 2:55 p.m.

Milk check overshadowed by farm operating costs 

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

In March, the all-milk price reached an all-time high of $25.90 per hundredweight. That broke the previous record set in September 2014. Despite strong dairy prices, American Farm Bureau Federation economist Daniel Munch said the milk check has been “dwarfed by increases in production costs.” Feed costs take up the largest portion of expenses with West Coast dairies seeing the largest cost increases. Labor costs are up 12% since 2016 with Oregon, Maine and Vermont having the biggest increase due to stringent labor regulations. Munch believes the ongoing high costs are challenging the solvency of dairy farms. “These costs are further exacerbated by inflationary pressures,” Munch said.
No end in sight for supply chain headache
The investment bank, Carl Marks Advisors, surveyed more than 100 U.S. supply chain executives. More than half of the people surveyed do not expect a return to a more normal supply chain until 2024 or beyond. Another 22% said these disruptions will likely continue until the second half of next year. Ocean shipping was cited as the biggest logistical breakdown. Eighty percent of the executives surveyed said supply chain costs have risen between 20%-60% between December 2020 and December 2021.
Milk production forecast declines
According to the July United States Department of Agriculture supply demand report, the 2022 milk production forecast is 226 billion pounds. That’s down 400 million pounds from the June report. The forecast for 2023 is 228.3 billion pounds, down one billion. The forecast for butter prices strengthened while the cheese price outlook softened.
Access to capital, credit
Kansas City Federal Reserve Bank Vice President Nathan Kauffman testified in the House Agriculture Committee farm bill hearing. “Most lenders indicate that loan repayment rates continue to rise, problem loans have remained sparse, and credit is readily available to meet borrower’s needs,” Kauffman said. Credit conditions for young, beginning and underserved farmers and ranchers was the focus of the hearing. “Looking ahead, demand for farm loans in the Kansas City Fed district are expected to rise notably with capital spending expected to decline for the first time since 2020,” he said.
Farm bill listening sessions
Dairy farmers have testified during a series of farm bill listening sessions in California and Arizona. National Milk Producers Federation President and CEO Jim Mulhern praised these dairy farmers for providing input. Topics ranged from water issues to trade to sustainability to provide an adequate safety net to producers of all sizes. Minnesota Rep. Angie Craig is hosting a farm bill listening session this month in her district.
New food safety agency proposed
A bill has been introduced in Congress to create a new food safety agency within the Health and Human Services Department. This proposal would transfer all of the Food and Drug Administration’s food responsibilities to this new agency. Illinois Sen. Dick Durbin and Connecticut Rep. Rosa DeLauro introduced the bill, saying more focus needs to be placed on food safety.
MDA working through drought relief applications
The application process for the Minnesota Agricultural Drought Relief Program has closed. Nearly 3,000 farmers and ranchers applied. “The average request is around $6,500,” said Agriculture Commissioner Thom Petersen. “We’re going through an approval request right now, but we’re hoping by the end of the month, there’ll be payments going out the door.” There was more demand for relief from the livestock sector. “I’d say about 70% applied under livestock and 30% under specialty crop,” he said.

HOS regulations eased for truckers hauling fuel
Minnesota Gov. Tim Walz has issued an emergency executive order, easing hours-of-service regulations for truckers hauling fuel. Walz said the measure will make sure gas and diesel fuel is more accessible and affordable for people across the state.

Used farm equipment values rocket higher
“Machinery Pete” Greg Peterson said supply chain issues and the lack of available new machinery continues to keep used equipment prices moving higher. “I’ve never seen anything like in the 32.5 years I’ve been tracking auction prices,” Peterson said. “It went higher all of 2021 and now, in 2022. It’s like a rocket ship.” Due to the shortage of parts, Peterson is seeing used equipment being used as a hedge. “It’s coming off last fall when the parts and availability issue became problematic,” he said. “Even if you wanted to get that new tractor, planter or combine, you couldn’t get your hands on it. That spooked people. We’re seeing people buying that nice 300 horsepower tractor just to have it.”

Titan announces strategic acquisition of Heartland Ag Systems
West Fargo-based Titan Machinery has entered into a definitive agreement to acquire Heartland Ag Systems for $110 million. Heartland is based in Hutchinson, Minnesota, and is the largest Case IH Application Equipment distributor in North America.
New president, CEO for DFA 
Dennis Rodenbaugh succeeds Richard Smith as president and CEO of Dairy Farmers of America. Smith was with DFA for 16 years. Most recently, Rodenbaugh was the DFA executive vice president of council operations and ingredient solutions.
IDFA promotions announced
The International Dairy Foods Association has promoted Robert Rosado and Andrew Jerome. Rosado is now the vice president of legislative affairs. Before joining IDFA, Rosado had worked on the Senate Agriculture Committee. Jerome moves up to the role of associate vice president of communications. Jerome’s previous experience was at Michael Torrey Associates and the National Farmers Union.

An exit for VanDerWal at MSCA
The Minnesota State Cattlemen’s Association has started to search for its new executive director. Allison VanDerWal has accepted a position with Form-A-Feed as a nutritional formulation specialist. VanDerWal was hired by the MSCA in February 2020.
Trivia challenge
USDA recommends three servings of dairy products per day. That answers our last trivia question. For this week’s trivia, who is the administrator of the Environmental Protection Agency? We will have the answer in the next edition of Dairy Star.
    Don Wick is owner/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.


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