Chuck ZimmermanDairyline, Markets

DairylineDairy Markets Week in Review
Happy New Year!

All eyes are on cheese prices where blocks plunged to the government support level Wednesday, closing the New Year’s holiday week at $1.1325 per pound, down 13 3/4-cents on the week, $1.02 below that week a year ago, and the lowest block price since March 2006. Barrel closed at $1.13, down 17 3/4-cents on the week and 96 cents below a year ago. Eight cars of block traded hands on the week and two of barrel. The NASS prices were not available at our deadline.

Butter closed at $1.13, down a penny on the week and 8 3/4-cents below a year ago. Five cars were sold on the week. Cash Grade A and Extra Grade nonfat dry milk both closed at 85 cents per pound, down a penny and a half on the week.

Provided courtesy of Dairyline.

China's Tainted Milk Victims Offered Payments

News EditorIndustry News, International

China’s Dairy Industry Association, a group of 22 milk producers, accused of selling tainted milk that sickened tens of thousands of babies, has agreed to compensate the victims, the state media announced.

The Association said it would provide one-time payments to the families of the children who were sickened or who died after consuming milk tainted with melamine, a chemical compound that is often used in the production of plastics and fertilizers.

“The enterprises offered to shoulder the compensation liability,” the association said, according to Xinhua, China’s official news agency. “By doing so, they hope to earn understanding and forgiveness of the families of the sickened children.”

As part of its promised compensation package, the dairy association said, it would also pay for the long-term health care needs of affected children.

“If the babies suffer from relative aftereffects, all medical fees will be covered by the fund,” the association said, according to Xinhua. Six children died, and nearly 300,000 were sickened. Earlier this month, the government said that more than 800 children remained hospitalized with kidney stones and other ailments.

Until the scandal broke in September, melamine was frequently added to dairy products as a means of increasing the protein content of watered-down milk.

This week the chairwoman of one of China’s biggest dairies, Sanlu Group, will face trial in Shijiazhuang, the capital of Hebei Province, on charges that the company knowingly sold adulterated milk. Last week Sanlu was declared bankrupt. Sanlu, which is partly owned by a New Zealand dairy cooperative, stopped all milk production in September.

Fonterra Cuts Price to Suppliers

News EditorDairy Business, Industry News, International

fonterraFonterra Australia has slashed its milk price to farmers and warned more severe cuts are to come.

Fonterra managing director Bruce Donnison sent letters to 1,500 of its suppliers last week stating the company had withdrawn its November step-up payment of 7c/kg butterfat and 17c/kg protein.

The letter states: “Since writing to you in early November, we have seen a further deterioration in trading conditions”.

“Commodity prices continue to decline and this has been exacerbated in recent weeks by a rapidly deteriorating financial situation around the world; a deterioration which has far exceeded even our most pessimistic expectations,” the letter states.

In the letter Mr Donnison warned: “Our forward expectations for the remainder of the season remain below any previous outlook”.

“Consequently we are in the process of reviewing our pricing levels for the February to June 2009 period.”

The announcement follows dairy giant Murray Goulburn’s pre-Christmas announcement that it would cut prices to its suppliers by an average of 26 per cent from February 1.

The decision sent shock waves through the dairy industry, given it was the first time since the 1980s that any milk processor had cut prices mid-season. Other company’s are soon expected to follow MG’s lead with Warrnambool Cheese & Butter declaring it would make an announcement in January.

New USDA Office Will Provide Eosystem Services

News EditorAgribusiness, Government, Industry News

usdaCarbon-trading, a boon for dairy farmers with environmentally friendly protocols, will get a shot in the arm from the new USDA Office of Ecosystem Services and Markets. According to USDA, agriculture producers provide many ecosystem services which have historically been viewed as free benefits to society — clean water and air, wildlife habitat, carbon storage and scenic landscapes.

Lacking a formal structure to market these services, farmers, ranchers and forest landowners are not generally compensated for providing these critical public benefits. So, the idea is to promote ecosystem markets. Market-based approaches to conservation have proven to be a cost-effective method to achieve environmental goals and sustain working and natural landscapes.

USDA has announced plans to establish a new USDA Office of Ecosystem Services and Markets and to create a federal government-wide Conservation and Land Management Environmental Services Board to assist the secretary of agriculture in the development of new technical guidelines and science-based methods to assess environmental service benefits which will in turn promote markets for ecosystem services including carbon trading to mitigate climate change.

“Our nation’s farms, ranches and forests provide goods and services that are vital to society — natural assets we call “ecosystem services,” said Agriculture Secretary Ed Schafer. “The Office of Ecosystem Services and Markets will enable America’s agriculture producers to better compete, trade their services around the world, and make significant contributions to help improve the environment.”

Shafer said he will name Sally Collins as the director of the Office of Ecosystem Services and Markets (OESM). Organizationally, OESM will have direct access to the secretary. Collins will assume this position after serving as associate chief of the USDA Forest Service for the past eight years, where she pioneered concepts for ecosystem services and markets as part of that agency’s sustainable land management mission.

OESM will provide administrative and technical assistance to the secretary in developing guidelines and tools needed to create and expand markets for ecosystem services and will support the work of the Conservation and Land Management Environmental Services Board.

As directed by the authorizing legislation, the first ecosystem services to be examined will be carbon sequestration. The Office of Ecosystem Services and Markets and the Conservation and Land Management Environmental Services Board will be established to implement actions authorized by the 2008 farm bill.

Nominations will be sought in the near future for a federally chartered public advisory committee to advise the board. The advisory committee will include farmers, ranchers, and forest landowners, tribal representatives, as well as representatives from state natural resource and environmental agencies, agriculture departments, and conservation and environmental organizations.

CWT Accepts Retirement Bids

News Editorcwt, Industry News

cwtlogoCooperatives Working Together (CWT) announced that it has tentatively accepted 184 bids in its second herd retirement of 2008. Those bids represent 61,078 cows and 1.2 billion pounds of milk. In addition, CWT has accepted bids for 1,548 bred heifers in this herd-retirement program.

Together, CWT’s two herd retirements this year account for 85,663 cows that produced 1.637 billion pounds of milk, along with another 2 billion pounds, milk equivalent, that CWT’s Export Assistance program has removed from the market.

Farmers in 40 states submitted a total of 471 herd-retirement bids in late November to CWT, reflecting “the continuing financial stress that many farmers are facing as milk prices plunge below the cost of production,” said Jerry Kozak, president and CEO of NMPF, which administers CWT. Kozak noted that although the costs of dairy feed and diesel fuel have dropped, milk prices have fallen faster.

CWT field auditors will begin visiting the 184 farms whose bids were accepted, checking their milk production records, inspecting their herds, and tagging each cow for processing. All farmers will be notified no later than Jan. 12, 2009, as to whether their bid was among those accepted in this herd-retirement round, the sixth one that CWT has conducted since 2003.

Once CWT field auditors inspect and accept the herds offered as part of the bidding process, farmers have 15 days in which to send their animals to a processing plant. CWT will again provide each farmer the NMPF animal-handling guidelines for the proper culling and transporting of dairy cattle, Kozak said.

Jim Tillison, chief operating officer of CWT, said that further bid information, including the average price of accepted bids, won’t be released until all the on-farm visits have been completed. The total number of bids initially accepted by this round includes:

Northeast: 63.6 million pounds of milk; 23 farms accepted; 3,117 number of cows

Southeast: 65.2 million pounds of milk; 27 farms accepted; 3,741 number of cows

Midwest: 63.6 million pounds of milk; 47 farms accepted; 3,224 number of cows

Southwest: 295.6 million pounds of milk; 38 farms accepted; 17,106 number of cows

West: 718.3 million pounds of milk; 49 farms accepted; 33,890 number of cows

Totals: 1,206.30 million pounds of milk; 184 farms accepted; 61,078 number of cows

Kraft’s Offers New Recipe App for iPhone

News EditorAgribusiness, Dairy Business

bg_mainKraft Foods is making it easier for busy consumers to plan meals, search recipes and even locate the nearest store through a new downloadable application for iPhone and iPod touch users. The application is called iFood Assistant and is available on the Apple App Store for 99 cents. It is billed as the first of its kind for a food or consumer packaged goods company.

“People’s lives are becoming increasingly complex and they’re looking for relevant content and solutions to make their lives easier,” Ed Kaczmarek, director of innovation, new services at Kraft, said in a statement.

More than 7,000 recipes can be found on the app. Once the recipe is chosen, iFoodAssistant creates an itemized shopping list, the ingredients can be viewed by which grocery isle they are located in and can be deleted as they go in the shopping cart. The recipes and shopping lists can be shared with others. Another click locates the most convenient store and promotional offers if available. Video cooking demonstrations can be viewed or shortcuts located like the “Dinner Tonight” and “Recipe of the Day” sections.

Kraft designed the application to include partners that provide relevant content or tools. The tools are “all different ways for people to save time or money or both,” said Basil Maglaris, a spokesperson for Kraft Foods. “People are leading more wireless lives so that’s the opportunity for us to provide food ideas, and more interactive experiences.”

Dairyline Markets In Review

Chuck ZimmermanDairyline, Markets

DairylineDairy Markets Week in Review
Cash cheese prices continued their descent Christmas Week, with block closing the shortened week at $1.27 per pound, down 3 1/4-cents on the week, 76 cents below a year ago, and just 14 cents above the government support price.

Barrel closed Wednesday at $1.3075, down 4 3/4-cents on the week, 67 1/4-cents below a year ago, but 3 3/4-cents above the blocks. Thirteen cars of block traded hands on the week and none of barrel.

Cash butter closed at $1.14, down 3 cents on the week and 11 cents below a year ago. Only one car was traded.

Cash Grade A and Extra Grade nonfat dry milk closed at 86 1/2-cents per pound, down a penny and a half on the week. The NASS-surveyed prices were delayed until December 29.

Provided courtesy of Dairyline.

Merry Christmas!

News EditorGeneral

Merry Christmas everyone!

Have a very joyful and loving holiday with your family and friends.
Cheers!

merry_christmas

EU approves Campina-Friesland Foods merger

News EditorDairy Business, International

logo FF fcEU regulators approved the merger of Netherlands-based dairy food product cooperatives Campina and Friesland Foods on condition they sell certain cheese and dairy drink divisions.

The European Commission said the initial merger would have resulted in serious competition concerns in Germany, the Netherlands and Belgium for various dairy products, including yoghurt drinks, cheeses and custards.

To meet EU concerns, the two cooperatives, which are owned by member dairy farmers, said they would sell off several dairy and cheese production plans as well as several brands including Yogho Yogho and Choco Choco brands.

The divested businesses account for around four percent of the new merged company’s total revenue, which is expected to total around euro9.1 billion ($12.5 billion).

The two cooperatives announced their merger in 2007.