TheDairySite Newsletter - 9 March 2012

TheDairySite Weekly Newsletter

Friday 9th March 2012

Our Sponsors Helping keep you updated for free!

ON-LINE SHOP News Company News Events Articles Diseases Treatments Employment Cattle Breeds SEARCH

Welcome to this week's newsletter

Editorial - Dairy Policies to Protect Producers Come Under Criticism

In 2009, the global dairy market suffered as prices paid to producers plummeted, yet input costs escalated. With dairy businesses in the US and the EU suffering, the US government paid out subsidies to help producers cope with tough times. In the EU, a high level support group was established to determine how the producers' position in the supply chain could be strengthened.

The 2009 milk crisis saw a number of producers leave the business and put pressure on governments to act in order to prevent such a crisis occurring again.

Last year, the US proposed the Dairy Security Act 2011, its aim to create a stronger dairy net for US producers. In brief, the Act would stabilise the dairy market and protect producers margins through a voluntary insurance programme.

The EU's high level support group proposed a number of measures, through the Milk Package, to strengthen producer power and protect them from future market collapses. This focuses on contractual agreements between producers and processors as well as supporting producer organisations.

This week, both policies came under criticism from producer representatives.

US

A recent USDA report highlighted the issue of small farms declining, with the numbers of herds milking less than 1,000 cows falling. In contrast, larger farms with more than 1,000 cows were increasing in size, numbers and percentage of production.

Commenting Jerry Slominski, from the International Dairy Foods Association, said that the Dairy Security Act would further increase the rate at which small farmers leave the business.

The Act requires that payments be reduced under supply management, which is likely to have a harsher impact on smaller farms.

“It’s pretty easy to see how the small farms will get squeezed out of business faster by this new government programme,” said Mr Slominski.

EU

The European Milk Board (EMB) has said that the EU milk package will only confirm the weak market position of dairy producers. Whether contracts are voluntary or not is left down to individual member states to decide - this decision by the EU has come under heavy criticism by farming unions, who believe that contracts should be obligatory in every country.

The milk package also refers to a European price monitoring instrument, however, EMB President Romuald Schaber says that this is not enough. He believes that the costs of milk production, market supply and demand must also be ascertained, along with milk prices, in order to monitor the milk markets.

With regards to producer organisations, he said that the pooling limits of 3.5 per cent of milk production across the EU and 33 per cent nationally are much too low. Processors, as bargaining partners, already have a market share triple that size.

Over the past few months, a number of mergers have been made in the EU dairy processor industry, which could cause further concern to milk producers wanting to gain more bargaining power.

Charlotte Johnston

This Week's Feature Articles

We have 5 new features this week:

Productivity to Mitigate Environmental Impacts of Cattle
It seems to be a common consumer perception that the modern dairy herd and its practices are more damaging to the environment than extensive systems. Speaking at the British Cattle Breeders Conference, Dr Jude Capper presented research that suggested environmental sustainability is linked to farm efficiency, reports Charlotte Johnston, TheCattleSite editor.

Dairy Commodity Report - ABARE
In the short term, world dairy prices are expected to fall slightly according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).

DairyCo UK Dairy Market Update: Butter Markets Weaken
In Dairy Co's monthly update, farmgate milk prices in the UK are at a similar level to Actual Milk Price Equivalent and US producers are shifting to larger herds.

Australian Dairy Production - An Overview
There are 8,594 dairy farms in Australia, with a national dairy herd of 1.6 million cows, according to the National Farmers' Federation Australia Farm Facts 2012.

Reducing Volatile Organic Compounds in Silages
Volatile Organic Compounds (VOC) can have short and long-term adverse health effects but can also impact feed intake. Biomin looks at how VOCs can be reduced in silages using inoculants.