The USDA announced July’s Class III at $9.97/cwt., unchanged from June, although down $8.27/cwt from July 2008. The average cheddar barrel market for July 2009 was $1.13/lb versus $1.90/lb in 2008.

The USDA June milk report was released on July 18. National milk production was down (-5.2%) from May ’09 and (-0.2%) from July ‘08. Upper Midwest milk production is trending upward with Minnesota +3.5%, Wisconsin +2.8%, Michigan +3.7%, and Iowa +2.5%. Western states have been experiencing significant decline with California (-4.1%), Idaho (-0.9%), Washington (-1.2%), Arizona (-6.1%) and Oregon (-2.1%). Cow numbers for the month of June 2009 are down 86,000 from June 2008 according to USDA data.

The National Milk Producers Federation CWT program announced that it will be removing an additional 87,000 cows from the most recent herd retirement program ending July 31, 2009. In addition, USDA recently announced a critical but temporary increase in the cheese and nonfat dry milk Support Price that resulted in a corresponding increase in the CME market value. As of August 12, the CME for cheese is up 20 cents/lb from July 1. Some analysts believe this action to be unwarranted with the thought that it may actually enhance lower prices in the longer term. I do not personally believe the modest increase in the USDA Support Program will significantly impact future national milk production resulting in lower commodity values given the current and future outlook. Regardless of the many opinions we certainly hope, and I believe, that milk prices will improve the remainder of this year and through 2010. We also need to remember that school openings, holiday orders, and modest optimism in our economy will hopefully provide good reason for improved market conditions.

The MILC program has certainly been a lifeline for many dairy producers; although the payment levels are not sufficient to offset the very low market conditions being experienced during 2009 as most producers will testify. It is estimated that over 1 billion dollars will be spent during 2009 on MILC payments. I believe the MILC program is an efficient process that helps preserve many farms along with maintaining important infrastructure in the Midwest. First District will work very hard to keep, and hopefully improve this program in future Farm Bills since it will be challenged by a number of opponents.

It is that time of year when seasonal heat and humidity in Minnesota and Wisconsin usually results in significant lower milk receipts at FDA. As of this writing, we are beginning to experience typical August heat and humidity which has not been the case up until now. Regardless, FDA milk receipts remain strong with plant operations running as full as possible. Once again, I would like to thank you for the excellent quality milk being produced and delivered to FDA. Excellent milk quality provides our production plant with the capability of producing high quality consistent product while at the same time maximizing yields that will continue to provide your cooperative with the ability to maximize returns for each member.

The headlines reporting on the financial calamity in dairy land haven’t been very cheery in the past month. Here’s a recent sample: "Crisis deepens for dairy farmers," "New figures reveal dairy industry is at crisis point," "Angry dairy farmers block streets."

What’s notable about these stories is that they’re all from Europe as were these: "EU leaders order study of milk market, "French milk producers block retailers to protest low prices," and "EU studies supermarkets’ role in dairy farmers’ woes."

The point is that the lamentable economic situation afflicting dairy producers in the U.S. is really no different than the one also distressing their peers in the European Union, the United Kingdom, Australia and New Zealand. The news is all bad, and it’s all over the world. The related point is that, other than government investigations, there doesn’t appear to be much consensus about how to tackle improvements in milk pricing in other parts of the globe.

But there is actually a glimmer of hope here at home, and by that, I’m not even referring to the cheese markets finally showing a few signs of life in the past week or two. What I mean is that NMPF’s new Strategic Planning Task Force is delving further into finding real long-term fixes for the situation.

In so doing, we have to first admit that the biggest problem is also one that no one organization or government can possibly fix, and that is the global recession. A worldwide decline in dairy demand, owing to the worst economic downturn in 75 years, is at the heart of the price crunch on the farm. If it were just America’s farms that were suffering, that would be one thing. But when the same dynamic plays out on dairies from Argentina, to Austria, to Australia, there is no swift unilateral, or multilateral action that can alleviate the problem.

Still, as White House Chief of Staff Rahm Emanuel has noted, one should never let a crisis go to waste. That’s why the domestic U.S. dairy industry, led by NMPF, is using the recession as a catalyst to engage in some thorough soul-searching about how we can improve our own milk pricing system.

NMPF’s Strategic Planning Task Force met recently in Chicago with more than a half dozen other farm organizations to discuss how the current crisis developed, and how we can make positive changes to blunt the impact of a similar situation in the future. Our Task Force spent time probing the widely-disseminated price stabilization plan, being promoted by the Holstein Association, the Milk Producers Council, and Dairy Farmers Working Together, which would assign production bases to individual farms in order to put some brakes on future milk production. The Task Force is in the process of conducting a more detailed analysis of that plan, and will meet again later in August to review that, as well as other ideas to reform the milk pricing system. These include assessing how Federal Orders can and should change; reviewing the effectiveness of the current farm safety nets we have in place, the Milk Income Loss Contract program and the Dairy Product Price Support program; and evaluating whether other safety nets, such as a gross margin insurance program, may be more effective.

It’s worth noting that in addition to discussing systemic changes that likely would need legislative action in order to apply them to all farms, the Task Force, and NMPF overall, is reviewing possible improvements to the Cooperatives Working Together program, in order to make that self-help initiative as responsive and dynamic as it can possibly be.

Previous farm-level price troughs have typically produced a pattern of calls for major reform, only to see the critical mass calling for big changes evaporate as the inevitable price recovery occurs and the sense of urgency passes. I believe this time will be different. History has embarrassed many who have made such assertions, only to see that history does tend to repeat itself. But I think the crisis this time won’t be wasted, and that rather than using the recession as a justification for tinkering at the margins, we can use it to really restructure the milk pricing system in ways that sweep away many of the features we all agree need to be changed.

First District Association is proud of its successful grass roots heritage that began in 1921. Members are encouraged to become actively involved in your cooperative and the upcoming election process. This is a good time for FDA members to communicate with one of your Unit Officers regarding any ideas for improvement for your upcoming November Unit meetings. It is crucial that FDA members remain involved with the governance of your cooperative. During 2009, the FDA Board of Directors and management worked diligently toward updating and "house-cleaning" of FDA Articles and Bylaws. All FDA members will receive a full copy that will highlight recommended changes. Members will vote on the Articles and Bylaws at each unit meeting.

The 2009 Nominations Committee will include a representative from each Unit and each Association Member Creamery. In the event you may be interested in nominating a director candidate, please contact FDA, Unit Officer, Creamery Manager, or Clint Fall.

Dan Hallberg, Kandiyohi, MN Tom Middendorf, Freeport, MN Keith Overman, Freeport, MN

Wanted Farm Hand Work call Leslie Bromenschenkel at 320-293-0989

For Sale: Farm fresh chickens. Available June 25. Call 320-877-7373.

Wanted: Used Berg Barn Cleaner Chain (counter clockwise) 320-834-2596

For Sale: Plastic twine, Netwrap, bunker covers and bale wrap. All sizes available. Booking now for 2009 season. Chris Kerfeld 320-333-9255.

For Sale: Ten Holstein heifer calves - one week to three months old. 507-829-2955

For Sale: Alfalfa hay, big square bales, no rain, stored inside and big round bales, no rain, stored outside. Contact Glen at 320-310-0879.

For Sale: Gehl 99 silage blower. Registered Holstein bulls (some are red and white) 320-877-7373