NDPO Calls for Third National Production Reduction

A message from the NDPO
by National Dairy Producers Organization
8/30/2013

Providing more than a dozen firm indicators, the board of directors of the National Dairy Producers Organization, Inc. gives producers ample reason for concern, but offers a plan and an agenda to prevent devastating losses nationwide.

For the third time in less than 24 months, the board of directors is calling on every producer in the country who is producing milk that is being shipped to a Class III or Class IV processor to reduce overall production by 5 percent as soon as prudent steps can be taken to do so.

"We do not take lightly the responsibility we have to all of our members and to all dairy producers in the country to thoroughly warn them that very difficult times are just around the corner, which are only compounded by the current financial distress of many producers nationwide,  if we do not work together and invoke our right to regulate milk production in this country in concert with profitable demand for that milk," said Mike Eby, board member of NDPO and a dairy producer from Gordonville, Pa.

"We [dairy producers] have the ability to prevent the devastating volatility and below-profitable margins we have incurred over the past five years. We have the ability to increase the amount we get paid for every hundredweight of milk we produce, if we are willing to take the steps necessary to secure for ourselves and our families a much brighter future. Producers can accomplish this feat by refusing to maintain the status quo that finds us continually paying for the privilege of producing milk that we cannot sell for a profit," said Gary Genske, board member, treasurer of NDPO, owner of three dairies and partner in the firm Genske, Mulder & Co., which provides accounting services to hundreds of milk producers nationwide.

The market indicators from more than a dozen different sources all point to a potential dramatic drop in the price of milk paid to dairy producers if immediate changes in the supply of milk are not effected at the farm level.

No fewer than one dozen market indicators are pointing to a significant drop in milk prices if something is not done immediately. Prices are already far too low for most producers across the country. Dairy producers in the Midwest, Intermountain Region and West are now and have been particularly squeezed for more than two years. In reality, every dairy producer in the country is producing milk at a cost above what they are receiving for their milk when you compare the USDA cost of production numbers with the national pay price of milk--a reality that has existed now for nearly five years.

Were it not for the overwhelming evidence from both the domestic and international markets indicating softening global sales and prices, at a time when competition for global demand due to estimated production increases in New Zealand and Australia signal a significant drop in future prices for milk from dairy producers, we would not be pushing this agenda as hard as we are.

It is critical that dairy producers immediately respond to this call by doing everything in their power to reduce milk production nationwide, but particularly in the regions of the country where a significant portion of all milk production is processed into cheese and butter.

Board member and dairy producer Bob Krucker offers these important comments, which are provided to help dairy producers better understand the proposals being offered by the National Dairy Producers Organization. Krucker states, "NDPO proposals contained in our DISSA-13 will create and maintain a stable, profitable domestic milk demand market.

"A 'demand market' is defined as 'increased demand pulling on steady to stable supplies.' A demand market is generally viewed as a profitable market.

"Our domestic milk demand has been shown to increase about 1 percent per year with a 1 percent increase in domestic population. While the world export demand for milk may increase at a rate different than our domestic demand, not all export demand will be profitable demand for the U.S. dairy farmer.  With increasing milk production around the world, it is doubtful that the U.S. dairy farmer will ever be the world's low-cost producer of milk.

"Even though the world export demand market may not always be a profitable market for the U.S. dairy farmer, we can still create and maintain a stable, profitable domestic milk demand market by adopting the proposals contained in DISSA-13.

"By reasonably managing our domestic inventory of butter, powder and cheese, and reasonably managing imports, and pricing milk used for export products at whatever level the export product prices will support, dairy farmers can create and maintain a profitable domestic 'demand market' for their milk (independent of the world export markets) and a financially sustainable future."

We realize these proposals and these concepts may be new or very different from what producers have been exposed to in the past, but the time has come for producers to find a better way to go--a better plan to implement on behalf of their farms' and families' long-term sustainability. We encourage producers to continue to study, even to study with purpose, the many proposals of the National Dairy Producers Organization. There is a better way to go. Visit www.nationaldairyproducers.org for more information.

Here are 12 recent articles published by a variety of sources that we see are sending a notice of clear and present danger for dairy producers if they are not willing to significantly change the amount of milk that is produced and made available to milk buyers here in America. Many more sources could be quoted, but suffice it to say, there is more than enough evidence for even the most skeptical producer.
1.  Class III milk price suffers as US cheese, butter stocks remain high http://goo.gl/Luaiat
2.  Cold storage stocks of butter are 33% higher than they were at this time in 2012. www.milkproducerscouncil.org
3.  U.S. milk futures fall nearly 4% to lowest level in more than a year http://goo.gl/5QZ8RY
4.  http://www.dairyherd.com/e-newsletters/dairy-daily/US-dollar-strength-seemed-to-depress-the-ag-markets-Thursday-AM-217908441.html
5.  http://www.dairyherd.com/e-newsletters/dairy-daily/Dairy-profitability-stuck-at-152-218096071.html
6.  When quotas are removed, there will likely be production growth in northern Europe http://goo.gl/i3574l
7. California's dairy producers have suffered more than $2 billion in losses in the past five years http://goo.gl/VGvmcA
8.  Shortages in California are severe enough that they have prompted one major co-op to offer its members a premium on all milk http://goo.gl/5nBAPp
9.  Bill Brooks: "There's a lot of cheese in inventory but not all of it is eligible to trade on the exchange."  http://goo.gl/EsXHz9
10. USDA Dairy Outlook: Decreasing Feed Costs -- and Lower Milk Prices http://goo.gl/tIU4t
11.  Number of Wisconsin's dairy cows steady, yet the state lost well over 600 dairy farm operations in the last year http://goo.gl/nUEHhU
12. Butter price at a lower level may help sales, but retailers can buy only so much and many are already well-stocked http://goo.gl/VzmX8k

For more information, please contact the National Dairy Producers Organization, Inc. at 888-343-5489; email info@nationaldairyproducers.org; or visit our website at www.nationaldairyproducers.org.

Content provided by the National Dairy Producers Organization.