Washington Dairygrams - January 25, 2012



As printed in our January 25, 2012 issue...

TWO ETHANOL SUBSIDIES EXPIRED at year’s end. The 45-cent-per-gallon ethanol blenders’ tax credit led to a $6 billion annual incentive to blend ethanol into gasoline, while a 54-cent-per-gallon tariff stifled imports.

STILL ON THE BOOKS is the 15.2 billion gallon Renewable Fuel Standard. It requires that oil and gas companies blend a minimum amount of renewable fuel; it consumed about 40 percent of the nation’s corn crop.

BENCHMARK CLASS III PRICE for December is $18.77, down 30 cents from November. Class III futures for the next 11 months averaged $17.48.

A RECENT RALLY in corn and soybean prices has been caused by drought in South America’s growing areas. Concerns are compounded by La Niña.

IN YEAR-END CROP TALLIES, USDA raised 2011 corn and soybean estimates modestly; most analysts projected a smaller harvest in November.

OVER $20 BILLION IN CROP INSURANCE indemnities and disaster payments have been paid out by crop insurance agencies and USDA since 2009. Roughly 80 percent of eligible acres are covered by insurance.

FEDERAL OUTLAYS on crop insurance could outpace spending on traditional commodity programs by 20 percent, estimates the Congressional Research Service. This spending may get the attention of budget cutters.

A FEDERAL JUDGE denied class certification to a group of Northeast dairy farmers in a lawsuit against DFA and DMS. Plaintiffs can pursue another course toward certification, press individual claims, or drop the action.

IN 2010, DAIRY FARM EQUITY recovered nearly half of the losses that occurred in 2008 and 2009. USDA forecasts equity could fully rebound back to 2007’s all-time high of $92.5 billion once 2011 data is collected.

GLOBAL DAIRY CONSUMPTION could grow 58 percent by 2050, projects the Food and Agriculture Organization. Meat sales could rise 73 percent.

FDA ISSUED TWO RULINGS which addressed use of antibiotics in animals. In late December, they pulled the plug on plans to withdraw the practice of feeding penicillin and tetracycline to livestock.

THE AGENCY issued a second order in early January barring certain extralabel uses of cephalosporins, a class of antibiotics used in both animals and humans. The new rule will have little impact on dairy.

BRIEFLY: Over the last six years, culling is up 29 percent or nearly 600,000 head. Illegal immigrants related to a U.S. citizen could find it easier to become legal citizens under recent rules announced by the Obama administration. Organic dairy processors reported that consumer demand has rebounded to prerecession levels; despite growing demand, producer margins remain thin. In a cost-cutting measure, USDA announced plans to close nearly 260 offices nationwide.

Click here to see the previous months Washington Dairygrams