Volume 32
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A
INSIDE
Cheese prices up in
latest AMS retail report.
For details, see page 3.
Guest column:
Did $2 cheese kill demand
or is this just a reprieve?
For details, see page 4.
Commonwealth Dairy
to expand yogurt plant.
For details, see page 6.
Dairy Research Institute
plans to launch open
innovation program
to seek solutions.
For details, see page 7.
November 16, 2012
Number 43
Cheddar price falls this week,
but demand still fairly steady
By Alyssa Sowerwine
MADISON, Wis. — Cheddar
prices at the Chicago Mercantile Exchange (CME) fell more
this week following significant
losses last week.
Prices for both Cheddar
blocks and barrels plummeted
Nov. 7 after settling above $2 per
pound for most of last month.
Cheddar barrels fell 16.5 cents
Nov. 7 to $1.91 per pound, then
fell another 7.5 cents last Friday
to $1.8350. Barrels fell 12 cents
Nov. 7 to $1.9900 per pound and
another 7 cents last Friday to
$1.9200.
This week, CME cheese
prices continued to fluctuate. Cheddar barrels fell just
a quarter of a cent Monday
Dairy industry wants action on
farm bill as Congress returns
WASHINGTON — Congress is back in session following a largely
“status quo” election last week, and dairy and agriculture groups are
pushing for action on the 2012 Farm Bill before year’s end.
With limited time left in between the holidays for the remainder of
2012, a 5-year farm bill passed by the Senate and by a House committee
earlier this year will either have to be passed in the coming weeks, or
work on it extended into next year. The 2008 Farm Bill expired Sept. 30.
Stakeholders say the farm bill’s best chance for passage is if
lawmakers decide to use its savings as part of negotiations on the socalled “fiscal cliff.” The Senate farm bill would save $23 billion over
10 years, while the House Agriculture Committee bill would save $35
billion over 10 years.
Rep. Jim Costa, D-Calif., late last week called for House members
to put the election behind them and take action on the farm bill.
“The campaign is over and it’s time to get to work for our nation’s
dairymen, farmers and producers,” Costa says. “While many in Washington were obsessing over election messaging, these groups have
reiterated again and again that they need a farm bill.”
Costa notes that the bill had “overwhelming support” in committee
and says he believes the bill will have the needed votes on the House floor.
“Whether it’s providing crop insurance, reforming the federal milk
marketing order or extending the Environmental Quality Incentive
Program, the only vehicle to do so is the farm bill,” he says. “Now, more
than ever, our dairymen, farmers and ranchers need the certainty that
only a 5-year farm bill can provide.”
A coalition of 235 agriculture organizations — including Associated
Milk Producers Inc., National Milk Producers Federation (NMPF),
National Farmers Union (NFU), Midwest Dairy Coalition and U.S. Dairy
Export Council — this week sent a letter to congressional leaders
urging for the passage of a new 5-year farm bill to be signed into law
Turn to FARM BILL, page 12
to $1.8325 per pound before
bumping up three-quarters of
a cent Wednesday to $1.8350
and then dropping 11.25 cents
Thursday to $1.7225. Blocks fell
6.25 cents Monday to $1.8575 but
increased 5.25 cents Wednesday
before falling 9 cents Thursday
to $1.8200. (For today’s market
prices, see chart on page 2.)
Brian Rice, principal with
Rice Dairy LLC, Chicago, notes
a couple of factors at play behind
the cheese price drop.
“As we turned into November, the Class III milk price was
higher, which moved milk from
Class IV into Class III,” he says.
He also notes the urgency of
holiday buying has died down
some.
Rice, however, says he doesn’t
think there’s much room on the
downside for cheese currently.
“I have a hard time seeing
cheese spending much time
below $1.85 in the near term,”
he says, adding that it’s possible
prices could go back toward the
$2-per-pound price level.
Phil Plourd, president of
Blimling and Associates, Madison, Wis., notes that previous to
last week’s cheese price drop,
“prices were well on the high
side of normal, which always
increases vulnerability.”
“I was a little surprised at
the speed by which it all came
unglued,” he says. “I think we
went to somewhat overbought
to somewhat oversold.”
Robert Chesler, vice president of the Foods Division at
FCStone LLC, Chicago, says
the cheese market was getting
choppy at the $2 price level, with
people buying cheese primarily
for short-term needs only.
“We needed an unclogging
of the pipeline,” he says. “The
price breaks we’re getting now
should lead to more long-term
buying of cheese.”
USDA’s Dairy Market News
on Wednesday noted that Class
I milk demand continues to be
strong in the Northeast and is
limiting the manufacturing milk
supply going to cheesemakers,
resulting in declining cheese
production in that region.
“For a number of weeks, cheesemakers have been attempting
to match production with sales,
unwilling to expand inventories
at previous price levels,” Dairy
Market News says. “The recent
CME price reductions should begin to change market conditions.
The lower prices will promote
increased sales as many buyers
were purchasing hand to mouth.”
Dairy Market News adds
that demand for cheese is good
ahead of Thanksgiving.
California Class 4b petition
draws variety of responses
SACRAMENTO, Calif. — Several dairy businesses and organizations have submitted responses to the petition that was sent earlier
this month to the California Department of Food and Agriculture
(CDFA) requesting an emergency hearing to consider a change
to the state’s Class 4b pricing formula. However, CDFA says the
petition fails to set forth the CDFA secretary’s authority to take
the action requested.
On Nov. 2, CDFA received a petition from California Dairies Inc.,
Dairy Farmers of America (DFA) and Land O’Lakes Inc. requesting a temporary modification to the sliding scale that translates
market prices for dry whey into higher monetary contributions to
the Class 4b price. (See “California cooperatives file new Class
4b petition, collaborate on milk marketing order study” in last
week’s issue of Cheese Market News.)
Turn to PETITION, page 14
Meanwhile, analysts seem
a bit surprised at the price
strength seen in butter in recent
weeks at the CME.
The CME butter price settled
at $1.8900 per pound Oct. 23 and
over the past few weeks has not
strayed far from that price point.
The butter price fell a couple
cents earlier last week but rebounded back to $1.89 by week’s
end, then fell 2.5 cents again in
Thursday’s trading to $1.8650.
Plourd says he is a bit surprised butter has hung on at this
price level for so long.
“Butter fundamentals are
probably the weakest of the dairy
family at this moment,” he says.
For example, butter futures
for early 2013 are showing prices
in the $1.70s.
Plourd notes that the difference between spot and butter
futures prices poses challenges
to manufacturers, who will be
reluctant to build inventories
when future and world markets
offer no reward for storage.
“Once the Thanksgiving holiday is past, all the cream starts
coming back to the churns, and
with prices at $1.80 but futures
in the $1.70s, you figure something’s gotta give,” he says.
Dairy Market News says
many butter makers are closely
Turn to MARKET, page 14
Micro dairies hold
unique opportunity
for value-added
By Aaron Martin
MADISON, Wis. — In
recent years micro dairies
have surged in popularity
thanks to direct marketing
opportunities for locallyproduced milk, cheese and
other value-added products.
Micro dairies are defined
as operations that milk no
more than 10 cows, sheep,
goats or water buffalo by
Turn to MICRO, page 15
Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
2
CHEESE MARKET NEWS ® — November 16, 2012
MARKET INDICATORS
Chicago Mercantile Exchange
CHEESE FUTURES for the week ended November 15, 2012
Cash prices for the week ended November 16, 2012
(Listings for each day by month, settling price and open interest)
Monday
Nov. 12
Tuesday
Nov. 13
Wednesday
Nov. 14
Thursday
Nov. 15
Friday
Nov. 16
$1.8325
-1/4
$1.8275
-1/2
$1.8350
+3/4
$1.7225
-11 1/4
$1.7225
NC
Cheese 40-lb. block
Price
$1.8575
Change
-6 1/4
$1.8575
NC
$1.9100
+5 1/4
$1.8200
-9
$1.8250
+1/2
Cheese Barrels
Price
Change
Weekly average (Nov. 12-16): Barrels: $1.7880(-.1730); 40-lb. Blocks: $1.8250(-.1700).
Weekly ave. one year ago (Nov. 14-18, 2011): Barrels: $1.9940; 40-lb. Blocks: $1.9555.
Extra Grade NDM
Price
Change
$1.5600
NC
$1.5600
NC
$1.5600
NC
$1.5600
NC
$1.5600
NC
Grade A NDM
Price
Change
$1.5750
NC
$1.5750
NC
$1.5725
-1/4
$1.5725
NC
$1.5650
-3/4
Fri., Nov. 9
NOV12
DEC12
JAN13
FEB13
MAR13
APR13
MAY13
JUN13
JUL13
AUG13
SEP13
OCT13
NOV13
DEC13
$1.8900
NC
$1.8650
-2 1/2
$1.8900
NC
$1.8900
NC
$1.7950
-7
Sign up for our daily fax or e-mail service for just $104 a year. Call us at 608-288-9090.
Butter
Cheese
On hand
Monday
Week
Change
8,606
117,301
-620
-3,668
November 12, 2012
Change since Oct. 1
Pounds
Percent
-1,992
-2,012
-19
-2
Last Year
Pounds
Change
4,706
128,387
+3,900
-11,086
(These data, which includes government stocks and is reported in thousands of pounds, are based on reports from a
limited sample of cold storage centers across the country. This chart is designed to help the dairy industry see the trends
in cold storage between the release of the National Agricultural Statistics Service’s monthly cold storage reports.)
CLASS III PRICE
(Dollars per hundredweight, 3.5% butterfat test)
YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2006
2007
2008
2009
2010
2011
2012
13.39
13.56
19.32
10.78
14.50
13.48
17.05
12.20
14.18
17.03
9.31
14.28
17.00
16.06
11.11
15.09
18.00
10.44
12.78
19.40
15.72
10.93
16.09
16.76
10.78
12.92
16.87
15.72
10.83
17.60
18.18
9.84
13.38
16.52
15.23
11.29
20.17
20.25
9.97
13.62
19.11
15.63
STAFF
Susan Quarne,
(PH 608/831-6002; FAX 608/831-1004)
e-mail: [email protected]
Kate Sander,
(PH 509/962-4026; FAX 509/962-4027)
e-mail: [email protected]
Alyssa Sowerwine,
(PH 608/288-9090; FAX 608/288-9093)
e-mail: [email protected]
Rena Archwamety,
(PH 608/288-9090; FAX 608/288-9093)
e-mail: [email protected]
Aaron Martin,
(PH 608/288-9090; FAX 608/288-9093)
e-mail: [email protected]
10.92
21.38
18.24
9.97
13.74
21.39
16.68
11.06
19.83
17.32
11.20
15.18
21.67
17.73
12.29
20.07
16.28
12.11
16.26
19.07
19.00
12.32
18.70
17.06
12.82
16.94
18.03
21.02
Mon., Nov. 12
2.016
1.878
1.843
1.843
1.842
1.850
1.836
1.825
1.840
1.835
1.828
1.811
1.790
1.805
1,177
1,329
473
254
252
141
131
153
53
42
48
44
65
46
Tues., Nov. 13
Wed., Nov. 14
1,177
1,333
477
257
258
145
135
153
53
42
48
44
65
46
2.019 1,177
1.920 1,338
484
1.865
267
1.850
269
1.839
154
1.836
137
1.846
154
1.858
53
1.840
42
1.838
48
1.828
44
1.814
65
1.790
46
1.805
2.018
1.892
1.842
1.829
1.835
1.850
1.836
1.826
1.840
1.835
1.828
1.813
1.790
1.805
44/4,208
Thurs., Nov. 15
2.011
1.853
1.820
1.814
1.825
1.830
1.826
1.844
1.840
1.838
1.828
1.814
1.790
1.805
275/4,478
81/4,278
57/4,233
1,177
1,410
538
301
284
162
142
166
53
42
48
44
65
46
Daily market prices are available by visiting CME’s online statistics sites at http://www.cmegroup.com.
DRY WHEY FUTURES for the week ended November 15, 2012
(Listings for each day by month, settling price and open interest)
Weekly average (Nov. 12-16): Grade AA: $1.8660(-.0170).
Class II Cream (Major Northeast Cities): $2.3914(+.0844)–$2.5609(+.0459).
Weekly Cold Storage Holdings
1,177
1,329
462
250
242
141
131
148
53
42
48
44
65
40
Total Contracts Traded/
132/4,172
Open Interest
Weekly average (Nov. 12-16): Extra Grade: $1.5600(NC); Grade A: $1.5720(NC).
Grade AA Butter
Price
Change
2.016
1.890
1.851
1.850
1.855
1.850
1.836
1.835
1.840
1.835
1.830
1.811
1.790
1.820
12.84
19.22
15.51
14.08
15.44
19.07
13.47
20.60
15.28
14.98
13.83
18.77
SUBSCRIPTION INFORMATION
Fri., Nov. 9
NOV12
DEC12
JAN13
FEB13
MAR13
APR13
MAY13
JUN13
JUL13
AUG13
SEP13
OCT13
NOV13
DEC13
63.98
63.38
59.50
57.25
56.75
55.98
56.00
56.00
56.75
56.00
54.00
52.50
54.50
51.03
229
309
128
88
80
61
58
51
52
53
51
48
49
47
Total Contracts Traded/
Open Interest
13/1,304
Mon., Nov. 12
63.98
62.00
58.50
57.25
56.03
55.98
56.00
55.98
56.75
56.00
54.00
52.50
54.50
51.03
229
309
128
88
81
63
58
54
52
53
51
48
49
47
Tues., Nov. 13
63.98
62.00
58.90
56.40
56.03
55.18
55.00
54.50
56.48
55.98
54.00
52.50
54.50
51.03
19/1,310
229
310
129
90
81
63
59
56
52
53
51
48
49
47
10/1,317
Wed., Nov. 14
63.98
62.38
59.75
56.40
55.75
54.75
53.75
53.50
55.50
54.50
54.00
54.00
54.00
52.00
229
311
132
90
85
67
66
61
53
54
51
48
49
47
Thurs., Nov. 15
63.70
61.75
59.00
56.20
55.00
54.75
55.00
54.50
55.50
54.50
54.00
54.00
54.00
54.00
37/1,343
228
314
136
99
101
70
70
64
53
54
51
48
49
48
67/1,385
Daily market prices are available by visiting CME’s online statistics sites at http://www.cmegroup.com.
National Dairy Products Sales Report
For the week ended:
Cheese 40-lb. Blocks:
Average price1
Sales volume2
Cheese 500-lb. Barrels:
Average price1
Adj. price to 38% moisture
Sales volume2
Moisture content
Butter:
Average price1
Sales volume2
Nonfat Dry Milk:
Average price1
Sales volume2
Dry Whey:
Average price1
Sales volume2
11/10/12
11/3/12
10/27/12
10/20/12
$2.0783
10,903,254
$2.0648
12,165,856
$2.0715
11,417,752
$2.0889
10,887,776
$2.1723
$2.0614
9,957,053
$34.66
*$2.1516
*$2.0450
*9,487,897
*$34.77
$2.1336
$2.0271
9,993,608
$34.74
$2.1708
$2.0642
9,727,449
$34.80
$1.8923
3,809,015
$1.9019
2,691,146
$1.8943
3,299,246
$1.9305
3,416,273
$1.5057
*$1.4939
14,753,322 *12,248,238
$1.4859
*11,489,667
$1.4718
11,927,835
$0.6299
7,498,494
$.6251
*9,184,150
$0.6415
7,369,511
*$0.6384
*6,095,843
/Revised. 1/Prices weighted by volumes reported. 2/Sales as reported by participating manufacturers.
Reported in pounds. More information is available by calling AMS at 202-720-4392.
*
POSTMASTER:
Send address changes to Cheese Market News®, Subscriber
Services, P. O. Box 628254, Middleton, WI 53562; Form
3579 requested; or call direct at 608/831-6002.
RETAIL PRICES
(Consumer Price Index*) Percent change versus
October 2012 1 mo. 6 mo. 1 year 2 years
Cheese & related products
+6.9
+1.4 +0.7
223.114
-1.8
Dairy & related products
+7.8
+0.8 +0.1
217.083
-1.1
All Food
+6.5
+0.2 +0.7
234.878
+1.7
REGULAR CONTRIBUTORS
*Source: U.S. Department of Commerce. For index, prices during 1982-84 = 100.
John Umhoefer, Downes-O'Neill LLC, International Dairy
Foods Association, National Milk Producers Federation
SUBSCRIPTIONS & BUSINESS STAFF
Subscription/advertising rates available upon request
Contact: Susan Quarne - Publisher
P.O. Box 628254, Middleton, WI 53562
PHONE 608/831-6002 • FAX 608/831-1004
Subscriptions:
WEBSITE: www.cheesemarketnews.com
DISCLAIMER: Cheese Market News® has made every effort to provide accurate current as well as historical market information. However, we do not guarantee the accuracy of these data and do not assume liability for errors or omissions.
Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
November 16, 2012 — CHEESE MARKET NEWS ®
NEWS/BUSINESS
3
MARKET INDICATORS
Cheese prices up in latest AMS retail report
WASHINGTON — Cheese ad numbers
increased across all sizes of natural varieties compared to the previous reporting
period two weeks ago, while there was a
nearly 3-fold increase in ad numbers for
butter, according to the latest National
Dairy Retail Report released Thursday
by USDA’s Agricultural Marketing Service (AMS). Retail advertising featured
holiday and baking themes that included
dairy products prominently, this week’s
AMS report says.
On a national level for conventional
dairy products this period, 8-ounce
blocks of natural cheese varieties were
at a weighted average advertised price
of $2.51, up from $2.44 two weeks ago,
the report says.
This week, 1-pound block varieties
of natural cheese varieties were at a
weighted average advertised price of
$3.27, down from $3.69 during the last
reporting period.
Natural varieties of 2-pound blocks
of cheese were at a weighted average
price of $6.90 this reporting period, up
from $5.62 two weeks earlier, AMS says.
Conventional 8-ounce natural cheese
shreds, the highest-featured cheese variety, were at a weighted average price of
$2.33 this period, up from $2.19 last period.
One-pound shreds in natural cheese
varieties were at a weighted average
price of $4.22 this reporting period, up
from $3.28 two weeks ago.
For conventional butter, 1-pound
packs had a national weighted average price of $2.71, down slightly from
$2.72 two weeks earlier, according
to the this week’s report.
CMN
DuPont Packaging seeks entries for 25th
DuPont Awards for Packaging Innovation
WILMINGTON, Del. —DuPont Packaging is seeking entries for the 25th DuPont
Awards for Packaging Innovation.
“Over the years, packaging innovations selected as winners of the DuPont
Award have changed the way we live.
In reaching the program’s 25th year,
we would like to particularly recognize
breakthroughs that reduce food waste,
a pressing need globally. The program
will retain its focus on innovation, sustainability and cost/waste reduction,”
says Shanna Moore, global director of
sustainability for DuPont Packaging &
Industrial Polymers.
Packaging designers, converters,
consumer goods producers, retailers and
equipment manufacturers from around
the world are encouraged to enter new
packaging that has been commercialized since Jan. 1, 2011. There is no fee
for entry and DuPont materials do not
need to be in the packaging structure.
In evaluating entries, jurors will consider excellence in areas of innovation,
sustainability and cost/waste reduction.
For more information visit
www.dupont.com/packaging. CMN
Dry Products*
November 16, 2012
NONFAT DRY MILK
Central & East:
low/medium heat $1.5100-$1.5800;
mostly $1.5200-$1.5700.
high heat $1.6100(+1/2)-$1.6400(+3/4).
West:
low/medium heat $1.4800(+1)-$1.5500;
mostly $1.4900-$1.5300(+1).
high heat $1.5100-$1.6100.
Calif. manufacturing plants: extra grade/grade A weighted ave. $1.4826(+.0154)
based on 7,349,257 lbs. Sales to CCC: 0 lbs.
WHOLE MILK POWDER (National):
$1.7000-$1.9000(+5).
EDIBLE LACTOSE
(FOB)Central and West: $.7000-$.9300; mostly $.7500-$.8200.
DRY WHEY
Central:
West:
(FOB) Northeast:
nonhygroscopic $.6000-$.6475(+3/4);
mostly $.6050-$.6400(+1).
nonhygroscopic $.5800(-2)-$.6575(+1);
mostly $.6000(-1/2)-$.6525(+1/2).
extra grade/grade A $.6575(+1 1/4)-$.6825(+3/4).
ANIMAL FEED (Central): Whey spray milk replacer $.4525-$.6000.
WHEY PROTEIN CONCENTRATE (34 percent): $1.1600-$1.3425;
mostly $1.2000-$1.2650.
DRY BUTTERMILK
(FOB)Central & East: $1.5900-$1.6550(+1 1/2).
(FOB) West:
$1.4450(+1/2)-$1.5150(+1/4); mostly $1.4500(+1)-$1.4750(+1/2).
CASEIN:
Rennet $3.7000-$4.4000; Acid $4.4500-$4.7500.
*Source: USDA’s Dairy Market News
www.cheeseshredder.com
For more information please visit www.cheeseshredder.com
CME FUTURES for the week ended November 15, 2012
Class III Milk#
Fri., Nov. 9
NOV12
DEC12
JAN13
FEB13
MAR13
APR13
MAY13
JUN13
JUL13
AUG13
SEP13
OCT13
NOV13
DEC13
JAN14
20.78
19.49
18.93
18.76
18.85
18.62
18.76
18.65
18.55
18.47
18.41
18.33
18.27
18.20
18.12
5,269
5,155
2,371
1,839
1,444
1,094
1,024
967
700
707
608
564
496
491
6
Mon., Nov. 12
20.80
19.20
18.74
18.64
18.64
18.60
18.55
18.45
18.49
18.45
18.40
18.35
18.28
18.23
18.12
5,330
4,981
2,366
1,878
1,450
1,102
1,050
958
715
709
604
578
516
501
6
Total Contracts Traded/
Open Interest 1,643/22,735
1,718/22,744
Fri., Nov. 9
Mon., Nov. 12
Tues., Nov. 13
Wed., Nov. 14
5,298
4,821
2,449
1,931
1,483
1,150
1,096
1,023
733
737
626
598
532
523
8
20.90
19.38
18.75
18.56
18.54
18.60
18.46
18.43
18.44
18.49
18.42
18.27
18.18
18.20
17.61
5,274
4,605
2,449
1,923
1,517
1,158
1,099
1,050
739
751
659
602
562
552
8
20.90
19.69
18.94
18.69
18.55
18.62
18.45
18.48
18.49
18.49
18.48
18.25
18.10
18.16
17.61
1,681/23,008
1,276/22,948
Thurs., Nov. 15
20.79
18.97
18.54
18.40
18.41
18.52
18.50
18.43
18.50
18.50
18.46
18.15
18.05
18.05
17.61
5,233
4,491
2,496
1,980
1,578
1,204
1,142
1,070
747
757
672
600
564
553
8
1,750/23,095
Class IV Milk*
NOV12
DEC12
JAN13
FEB13
MAR13
APR13
MAY13
JUN13
JUL13
AUG13
SEP13
OCT13
NOV13
18.72
18.65
18.69
18.72
18.81
18.50
18.40
18.35
18.35
18.35
18.35
17.75
17.75
134
165
135
136
118
60
57
52
5
5
5
5
5
18.72
18.65
18.69
18.72
18.66
18.50
18.40
18.35
18.35
18.35
18.35
17.75
17.75
135
165
135
136
118
71
68
63
6
6
6
6
6
Total Contracts Traded/
0/887
Open Interest
48/926
Fri., Nov. 9
Mon., Nov. 12
Tues., Nov. 13
18.72
18.60
18.71
18.70
18.66
18.50
18.40
18.35
18.35
18.35
18.35
17.75
17.75
Wed., Nov. 14
134
165
136
144
123
72
69
64
6
6
6
6
6
134
165
131
144
131
74
69
64
6
6
6
6
6
18.72
18.60
18.72
18.70
18.65
18.50
18.40
18.40
18.35
18.35
18.35
17.75
17.75
28/943
Thurs., Nov. 15
18.72
18.50
18.70
18.70
18.65
18.43
18.40
18.39
18.35
18.35
18.35
17.75
17.75
30/948
134
169
137
148
138
76
69
68
6
6
6
6
6
45/975
Cash-Settled NDM*
NOV12
DEC12
JAN13
FEB13
MAR 13
APR13
JUL13
151.50
155.55
158.25
158.53
156.78
156.00
155.00
238
216
71
46
30
3
2
151.50
155.55
158.25
158.53
156.78
156.00
155.00
Total Contracts Traded/
Open Interest
0/608
238
216
70
46
30
3
2
Tues., Nov. 13
Wed., Nov. 14
151.50
155.55
158.25
158.53
156.78
156.00
155.00
151.50
155.55
158.25
158.53
156.78
156.00
155.00
3/609
238
216
71
46
30
3
2
238
216
74
46
30
3
2
Thurs., Nov. 15
151.50
155.53
158.35
158.53
156.78
156.00
154.95
238
216
76
46
30
3
2
6/614
5/618
Tues., Nov. 13
Wed., Nov. 14
Thurs., Nov. 15
188.48
173.00
171.25
171.00
174.00
175.50
177.00
179.00
180.00
180.00
183.00
182.00
182.00
181.00
188.48
173.50
172.00
171.00
174.00
175.50
177.00
179.00
180.00
180.00
181.50
180.00
181.00
180.00
5/610
Cash-Settled Butter
Fri., Nov. 9
NOV12
DEC12
JAN13
FEB13
MAR13
APR13
MAY 13
JUN13
JUL13
AUG13
SEP13
OCT13
NOV13
DEC13
188.48
172.00
172.00
171.00
174.00
176.00
177.00
179.00
180.00
180.00
183.00
182.00
182.00
181.00
814
795
210
203
95
72
54
61
49
29
13
6
6
8
Total Contracts Traded/
30/2,415
Open Interest
Mon., Nov. 12
188.48
173.00
172.00
171.00
174.00
175.50
177.00
179.00
180.00
180.00
183.00
182.00
182.00
181.00
814
806
210
204
95
75
54
61
49
29
13
6
6
8
17/2,430
814
806
218
204
95
75
54
61
49
29
13
6
6
8
17/2,438
814
807
218
204
95
75
54
61
49
29
18
19
16
8
41/2,467
188.45
172.00
172.00
171.00
174.00
175.50
177.00
179.00
179.98
179.00
181.50
180.00
181.00
180.00
814
807
218
205
96
76
56
61
49
32
18
19
16
8
14/2,475
Daily market prices are available by visiting CME’s online statistics sites at http://www.cmegroup.com.
#The total contracts traded for Class III milk includes electronically-traded contract volumes.
*Total Contracts Traded/Open Interest reflect additional months not included in this chart.
DISCLAIMER: Cheese Market News® has made every effort to provide accurate current as well as historical market information. However, we do not guarantee the accuracy of these data and do not assume liability for errors or omissions.
Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
4
CHEESE MARKET NEWS ® — November 16, 2012
GUEST COLUMNIST
CMN Exclusive!
Cheddar Block Monthly Chart
Perspective:
Industry Matters
Dave Kurzawksi is a senior broker
with the Chicago-based DownesO’Neill division of FCStone. He
contributes this column exclusively
for Cheese Market News®.
Did $2 cheese kill demand
or is this just a reprieve?
If you look past weaker international cheese prices for a moment, it
wasn’t that hard to make an argument
for $2.00 cheese at some point during
the holiday rush. Strong U.S. consumer
demand coupled with slowing U.S. milk
production was the dry tinder that lit-up
cash prices this fall. In fact, until very
recently it looked as though $2 cheese
may be a mainstay through year-end.
While we now know that is not the case,
don’t be surprised if the $2 cheese show
is at intermission.
For starters, the U.S. milk production
picture is still in jeopardy. After much
chatter of the possibility this summer,
USDA finally delivered negative yearover-year production figures in their
September report. And although prices
have risen to make many producers
across the country profitable over the
past month or so (break-evens are gen-
erally $17.50-$18.50 in most areas now),
I’d argue that one month of profitability
doesn’t make producers healthy. In fact,
depending on several factors including
weather and the impact of poor forage
quality on milk-per-cow, it’s safe to say
that milk production will likely not recover until well into 2013. And that will
only serve to enhance demand.
Fluctuations in the demand for
cheese tend to drive price. Supply of milk
and finished cheese is critical as well,
but cheese is really only worth what a
buyer is willing and able to pay. The past
few months have been a swift reminder
that the vast majority of our business is
still very much domestic in nature. And
regardless of what the talking heads say,
the U.S. buyer was generally feeling much
better about the state of the economy
since mid-summer.
U.S. home sales rose by more than
10 percent to a two-year high, the Dow
Jones Industrial Average spent most
of its time over 13,000 — a four-year
high — and Apple expects to realize
$52 billion in revenue for the December
quarter in part courtesy of strong iPhone
5 sales. With numbers like that, we don’t
need a report to show us that consumer
confidence is on the mend. But if you’d
like one, earlier this month the Thomson
Reuters/University of Michigan preliminary consumer sentiment index climbed
to 84.9, the fourth straight increase and
the highest since July 2007.
Recently, however, that confidence
was shaken. Over the past week or so
many markets hit a headwind and have
traded lower. From soybeans to stocks,
market participants have faded the
inflationary talk that wafted above the
“what if” conversations concerning the
re-election of President Obama. Be it a
perceived wave of new regulations or the
“fiscal cliff” debate currently evolving,
that growing confidence hit a stumbling
block. While I hope for bi-partisan effort
to smooth the work of businesses and
balance the budget, the markets are not
betting on that outcome. But that should
not thwart our attention from the immediate concerns of the dairy markets.
The issues of strong U.S. demand
and flat to negative milk production
growth are real issues. Just because
they may have gone dormant as we approach Thanksgiving and hit a pocket
of cheese availability, which will likely
bring some weaker cheese prices still,
doesn’t mean that the underlying fundamentals have changed significantly
enough to avoid another run at $2 or
higher. When we merge a dwindling
milk supply with a growing hunger for
dairy products, the risk for dairy prices
is not down — but up. So we’re taking
a respite from higher prices now. But
the deck has not been reshuffled and
the market as I see it is still poised for
more strength heading into 2013. CMN
The views expressed by CMN’s guest
columnists are their own opinions and
do not necessarily reflect those of Cheese
Market News®.
NEWS/BUSINESS
Dean Foods reports third quarter results; WhiteWave will report separately in next quarter
DALLAS — Dean Foods Co. recently
announced its third quarter financial
results, which is says were driven by
continued solid growth across all operating segments.
The company reported third quarter 2012 diluted earnings per share
of $0.20, compared to a third quarter
2011 loss per share of $8.39. The prior
year third quarter includes a $1.9 billion goodwill impairment charge. On
an adjusted basis, third quarter 2012
diluted earnings per share were $0.33,
an 83-percent increase from the $0.18
adjusted diluted earnings per share in
the prior year’s third quarter.
Third quarter consolidated operating income for 2012 totaled $182 million,
compared to a consolidated operating
loss of $1.9 billion in the third quarter
of 2011. Adjusted third quarter consolidated operating income totaled $145
million, a 35-percent increase from
the $108 million reported in the third
quarter of 2011.
This is Dean Foods’ fifth consecutive
quarter of growth.
“Our strong performance this year
has created the flexibility to pursue
important strategic actions like the
recently completed initial public offering of The WhiteWave Foods Co.,” says
Gregg Engles, chairman of Dean Foods.
“It has also driven our expectations for
further growth to close out the year.”
Net income attributable to Dean
Foods totaled $36 million for the third
quarter of 2012, compared to a net
loss of $1.5 billion in the prior year’s
third quarter. Adjusted net income for
the third quarter was $61 million, an
84-percent increase from $33 million
in the third quarter of 2011.
Net sales for the third quarter of
2012 totaled $3.1 billion, compared
to $3.4 billion of net sales in the third
quarter of 2011, reflecting strong sales
growth at WhiteWave-Alpro offset by the
pass-through of lower commodity costs
at Fresh Dairy Direct and Morningstar.
The WhiteWave-Alpro segment reported net sales of $598 million for the
third quarter, up from 2011 net sales of
$531 million. Net sales growth was led
by the coffee creamers and beverages
platform, which saw net sales increase
by more than 20 percent in the third
quarter of 2012 compared to the same
period last year. Net sales in the premium dairy platform, which includes
Horizon Organic branded milk and other
products, increased mid-single digits in
the third quarter.
Beginning with the fourth quarter of
2012, The WhiteWave Foods Co. will report
earnings separately from Dean Foods and
expects to hold independent conference
calls with the investment community.
Third quarter Fresh Dairy Direct
operating income was $94 million, compared to $75 million in the third quarter
of 2011. Adjusted operating income for
this segment was $100 million in the
third quarter, up from $75 million in
the same quarter last year.
Fresh Dairy Direct fluid milk volumes declined 1.4 percent on a yearover-year basis, excluding the impact
of divestitures. This compares to the
balance of the industry that experienced
a volume decline of approximately 3.1
percent on a year-over-year basis, based
on USDA data and company estimates.
The pass-through of lower overall
year-over-year commodity costs resulted in Fresh Dairy Direct net sales
of $2.2 billion, a 13 percent decrease
from $2.5 billion in net sales for the
third quarter of 2011.
Third quarter 2012 Morningstar
volumes increased 6 percent from the
third quarter of 2011. Core volume
growth, offset by the pass-through of
lower dairy commodity costs, resulted
in Morningstar net sales of $338 million, a decrease of 3 percent from the
year-ago period.
For more information on the company’s third-quarter financial report,
visit www.deanfoods.com.
CMN
Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
November 16, 2012 — CHEESE MARKET NEWS ®
5
NEWS/BUSINESS
Speakers at Washington state dairy industry meeting focus on importance of exports
By Kate Sander
CLE ELUM, Wash. — Exports are critically important to the health of the U.S.
dairy industry, according to speakers at
the Washington state dairy industry’s
annual meeting this week. The United
States has many things going for it when
it comes to exports, but there remains
a critical need to focus on ways to better serve overseas customers, they say.
Dermot Carey, senior vice president,
ingredients division of Darigold, a major
U.S. exporter, stressed to the audience
of dairy producers and other industry
leaders that dairy exports facilitate the
viability of the U.S. industry, allowing
for increased production and new customers without creating burdensome
inventories.
“Without (exports), we couldn’t keep
growing,” he says. “Because we’d reach
a point where we’d have burdensome
inventories of product that would weigh
on price.”
At that point, it then becomes
necessary to simply clear inventory,
not market product, and that does not
create long-term sustainability.
“If you don’t continue to drive a new
customer base, how do you grow as an
industry?” he says.
Overall, the world population is
growing quickly. In addition, the middle
classes in countries like China are
growing and consuming more dairy. But
while demand is growing in emerging
markets, milk production is not feasible
or is limited in many of them. There are
many infrastructure issues that need to
be overcome for them to produce enough
milk, Carey says.
Currently, the United States represents more than 10 percent of net global
dairy trade, and with the strengths the
United States has — including a flatter
year-round production curve than most
countries and ability to grow— it is well
positioned, Carey says.
Meanwhile, other exporters like
New Zealand are constrained by several
factors including dairy land growth and
Thailand expected to join TPP countries
BANGKOK, Thailand — Thai newspapers have reported this week that
Thailand is expected to enter the TransPacific Partnership (TPP).
The Bangkok Post reported Tuesday
that the announcement of Thailand’s
entry into the TPP is expected to be
a highlight of the visit Sunday by U.S.
President Barack Obama, and that the
Thai cabinet earlier this week agreed
to the TPP proposal.
Earlier this summer, the United
States and Thailand agreed to resume
a formal dialogue under the Trade and
Investment Framework Agreement to
address trade issues, including the TPP.
The International Dairy Foods
Association (IDFA) says the TPP’s
Asia-Pacific region constitutes the U.S.
dairy industry’s fastest-growing export
market. U.S. dairy exports to this region
totaled more than $2 billion in 2011, an
increase of nearly 50 percent from the
previous year, which also was a record.
IDFA adds that Thailand currently
is the 14th largest export market for
the United States. Although it imported
$68.7 million worth of U.S. dairy products
last year, Thailand also places significant
tariffs on U.S. dairy products, including
30-percent tariffs on cheese and ice cream.
“Having Thailand join the TPP
negotiations would provide an opportunity to eliminate these restrictive
tariffs,” says John Kelly, IDFA manager
of international affairs. “It also would
help to prevent the use of sanitary
and phytosanitary measures and other
regulatory barriers that could impede
U.S. exports once tariffs are reduced.”
The TPP is a regional agreement that
aims to liberalize trade and investment
and address challenges. It currently is
being negotiated by Australia, Brunei
Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, the United States
and Vietnam. Canada and Mexico will
join the 15th round of talks in New Zealand next month, and Japan also has expressed interest in participating. CMN
CWT accepts 12 bids for export assistance
ARLINGTON, Va. — Cooperatives
Working Together (CWT) has accepted
12 requests for export assistance from
Dairy Farmers of America, Darigold,
Land O’Lakes and United Dairymen of
Arizona to sell 2.09 million pounds (948
metric tons) of Cheddar and Monterey
Jack cheese and 5.46 million pounds
(2,478 metric tons) of butter to customers in Asia, the Middle East, and North
Africa. The product will be delivered
November 2012 through May 2013.
In 2012, CWT has assisted member
cooperatives in making export sales
of Cheddar, Monterey Jack and Gouda
cheese totaling 108.4 million pounds,
butter totaling 66.7 million pounds,
anhydrous milk fat totaling 127,868
pounds, and whole milk powder totaling 85,980 pounds. The product will
be delivered to 36 countries on four
continents.
CWT pays export bonuses to the
bidders when delivery of the product is verified by the submission
of required documentation. CMN
KCCO seeks butter
KANSAS CITY, Mo. — USDA’s Kansas
City Commodity Office this week issued
a solicitation for 533,520 pounds of butter. Offers are due by 9 a.m. CST Nov. 28.
For more information, visit http://portal.wbscm.usda.
gov/publicprocurement.
CMN
example, how in some countries milk
products are marketed for certain times
of day and certain age groups. In terms
of cheese, per capita Korea is the fast
growing cheese market in the world,
Carey notes, citing the growing popularity of pizza in that country. However,
there is as an increasing demand for
low-sodium cheese there.
Africa also could pose more opportunities, but very few people there can
afford dairy products, Carey says, noting
that dairy, on a protein basis, is expensive. Still, more and more countries are
looking to dairy to fill nutrition gaps.
The United States has yet to make the
key reforms needed to fully capitalize on
the opportunities, the Bain report says.
If the United States doesn’t make key
reforms, unmet demand will accelerate the expansion of other producers,
and U.S. industry competitiveness will
erode.
The report says the future of the
U.S. dairy industry would benefit from:
reformed milk pricing systems to improve the forward/futures market to
manage price volatility; reformed price
supports to remove the government as
a “last resort” buyer and remove disincentives for product innovation; better
mechanisms for risk management to
mitigate the impact of volatility; and
modified standards of identity that are
closer to global norms if needed to meet
customer needs.
The reforms, whatever their details,
must enable key outcomes including
flexible pricing to let milk flow to the
best/most profitable use, greater price
predictability, market incentives to
better align product portfolios with
customer needs, and value growth for
producers and processors by investment
in innovation, safety and quality. CMN
should reach peak by 2020, says Brett
Burgess, manager, Bain & Co., in presenting findings from last year’s “Dairy
Globalization Refresh: 2011 Update.”
The study, conducted by Bain & Co., was
commissioned by Dairy Management
Inc. and the U.S. Dairy Export Council,
and updated an earlier report in light
of changing world market conditions.
(For more information, see “Innovation Center, Bain & Co. research shows
U.S. ‘on right track’ to international
growth” in our Aug. 5, 2011, issue.)
The European Union (EU), with the
process of removing its milk production
quotas, looks to provide increased export competition over the 2009 outlook.
Still, New Zealand and the EU, despite
modest increases, are unable to fill
demand gap, the Bain study says.
The refreshed view of dairy fundamentals shows the worldwide demand
gap is wider than anticipated and the
window of opportunity remains open
with the United States as a likely source
for many dairy products.
Dairy consumption is expected to
grow quickly in key emerging markets
from which about 75 percent of new
dairy consumption will come, according
to the Bain study.
However, key issues remain on how
to make products that people in export
markets can afford — and that they
will eat.
“Do you know what the most common
flavor of yogurt in China is? Aloe,” Carey
says, adding that in Southeast Asia it’s
red bean. “And all of the yogurts are
white. They don’t color them to match
the flavors. So how can we sell strawberry yogurt in China? It’s going to be
a tough sell.”
People use dairy differently in other
parts of the world. Carey notes, for
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Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
6
CHEESE MARKET NEWS ® — November 16, 2012
NEWS/BUSINESS
USDA, HHS to form Dietary Guidelines Advisory Committee in 2013, nominees sought
WASHINGTON — USDA and the U.S.
Department of Health and Human Services (HHS) have announced plans to
establish the 2015 Dietary Guidelines
Advisory Committee (DGAC) at the
beginning of next year.
The agencies also announced
an invitation is being extended for
nominations of individuals who are
interested in being considered for
appointment to the committee.
Under federal law, the secretaries of HHS and USDA are required
to publish the Dietary Guidelines for
Americans at least every five years.
The guidelines were first published
in 1980, with revisions in 1985, 1990,
1995, 2000, 2005 and 2011.
The DGAC is expected to begin
meeting during the spring/summer
of 2013 and will meet a minimum of
four times during the course of its
BelGioioso reaches settlement over violations
MADISON, Wis. — BelGioioso Cheese
Inc. and the Wisconsin Department of
Justice recently reached a settlement
resolving the state’s complaint that the
company violated terms of its Wisconsin
Pollutant Discharge Elimination System
(WPDES) permit.
The state’s complaint charged BelGioioso, which operates five cheesemaking facilities in northeast Wisconsin,
with violating individual permit terms
at one of the facilities and with violating general permit terms at another.
The violations included land spreading industrial dairy waste too close to
and into, a drainage way, spreading on
saturated soils, runoff to a wetland,
winter spreading on sites not approved
for winter months, and failure to report
noncompliance. The claims were based
on inspections triggered by hotline
complaints at various locations in
Manitowoc and Oconto, Wis., counties.
BelGioioso responded to the state’s
enforcement action by taking responsibility for the violations, retaining
consultants and taking steps to improve
and minimize its land spreading activities. As part of the settlement, BelGioioso agreed to create and implement
a comprehensive wastewater manage-
ment plan for all five of its facilities,
according to the stipulation and order
for judgement that was signed by both
parties in October. This plan will enable
BelGioioso to stay in and exceed compliance, and it will benefit its neighbors,
especially in Brown County, Wis., where
storage and disposal options for cheese
plant wastewater are very limited.
Additionally, BelGioioso has committed to construct at its Glenmore-Denmark facility a wastewater treatment
plant that is approved by the Wisconsin
Department of Natural Resources and
designed to comply with the company’s
WPDES permit limits and conditions.
The company estimates that this wastewater plant will cost approximately
$1.5 million.
BelGioioso also was ordered to pay
a total of $45,000 for costs related to
the violations, investigation and court
expenses.
Wisconsin Assistant Attorney General JoAnne Kloppenburg represented
the state, and the law firm of Liebmann,
Conway, Olejniczak & Jerry represented
BelGioioso. Dane County Circuit Court
Judge Amy R. Smith approved the
parties’ settlement and incorporated
it into the court’s judgment.
CMN
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operation. The DGAC is expected to
be comprised of up to 17 members.
Prospective members should be
knowledgeable of current scientific research in human nutrition
and chronic disease and be respected
and published experts in their fields,
USDA and HHS note.
Members also should be familiar
with the purpose, communication
and application of the guidelines
and have demonstrated interest in
the public’s health and well-being
through research and/or educational
endeavors.
Expertise will be sought in specific
specialty areas that may include but
are not limited to: cardiovascular
disease; type 2 diabetes; overweight
and obesity; osteoporosis; cancer;
pediatrics; gerontology; maternal/
gestational nutrition; epidemiology;
general medicine; energy balance;
nutrient bioavailability; nutrition
biochemistry and physiology; food processing science, safety and technology; nutrition education and behavior
change; and/or nutrition-related
systematic review methodology.
Nominations must be submitted
no later than the close of business
on Nov. 26.
For more information, visit
www.dietaryguidelines.gov. CMN
Commonwealth Dairy to expand yogurt plant
BRATTLEBORO, Vt. — Commonwealth
Dairy LLC recently announced that it will
invest $12 million in new facilities and
equipment at its plant in Brattleboro,
Vt., which began operations in March
2011. When the project is completed, the
company expects to add up to 34 new jobs
to its existing workforce of 110.
“Our production and expansion in
Brattleboro has far exceeded our most
optimistic projections when we launched
this project in 2010,” says Tom Moffitt,
president and CEO, Commonwealth
Dairy. “In less than two years, we have
become a leading producer of authentic
strained Greek yogurt, including our own
Green Mountain Creamery brand.”
As of January 2012, the company was
producing more than 100,000 cases of
packaged yogurt, including its strained
Greek yogurt, per week.
Commonwealth Dairy CFO Ben
Johnson says the company appreciates
the leadership of Vermont Gov. Peter
Shumlin and the Vermont Agency of
Natural Resources, the Vermont Agency of
Commerce and Community Development,
the Vermont Department of Agriculture
and the Towns of Brattleboro and Guilford
in making the project and expansion a
success, as well as the representatives
of the federal New Markets Tax Credit
Program who assisted with the latest
round of financing.
The new investment will add more
than 23,000 square feet to the facility,
including a new processing line, new
warehouse space, a new filling machine,
fermentation tanks, wastewater treatment improvements and new whey processing and packaging equipment. More
office space also will be included. All of
the milk utilized by the plant is expected
to continue coming from area farmers.
The project is expected to be completed
by April 2013.
Commonwealth Dairy LLC is a joint
venture between Ehrmann USA Holding,
a U.S. subsidiary of the German-based
international yogurt company Ehrmann AG, and Commonwealth Yogurt.
Moffitt and Johnson are its principal
owners. The company manufactures
private label, co-pack and branded
Class II dairy products, which are
primarily yogurt products.
CMN
Eurex Exchange offers whey powder contracts
BONN, Germany — Eurex Exchange
recently began offering a futures contract
on whey powder (FWHY) as part of its
agricultural derivatives segment. The
“European Whey Powder Index” is published by the Agrarmarkt InformationsGesellschaft mbH, Bonn. The new contract
complements the existing suite of futures
on skimmed milk powder and butter that
have been offered since the end of May
2010. Like these contracts, the new whey
futures contract will be based on a trading unit of 5 metric tons, denominated in
euros and settled in cash.
As part of the product launch for whey
powder contracts, maturities for existing
dairies contracts were extended and trading hours adjusted starting Sept. 7. Contracts for the Skimmed Milk Powder Index
Futures and the Butter Index Futures are
available with terms up to the next six
calendar months after Sept. 7, and the
following four quarterly months from the
cycle January, April, July and October. All
three dairies futures are traded from 8:45
a.m. to 6:30 p.m. Central European Time.
“Whey powder has gained considerable importance for the food industry in
recent years due to the high nutritional
value of whey protein,” says Ulrich Lammel, dairy strategic sourcing manager,
Kraft Foods Europe Procurement. “Prices
are highly volatile and, until now, Europe
has lacked a risk management instrument
available on an exchange. We therefore
welcome the introduction of a corresponding futures contract on Eurex.”
Sascha Siegel, the responsible product
developer at Eurex, says the new contract
was developed at the request of and in
close collaboration with major market
participants.
“We aim to expand our leading position in dairy derivatives in Europe with
the support of the agricultural and
food industries,” Siegel says.
CMN
For more information please visit www.zepnick.com
Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
November 16, 2012 — CHEESE MARKET NEWS ®
7
NEWS/BUSINESS
Dairy Research Institute plans to launch
open innovation program to seek solutions
ROSEMONT, Ill. — The Dairy Research
Institute (DRI), established under the
leadership of America’s dairy farmers,
last week announced the launch of an
open innovation program. The new
program and associated submission site,
DRIResearchSubmission.com, seek existing solutions and technologies from
within and outside the dairy industry
to help accelerate research and meet
specific dairy industry needs.
“The Dairy Research Institute is
committed to sound, scientific research
to better understand the value of dairy
products and accelerate dairy product
and ingredient innovation,” says Greg
Miller, president of the Dairy Research
Institute. “The open innovation program
expands our view to ensure the dairy industry benefits from the best innovative
ideas, whether from within or outside
our industry.”
The program aims to discover solutions to challenges that may already
exist in other industries, reduce research time and dollars spent to solve
industrywide issues and decrease time
to activation.
“While the dairy industry has always
been receptive to outside innovation,
this effort formalizes the process to
encourage the exchange of new ideas
and partnerships with other industries,”
says Beth Rice, manager of scientific
affairs, Dairy Research Institute. “Someone from a different field could have
an existing solution to a dairy-specific
challenge that we might not find without
looking beyond our own industry.”
The site is currently accepting sub-
missions on the following topics:
• Identification of a biomarker for
dairy food intake;
• Novel methods to further improve
quality of fresh or low-sodium cheeses;
and
• Methods to prevent biofilm formation in dairy processing equipment
The Dairy Research Institute will
conduct a technical review of all submissions and evaluate each for potential
scalability, pilot testing and application
to the dairy industry.
According to Rice, the short-term
benefit of submitting a potential solution is the possibility for funding on
research to determine how the technology applies to the dairy industry.
The long-term benefit could be even
greater, she adds.
“Applicants have the possibility to
gain access to an entire industry that
they may not have had a connection with
before,” she says. “This could open doors
to build new partnerships within the
dairy community for long-term success.”
The Dairy Research Institute conducts research on behalf of partners,
including the Innovation Center for
U.S. Dairy, which also will be able to
use this resource to address new dairy
innovation challenges.
In addition, the Innovation Center
this week held a “Future of Dairy Forum” in Rosemont which included eight
breakout sessions on specific growth
opportunities for the dairy industry.
For more information on the forum, visit www.usdairy.com/insights/
pages/future-of-dairy-forum.aspx. CMN
DSM to acquire Cargill’s cultures business
HEERLEN, the Netherlands — Royal DSM
recently announced that it has reached an
agreement with Cargill to acquire Cargill’s
cultures and enzymes business in an all-cash
transaction valued at 85 million euros.
Subject to customary conditions, the
transaction is expected to close in the next
couple of months.
DSM previously had announced that
it was in exclusive discussions with Cargill regarding the acquisition (see “DSM
discussions with Cargill could result in
acquisition of cultures, enzymes business” in the Sept. 21, 2012, issue of Cheese
Market News).
The cultures and enzymes business of
Cargill is a leading global manufacturer
of cultures and enzymes for the dairy and
meat industries with manufacturing operations in Wisconsin (U.S.) and France.
DSM notes it has a strong pipeline of new
products built on three pillars of technology:
culture texture toolbox, fast acidification
for cheese yield improvements and culture
flavor systems.
By combining the cultures and enzymes
business of Cargill with the dairy business of
DSM Food Specialties, a strong global player
will be created, enabling DSM to propel sales
growth as well as capture sizable synergies
in global manufacturing and customer
reach as well as innovation capabilities in
biotechnology, the companies say.
The combination of the two businesses will allow DSM to achieve its ambition
to become a tier one supplier of cultures
and enzymes to the global dairy market
and will greatly accelerate DSM’s growth
plans for its business, which continues to
benefit from consumer demand for more
versatile dairy products, DSM adds. The
acquisition further strengthens DSM’s
global position in dairy ingredients with
enzymes, PUFAs, vitamins, cultures,
probiotics, bio actives, preservation
systems and tests.
“This is a very important growth-enhancing acquisition for our Food Specialties
business and fully fits our strategy as we
continue to create value for all stakeholders
by providing innovative, sustainable solutions to the world’s greatest current and
future challenges,” says Stephan Tanda,
member of the DSM managing board who
is responsible for the nutrition cluster..
Hans-Christian Ambjerg, president,
DSM Food Specialties, adds, “We are very excited about this opportunity to build critical
mass and to serve our customers faster with
more innovative solutions. We look forward
to welcoming the Cargill employees with
their great knowledge and expertise.” CMN
Our Customers…
Making You Our
Number One Priority!
USDA releases list of largest cooperatives;
record sales, income reported in 2011
WASHINGTON — Domestic food and agricultural cooperatives fared well in 2011,
besting previous sales and income records
set in 2008 by $10 billion and $500 million
respectively, according to the list of top
100 ag co-ops recently released by USDA.
“These new cooperative sales and
income records for 2011 underscore the
strength and productivity of the nation’s
farmer- and rancher-owned cooperatives,
and the vital role they play in the nation’s
economy,” says Dallas Tonsager, under
secretary for Rural Development. “Primarily because of mergers, the number
of farm co-ops continued to decline, but
memberships and asset values are up.”
Net income before taxes for all agricultural co-ops was a record $5.4 billion,
eclipsing the previous high of $4.9 billion,
set in 2008. Net income was up more than
25 percent, or $1 billion, from 2010.
The 2,285 surveyed cooperatives had
sales of $213 billion, exceeding 2010 sales
by more than $40 billion.
USDA’s list of the nation’s 100 largest
ag co-ops showed reported revenue of $148
billion in 2011, an increase of almost 30
percent over 2010, when revenue totaled
$113 billion. Net income for the 100 top
co-ops was $3.17 billion, up from $2.35
billion in 2010. The previous top 100
co-op records were $130 billion for sales
and $2.42 billion for income, both marks
set in 2008.
Aside from shuffling places, the Top
10 cooperatives didn’t change much
from 2010: five of the top 10 maintained
their previous ranking. No new entrants
cracked the Top 10.
CHS Inc. again topped the list as the
nation’s largest ag co-op with $36.9 billion
in revenue in 2011. CHS’ revenues — $11.6
billion more than in 2010 — eclipsed the
combined sales of the next three cooperatives on the list.
Dairy Farmers of America (DFA) came
in second on the list with $12.9 billion in
revenue, trading places from 2010 with
third-ranked Land O’ Lakes Inc. DFA’s
reported revenues of $12.9 billion jumped
nearly $3 million from 2010, propelling it
ahead of Land O’ Lakes reported revenue
of $12.8 billion.
For a complete list of the top 100
ag-cooperatives, visit www.rurdev.usda.
gov/BCP_Coop_RurCoopMag. CMN
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Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
8
CHEESE MARKET NEWS ® — November 16, 2012
PEOPLE
U.S. Dairy Export Council elects Paul Rovey, Ariz. dairyman, as chairman of board
ARLINGTON, Va. — Arizona dairyman
Paul Rovey was elected chairman of the
U.S. Dairy Export Council (USDEC) at
the association’s membership meeting
in October.
Rovey had been serving as interim
chairman, filling the seat made vacant
by former chairman Les Hardesty’s
retirement. Rovey is the fourth elected
chairman in the organization’s history,
following Elwood Kirkpatrick (19952004), Tom Camerlo (2004-2009) and
Obituary
George Antonio Borba
VISALIA, Calif. — George Antonio
Borba, former chairman of the board
for California Dairies Inc. (CDI) and
California Milk Producers (CMP), died
here Oct. 23. He was 80 years old.
Borba served as chairman of the board
for CDI from 1999-2009 and as chairman
of CMP from 1996-1999. Borba also operated George Borba and Son Dairy.
Borba is remembered by his colleagues in the dairy industry as an
extraordinary and respected leader
who made contributions to CDI and the
industry as a whole.
“George Borba was willing to take a
vision of a united California dairy industry
and take it to the next level. For this, I
have the utmost respect for him,” says
Tony Mendes, CDI member and former
chairman of the board. “The dairy industry owes a great deal to George Borba.
Throughout his career he vigorously advo-
cated on behalf of all dairymen, large or
small, always inserting himself personally
into issues that affected them.”
As chairman of CMP, Borba championed the formation of and served as chairman of a Marketing Agency in Common
(MAC) among CMP and other California
cooperatives. In 1999, Borba played a role
in the merger of Danish Creamery, San
Joaquin Valley Dairymen and CMP which
led to the creation of CDI. Under Borba’s
leadership, CDI surpassed $3 billion in
sales, making it the second largest dairy
processing cooperative in the nation.
Borba is survived by his wife of 57
years, Delores; daughters Kim Borba,
Linda (Armen) Gourdikian, Victoria
(Andrew) Rynsburger, Cynthia (Tom)
Podmajersky; son George Borba Jr.
(Jennifer); 18 grandchildren; four
great-grandchildren; a brother, John,
and a sister, Mary Borba Parente. CMN
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Hardesty (2009-2012).
Rovey milks approximately 2,100
cows on his dairy farm in Glendale,
Ariz. He also serves as chairman of
the boards of Dairy Management Inc.
(DMI), United Dairy Industry Association (UDIA) and the National Dairy
Board (NDB).
Rovey will preside over the 116-member organization that focuses on market
development, market access and trade
policy and is supported primarily by
the dairy checkoff and complemented
with additional funding from the USDA.
“I know all the work that goes into
building the U.S. dairy brand and I
know my fellow producers and I are
eager to strengthen and expand our
markets abroad,” Rovey says. “The
coming years are going to be crucial
as we work to cement our position as
consistent suppliers of dairy products
to buyers, whether here or overseas.
USDEC’s model is sound and responsive, and I’m proud to be a part of this
organization.”
Also at the meeting, Kenton Holle
was elected to serve as USDEC’s vice
chairman. He is the vice chairman of
the National Dairy Board, a member of
DMI’s board of directors and milks 600
cows in Mandan, N.D., for Land O’Lakes.
In addition, Tom Gallagher was reelected USDEC’s secretary/treasurer.
Since 1995, Gallagher has served as
the chief executive officer for DMI,
which manages the national dairy
producer checkoff program. CMN
Comings and goings … comings and goings
Tom Gilbert has been named
sales and marketing manager for
Bob White Systems, South Royalton,
Vt. Gilbert is a cheesemaker and former owner/operator of a cheese factory, producing and selling artisanal
cheese and yogurt. Gilbert also has
worked as a dairy herdsman in three
states.
Joe McGoldrick has been named
Midwest regional sales manager for
EDL Packaging Engineers, Green
Bay, Wis. McGoldrick has previous experience in managing custom equipment projects, equipment sales and
consumer product ingredients.
Brendan Flanagan has been promoted to vice president of state and
local affairs for the National Restaurant Association (NRA), Washington, D.C. In the newly-created position, Flanagan will lead the NRA’s
engagement in public policy matters
at the state and local level. Flanagan
has spent nearly 20 years working on
public policy issues for the restaurant
industry at the local, state and federal level. For the past 11 years, he has
worked in the NRA’s policy and government affairs department.
Mark Jacobson has been named
senior relationship manager for
the middle market banking team of
Rabo AgriFinance, Chicago. In the
new role, Jacobson will be responsible for creating lending solutions
for processors and agribusiness in
Illinois, Michigan and Wisconsin.
Jacobson is a former vice president
of food & agribusiness for Bank of
America, N.A. He also has analytical credit experience and capital
structuring experience with Wells
Fargo, CoBank and PNC Bank. CMN
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Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
November 16, 2012 — CHEESE MARKET NEWS ®
9
NEWS/BUSINESS
Arla to expand
milk powder plant
for Chinese market
AARHUS, Denmark — Arla Foods has
announced plans to expand its Arinco
milk powder facility in Denmark in order to meet the demand from a 10-year
contract it signed earlier this year with
Chinese child and infant formula company Biostime. (See “Arla signs supply
agreement with Chinese baby formula
company to secure capacity” in the July
6, 2012, issue of Cheese Market News.)
Under the contract, Biostime will require approximately 20,000 metric tons of
milk powder a year for the next 10 years.
Biostime will finance half of the expansion of Arla’s Arinco milk powder facility.
“We expect that this increased
production for the Chinese market will
create about 30 new jobs at our facility
between now and 2014,” says Mogens
Bogh Pedersen, Arinco site director. “The
investment also means we can introduce
more automated processes and thus make
production at Arinco even more efficient.”
Arla already exports refined milk
powder and infant nutrition products to
China. The contract with Biostime was
signed soon after Arla’s strategic agreement with major Chinese food company
COFCO for joint ownership of China’s largest dairy company, Mengniu Dairy Group.
Arla says these agreements are intended
to strengthen its presence and long-term
profitability in the Chinese market. CMN
Six members of European Union exceed milk quotas in 2011/2012
BRUSSELS, Belgium — Ireland
exceeded its milk quota for 2011/2012
by about 60,000 metric tones (+1.1
percent), triggering “superlevy”
penalties of approximately 16 million euros ($21 million), according
to recent figures published by the
European Commission.
Five other European Union member countries also exceeded their milk
quotas in 2011/2012, though total EU
deliveries remained 4.7 percent below
the global quota volume.
According to national declarations, Austria, Ireland, the Netherlands, Germany, Cyprus and Luxembourg exceeded their national
quotas by a total of 283,000 metric
tons despite the 1 percent quota
increase in the year 2011/2012. The
Netherlands also exceeded its direct
sales quota, while the other member
states exceeded only their quota for
deliveries. All together, these member
countries have triggered penalties of
about 79 million euros ($103 million).
The number of member countries
exceeding their quotas remains
limited and the concerned surplus
production accounts for less than 0.2
percent of all milk delivered or covered by direct sales. Several member
countries produced far below their
respective national quota.
In the quota year 2010/2011,
penalties worth 55.6 million euros
($72.2 million) were triggered in five
member countries, and overall EU
deliveries were 5.5 percent below the
total EU quota volume.
The dairy quota system was
introduced in the 1980s to address
problems of surplus production.
Each member country has two
quotas, one for deliveries to dairy
processors and the other for direct
sales at the farm level. The quota
system will be abolished in April
2015. The 2008 CAP Health Check
established a 1 percent increase in
quotas every year until then. CMN
Byrne Dairy’s plans
for new yogurt
plant, agritourism
center in works
CORTLAND, N.Y. — Byrne Dairy announced it has reached an agreement
with the Cortland County Industrial
Development Agency that could lead
to a new yogurt plant and agritourism
destination at the Finger Lakes East
Business Park located here.
Under terms of the option agreement, Byrne Dairy has the right to
purchase a 127-acre parcel of land if
building plans are approved, the company receives local incentives and New
York State funding assistance is granted,
Byrne Dairy says in a news release.
If all contingencies of the agreement
are met, the company says construction
could begin on the company’s fourth
manufacturing facility in the central
New York area in 2013.
“Our vision is to create a destination
for generations to experience by carefully
planning the site to have visitor access for
tourism and entertainment as well as training and educational opportunities,” says
Carl Byrne, president and CEO of Byrne
Dairy. “We want to build an environment
that inspires and encourages learning
along with attractions that utilize the site’s
beautiful scenery and available land.” CMN
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Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
10
CHEESE MARKET NEWS ® — November 16, 2012
NEWS/BUSINESS
Estrella Family Creamery faces court order
MONTESANO, Wash. — The U.S. Attorney’s Office of the Western District of
Washington recently announced that the
Estrella Family Creamery, Montesano,
Wash., now is barred by a federal court
order from producing and selling cheese
in interstate commerce.
In this latest judgment, U.S. District
Court Judge Benjamin H. Settle issued a
permanent injunction against Estrella and
ordered the owners to pay the costs the
government incurred when it seized the
cheese inventory in October 2010, after
repeated tests by FDA and the Washington
State Department of Agriculture (WSDA)
showed the persistent presence of Listeria monocytogenes in Estrella’s cheese
products and facilities.
The judge’s order also authorizes FDA
to inspect Estrella’s operations in the future to ensure the creamery is complying
with the permanent injunction.
On Oct. 21, 2010, the government filed
a civil forfeiture action against Estrella.
Testing earlier that year revealed the
presence of Listeria monocytogenes in
the creamery’s cheese, the salt brine
used in processing the cheese, and in
production and storage areas throughout
the farm. Estrella had recalled a variety
of cheeses in February and March 2010
following the test results, but refused
FDA’s request that it recall all cheese
following additional tests in August of
that year which revealed the persistent
presence of Listeria monocytogenes in
the production space and aging rooms.
Settle issued a warrant, and the U.S.
Marshal’s Service seized all of Estrella’s
cheese products in place on Oct. 21, 2010.
Months later, Estrella informed the government that they fed the seized cheese
to pigs on their farm, in violation of the
court’s warrant.
On Aug. 16, 2012, attorney David G.
Cox, who is representing Estrella Family
Creamery and its owners, filed a motion
on behalf of his clients to separate the
issues of liability and remedy in the
summary judgment. The motion argued
that if the creamery did not engage in
interstate commerce, FDA lacked any
regulatory authority to conduct inspections of its facility. The defendants said
they would not contest FDA’s request
for a summary judgment, but said more
evidence would be necessary to allow the
court to determine the scope and extent
to FDA’s remedy in this case.
The motion also said, “Defendants
have been abused by FDA to such an
extent that defendants are willing to
forego their right to engage in interstate
commerce, to never again have to deal
with FDA, and to instead engage solely
in intrastate commerce free from the
draconian methods of FDA.”
Settle granted the government’s motion for summary judgment on the case
Oct. 24, 2012. Holding that the government
was entitled to an order of condemnation and an award of costs, Settle stated,
“Allowing defendants to escape liability
by feeding the cheese to the pigs would
subvert the purpose of the regulatory
statute.”
Settle also entered the government’s
proposed injunction, which prohibits the
creamery from engaging in the production
or sale of cheese or other foods in interstate
commerce unless it takes comprehensive
steps to eradicate Listeria monocytogenes
from its facilities and implements other
food safety measures proposed by FDA. The
injunction authorizes FDA to inspect the
creamery in order to ensure it is complying
with the terms of the injunction.
Assistant U.S. Attorney David East handled the matter for
the U.S. Attorney’s office. CMN
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Emmi acquires 24-percent of German
organic dairy processor Gläserne Molkerei
LUCERNE, Switzerland — Emmi
recently announced that its subsidiary
Molkerei Biedermann, which specializes in organic products, is entering into
a strategic partnership with German organic dairy company Gläserne Molkerei
by acquiring a 24-percent stake in the
company. Gläserne Molkerei is a leading organic milk processor in northeast
Germany with a premium range of milk,
cheese, yogurt and other dairy products.
Emmi says this strategic partnership
will enable the company to consolidate
its position in Germany, a key market,
and become more involved in the
growing market for organic products,
including exports of these products
from Switzerland.
CMN
USDA: 60 dairy co-ops were sold or went
out of business nationwide from 2000-2010
WASHINGTON — The first decade
of the 21st century was hard on dairy
cooperatives across the country, with
a net loss of 60 co-ops recorded in that
10-year span, dropping the total from
211 in 2000 to 151 in 2010, according
to a USDA report released this summer.
The number of dairy cooperatives
that disappeared between 2000 and
2010 outpaced the number of new cooperatives that were formed by nearly
four to one. Almost two of every five
dairy cooperatives existing in 2000 had
gone out of existence by 2010, averaging 7.5 cooperative exits per year from
2000-2010, the study found.
Most of the 83 cooperatives that
ceased to exist between 2000 and 2010
were sold or went out of operation (49
cooperatives), while 30 merged with
another cooperative. Four no longer
handled member-producer milk, according to USDA.
Research also indicates there are
ongoing adjustments among cooperatives that manufacture or process
members’ milk into specialty niche
products. From 2000-10, many cooperatives ceased making niche products;
however, at the same time a number of
cooperatives began making niche products or were formed in order to make
niche products.
Small cooperatives (those handling
less than 50 million pounds of milk
annually) had more exits and entries
than medium-sized cooperatives (50
million to 1 billion pounds) or large cooperatives (1 billion pounds or more).
The net drop of 63 small cooperatives
during 2000-10 was the largest change
among the 3 size groups. Accordingly,
small cooperatives went from being a
majority of the nation’s dairy cooperatives (60.2 percent in 2000) to 42.4 percent in 2010, according to USDA.
Medium-sized cooperatives showed
the smallest net change in numbers (a
decline of three cooperatives) while
the number of large cooperatives grew
by a net of six cooperatives, mostly
due to increases in the amount of milk
handled by existing cooperatives, the
report says.
Close to half the 83 dairy cooperative exits were in the North Atlantic
region. In addition, the North Atlantic
was the only region where a majority of
the cooperative exits were by merger.
The South Atlantic region (with the
fewest cooperatives of all the regions
in 2000) had no exits and added two
cooperatives from 2000-10. The East
North Central region had eight new cooperatives form in that time, while the
North Atlantic region had seven new
cooperatives form.
USDA says the performance of dairy
cooperatives was examined using a
measure of financial performance that
takes into account the alternative cost
of using member-supplied capital. The
results indicate that, on average, dairy
cooperatives generated extra value for
members throughout the entire decade, meaning earnings were able to
cover a nominal charge for use of member-supplied capital. The results also
indicated that for cooperatives that
merged, financial performance was
not an obvious reason. Rather, a strong
position may have made some cooperatives attractive merger candidates.
The report concludes that dairy
cooperatives are flexible, responsive
organizations that adapt to member
needs in the marketplace. Dairy cooperatives represent a major share
of U.S. milk production, even as some
have altered operations to meet changes in the market environment, and
some have gone out of business. CMN
DSM site in South Bend awarded top-level
Food Safety System Certification 22000
SOUTH BEND, Ind. — DSM Food Specialties B.V. has announced that its production
site located here has been awarded Food
Safety System Certification (FSSC) 22000,
the top-level food safety certification.
DSM says earning the certification
reaffirms its “Quality for Life” commitment to manufacturing ingredients that
are safe in terms of quality, reliability
and traceability.
In order to obtain the FSSC 22000
a food manufacturer must follow
strict requirements including: trained
and qualified personnel, sufficient
infrastructure, and a work environment that ensures food safety. CMN
Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
November 16, 2012 — CHEESE MARKET NEWS ®
11
NEWS/BUSINESS
Licensed cheese imports down in October
WASHINGTON — U.S. cheese imports
subject to licensing requirements
totaled 14.9 million pounds, down 7
percent from October 2011, according
to the latest numbers from USDA’s
Foreign Agricultural Service (FAS).
January-October licensed cheese imports totaled 136.0 million pounds, up
4 percent from the same 2011 period.
(The figures released by USDA are
in kilograms; Cheese Market News
has converted the data to pounds by
multiplying by 2.2046.)
Licensed imports of Swiss and Emmenthaler with eye formation totaled
3.4 million pounds in October, down 7
percent from a year earlier. JanuaryOctober licensed imports of these
cheeses totaled 34.8 million pounds,
down 5 percent from the same months
last year.
October imports of Italian-type
cheeses subject to licensing requirements totaled 1.1 million pounds, down
54 percent from October 2011. Year-todate licensed imports of Italian-type
cheeses through October totaled 12.7
million pounds, up 23 percent from the
same period in 2011.
Licensed Edam and Gouda imports
in October totaled 1.1 million pounds,
down 24 percent from a year ago.
January-October licensed imports
of these cheeses totaled 9.2 million
pounds, up 14 percent from the same
2011 period.
Cheddar imports subject to licensing requirements totaled 824,337
pounds in October, up 12 percent
from October 2011. January-October
licensed imports of Cheddar totaled
10.3 million pounds, up 75 percent
from January-October 2011.
October licensed imports of processed Gruyere totaled 739,476 pounds,
up 42 percent from October 2011.
January-October processed Gruyere
imports subject to licensing requirements totaled 4.4 million pounds, up
2 percent from the same 2011 period.
Imports of Blue mold cheeses
subject to licensing requirements
totaled 692,185 pounds in October, up
72 percent from October of last year.
Year-to-date licensed imports of Blue
mold cheeses through October totaled
4.7 million pounds, down 6 percent
from the first 10 months of 2011.
Licensed imports of other cheese
not-specifically-provided-for (NSPF)
totaled 7.1 million pounds in October,
up 1 percent from October of last
year. January-October imports of
other cheese NSPF totaled 59.9 million
pounds, virtually unchanged from the
same months in 2011.
October licensed butter imports totaled 2.9 million pounds, up 176 percent
from October 2011. January-October
licensed butter imports totaled 9.1
million pounds, up 41 percent from
the same period last year.
October licensed imports of butter
substitutes totaled 717,262 pounds,
down 67 percent from a year earlier.
January-October licensed butter substitute imports totaled 9.4 million
pounds, up 154 percent from JanuaryOctober 2011.
Imports of high-tier cheese and other dairy products year-to-date through
October totaled 22.9 million pounds, up
3 percent from the comparable months
in 2011. Italian-type cheeses are leading high-tier imports year-to-date with
11.9 million pounds, down 9 percent
from January-October 2011. Following
this category are high-tier imports of
other cheese NSPF, with 5.6 million
pounds January-October, up 36 percent
from the same 2011 period.
CMN
Sargento enlists Advantage Sales and
Marketing to promote retail sales growth
PLYMOUTH, Wis. — Sargento Foods
Inc. recently announced it has appointed Advantage Sales and Marketing
(ASM) as its national sales and marketing agency.
“The appointment of ASM as our
national agency partner is an integral
piece of our long-term strategy to be the
leader in the natural cheese category,”
says Louie Gentine, president and chief
customer officer at Sargento. “We chose
ASM because they will be an outstanding
partner that will help us achieve our
long-term growth goals.”
Michael Pellegrino, president,
Sargento Consumer Products Division (CPD), Mark Gumm, CPD vice
president-sales, and Rick Sternhagen,
CPD director-sales, will work closely
on behalf of Sargento with ASM on all
strategic initiatives.
A transition process is in place and
will be completed toward the end of the
year. ASM will assume responsibility for
Sargento headquarter and retail sales
operations in the grocery, mass, club,
drug and value classes of trade.
ASM is headquartered in Irvine,
Calif., and has 66 offices in the
United States and Canada.
CMN
For more information circle www.cheesemarketnews.com
Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
12
CHEESE MARKET NEWS ® — November 16, 2012
NEWS/BUSINESS
FARM BILL
Continued from page 1
by the end of the legislative session.
In the letter to House Speaker John
Boehner, R-Ohio, Majority Leader Eric
Cantor, R-Va., Minority Leader Nancy
Pelosi, D-Calif., and Minority Whip Steny
Hoyer, D-Md., the coalition notes the
paramount importance of the legislation.
“Failure to pass a new 5-year farm
bill before the year’s end will create
significant budget uncertainty for the
entire agricultural sector, including the
rural businesses and lenders whose livelihoods are dependent upon farmers’ and
livestock producers’ economic viability,”
the letter says.
The letter also notes that a temporary
extension of the farm bill would be a
“short-sighted, inadequate solution that
would leave our constituencies crippled
by uncertainty.”
Jerry Kozak, president and CEO,
NMPF, says the dairy title, along with
the rest of the farm bill, saves money
compared to the present program.
He notes that NMPF’s board of directors earlier this year came out against an
extension of the status quo, asserting that
an extension of current policy through
2013 does dairy farmers no real good and
leaves the tough choices about budget
priorities unresolved.
“Dairy farmers need more than platitudes from Congress — we need action
and leadership,” Kozak says.
Steve Etka, coordinator for the Midwest Dairy Coalition, notes the organization has stated previously that it supports
the dairy provisions of the Senate-passed
farm bill as well as the farm bill passed
by the House Ag Committee.
“However, the bill has not progressed,
leaving dairy farmers without an effective
program,” Etka says.
“Congress could decline to take
any action at all, just as we’ve seen the
past several months,” he adds. “Such
inaction would be to the detriment of
the nation’s dairy farm families, as well
as other taxpayers. Congress shouldn’t
squander away two years of work on the
new farm bill by pushing the debate into
a new year and forcing the process to
start all over again.”
Also this week during its 94th annual
convention, the New Jersey Farm Bureau
emphasized the importance of getting
a farm bill passed as soon as possible.
“American farmers need the farm
bill,” says Richard Nieuwenhuis, who is
retiring as president of the New Jersey
bureau after serving for the maximumallowed three terms and who also serves
on the board of the American Farm
Bureau Federation.
“A major concern of the federation
is the lack of such a bill, leaving many
farmers, especially dairy farmers, without any sort of safety net in the event of
crop failure,” Nieuwenhuis says.
He notes that most of the commodity
programs won’t be affected until spring
2013 because the 2008 Farm Bill covers
2012 crops.
“However, several dairy provisions
are now expiring,” he says. “Hence, we
either need a new bill now, or the 2008
bill must be extended prior to year’s end.”
Meanwhile, the Council for Citizens
Against Government Waste (CCAGW)
and the National Taxpayers Union this
week released the second in a series of
videos voicing concerns on the inclusion of the Dairy Market Stabilization
Program (DSMP) in dairy policy reform.
The groups say the stabilization
provision would “launch a new raft of
complicated federal rules and regulations aimed at keeping prices high for
families who buy milk or dairy products
and continue government control over
the nation’s milk supply.”
The market stabilization program
is included in the proposed farm bill
approved by the House Committee on
Agriculture in July. The bill now awaits
floor debate by the full House. The groups
note that former Agriculture Committee
Chair Bob Goodlatte, R-Va., and Rep.
David Scott, D-Ga., are expected to offer
an amendment to delete the stabilization
program.
“One of the most interesting facts to
come out of the recent election is that
51 percent of voters believe that government is doing too much, an increase of 7
percent from 2008,” says CCAGW President Tom Schatz. “The DMSP is precisely
the kind of incessant meddling that has
outraged American taxpayers. The U.S.
dairy program is already a mindlessly
convoluted patchwork of government
manipulation; instead of grafting more
rules and regulations onto an already
incomprehensible operation, the federal
government should be getting out of the
way and letting the free market drive
milk production.”
The video is available at www.Your
MilkMoney.org.
Both the International Dairy Foods
Association (IDFA) and Dairy Institute
of California also oppose the stabilization
provision and support the compromise
Goodlatte-Scott amendment.
“One of the problems with the farm
bill is the controversial program to
limit milk production by penalizing dairy
farmers that is part of the Dairy Security
Act,” says Jerry Slominski, IDFA senior
vice president, legislative and economic
affairs. “The Goodlatte-Scott amendment
has been endorsed by a broad coalition
of consumer organizations, conservative
groups, food manufacturers and the
second largest dairy co-op in the county.
Adopting the Goodlatte-Scott approach
would not only be good policy for the
dairy industry, it is the kind of bipartisan
compromise that will be needed to get
a farm bill through Congress and to the
president’s desk.”
The California Dairy Institute views
prospects for a farm bill during the lame
duck session as “very possible,” says
Executive Director Rachel Kaldor.
“In whatever timeframe the farm
bill is considered, we hope there
will be broader appreciation of the
negative impact of supply management on our need to grow markets
globally,” Kaldor says. “Passage of the
dairy title without substantive amendments to remove supply management
portends long-term setbacks for U.S.
dairy farmers and processors.” CMN
U.S. dairy exports are lower in September
For more information circle www.cheesemarketnews.com
WASHINGTON — U.S. dairy exports
overall were lower in September vs.
August, down by about 5 percent by
both volume and value, according to
the latest U.S. Dairy Export Council
(USDEC) report, based on USDA data.
Total dairy export value in September
was $400.5 million, down 4 percent
from a year ago. The year-to-date value
of dairy exports through September
totaled $3.97 billion, up 12 percent from
the same period last year.
In the first nine months of 2012,
U.S. exports of dry ingredients (milk
powder, whey, lactose), cheese and
butterfat were 2.76 billion pounds, up
6.1 percent from the previous year. (The
figures released by USDA and USDEC
are in metric tons; Cheese Market News
has converted the data to pounds by
multiplying by 2,204.6.)
U.S. exports of nonfat dry milk and
skim milk powder (NDM/SMP) in the most
recent quarter (July-September) totaled
238.1 million pounds, down 3.3 percent
from a year earlier, USDEC reports. Yearto-date, NDM/SMP sales to Mexico were
up 18 percent from the same 2011 period,
while exports to Southeast Asia were down
32 percent. Shipments to the Middle East/
North Africa more than doubled.
U.S. exports of cheese in the third
quarter were 134.1 million pounds, up
27.6 percent vs. last year, USDEC says.
Year-to-date, shipments of cheese to
Mexico were up 39 percent compared
to last year, shipments to Japan were
up 30 percent and shipments to Saudi
Arabia were up 34 percent.
USDEC says U.S. exports of whey
products in the most recent three
months totaled 273.8 million pounds,
up 8.6 percent compared to a year ago.
China remains the major customer for
U.S. whey products, and 2012 purchases
by China are up 10.9 percent compared
to last year. Whey protein concentrate
(WPC) exports are up 33.7 percent
year-to-date, USDEC reports.
Lactose exports remain fairly steady
in the third quarter at 168.2 million
pounds, down 4.3 percent from last year,
USDEC says. Meanwhile, U.S. exports
of butterfat in the latest quarter were
just 16.4 million pounds, down 42.2
percent compared to last year. CMN
Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
November 16, 2012 — CHEESE MARKET NEWS®
13
CLASSIFIED ADVERTISING
•
EQUIPMENT
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CHEESE MARKET NEWS ® — November 16, 2012
C L A S S I F I E D
ADVERTISING
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NEWS/BUSINESS
MARKET
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Dalhart Production Manager
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For more information circle 5 on the FAST FAX form on page 12.
9
Continued from page 1
monitoring their supply/demand balance,
with many working down inventories
rather than enhancing them.
“Butter demand has been very good
going into the Thanksgiving holiday
period with many promotional activities
scheduled,” Dairy Market News says. “The
period between Thanksgiving and the year
end is a period where good butter demand
is typically spread out over a longer period of time vs. prior to the Thanksgiving
holiday; thus, butter orders and shipments
are projected to be very active during the
next 4 to 6 weeks.”
Dairy Market News also says that in
the coming months, some manufacturers
of both cheese and butter plan to divert
milk more toward Cheddar production
than butter.
“They believe that Cheddar will present a more profitable way to hold milk in
coming months,” Dairy Market News says.
Plourd notes that the market for butter over the past several weeks has had
a largely narrow focus on domestic needs
and will likely soon give way to world
conditions, which are less supportive of
higher prices.
PETITION
Continued from page 1
Tuesday CDFA sent a response, saying that in absence of a statement that
sets forth the secretary’s authority to
take action, CDFA cannot determine if
the petitioners are proceeding under
the discretionary or mandatory hearing
procedure set forth in the California Code
of Regulations.
“The department will evaluate any
future resubmission of the petition in
accordance with the provisions of the applicable regulatory procedure,” says Kevin
Masuhara, director of CDFA’s Division of
Marketing Services.
Letters supporting the petition have
been sent to CDFA by Western United
Dairymen, California Dairywomen Association (CDWA), California Dairy
Campaign (CDC), Lorinda Dairy and
Alfred Soares Dairy.
“California dairy families are suffering
severe economic hardship at this time.
Many have gone out of business and many
more will follow due to eroded equity.
Many cannot get funding to purchase
hay for the winter. Many will not be in
business by winter if they do not get some
price relief,” writes Linda Lopes, CDWA
president, in her letter urging CDFA to
support the petition.
Dairy processors including Hilmar
Cheese Co., Los Altos Food Products Inc.,
Farmdale Creamery and Saputo Cheese
USA Inc., and the processor organization
Dairy Institute of California have sent
letters urging CDFA to deny the petition,
saying the proposed changes would hurt
dairy processors and long-term investment in the California dairy industry.
He adds that the export picture for
cheese has not been especially competitive for some months. Last week the price
gap was wide, with the latest GlobalDairyTrade auction in New Zealand yielding an
average Cheddar price of about $1.38 per
pound, much cheaper than U.S. cheese.
Sara Dorland, managing partner
with Ceres Dairy Risk Management LLC,
Seattle, says a tighter market for U.S.
cheese has driven up prices domestically, but that same tightness is not in
play globally.
“The price of cheese in Europe and
Oceania has not come up, so we had to
come down,” she says.
Dorland notes that waning export
demand should put more product back
into the U.S. market, which should push
prices down.
“As our prices come more in line with
world prices, I think you’ll see export
demand start to pick up again,” she says.
Rice notes that even though anecdotally he has heard of export demand waning
since the summer, recent export numbers
are still above year-ago levels — although
September export volumes for cheese
were lower than August.
“There seems to be a bit
of a disconnect between the data
and the chatter,” he says.
CMN
“While we recognize the struggles
producers are facing as a result of high
feed costs, the regulatory solutions proposed by the petitioners will not solve
their problems. Real relief must come
from the marketplace, or it will not be
lasting,” says David Ahlem, vice president of dairy procurement and policy,
in Hilmar’s letter to CDFA Secretary
Karen Ross.
Los Altos Food Products Inc. says California cheese manufacturers, especially
the smaller ones, also are struggling,
and the proposed 4b change would only
increase uncertainty.
“Milk prices are at historic highs, and
have been so since February 2011. The
impact of high 4b prices coupled with the
Dairy Interests’ pursuit to triple and quadruple whey component prices threatens
California’s cheese manufacturers on a
monthly basis,” writes Los Altos CFO
Corin Andrade. “Margins are lost, pricing
is unpredictable and no investment in
manufacturing capacity can go forward
within such economic uncertainty.”
Meanwhile, a hearing was held last
week in the San Bernardino County Superior Court regarding legal action filed
on behalf of Milk Producers Council, DFA,
Security Milk Producers Association and
CDC that alleges CDFA failed to follow the
law in refusing to bring California’s Class
4b price into better alignment with the
prices across the rest of the country. (See
“Dairy groups file legal action over Class
4b price alignment” in the Sept. 7, 2012,
issue of Cheese Market News.)
At this hearing, Judge Joseph R.
Brisco issued a tentative ruling denying the “Writ of Mandamus” filed
by the dairy groups. A final ruling is
expected to be made soon.
CMN
Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
November 16, 2012 — CHEESE MARKET NEWS ®
15
NEWS/BUSINESS
MICRO
Continued from page 1
American Micro Dairies Inc. (AMD),
a non-profit group launched in South
Royalton, Vt., about three years ago
to connect micro dairy operators with
resources. While micro dairies are challenged to comply with state and federal
regulations and keep start-up costs in
check, advocates of the concept say
smaller operations also have distinct
advantages.
“Many dairy farmers have pushed to
get larger beyond their means, or they
have gotten out of dairy all together.
We see micro dairying as the future of
the dairy industry,” says Sophie Pierce,
co-program director of AMD.
Frank Kipe, owner of MicroDairy
Designs LLC in Smithsburg, Md., started
out with a plan to use milk from two
Jersey cows to make ice cream that
he would market under the label “The
World’s Most Expensive Ice Cream”
years ago. He soon found, however,
that high start-up costs and regulatory
hurdles would make it difficult to maintain such a small creamery.
“We went looking for equipment
that would meet the standards (in the
federal Pasteurized Milk Ordinance),
and the cheapest system was a quarter
million dollars,” Kipe says. “I got mad
and said I would build one by myself.”
Kipe spent more than a year designing a milk pasteurizer that met federal
standards. When the project was finished, he sold the pasteurizer and ever
since Kipe has been in the business of
selling micro dairy equipment rather
than ice cream. He has installed about
185 of his Vat Pasteurizer systems in
37 states and five countries outside the
United States.
“What we basically discovered is
there is a convergence of a bunch of
trends that have made for a successful
accidental business,” Kipe says.
More consumers are seeking locallyproduced food and milk, willing entrepreneurs want to retain or return to
a farming lifestyle, and technological
advancements have made it more affordable for them to do so, Kipe says.
Dave Potter, vice president and
technical manager for Dairy Connections Inc., agrees. Dairy Connections
Inc. distributes cheesemaking cultures
and enzymes, primarily for artisanal and
farmstead cheesemakers.
“(Artisanal and farmstead cheesemaking) have helped smaller farmers
maintain their lifestyle on the farm.
That’s been fueled by growth in the
local food movement and more of a
demand for artisanal cheeses,” Potter
says. “The market is out there for these
cheesemakers.”
The most common kind of cheeses
being produced by micro dairies, Potter
says, are artisanal Cheddars. Washedrind, bloomy-rind and other cheeses
with stronger flavor profiles have grown
in popularity and command a higher
market value. Goat’s and sheep’s milk
cheeses also remain popular among
micro dairy cheesemakers.
West and Marguerite Constantine,
owners of WesMar Farms in Moreauville,
La., produce and market Chevre, goat’s
milk soap and fluid goat’s milk directly
to consumers. WesMar Farms milk 1012 goats and also are a registered zoo,
which allows the Constantines to draw
consumers through agri-tourism.
“People are yearning for something
like this,” says Marguerite Constantine.
“The price of fuel is driving food costs
up, there’s a lack of trust in regulatory
agencies to protect food sources, and
I think right now if anyone has the
opportunity to go into small dairy, now
is the time to do it because demand is
going to continue to grow.”
While numerous trends have fueled
success for micro dairies in recent years,
there also are more inherent advantages
associated with micro dairies.
“One big advantage is that micro
dairy farmers get higher prices for
their milk,” says Pierce. “A conservative estimate might be $1.67 a gallon in
a commodity market. Selling direct to
consumers, the price can be $6-$8 per
gallon. Granted, they’re not producing
as much milk, but they have a direct
relationship with their consumers,
cutting out the middle man.”
In addition, the premium price
consumers are willing to pay for micro
dairy products is a result of creative
marketing and compelling storytelling.
“The key to success in small-scale
production is that you need someone
on your team who can explain why
your cheese is worth a dollar more,”
Kipe says.
Marguerite Constantine, who markets her products at health food stores
and farmer’s markets, says many micro
dairies don’t focus enough on marketing
themselves and their products.
“A lot of the smaller farmers are
not willing to go out and market their
products, and that’s something you
just have to do. You may grow the most
beautiful tomatoes, but if they sit on
the vine, you’re not going to make any
money. You can be good at your craft, but
you have to be a good business person,
too,” she says.
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Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com
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CHEESE MARKET NEWS ® — November 16, 2012
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As one of only two licensed goat
dairies in Louisiana, WesMar Farms
has cornered the local market with its
Chevre and other goat’s milk products
— but the relationship between cheesemaker and consumer is something
that the Constantines are constantly
fostering.
“I think small dairies have an
advantage because they can make adjustments to accommodate consumers
a lot easier than larger companies,”
Marguerite Constantine says.
Still, a glance at nationwide trends
reveals that many smaller dairy producers remain hard-pressed to stay in
business. According to the 2011 USDA
livestock operations summary, there
were about 20,400 dairy operations
with less than 29 milking cows in 2009,
20,000 in 2010 and 19,400 in 2011.
That’s a sign that hurdles still face
micro dairy operators, says Delilah
Griswold, AMD co-program director.
“Some of the challenges have to do
with regulations, access to appropriately-sized and appropriately-priced
equipment,” she says.
When it comes to meeting regulatory guidelines, Kipe has worked to
streamline the process and reduce
start-up costs.
“There are so many hoops you have
to jump through to be in the dairy business. You have to be the marketing guy,
the lawyer, the finance person. That’s
why only the most stubborn, creative
people get to the point where they’re
actually putting a production system
in place,” Kipe says.
Kipe has spent years trying to
simplify the start-up process and
remove some of the hurdles facing
smaller operators.
“The regulatory piece is the hardest to get through. We’ve tried to pull
a lot of the pieces together,” he says.
“We have a pattern that we know
works. It’s been approved, there’s
one piece of the regulatory hurdle
we’ve over come — but then you’re
inspected all the time, and you have
to do an awful lot of things to stay in
compliance.”
Kipe has three criteria for success:
100 percent regulatory compliance,
economic sustainability and flexibility
to produce a number of products and
meet market demand.
MicroDairy Designs markets Vat
Pasteurizers in 15, 30 and 45 gallon
sizes (ranging in cost from $12,900$21,900). The 3-A Sanitary Standards
Inc. (SSI)-approved equipment can
serve as a pasteurizer, cheese vat,
yogurt vat or a small bulk tank.
“Any time you move milk, you have
to clean something, and you have the
potential for human or mechanical
failure,” Kipe says. “Most of our customers will milk into a bucket, they
pour it into the vat. It’s stored there,
heated there and pasteurized in that
one vat. Even though small-scale dairies might not have all the resources of
large scale operators, we have a plan
that allows them to be effective.”
MicroDairy Design also markets
components separately — pumps,
chillers, dual bulk tanks, and table-top
temperature recording and indicating
thermometers. Also, it’s EcoFlex Packager can fill and cap glass and plastic
bottles, yogurt cups, deli tubs and
other containers ranging in size from
coffee creamer cups to gallon jugs.
AMD, which works closely with
Bob White Systems Inc., a company
that was founded in 2006 to help
micro dairy producers sell safe, fresh
dairy products from their farms, cites
technology as playing a key role in the
success of micro dairies.
Bob White Systems markets a wide
array of products and equipment and
recently released a new pasteurizer for
micro dairy operators called the Low
Input-Low Impact (LILI) Pasteurizer.
The company says unlike commercial
units, LILI does not homogenize,
separate or standardize milk — which
safeguards its nutritional value and
helps retain farm- fresh flavor. Milk
is heated to at least 161 degrees Fahrenheit for a minimum of 15 seconds to
kill pathogens before it’s looped back
through a heat exchanger where it’s
cooled to 60 degrees. It then flows
into a bulk tank at a rate of one gallon a minute where it’s cooled more
and stored.
AMD is working to create a resource network that will connect
potential micro dairy operators with
people and resources that help with
business planning, marketing and
regulatory compliance. Griswold
says AMD’s primary goal is not to be
an expert in all areas of micro dairies, but rather to be a facilitator for
those resources.
CMN
Reprinted with permission from the Nov. 16, 2012, edition of CHEESE MARKET NEWS® © Copyright 2012 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com