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Weekly Digest: USDA amends Class I skim milk price formula

Progressive Dairyman Editor Dave Natzke Published on 11 March 2019

Digest Highlights

USDA amends Class I skim milk price formula

Bit by bit, dairy provisions included in the 2018 Farm Bill are moving toward the implementation stage.

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The USDA announced an amendment to the Class I skim milk price formula under the Federal Milk Marketing Order (FMMO) program. The change is effective May 1, 2019.

Currently, the Class I skim milk price is calculated using the “higher of” the monthly advanced pricing factors for Class III or Class IV skim milk, which reflect dairy product survey prices for the two weeks prior to the price announcement, plus the applicable adjusted Class I differential. Because market prices for these surveyed products fluctuate, the “higher of” factor used to determine the Class I skim milk price can change, increasing risk and uncertainty associated with hedging.

Approved in the 2018 Farm Bill, the new formula for the FMMO Class I skim milk price will be average of the monthly Class III and Class IV advanced pricing factors, plus 74 cents per hundredweight, plus the applicable adjusted Class I differential.

Read: NMPF considering Class I price formula change proposal.

Nominees sought for National Dairy Promotion and Research Board

Dairy producer nominees are being sought to serve on the National Dairy Promotion and Research Board (NDB). Twelve newly appointed members will serve three-year terms, Nov. 1, 2019, through Oct. 31, 2022.

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Nominations are being accepted from eight geographic regions: Region 2 (California and Hawaii); Region 3 (Arizona, Colorado, Montana, Nevada, Utah and Wyoming); Region 4 (Arkansas, Kansas, New Mexico, Oklahoma and Texas); Region 6 (Wisconsin); Region 9 (Indiana, Michigan, Ohio and West Virginia); Region 10 (Alabama, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee and Virginia); Region 11 (Delaware, Maryland, New Jersey and Pennsylvania); and Region 12 (Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont).

Nomination deadline is April 15. To nominate an individual, submit a copy of the nomination form and a signed background form for each nominee to: Jill Hoover, Deputy Director, Promotion, Research and Planning Division, Dairy Program, AMS, USDA, 1400 Independence Ave. SW, Stop 0233, Room 2958-S, Washington, D.C. 20250-0233. For nominating forms and information, visit the AMS website or call (202) 720-1069.

The NDB administers promotion, research and nutrition education programs funded through the national dairy checkoff.

USDA, FDA to jointly regulate cell-cultured livestock food products

The USDA’s Food Safety and Inspection Service (FSIS) and the U.S. Department of Health and Human Services’ (HHS) FDA will jointly oversee the production of human food products derived from the cells of livestock and poultry.

FSIS and FDA released a formal agreement to address the regulatory oversight of human food produced using this new technology. The formal agreement describes the oversight roles and responsibilities for both agencies and how the agencies will collaborate to regulate the development and entry of these products into commerce.

Under the formal agreement, FDA oversees cell collection, cell banks, and cell growth and differentiation. A transition from FDA to FSIS oversight will occur during the cell harvest stage. FSIS will oversee the production and labeling of human food products derived from the cells of livestock and poultry.

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IRS waives estimated tax penalty for farmers who file returns and pay tax by April 15

The Internal Revenue Service (IRS) will waive the estimated tax penalty for any qualifying farmer who files his or her 2018 federal income tax return and pays any tax due by Monday, April 15, 2019. (The deadline is Wednesday, April 17, 2019, for taxpayers residing in Maine or Massachusetts.)

The IRS is providing this relief because, due to certain rule changes, many farmers may have difficulty accurately determining their tax liability by the March 1 deadline that usually applies to them. For tax year 2018, an individual who received at least two-thirds of his or her total gross income from farming during either 2017 or 2018 qualifies as a farmer.

To be eligible for the waiver, qualifying taxpayers must attach Form 2210-F, available on the IRS website, to their 2018 income tax return. This form can be submitted either electronically or on paper. The taxpayer’s name and identifying number, usually a Social Security number, must be entered at the top of the form. The waiver box – Part I, Box A – should be checked. The rest of the form should be left blank.

Further details can be found in IRS Notice 2019-17.

Wisconsin proposal creates driver’s license for noncitizens

A state budget proposal that creates a driver’s license for noncitizens has gained the endorsement of Wisconsin’s Dairy Business Association (DBA).

Gov. Tony Evers included a provision in his proposed budget that would create a driver’s license for noncitizens.

The DBA has been working for several years to convince legislators to allow people, regardless of immigration status, to drive legally in Wisconsin if they are properly trained and insured.

“A person’s ability to drive legally should be based on whether that person can drive safely,” said DBA President and Wisconsin dairy farmer Tom Crave. “This provision is about public safety more than anything else. Also, in rural parts of the state, there is sometimes little alternative to driving. An otherwise responsible person should not have to break the law to drive to work or pick up their children from school.”

New England dairy farmers enhance school breakfast programs

Dairy farmers in Massachusetts, Rhode Island, Connecticut, New Hampshire and Vermont provided more than $85,000 to purchase equipment to improve school meal programs during the 2017-18 school year.

Schools used the funds to purchase equipment such as mobile breakfast carts, refrigerators, insulated cooler bags, smoothie machines and more to increase breakfast access and offerings for students.

Dairy farmers in each of these New England states also visited with schools or hosted schools on their farms for tours.

Since 2009, dairy farmers throughout New England have been supporting school wellness through initiatives that focus on increasing access to nutritious foods and physical activity. They've done this through their support for the Fuel Up to Play 60 program, which is implemented regionally by New England Dairy & Food Council.

New York overtime bill would be costly to dairy farmers

The New York Farm Bureau (NYFB) cited a new report highlighting costs facing the state’s family farms should a farmworker labor bill (S. 2837/A. 2750) pass this legislative session.

Farm Credit East analyzed economic data, summarizing the impact on financial results on New York farms over a five-year period. The study determined overtime on a 40-hour work week and beyond an eight-hour day will increase labor costs on farms by $299 million, or more than 17 percent. When combined with the rising minimum wage, net farm income will drop by 23 percent.

The analysis is worse for dairy farms, according to the study. They will see net farm income completely wiped out, with a 101 percent drop in net farm income. These numbers are based on a five-year average of financial results.

NYFB President David Fisher said the repercussions of the legislation based on economic analysis will be felt far beyond the state’s family farms and extend to the further decline of the rural economy both upstate and on Long Island. Based on USDA statistics, New York has already lost nearly 20 percent of its dairy farms in the past five years.

Dairy farmer Judi Whittaker, of Whittaker Farms in Broome County, said the overtime provision would force payroll up on her farm by more than $200,000 from the current $500,000 payroll.

The full report can be found on the Farm Credit East website.

Wisconsin dairy groups endorse nutrient trading system bill

Wisconsin dairy organizations have thrown their support behind a state legislative initiative creating a smoother path to nutrient trading as a means to improve water quality. State Sen. Robert Cowles (R-Allouez) is circulating a bill (LRB-1244) to create a third-party clearinghouse to streamline the buying and selling of water-quality credits.

The clearinghouse approach for water-quality credits would function something like existing markets for carbon credits. Various entities, including local water treatment facilities, cheese plants and other factories, are required to meet limits for what pollutants or nutrients – including phosphorus – they can discharge to the environment.

At the same time, there are environmental and farming organizations that can implement innovative farming techniques or land-use changes that would reduce the amount of phosphorus in a watershed. Now, organizations doing that kind of work could sell credits from the phosphorus reductions they achieve, and other entities could buy them to offset the amount of phosphorus they need to remove from their waste streams.

“This type of trading system is something that dairy farmers have been interested in for some time,” said John Holevoet, director of government affairs with the Dairy Business Association. “This new credit system would be a great way to encourage farmers to implement new conservation practices.”

“Anyone who takes the time to visit with farmers knows no two farms are the same,” said Cindy Leitner, president of the Wisconsin Dairy Alliance. “Farmers will be able to generate water-quality credits by implementing workable practices on land as well as advancing new, innovative manure-treatment technologies through the use of a clearinghouse. Credits can be verified and sold to the clearinghouse, which then transacts those credits back to industrial and municipal point sources. This new mechanism will allow farmers to generate an additional revenue stream, improving water-quality practices.”  end mark

Dave Natzke
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