January 2, 2009

Welcome to Weekly Update, a publication of Western United Environmental Services (WUES), designed to bring you valuable information and helpful tips for compliance with the waste discharge requirements of the Central Valley Regional Water Quality Control Board. We strive to provide your dairy with quality service, while at the same time saving you money as you face the challenges of compliance. Each week you will find features on compliance issues, regulatory changes or common questions, as well as workshop notices and introductions to the WUES technicians. If you have missed any of our past issues, they can be found on our website at www.wuenvironmental.com.

Industry Outlook, 2009

As Recession Deepens, So Does Milk Surplus – The long economic boom, fueled by easy credit that allowed people to spend money they did not have, led to a huge oversupply of cars, houses and shopping malls, as recent months have made clear. Now, add one more item to the list: an oversupply of cows. And it turns out that shutting down the milk supply is not as easy as closing an automobile assembly line. As a breakneck expansion in the global dairy industry turns to bust, Roger Van Groningen must deal with the consequences. In a warehouse that his company runs here, 8 to 20 trucks pull up every day to unload milk powder. Bags of the stuff - surplus that nobody will buy, at least not at a price the dairy industry regards as acceptable - are unloaded and stacked into towering rows that nearly fill the warehouse. Mr. Van Groningen's company does not own the surplus milk powder, but merely stores it for the new owners: the taxpayers of the United States. To date, the government has agreed to buy about $91 million worth of milk powder. "The thing is, they are going to produce it because they have to milk the cows," Mr. Van Groningen said. "It's like a river. It keeps coming." In addition, dairy farmers are all too aware that, unlike industrial machinery, cows cannot be turned off and stored until economic conditions improve; they must be fed and cared for, at continuing expense. <more> Jan. 1, 2009 NY Times

Dairy takes a dive to end the year – Dairy markets really hit-the-skids to end 2008. Cash cheese barrels on the Chicago Mercantile Exchange dropped 11.75 cents on Wednesday to settle at $1.13 while blocks lost a nickel to close at $1.1325. A number of the Class III futures contracts were trading down the 75-cent limit during the day and while they did rebound a little, 2009 contracts still lost anywhere from 15 to 70 cents. January, February and March contracts all closed under $11.00. Cash cheese ends the year at or very close to the federal government support price even though the weekly average cash cheese price for 2008 will be a record high. The support price for blocks is $1.1325, barrels $1.1014. This is the first time since March of 2006 that cash cheese was at support price although the government didn't buy any at that time. The last time Commodity Credit purchased cheese was from January to July in 2003. A year ago, cash barrels were at $1.98 and blocks were $2.03. <more> Dec. 31, 2008 Brownfield Ag News

CWT to continue in 2009 – Cooperatives Working Together has received commitments from its members that they will continue to fund the program in 2009, CWT officials said last week.  "Now more than ever, CWT is the only answer to the question of what can farmers do to positively impact their milk price," says Jerry Kozak, president and chief executive officer of the National Milk Producers Federation, which manages CWT. "Both world and U.S. dairy markets are sagging and things look tough for 2009. Our members recognize that this program is the best way to help balance supply and demand and positively impact producers' bottom line," he adds. CWT is currently in the process of removing 184 herds, with 61,000 cows that produced 1.2 billion pounds of milk, through its second herd retirement of 2008. CWT's first herd retirement of the year removed 25,000 cows that produced 430 million pounds of milk. In addition, its export assistance program has helped members sell overseas the equivalent of more than two billion pounds of milk in 2008. <more> Dec. 24, 2008 CWT Press Release

MILC program sign-ups underway – Sign-ups are underway for the Milk Income Loss Contract Program (MILC) and will continue through the program's expiration date, Sept 30, 2012. The 2008 Farm Bill reauthorizes the MILC Program, which operates similarly to the counter-cyclical payment program for crops, and makes three key changes in program operation. Under the 2008 Act, the MILC payment rate and the per-operation poundage limit are modified, depending on when the milk is produced. In addition, a "feed cost adjuster," is introduced over the life of the 2008 Act, which adjusts the $16.94 per hundredweight (cwt.) benchmark price upward depending on the cost of feed rations. When available, MILC payments are based on a payment rate percentage that is multiplied by the difference between a now-flexible target ($16.94 per cwt. or higher) and the specific month's Boston Class I price of milk. <more> Dec. 19, 2008 USDA Press Release

CALENDAR OF MONTHLY MONITORING ACTIVITIES

JANUARY

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