NMPF offers counter analysis of market stabilization study · tage cheese, in January totaled 883.4...

Reprinted with permission from the March 4, 2011, edition of CHEESE MARKET NEWS® © Copyright 2011 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com

January cheese production up 5 percent from last yearWASHINGTON — Total U.S. cheese production, excluding cot-tage cheese, in January totaled 883.4 million pounds, 5.0 percent above January 2010’s 841.6 million pounds but 2.7 percent below December’s 907.8 million pounds, according to data recently re-leased by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Dairy Production chart on page 11.)

Production of Mozzarella, the nation’s most-produced cheese, totaled 306.2 million pounds, up 7.4 percent from 285.0 million pounds a year earlier. Total Italian-type cheese production, of which Mozzarella is the largest component, was up 5.3 percent from a year earlier to 382.1 million pounds.

Cheddar production rose 5.6 percent in the January-to-January comparison to 281.5 million pounds. Total American-type cheese

President signs measure to extend funding for two weeks WASHINGTON — Narrowly avoiding a government shutdown, Congress this week passed a measure to extend the fiscal year 2011 continuing resolution (CR) until March 18, 2011. President Obama signed the measure on Wednesday.

The new CR cuts about $4 billion from the previous CR funding level that would go until the end of the current fiscal year: $1.2 billion by terminating eight non-defense programs for which no funds were requested or were recommended for termination in the president’s fiscal year 2012 budget, and $2.7 billion by eliminating nearly 50 earmarked programs and projects.

“The spending cuts we came together to pass today are an encourag-ing step as we look for responsible, bipartisan solutions for reducing our deficit,” says Sen. Chris Coons, D-Del. “But this country and this government are facing real financial problems, and we’re not going to solve them by negotiating two weeks at a time with the threat of a government shutdown constantly looming overhead.”

President Obama reiterated this sentiment in a statement following passage of the CR.

“I’m pleased Democrats and Republicans came together and passed a plan that will cut spending and keep the government running for the next two weeks,” Obama says. “But we cannot keep doing business this way. Living with the threat of a shutdown every few weeks is not responsible, and it puts our economic progress in jeopardy. That’s why I’m calling on Democratic and Republican leaders of Congress to begin meeting immediately with the vice president, my chief of staff and budget director so we can find common ground on a budget that makes sure we are living within our means.”

House Speak John Boehner, R-Ohio, notes that Americans want the government to stay open and to spend less money.

“The new House Republican majority was not elected to shut down the federal government, but Congress will have to take a look at Medicare and Social Security spending to balance the budget,” he says.

Republican and Democratic leaders have struggled to agree on funding cuts over the past several weeks. Senate Democrats initially rejected a bill passed by the House that would have cut $62 billion for the last seven months remaining in the fiscal year 2011 budget. (See

Volume 31 March 4, 2011 Number 6

ARLINGTON, Va. — The National Milk Producers Fed-eration (NMPF) this week released an analysis of a recent study commissioned by the International Dairy Foods Association (IDFA) that reviewed a proposed market stabilization program included in NMPF’s Foundation for the Future (FFTF) dairy reform proposal.

According to NMPF’s analy-sis, the review of NMPF’s pro-posal by Informa Economics, Memphis, Tenn. — a market

NMPF offers counter analysis of market stabilization study

research and consulting firm — was “extremely limited” in its scope and “failed to take into consideration how pro-ducers would have cut their milk production in response to a reduction in their milk checks.”

The Informa Economics study, as well as NMPF’s analysis, primarily focuses on one aspect of FFTF, the es-tablishment of a Dairy Market Stabilization Program (DMSP) that is designed to reduce dra-matic swings in market condi-tions that ultimately result in negative margins, such as those experienced by dairy farmers in 2009, NMPF says.

The DMSP would be activat-ed only when margins become compressed due to low milk prices or high feed costs. When they do, the program would reduce the amount that farm-ers are paid to encourage them to temporarily reduce their milk marketings, which, in turn, would result in increased producer margins, NMPF says. The money collected under DMSP would be used to stimu-late demand through product purchases.

In the Informa Economics report released in January at the 2011 Dairy Forum, re-

searchers noted that had the DMSP been in place between 2000-2009, it would have re-duced farmers’ pay prices by $626 million (with $390 million of that total in 2009 alone). (See “IDFA study uncovers high costs of NMPF stabiliza-tion program” in the Jan. 28, 2011, issue of Cheese Market News.)

In addition, regional dif-ferences highlighted by the Informa study show that the DMSP would impose greater penalties on some regions — for instance, during the period analyzed by the report, the Midwest and the Northeast would have taken the biggest hit, IDFA says.

Compared to those regions, California, the No. 1 milk-pro-ducing state in the country, barely broke the top 10 states in amount withheld over the 10-year span and ranked 23rd as a percent of the withhold-ing compared to total milk production in the state, the study showed.

However, NMPF says the Informa study made no at-tempt to estimate how produc-ers would have altered their milk output, or how cheese purchases would have helped producer incomes, had the

program been active during that period.

NMPF’s new analysis shows that under the DMSP, dairy farmers would have received at least $3 billion more in revenue had the stabilization program been in place in 2009. NMPF notes that finding is cor-roborated by a separate, new analysis done by Scott Brown, an economist with the Uni-versity of Missouri’s Food and Agricultural Policy Research Institute (FAPRI). That analy-sis shows that producers would have received an increase of $3.4 billion in cash receipts with the DMSP in place in 2009 by reducing milk output and ultimately bolstering prices, NMPF says.

“The purpose of the Informa study was transparent; its sole intent was to pit producer against producer in region by region by focusing on the differences in the total dol-lar reductions producers in various states would have ex-perienced,” says Jerry Kozak, NMPF president and CEO. “But the Dairy Market Stabilization Program treats all producers equitably; they are all subject to the same required production reduction percentages.”

Dairy groups laud actions to resolve trucking dispute

A

INSIDE

Turn to ANALYSIS, page 12 D

Turn to JANUARY, page 11 D

WASHINGTON — The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Coun-cil (USDEC) on Thursday applauded the announce-ment by President Barack Obama and President Felipe Calderon of Mexico that both countries have an un-derstanding on the path to resolving the cross-border trucking dispute. Turn to DISPUTE, page 11 DTurn to FUNDING, page 11 D

✦ Guest column: ‘Wisconsin in the spotlight.’ For details, see page 4.

✦ Judge upholds order to destroy Morningland cheese. For details, see page 5.

✦ Forecast for dairy exports is up to $3.7 billion. For details, see page 6.

✦ Land O’Lakes reports strong year; CEO talks issues affecting agriculture. For details, see page 10.

Reprinted with permission from the March 4, 2011, edition of CHEESE MARKET NEWS® © Copyright 2011 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com Reprinted with permission from the March 4, 2011, edition of CHEESE MARKET NEWS® © Copyright 2011 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.comReprinted with permission from the March 4, 2011, edition of CHEESE MARKET NEWS® © Copyright 2011 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com

MARKET INDICATORS2 CHEESE MARKET NEWS® — March 4, 2011

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.

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REGULAR CONTRIBUTORSJoseph O’Donnell, John Umhoefer, Downes-O'Neill LLC, International Dairy Foods Association, National Milk Producers Federation, U.S. Dairy Export Council

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CLASS III PRICE(Dollars per hundredweight, 3.5% butterfat test)

YEAR2005200620072008200920102011

JAN 14.1413.3913.5619.3210.7814.5013.48

FEB 14.7012.2014.18 17.03 9.31 14.2817.00

MAR14.0811.1115.0918.0010.4412.78

APR14.6110.9316.0916.7610.7812.92

MAY13.7710.8317.6018.18 9.8413.38

JUN13.9211.2920.1720.25 9.9713.62

JUL14.3510.9221.3818.24 9.9713.74

AUG13.6011.0619.8317.3211.2015.18

SEP14.3012.2920.0716.2812.1116.26

OCT14.3512.3218.7017.0612.8216.94

NOV13.3512.8419.2215.5114.0815.44

DEC13.3713.4720.6015.2814.9813.83

Cheddar Cheese and Dairy Product Prices

Cheese 40-lb. Blocks:

*/Revised. 1/Prices weighted by volumes reported. 2/Sales as reported by participating manufacturers. Reported in pounds. More information is available by calling NASS at 202-690-2424.

2/5/11 2/19/11

Average price1

Minn./Wis. Other states U.S.Sales volume2

Minn./Wis. Other states U.S.

Cheese 500-lb. Barrels:Average price1

Minn./Wis. Other states U.S.Adj. price to 38% moisture Minn./Wis. Other states U.S.Sales volume2

Minn./Wis. Other states U.S.Moisture content Minn./Wis. Other states U.S.

2/12/11 2/26/11

$1.6559$1.5659$1.5719

698,3219,892,940

10,591,261

$1.6992$1.6216$1.6639

$1.6200$1.5317$1.5796

4,870,0544,059,1568,929,210

34.97%34.36%34.69%

$2.07853,843,089

$1.332017,218,051

$.40859,323,662

$1.7646$1.6444$1.6518

570,3148,683,1649,253,478

$1.7993$1.7678$1.7840

$1.7223$1.6722$1.6979

4,858,0394,579,6809,437,719

35.23%34.46%34.86%

$2.08623,165,702

*$1.361317,309,984

$.420110,072,646

$1.8445$1.7799$1.7850

733,0368,580,2529,313,288

*$1.9172$1.8858$1.9005

*$1.8365$1.7847$1.8088

*3,967,0844,496,936

*8,464,020

35.28%34.49%34.86%

*$2.0795*2,515,814

$1.3938*18,086,240

$.435010,205,610

Butter:Average price1 U.S.Sales volume2 U.S.

Nonfat Dry Milk:Average price1 U.S.Sales volume2 U.S.

Dry Whey:Average price1 U.S.Sales volume2 U.S.

For the week ended:

$1.9580$1.8768$1.8810

553,44210,028,97110,582,413

$2.0054$1.9755$1.9896

$1.9171$1.8621$1.8878

3,961,6754,460,4948,422,169

35.14%34.23%34.66%

$2.03553,922,387

$1.402717,533,704

$.428810,022,494

(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.)

ButterCheese

6,312128,085

-721-923

10,638141,019

+1,806+976

-4,326-12,934

+40 +1

Weekly Cold Storage Holdings February 28, 2011On hand Week Change since Feb. 1 Last YearMonday Change Pounds Percent Pounds Change

Class 4aClass 4b

Butterfat$ 2.2609/lb.$ 2.2609/lb.

SNF$ 1.1451/lb.$ 1.0349/lb.

Equivalent$ 17.88/cwt.$ 16.92/cwt.

California Minimum PricesReleased March 1, 2011

Total Contracts Traded/Open Interest Daily market prices are available by visiting CME’s online statistics sites at http://www.cmegroup.com.

FEB11MAR11APR11MAY11JUN11JUL11AUG11SEP11OCT11NOV11DEC11

0/2,021

1.7451.9451.7761.7161.6891.6911.7021.7181.7121.6951.680

371314245154152919698

150173177

CHEESE FUTURES for the week ended March 3, 2011(Listings for each day by month, settling price and open interest)

1.7451.9551.7701.7071.6871.6951.7021.7181.7131.6951.680

371314247157172949698

150175196

63/2,070

1.7451.9671.7951.7241.6871.6951.7041.7191.7301.7051.686

3713142471571729496

111163188209

Fri., Feb. 25 Mon., Feb. 28 Tues., Mar. 1 Wed., Mar. 2 Thurs., Mar. 3

1.7431.9321.7551.7111.6711.6651.7021.7181.7121.6871.680

371314245154152919698

150173177

11/2,021

1.7431.9051.7411.7031.6711.6621.7021.7181.7081.6851.680

371314239154152919698

150173177

37/2,015 93/2,122

Total Contracts Traded/Open Interest Daily market prices are available by visiting CME’s online statistics sites at http://www.cmegroup.com.


5/2,195

42.9851.5055.9054.9553.0053.5052.7549.2546.0046.0047.98

477297315269180112105109117110104

DRY WHEY FUTURES for the week ended March 3, 2011(Listings for each day by month, settling price and open interest)

42.9851.5055.9054.0054.0053.5050.5049.2546.0046.0047.98

477297315271181112104109117110104

16/2,197

42.9850.7554.7553.5053.2552.0049.2547.7545.0044.0045.95

477297315276185113108111118109105

34/2,214


42.9851.5055.9054.9553.0053.7553.0049.2546.0046.0047.98

477297315269180110104109117110104

18/2,192

43.0051.5055.4354.9853.0054.4853.4550.7346.1047.0048.45

477297314265180110104107116110104

27/2,184

Monday Tuesday Wednesday Thursday Friday

Chicago Mercantile Exchange

Feb. 28 Mar. 1 Mar. 2 Mar. 3 Mar. 4

Weekly average (Feb. 28-March 4): Barrels: $1.9655(+.0192); 40-lb. Blocks: $2.0030(+.0180).Weekly ave. one year ago (March 1-5, 2010): Barrels: $1.2725; 40-lb. Blocks: $1.3205.

Cheese BarrelsPriceChange

Cheese 40-lb. blockPriceChange

Extra Grade NDMPriceChange

Grade A NDMPriceChange

Weekly average (Feb. 28-March 4): Extra Grade: $1.8000(NC); Grade A: $1.8180(-.0145).

Grade AA ButterPriceChange

Class II Cream (Major Northeast Cities): $2.4522(+.2011)–$2.5728(-.0262).Weekly average (Feb. 28-March 4): Grade AA: $2.0780(+.0680).

$1.9625+1

$2.0000+1/2

$2.1150+9 1/4

Sign up for our daily fax or e-mail service for just $104 a year. Call us at 608-288-9090.

$1.8000 NC

$1.8150-3/4

Cash prices for the week ended March 4, 2011

$1.9525NC

$1.9950+1/4

$1.8000NC

$1.8225NC

$2.0225+1/4

$1.9800+1 3/4

$2.0075+3/4

$2.1150NC

$1.8000NC

$1.8150NC

$1.9525+1/4

$1.9925+1/2

$1.8000NC

$1.8225-1

$2.0200NC

$1.9800NC

$2.0200+1 1/4

$1.8000 NC

$1.8150NC

$2.1175+1/4

Reprinted with permission from the March 4, 2011, edition of CHEESE MARKET NEWS® © Copyright 2011 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.comReprinted with permission from the March 4, 2011, edition of CHEESE MARKET NEWS® © Copyright 2011 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com

March 4, 2011 — CHEESE MARKET NEWS® 3

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.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.

For more information circle 1 on the FAST FAX form on page 12.

YOU CAN CUT YOUR HEDGING COSTS TRADE WITH GPC FOR $3.41 PER SIDE

Class III Milk Class IV Milk Whey Cheese Cash Settle Butter NFDM Options Trade Electronically $3.41 Side*

Call Free: 1-877-Gressel Southwestern Division: (602) [email protected]

BROKERS OF DAIRY FUTURES & OPTIONS SERVING AGRI-BUSINESS SINCE 1933

CHEESE FUTURESNOW TRADING.

MARKET INDICATORS

Dry Products March 4, 2011

DRY BUTTERMILK(FOB)Central & East: $1.4100(+6)-$1.6500.(FOB) West: $1.3800(+5)-$1.5400; mostly $1.4200(+3)-$1.4700(+2).

EDIBLE LACTOSE(FOB)Central and West: $.2900(-2)-$.5200(+6); mostly $.3300-$.4000(+1).

NONFAT DRY MILKCentral & East: low/medium heat $1.4400-$1.9000(+5); mostly $1.4800(+3)-$1.7800(+3). high heat $1.5100(+6)-$1.9000(+5).West: low/medium heat $1.3600(+1)-$1.8500; mostly $1.4700(+2)-$1.7500(-4). high heat $1.4200(+2)-$1.7200(+2).Calif. manufacturing plants: extra grade/grade A weighted ave. $1.3605(+.0312) based on 13,854,271 lbs. Sales to CCC: 0 lbs.

WHOLE MILK POWDER (National): $1.7500-$2.0400.

DRY WHEYCentral: nonhygroscopic $.3600-$.5900(+1); mostly $.3725(+1/4)-$.4225(+1/2).West: nonhygroscopic $.4050-$.5775(-9 1/4); mostly $.4400-$.5150.(FOB) Northeast: extra grade/grade A $.4075-$.4325.

ANIMAL FEED (Central): Whey spray milk replacer $.2750-$.3800.

WHEY PROTEIN CONCENTRATE (34 percent): $1.0200-$1.2750(-17 1/2); mostly $1.0300-$1.1300(+1).

CASEIN: Rennet $4.1400-$4.6000(+15); Acid $4.2800-$4.6500(+15).

Class III: Price Skim Price Class IV:Price Skim Price Class II:Price Butterfat PriceComponent Prices: Butterfat Price Nonfat Solids Price Protein Price Other Solids Price Somatic Cell Adjustment RateProduct Price Averages:Butter Nonfat Dry Milk Cheese Dry Whey

Class & Component PricesJanuary 2011

$ 13.48/cwt.$ 6.63/cwt.

$ 16.42/cwt.$ 9.67/cwt.

$ 16.79/cwt.$ 2.0309/lb.

$ 2.0239/lb.$ 1.0743/lb.$ 1.7590/lb.$ 0.2002/lb.$ 0.00070/1,000 scc

$ 1.8428/lb.$ 1.2530/lb.$ 1.4076/lb.$ 0.3935/lb.

February 2011

$ 17.00/cwt.$ 9.29/cwt.

$ 18.40/cwt.$ 10.74/cwt.

$ 17.97/cwt.$ 2.3037/lb.

$ 2.2967/lb.$ 1.1930/lb.$ 2.5586/lb.$ 0.2310/lb.$ 0.00087/1,000 scc

$ 2.0680/lb.$ 1.3728/lb.$ 1.7449/lb.$ 0.4234/lb.

International Dairy Markets March 4, 2011

OceaniaButter: 82 percent butterfat $4,600(+100)-$5,100. Cheddar Cheese: 39 percent maximum moisture $4,300-$4,600(+100).Skim Milk Powder: 1.25 percent butterfat $3,700(+100)-$4,300(+100).Whole Milk Powder: 26 percent butterfat $4,300(+300)-$4,950(+450).* Source: Dairy Market News. Prices reported in U.S. dollars per metric ton, F.O.B. port. To convert to price per pound: divide price by 2,204.6 pounds.

Western and Eastern Europe Butter: 82 percent butterfat $5,650(+400)-$5,875(+175); 99 percent butterfat $6,075(+125)-$6,500(+200).Skim Milk Powder: 1.25 percent butterfat $3,675(+125)-$4,300.Whole Milk Powder: 26 percent butterfat $4,750(+250)-$5,000.Sweet Whey Powder: Nonhygroscopic $1,375(+125)-$1,650.

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.

Total Contracts Traded/Open Interest

Cash-Settled NDM

136.50154.50162.53163.00163.25160.50154.00147.50146.00137.50137.03

290243231237228142120110994444

3/1,788


Cash-Settled Butter



37850651036927116710992897274

23/2,637

208.00203.00200.00198.00195.50195.50196.50193.50192.75190.50184.75

136.50154.00162.00163.00162.98160.50154.00147.50146.00137.50137.03

2902432282412301411201101084549

54/1,805

208.00208.00204.98201.50200.00198.00197.53194.50194.93191.25187.25

37851052337628817810992927284

206/2,702

136.50152.25162.00163.00162.00160.50155.00147.50146.00137.50137.03

2902442282432311441211091084550

34/1,813

208.00210.00209.98208.00207.75204.00199.00197.00195.50193.00187.50

37751352338629718311296947490

80/2,745





FEB11MAR11APR11MAY11JUN11JUL11AUG11SEP11OCT11NOV11DEC11JAN12FEB12MAR12APR12MAY12JUN12

Class III Milk#*

17.0819.4418.1117.5017.0517.0717.0817.1016.9716.8316.6216.1015.9916.0515.8515.9915.95

5,0566,5485,7994,6383,6842,6732,5112,4832,2862,1342,061

197127119595739

1,080/40,590

17.0719.4718.0717.3716.9016.9917.0017.0216.8516.6916.5416.1415.9416.0515.8515.9915.95

5,0586,5685,8134,6443,6552,6492,5122,4922,3062,1592,086

210127119595739

589/40,672

17.1019.6018.3017.5117.0317.0817.0817.1317.0016.7816.5916.1215.8216.0015.8516.0015.95

5,0596,5485,8094,7073,6742,6622,5332,5052,3192,1712,101

210128119635740

1,203/40,824


Class IV Milk*

FEB11MAR11APR11MAY11JUN11JUL11AUG11

18.3819.5920.1520.3219.7719.8119.31

65221346347392312283

18.3819.5920.2020.3220.0319.9919.35

65221347349408322287

137/2,684

18.3819.7520.5920.5920.4020.0519.35

65230354359418362296

73/2,605

CME FUTURES for the week ended March 3, 2011


206/2,791

17.0519.1917.9417.4016.9516.9717.0317.0416.9416.7916.6016.0815.9515.9515.8515.9015.85

5,0696,5335,7684,6403,6802,6612,5082,4792,3052,1362,059

192126110595739

18.3819.5920.1520.3220.0019.8119.31

65214339340385305276

136.50154.50162.53165.00163.25160.50154.00147.50146.25137.50137.03

290243213216208140120110894344

208.00200.00197.00196.00193.50193.00194.50193.50192.25190.50184.75

37850849936727216710892887274

45/2,625

5/1,716

5/2,533

1,242/40,539

17.0719.0717.8117.3316.9817.0017.0617.0416.9816.8416.6016.0815.9515.9515.8515.9015.85

5,0336,4525,7274,6193,6772,6612,5192,4602,2802,1342,054

191126110595739

2,160/40,316

18.4019.7320.1420.0019.7520.0019.50

65214339340385305276

100/2,528

136.50155.00162.53165.00163.25163.00156.50150.00146.25137.50137.03

290243213216208139120111874344

149/1,714

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4 CHEESE MARKET NEWS® — March 4, 2011

John Umhoefer is executive

director of the Wisconsin Cheese

Makers Association. He contributes

this column monthly for Cheese Market News®.

Perspective:WCMA

Wisconsin in the spotlight

WCMA UPDATE

When we’re not winning Super Bowls, Wisconsin is making national news for bold policy initiatives from Gov. Scott Walker that may become a blue-print for other debt-ridden states.

Walker’s Budget Adjustment Bill, aimed at closing a deficit in the state’s current fiscal year has drawn intense media coverage in recent weeks, but even more “hot off the press” is the governor’s two-year state budget pro-posal, announced March 1.• Biennial budget highlights

Several components of Gov. Walker’s biennial budget touch the dairy industry and some of those impacts are noted here.

• Funding for the Wisconsin Depart-ment of Natural Resources (DNR) is decreased by 15 percent and 70 posi-tions are eliminated in fiscal year 2012 (which begins July 1 of this year).

• The budget includes a proposal aimed directly at relief for dairy pro-cessors. DNR “may not promulgate or

enforce any rule establishing an effluent limitation for the discharge of phospho-rous if that effluent limitation is more stringent than the effluent limitation for the discharge of phosphorous that is established by any state in the region,” the budget bill states. This region includes Illinois, Indiana, Michigan, Minnesota, or Ohio.

WCMA joined food and dairy proces-sor groups in opposition to new state phosphorus limits in 2010, limits that would have forced many processors to install multi-million dollar ultrafiltra-tion equipment to remove a fraction more phosphorus from wastewater moving to state streams and lakes.

WCMA argued that new, lower limits of phosphorus would place Wisconsin at a competitive disadvantage to other dairy states. The governor, via this bud-get, has agreed.

• The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) fares well in the

overall budget package with slight gains in funding over the next two years. The budget trims eight jobs at DATCP but adds back six meat inspectors in the second year.

• Dairy 2020, the dairy farm expan-sion program formerly housed in the Department of Commerce, comes to DATCP with a modest $64,900 budget (one employee salary).

Overall, the budget requires employ-ees at all state agencies to contribute 5.8 percent of salary to the state pension program and to increase their contri-bution to health insurance premiums from 6 percent to 12.6 percent. Agen-cies would also need to cut 10 percent of their overall budgets (aside from salaries and benefits).

The governor’s budget includes the idea of separating the University of Wisconsin-Madison from the system of 25 University System campuses across Wisconsin. One potential benefit of an in-dependent Madison campus, a reduction in the bureaucracy surrounding building projects such as the new Babcock Hall, is muted. The State Building Commission would retain control over any construc-tion project greater than $500,000.• Budget adjustment bill

Wisconsin hit the media spotlight in February when Gov. Walker’s budget ad-justment bill aroused protests by state teachers, union members and public employees. The governor addressed a $165 million shortfall in Wisconsin’s cur-rent fiscal year with several provisions, including greater public employee con-tributions to pension and health care benefits (identical to changes in the two-year budget noted above).

The bill limits the right of municipal and state employees to collectively bargain to the subject of base wages. (Public safety employees — law en-

forcement, fire employees and state troopers — are not included in this provision). Wisconsin’s Legislative Reference Bureau, in its summary of the bill, notes that negotiations over wage increases would be limited to the amount of increase in the consumer price index.

Gov. Walker has noted that without passage of this bill, the state may face 1,500 public employee layoffs in this fiscal year (ending June 30) and pos-sibly 6,000 more over the next two years. The possibility of layoffs among key positions, such as food safety inspec-tors, is low.

State employees, including food safety inspectors, have not walked off their jobs in the three weeks of debate over the governor’s bill and such action is not expected in the near future.• Raw milk legislation

Wisconsin legislators in favor of raw (unpasteurized) beverage milk sales are expected to offer legislation this spring that would legalize the sale of milk directly from farm bulk tanks to consum-ers visiting the farm. A working group convened by DATCP in 2010 prepared a lengthy draft report on this subject, outlining a program of sanitation and testing for farms if this concept became a reality in Wisconsin. The final report has not been released by Agriculture Secretary Ben Brancel.

WCMA remains opposed to on-farm raw milk sales. The potential for damage to Wisconsin’s signature dairy industry and its 14,000 dairy farms far outweighs any benefit to a handful of Wisconsin raw milk advocates. 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

MONTREAL — Wellspring Capital Management and Harold Bevis, chair and CEO of Packaging Solutions Holdings, Lakeforest, Ill., recently announced that Packaging Solutions Holdings has acquired Excel Pac, a flexible packaging manufacturer in the food, dairy and pet food markets based in Montreal. Financial terms of the transaction were not disclosed.

Packaging Solutions Holdings, a packaging company focused on provid-ing value-added packaging and services to the food, medical and consumer markets, now will have the manufac-turing footprint and personnel to serve the industry from three plant locations in Canada and the United States with an asset base of 10 laminators and 11 printing presses. In addition, the research and development team of the new, larger entity now has more than 20 people developing next generation packaging solutions.

Excel Pac’s packaging solutions are

Packaging Solutions Holdings acquires flexible packaging manufacturer Excel Pacused for a wide range of products includ-ing cheese, yogurt, pet food, confection-ery, bakery, frozen pizza and meat. The products are delivered in rollstock form, premade pouches with press to close zippers, premade pouches with slider zippers and side-gusseted flat bottom pouches with slider zippers.

The company has an in-house graphic design process from start-to-finish and in-house metallization and coating processes to achieve precise outcomes.

Excel Pac will be integrated into Packaging Solutions Holdings and together they form a more than $200 million packaging company.

Vincent Musacchio, Excel Pac’s CEO and owner, will be joining the board of Packaging Solutions Holdings, and his entire management team will remain with the company.

“We are proud of the business we have built at Excel Pac and look for-ward to being part of a larger company

that is committed to being a nimble, customer-oriented and responsive top tier supplier,” Musacchio says.

Bevis adds that with its focus on manufacturing excellence and high-quality product performance, Excel Pac has distinguished itself as a “gem” in the industry.

“As we build a new high-end competitor in the flexible packaging

industry, Excel Pac hits our sweet spot with its attractive, growing and reces-sion-resistant end markets and high quality customer base,” Bevis says. “With the massive consolidation that has happened among food and medical packaging suppliers, we are going to fill the void by creating a new, strong, multi-skilled procurement option for dis-criminating buyers of packaging.” CMN

LE MARS, Iowa — Wells’ Dairy Inc. recently announced that it is changing the legal name of the company to Wells Enter-prises Inc. as the company continues to move forward as a leading manufacturer in ice cream and frozen novelties.

“We felt the time was right to adjust our name to more adequately reflect our business,” Wells says, noting the new name reflects the family ownership of the company but eliminates the element of “dairy,” which the company says

Wells’ Dairy Inc. announces name changeadded confusion due to its connotation of fluid milk processing or dairy cattle operations.

Wells divested itself of the fluid and cultured part of the business in late 2007 and early 2008.

“As an ice cream and frozen nov-elty only company, Wells Enterprises Inc. accurately identifies the future growth of the company as we continue to expand our flagship Blue Bunny brand nationwide,” Wells says. CMN



NEWS/BUSINESS


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SHELBYVILLE, Tenn. — U.S. Marshals last week seized about $200,000 worth of food products from Bedford Cheese Store Inc., Shelbyville, Tenn., after FDA investigators found evidence of rodents throughout the company’s facility.

An FDA inspection found rodent feces, rodent hair, rodent nesting ma-terial and building defects that could allow rodents and other pests to enter food storage areas and other areas, FDA says.

Products seized included cheese, frozen foods, pastas, salad dressings, prepared salads, soups and various bulk ingredients. The products are adulter-ated under the Federal Food, Drug and Cosmetic Act because they have been held under unsanitary conditions and may have become contaminated with filth.

U.S. Marshals seize food products from Tennessee-based Bedford Cheese Store

“The violations at Bedford Cheese are widespread and significant,” says Dara A. Corrigan, FDA associate com-missioner for regulatory affairs. “This enforcement action was taken because the company failed to provide adequate safeguards to ensure that products they produce or hold for sale remain free of contamination.”

FDA notes that in a written response to the agency following the inspection, Bedford Cheese “committed to cleaning up its facility.” However, the company failed to complete all corrective ac-tions, including the development and implementation of a pest control plan to rid the facility of the active rodent infestation.

Calls and an e-mail to Bedford Cheese Store seeking comment were not returned by press time. CMN

U.S.-Korea FTA stalled as EU passes agreement; dairy industry calls for swift passageWASHINGTON — This week the Obama Administration released its 2011 Trade Policy Agenda and 2010 Annual Report. Addressing the pending U.S.-Korea free trade agreement (FTA) that was nego-tiated in December, the agenda states that the administration is continuing its close cooperation with Congress to secure approval of this landmark agree-ment as soon as possible.

The agenda adds that the admin-istration is continuing to work to resolve outstanding issues related to the pending Colombia and Panama trade agreements, which include tax transparency and labor and human rights concerns.

However, the President’s agenda has come under criticism for not out-lining a clear enough plan on how the

outstanding issues in the three pending agreements will be resolved in a timely manner.

Ways and Means Committee Chair-man Dave Camp, R-Mich., and Trade Subcommittee Chairman Kevin Brady, R-Texas, issued a joint statement Tues-day criticizing the continued delays and lack of a concrete plan to advance the trade agreements. Both Camp and Brady called for all three agreements to be considered by July 1.

“The president’s agenda shows no sense of urgency, even while acknowl-edging a clear reason for urgency — that U.S. businesses, workers, farmers and ranchers are increasingly disadvan-taged as Colombia and Panama imple-ment trade agreements with other countries,” Camp says.

Also on Tuesday, 67 Republican members of the House of Represen-tatives sent a letter to the president encouraging the passage of the three pending FTAs.

“We stand ready to work with you to ensure that new opportunities are created for our farmers, manufacturers, service providers and workers by passing the three pending free trade agreements with Colombia, Panama and South Korea within the next six months,” the repre-sentatives say in the letter.

“Our three pending agreements have languished, while our partners have aggressively pursued negotiations that exclude the U.S. and put American workers at a competitive disadvantage,” the letter continues.

Last month, the European Parlia-ment voted to pass an FTA between the European Union and South Korea, which will take effect July 1. South Korea and the EU will eliminate 98.7 percent of the tariffs in trade value for both industrial and agricultural products within five years of the agreement.

U.S. dairy industry organizations have repeatedly called for a swift pas-sage of all three pending trade agree-ments.

Chris Galen, senior vice president of communications for the National Milk Producers Federation (NMPF), says the organization remains eager to see the U.S.-Korea FTA implemented as swiftly as possible.

“The recent news regarding the EU’s vote in favor of their own FTA with Korea drives home the fact that as of July 1, the EU will have preferential access in Korea for dairy products but we will not,” Galen says. “We need to move fast on U.S. approval so that we do not lose ground in that important market.”

Galen adds that the Colombia and Panama FTAs also are beneficial to the U.S. dairy industry, and NMPF hopes to see these swiftly approved as well.

The International Dairy Foods As-sociation (IDFA) submitted testimony last week for a hearing held by the House Ways and Means Committee on U.S. trade policy issues, focusing on pending trade agreements with Colum-bia, Panama and South Korea, as well as U.S.-China trade concerns and U.S. trade with the countries in the Pacific Rim. In addition to market-oriented policies, IDFA called for quick action to approve the pending trade agree-ments with Colombia, Panama and South Korea.

“In general, we need the right policies in place that will facilitate the U.S. dairy industry’s ability to expand into these markets, especially in light of the rapid pace that other competing exporters have negotiated competing trade deals with these countries,” says Clay Hough, senior group vice president, IDFA.

The dairy industry has paid par-ticular attention to the pending FTA with Korea. In 2010, South Korea was the U.S. dairy industry’s sixth-largest export market and imported more than $115 million worth of American dairy products, according to IDFA.

“While IDFA is a strong supporter of all three FTAs, we definitely see the biggest gains for dairy in the Korea agreement,” Hough says. “Korea is a very important market for U.S. dairy exporters and it is imperative we get that agreement approved before July 1, or we will risk a significant loss of market share to the EU. However, we would like to see concrete action and a timeline for moving those forward on the Panama and Colombia agreements.” CMN

MOUNTAIN VIEW, Mo. — An order of destruction for raw milk cheese pro-duced by Morningland Dairy, Mountain View, Mo., recently was upheld in a Missouri circuit court.

A permanent injunction was granted in the Howell County Circuit Court, following the Jan. 11-12, 2011 hearing in a case involving Morningland Dairy, the Missouri State milk Board and the Missouri Department of Agriculture. As a result of the permanent injunction, products previously embargoed have been ordered to be destroyed.

According to the judgment, the dairy’s business documentation pro-cedures must be improved, including maintaining records of cheese produc-tion, from preparation of each batch to cutting, ripening and retail sale. For future production, Morningland Dairy must ensure that cheese is not made available for sale until fully ripened.

Following the discovery of Listeria monocytogenes and Staphylococcus au-reus in samples of Morningland’s cheese last year, the Missouri State Milk Board

Order to destroy Morningland cheese upheldin October condemned and ordered the destruction of all cheese products the dairy manufactured between Jan. 1 and Aug. 26, 2010. Morningland re-fused to destroy the cheese. Backed by the Farm-to-Consumer Legal Defense Fund, the owners argued that there was not sufficient evidence to warrant the destruction of the dairy’s entire cheese inventory, valued at $250,000. (See “Morningland recalled cheese battle continues,” Oct. 22, 2010, in the archives at www.cheesemaketnews.com.)

In the circuit court’s judgment filed Feb. 23, Judge David Dunlap writes that the Missouri Milk Board, which conducted further testing and observa-tion following the initial discovery of contamination, was justified in ordering the destruction of the cheese.

“When it became clear that the problem of contamination was wide-spread and perhaps endemic, the Board had ample warrant to main-tain the condemnation status and to explore the propriety of forced destruction,” the court says. CMN

http://www.johnsonindint.com




NEWS/BUSINESS

WASHINGTON — Ethanol has been a hot topic the past few weeks as Congress has been working to pass measures to fund the federal government after cur-rent funding levels expire this week.

On Wednesday, the Senate passed a two-week extension of a continuing resolution (CR), which was signed by President Obama later that day, to fund the federal government through March 18. (For more on the funding measure, see related article in this issue.)

The new CR did not include two ethanol-related amendments that were included in a separate, larger House funding bill passed last month that is still awaiting action in the Sen-ate. On that bill, the first amendment would have denied funding for ethanol blender pumps or storage facilities, while the second amendment would have denied funding for the Environ-mental Protection Agency (EPA) to implement its recent decision to allow a 50-percent increase in the amount of ethanol permitted in gasoline. (See “Industry reacts to drop in USDA corn crop estimate, EPA increase in ethanol limits,” Oct. 15, 2010, in Cheese Market News’ article archive at www.cheese-marketnews.com.)

In a letter to lawmakers sent this week, several dairy and agriculture groups including the International Dairy Foods Association (IDFA), Califor-nia Dairies Inc. and Alliance of Western Milk Producers called on congressional leadership to resist calls for spending on infrastructure for conventional biofuels.

“Dairy producers have been strug-gling with high feed costs,” says Jerry Slominski, IDFA senior vice president of legislative affairs and economic policy. “Instead of government mandates that drive costs higher, we should be looking

Ag, dairy groups weigh in on ethanol debateat changing some of our existing govern-ment programs that are actually helping to create the problem.”

In addition, last week at USDA’s annual Agricultural Outlook Forum, former President Clinton warned farm-ers that using high amounts of corn for ethanol could lead to higher food prices and riots in developing countries.

While acknowledging the role of ethanol in reducing U.S. dependence on imported fuels, Clinton says U.S. farm-ers need to be aware of the developing countries’ food needs as well as the domestic ethanol market.

Some agriculture groups, however, see the issue differently. Bob Stall-man, president of the American Farm Bureau Federation (AFBF), says that instead of pointing fingers at ethanol for increased corn prices, the United States needs to look at what is really driving demand, which he says are en-ergy prices, weather-related issues and a growing global middle class.

“This general rise in the price of grains has not been limited to corn,” Stallman says. “Soybean prices, too, have moved to new levels, certainly due in part to spillover effects from corn, but also due to exploding demand from China and other rapidly developing countries.”

Stallman adds that many factors are playing a role in increased oil prices and the “food vs. fuel cliche is growing tiresome.”

“Ethanol is a good, clean, home-grown fuel that lessens U.S. reliance on foreign fuel while adding jobs to the American economy,” he says.

Congress now will work on a longer-term measure to fund the government through Sept. 30, the end of the current fiscal year. The fate of the ethanol debate in that measure remains to be seen. CMN

WASHINGTON — The National Restaurant Association’s Restaurant Performance Index (RPI) declined in January amid weather-dampened sales and traffic levels.

The RPI — a monthly composite in-dex that tracks the health of and outlook for the U.S. restaurant industry stood at 100.2 in January, down 0.8 percent from its December level. Despite the decline, the association notes January marked the fourth time in the last five months that the RPI stood above 100, which signifies expansion in the index of industry indicators.

“The RPI’s January decline was due in large part to dampened sales and traf-fic levels as a result of extreme weather in some parts of the country,” says Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Associa-tion. “Although restaurant operators reported softer same-store sales and customer traffic results in January, their outlook for sales growth and the economy remained optimistic.”

Restaurant performance declines in JanuaryRiehle notes that overall, the eco-

nomic fundamentals of the restaurant industry remain positive, which will likely lead to stronger sales and traffic levels in the months ahead.

The Current Situation Index — which measures current trends in four industry indicators including same-store sales, traffic, labor and capital expenditures — stood at 98.6 in January, down 1.1 percent from its December level. The Current Situation Index remained below 100 for the third consecutive month.

The Expectations Index — which measures restaurant operators’ six-month outlook for four industry indica-tors including same-store sales, employ-ees, capital expenditures and business conditions — stood at 101.8 in January, down 0.5 percent from December’s 45-month high of 102.4.

The RPI is based on the responses to the National Restaurant Association’s Restaurant Industry Tracking Survey, which is fielded monthly among res-taurant operators nationwide. CMN

WASHINGTON — U.S. dairy product exports are expected to reach $3.7 billion in fiscal 2011, according to the February forecast in the “Outlook for U.S. Agricul-tural Trade” released last week by USDA. USDA raises its February forecast $500 million from last November’s forecast of $3.2 billion of dairy exports for fiscal 2011, which ends Sept. 30.

“The export forecast for dairy prod-ucts is raised $500 million due to rising global unit values and increased export volumes to Mexico and Asia,” the Feb-ruary report says. “International dairy prices have been strengthening due to weather-related production concerns in the EU and Oceania.”

U.S. dairy product exports reached $3.37 billion in fiscal 2010. Dairy products exported October-December 2010 were valued at $986 million, up from $663 million in the same 2009 quarter.

The February report forecasts total U.S. agricultural exports for fiscal 2011 at $135.5 billion, up $9 billion from November’s forecast and up $26.8 billion from 2010. Exports are forecast to exceed the previous record set in 2008 by $20.6 billion. The report says sharply higher unit values for grains, soybeans and cotton account for most of the forecast increase for exports, and strong global demand is behind a higher forecast for dairy and animal products. The forecast for U.S. agricultural exports to China, the

U.S. dairy product exports forecast is up; exports expected to climb to $3.7 billion

top U.S. market, is raised to a record $20 billion. Projected U.S. exports to Canada, Mexico and the European Union also are up significantly from November.

USDA also raised its February fore-cast of imports of dairy products to the United States, with $2.7 billion worth of imports projected in fiscal 2011, up $200 million from $2.5 billion in November’s forecast. The February forecast for cheese imports during 2011 is $1.0 bil-lion, the same as November’s forecast. U.S. imports of dairy products reached $2.42 billion and cheese imports totaled $963 million in fiscal 2010.

The value of total U.S. agricultural imports is forecast to reach $88 billion in fiscal 2011, up $2.5 billion from the November forecast, as food and agri-cultural commodity prices increased during the second half of 2010, the re-port says. This projection represents an 11-percent gain from 2010, of which 6-7 percent is attributed to higher import prices and 4-5 percent to greater vol-ume. Real personal consumer spending for food and beverages rose 4.9 percent in the fourth quarter of 2010, while real spending for food services climbed 4.1 percent in seasonally-adjusted terms.

World food prices reached a re-cord high in January 2011, USDA says, topping the previous high in mid-2008, and rising more than 50 percent since December 2008. CMN

http://www.harrydavis.com




NEWS/BUSINESS

In last week’s issue of Cheese Market News, in the article “Saputo reports increased net earnings for third quarter, up 7.2 percent from year prior,” we incor-rectly published the amount the compa-ny recorded as a charge due to a recall. The sentence should have stated, “The company recorded a charge of C$1.9 mil-lion during the quarter related to this recall.” CMN regrets this error. CMN

ARLINGTON, Va. — Cooperatives Working Together (CWT) recently accepted two requests for export as-sistance from Darigold to sell a total of 276 metric tons (0.608 million pounds) of Cheddar and Monterey Jack to customers in Asia. The product will be delivered in April.

In 2011, CWT has assisted members in making export sales of Cheddar, Monterey Jack and Gouda totaling 6,899 metric tons (15.2 million pounds) to 15 countries on three continents.

CWT will pay export bonuses to the bidders when delivery of the product is verified by the submission of the required documentation. CMN

CWT assists with more cheese sales

AUCKLAND, New Zealand — The trade weighted index (TWI) was up 5.9 percent following Tuesday’s auction on globalDairyTrade, Fonterra’s internet-based sales platform.

Prices were up for anhydrous milkfat (AMF), skim milk powder (SMP) and whole milk powder (WMP) in this week’s event. No buttermilk powder was offered in this auction.

The average price achieved across all contracts and contract periods for AMF was US$6,424 per metric ton FAS ($2.9139 per pound), up 1.1 percent from the Feb. 15 auction. The average price for SMP was up 2.3 percent to US$3,977 per metric ton FAS ($1.8039 per pound).

The average price achieved across all contracts and contract periods for WMP was US$4,619 per metric ton FAS ($2.0951 per pound), up 9.6 percent from last month’s auction.

The next trading event will be held March 15. For more information, visit www.globalDairyTrade.info. CMN

All commodity prices up in latest globalDairyTrade

Correction

(See “DIAC to vote on final package of recommendations March 3” in the Feb. 18, 2011, issue of Cheese Market News.)

“A tremendous amount of time and effort has been put into this report by members of the Dairy Industry Advisory Committee and I’m appreciative of their efforts and their willingness to dedicate time in support of the dairy industry,” Vilsack says.

The National Milk Producers Fed-eration (NMPF) issued a statement today, saying the vote is a welcome development in that many of the rec-ommendations in the report approved by the committee are reflected in the

Dairy Industry Advisory Committee approves final recommendations on price, profitabilityFoundation for the Future program already developed by NMPF.

“It’s good to see that other industry experts looking at the challenges fac-ing the dairy sector — and examining possible future actions — are coming to the same conclusions that our members reached in the past year,” says Jerry Kozak, president and CEO, NMPF. “We greatly appreciate Secretary Vilsack’s leadership in creating an inclusive, deliberative method to thoroughly ex-amine current dairy policy, and explore what changes are needed.”

The Dairy Industry Advisory Com-mittee was chartered to review farm milk price volatility and dairy farmer

profitability. The committee was asked to make recommendations to the secretary on how USDA can best ad-dress these issues and meet the dairy industry’s needs, both short- and long-term. The committee also was asked to provide feedback on how actions taken by USDA in 2009 have affected the dairy industry.

For a written copy of the final report, which will be available in ap-proximately 10 days, contact Solomon Whitfield at [email protected]. An electronic version of the current draft report can be found at www.fsa.usda.gov/Internet/FSA_File/diac_final_rpt_0302.pdf. CMN

WASHINGTON — The Dairy Industry Advisory Committee this week voted to approve a final report to USDA Secretary Tom Vilsack that offers recommendations concerning dairy farm profitability and milk prices. The vote supports a report that offers 23 public policy recommendations.

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USDA’s Agricultural Marketing Ser-vice recently announced that William A. Wise has been appointed market administrator, Pacific Northwest and Arizona milk marketing orders. Wise has served for 29 years in the Phoenix market administrator office. He has been an assistant market administrator since 1995 and most recently responsible for aiding in the administration of the Pacific Northwest and Arizona milk marketing orders.

The California Milk Advisory Board (CMAB) recently announced that Richard Michel has been elected chairman, and Domenic Carinalli Jr. has been elected vice chairman of the board. Michel, a third-generation dairy-man from Waterford, Calif., is a member of Western United Dairymen and the California Dairies Inc. processing co-operative. Carinalli, a dairyman from Sebastopol, Calif., is a past president

of Western United Dairymen. At-large members of CMAB’s executive com-mittee include dairy farmers Richard Wagner, Escalon, Calif., and Dante Migliazzo, Atwater, Calif.

Swiss Valley Farms, Davenport, Iowa, and its subsidiary Caves of Faribault, Faribault, Minn., recently announced that Kelly McNamara and Jeannie Ke-nevan have been hired as regional sales managers. McNamara has more than 10 years of sales and management experi-ence, most recently as regional sales manager of Grafton Village Cheese in Ver-mont. Kenevan worked for seven years with Summit Brewing Co. in Minnesota, where she managed relationships, com-munication, sales and training efforts for numerous wholesalers and retail-ers. Both McNamara and Kenevan will report to Jeff Jirik, vice president, Blue Cheese Division, and Jeff Saforek, vice president, sales and marketing. CMN

Dale Cleon HumphreysMILLVILLE, Utah — Former cheese-maker Dale Cleon Humphreys of Mill-ville, Utah, passed away on the morning of Feb. 20. He was 72.

Humphreys was born June 28, 1938, in Logan, Utah, to Cleon Orvan and Leah Jane Jorgensen Humphreys. He had four brothers and three sisters.

Humphreys attended school in Millville and graduated from South Cache High School in 1956. After graduating he served in the South Australian LDS Mission from 1958 to 1960. He attended Utah State University studying food science. He married Karen Christie McFarland on Nov. 21, 1962.

In 1966, Humphreys began his career at Gossner Foods as head cheesemaker, where he worked for 45 years. At the time of death he was still working there as a consultant.

“Dale was instrumental in producing consistent top quality Swiss cheese and received many awards for his efforts,” Gossner Foods says. “The Gossner fam-ily and organization express sincere condolences to the Humphreys family. He will be missed by many in the dairy industry.”

Humphreys served in many church callings throughout his life including

bishop, devoted home teacher, and at the time of death he was serving as stake patriarch in the University YSA third stake. He served as mayor of Millville city and on various committees.

He is preceded in death by his parents, Leah and Cleon Humphreys; sister, Marise Nordick and his infant brother, Orvan.

He is survived by his wife, Christie; his children, Lorin (Kari) of Boise, Eric (Teena) of Amalga, Wayne (Julie) of Townsend, Mont., Heidi Bentley (Nathan) of Boise, Tina Howard (Tim) of Brigham City and Amber Hansen (Tim) of Logan, foster daughter, Reha-leah Toledo (Travis) of Albuquerque; siblings, Janet Bankhead (Gerald, deceased) of Malta, Idaho, JC (La-may) of Tabiona, Utah, Bob (Donna Jean) of Millville, currently serving an LDS mission in Nauvoo, Ill., Lynette (Jack, deceased) of Logan, Kevin (Lorie) Millville, 37 grandchildren, one great-grandchild and many nieces and nephews.

In lieu of flowers please make donations to the Huntsman Cancer Medical Center or the LDS Perpetual Education fund. Condolences and memories may be shared with the fam-ily at www.allenmortuaries.net. CMN

Obituary

AUCKLAND, New Zealand — Fonterra recently announced that the coopera-tive’s CEO, Andrew Ferrier, intends to step down from his role in the second half of this year. A search is underway for a new CEO.

“Andrew has devoted eight years to building Fonterra into a highly suc-cessful cooperative delivering great

Fonterra CEO Andrew Ferrier to step down, search currently underway for replacement

DALLAS — Joseph Scalzo, who six months ago was promoted to president and chief operating officer of Dean Foods, left the company Feb. 25, accord-ing to an announcement this week from Dean Foods. Gregg Engles, chairman and CEO of Dean Foods, is assuming Scalzo’s operating responsibilities, and executives previously reporting to Scalzo now will report directly to Engles. The company does not intend to name a replacement for Scalzo.

“I want to thank Joe for his many contributions to Dean Foods,” Engles says. “Joe was instrumental in building the WhiteWave platform into a single winning company, and recruited and developed exceptional talent. We wish Joe well in his future endeavors as he pursues opportunities to lead a consumer packaged goods company.”

Engles named Scalzo chief operat-ing officer in late 2009 before Scalzo earned the additional title of president in August 2010. He was slated to oversee Dean Foods’ operation turnaround and near-term strategic initiatives, as well as its business units and key functions.

Dean Foods president will not be replacedDean Foods, which has struggled over

the past year with fluctuating milk prices and low profitability, reported continued losses in earnings for its fourth-quarter and full-year 2010 financial results. (See “Dean Foods announces fourth-quarter and full-year results, reflecting a diffi-cult 2010” in last week’s issue of Cheese Market News.)

Engles says Dean Foods expects to finish out its initial $300 million cost-reduction program by achieving the final $125 million or better of sav-ings across the supply chain in 2011. Additionally, he says the company is aggressively attacking cost at the cen-ter, with a goal of reducing its SG&A (selling, general and administrative expenses) run rate by at least $30 million by year end 2011.

“It has become clear to the board, me and Joe that Dean Foods will be best served by a new structure that can move decisively and quickly to execute our strategy while maintaining an extremely tight rein on costs,” Engles says. “Dean Foods has a bright future, and I am con-fident we will deliver for shareholders, customers and our employees.” CMN

PEOPLE

results for its farmer shareholders and New Zealand,” says Fonterra chair Henry van der Heyden. “In 2003 Andrew inherited nearly 20,000 people that made up Fonterra and has single-mindedly molded them into a world-class team, working to a clear strategy and with a real sense of purpose. Fonterra has never been

in better shape, and that is credit to Andrew’s leadership.”

Ferrier indicated some time ago that he wanted to move on by the end of 2011, according to van der Heyden, and a search for a new CEO began nearly two years ago.

An international search started at the end of last year, and Fonterra’s board will be considering internal and external candidates, van der Heyden says.

“It is possible that we will have identified a suitable candidate by the second half of this year, but Andrew is committed to continuing in his role

until we have found the right person,” van der Heyden says.

Ferrier says with Fonterra in good shape, it provided the right opportunity for the transition.

“I have had 17 years as a CEO, in-cluding eight years at Fonterra, and I am looking forward to more flexibility in my life, spending more time with my family, and choosing from a number of business interests that are available to me,” Ferrier says.

“Fonterra is a great cooperative and, when I leave, I will have abso-lute confidence in it becoming even stronger in the future,” he adds. CMN

Comings and goings … comings and goings

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NEWS/BUSINESS

MINNEAPOLIS — Land O’Lakes, Inc., achieved solid financial results in 2010, including the second-highest net sales and earnings in its 90-year history, despite chal-lenging economic conditions, according to leaders of the national food and agricultural cooperative. This message was delivered to more than 1,000 cooperative members and visitors gathered in Minneapolis this week for the co-op’s 90th annual meeting.

Land O’Lakes reports strong year; CEO talks about issues affecting agriculture at largeHighlights of 2010 performance

included:• Net sales of $11.1 billion, up from

$10.4 billion in 2009 and the company’s second-highest net sales ever;

•Net earnings of $178 million, down from 2009’s $209 million but the second-highest in Land O’Lakes’ history;

• A record-high $125 million in cash returned to members;

• A notable reduction (11 percent) in debt, supporting the cooperative’s strong, stable balance sheet;

• Strengthening Land O’Lakes’ mar-ket presence in nearly all key business segments; and

• Strategic positioning for future performance and growth.

Strong fourth-quarter performance contributed to the solid full-year results. For the quarter, net sales were $2.8 bil-lion, up from $2.5 billion for the same quarter in 2009. Net earnings were $74.6 million compared to $49.3 million one year ago.

2010 earnings benefited from $6 mil-lion in unrealized hedging gains (as of Dec. 31, 2010), while 2009’s net earnings were impacted by $37 million in unreal-ized hedging gains. Company officials note that unrealized hedging is more an indicator of market conditions at a given time than of performance.

Land O’Lakes’ Dairy Foods business reported pretax earnings of $50.3 million for the year, compared to $61.0 million in pretax earnings for 2009. Dairy Foods 2010 results include a $4.2 million unreal-ized hedging gain position as of Dec. 31, 2010, while 2009’s results included $13.0 million in unrealized hedging gains.

While Dairy Foods volumes were mixed, margins were strong nearly across the board, the company reports. Dairy Foods sales for the year totaled $3.7 billion, compared to $3.2 billion in 2009. Notably, volume was up for the company’s flagship branded butter despite a price-conscious market. Innovative products, like Land O’Lakes Butter with Olive Oil, also performed well, and Land O’Lakes’ Foodservice business outperformed the industry (led by a significant increase in school segment volume), the company reports. Although volumes were down in the consumer cheese category, Land O’Lakes built on its leading position in deli cheese.

In addition to providing financial and operating results, Land O’Lakes leaders also discussed several agricultural, food industry and cooperative issues.

Land O’Lakes President and CEO Chris Policinski notes that less than 2 percent of the U.S. population is directly involved in production agriculture.

“As a result, few people have a first-hand understanding or knowledge of agriculture, as compared with previous generations. That means it’s up to us

— those of us who are directly involved with agriculture and food production — to both educate and advocate,” he says.

Policinski says the goals should be to:• Promote a fact-based public

understanding of agriculture and food production;

• Listen and respond to “messages from the marketplace” — especially public concern about environmental sustainability, animal care and food safety; and

• Support co-existence and choice in both agricultural methods and food options.

The industry must set and enforce high standards, he notes.

On the animal welfare side of the business, the National Milk Producers Federation’s animal welfare initiative Farmers Assuring Responsible Manage-ment (FARM) is just one example of a ma-jor, industry-wide effort to set measurable standards for the entire industry — and Land O’Lakes members are implementing those standards throughout the coopera-tive system, Policinski says.

On the topic of food quality and safety, Policinski calls for “robust food safety and quality policies and processes” for produc-ers of all types and sizes throughout the food system.

“When I talk about more robust poli-cies and processes, I’m not talking just about improving our ability to identify and respond to problems … although that is part of it. I’m talking about improving our ability to prevent problems,” he says.

Policinski notes that Land O’Lakes has a companywide product safety and quality policy, has committed substantial resources to food safety and quality assur-ance, and maintains a rigorous milk quality program. Policinski concluded his remarks by voicing support for co-existence and choice across agriculture.

“Too often we see dueling visions of agriculture. One vision is of large-scale agriculture, driven by sound science and technology, and connected to consumers through global supply chains. The other vision is of small-scale agriculture con-nected to consumers through local food networks,” he says.

“Both types of agriculture can and should co-exist. With a diverse food system, we can enable producers to increase pro-ductivity and feed a hungry world, while at the same time giving consumers the food choices they want for their families.” CMN

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NORTHFIELD, Ill. — Kraft Foods Inc. recently announced that the U.S. Court of Appeals for the Second Circuit upheld a lower court’s ruling denying Kraft’s request for a preliminary injunc-tion against Starbucks Coffee Co.

The injunction would have stopped Starbucks from unilaterally ending its strategic partnership with Kraft before a mandatory arbitration proceeding decides the core issues in this dispute. (See “Kraft seeks preliminary injunc-

tion in dispute,” Dec. 10, 2010, in Cheese Market News’ article archive at www.cheesemarketnews.com.)

Kraft notes the arbitration process already is underway and will con-tinue over the next several months. The recent court decision does not affect the company’s defense of its rights in arbitration, says Marc Firestone, executive vice president of corporate and legal affairs and general counsel, Kraft Foods. CMN

Kraft denied reversal in Starbucks dispute

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NEWS/BUSINESSMarch 4, 2011 — CHEESE MARKET NEWS® 11

JANUARYContinued from page 1

FUNDINGContinued from page 1

production, of which Cheddar is the largest component, totaled 362.7 million pounds in January, up 4.4 percent from a year earlier.

Wisconsin, the nation’s top cheese-producing state, experienced a 1.8-per-cent increase in production compared to January 2010, rising to 217.7 million pounds. California followed with 186.1 million pounds, a 6.0-percent increase over January 2010.

The next four cheese-producing states were Idaho with 68.4 million pounds in January 2011, up 2.2 percent vs. a year earlier; New Mexico with 68.3 million pounds, up 25.2 percent; New York with 57.1 million pounds, down 0.9 percent; and Minnesota with 53.7 million pounds, down 1.3 percent.

NASS reports total U.S. butter production in January 2011 was 166.5 million pounds, up 2.7 percent from January 2010 and up 5.4 percent from December 2010.

California led the nation’s butter production with 54.0 million pounds in January, a 1.2-percent decline from its production a year earlier. CMN

“Obama releases fiscal 2012 budget proposal” in the Feb. 18, 2011, issue of Cheese Market News.)

Congressional leaders say both houses now will work to find common ground on a longer-term spending plan to fund the government through Sept. 30, the end of the current fiscal year.

On the heels of the budget debate, the Government Accountability Office (GAO) released a report this week that shows the federal government has 15 different agencies overseeing food safety laws, more than 20 separate programs to help the homeless and 80 programs for economic development.

The report, “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars and Enhance Revenue,” is the GAO’s first annual re-port to Congress in response to a new statutory requirement that GAO identify federal programs, agencies, offices and initiatives, either within departments or government-wide, that have duplicative goals or activities.

GAO notes the report also seeks to highlight other opportunities for potential cost savings or enhanced revenues.

In the first section of the report, GAO identifies 34 areas where agencies, offices or initiatives have similar or overlapping objectives or provide similar services to the same populations. It also shows where government missions are fragmented across multiple agencies or

programs. GAO notes these areas span a range of government missions including agriculture, defense, economic devel-opment, energy, general government, health, homeland security, international affairs and social services.

The second part of the report summa-rizes 47 additional areas — beyond those directly related to duplication, overlap or fragmentation — describing other opportunities for agencies or Congress to consider that could either reduce the cost of government operations or enhance revenue collections for the Department of Treasury, GAO says.

GAO notes that many of the issues included in the report are focused on activities that are contained within single departments or agencies.

“In those cases, agency officials can generally achieve cost savings or other benefits by implementing existing GAO recommendations or by undertaking new actions suggested in this report.”

However, GAO notes that a number of issues it has identified, particularly in the duplication area, span multiple organizations and therefore may require higher-level attention by the executive branch, enhanced congressional over-sight or legislative action.

“Collectively, these savings and rev-enues could results in tens of billions of dollars in annual savings, depending on the extent of actions taken,” GAO says.

To v i e w t h e r e p o r t , v i s -it www.gao.gov. CMN

In response to the long-standing lack of U.S. compliance with its truck-ing obligations to Mexico under the North American Free Trade Agree-ment (NAFTA), Mexico has been legally levying tariffs on a variety of U.S. exports since March 2009. In August 2010, Mexico added a new retaliation list that included many U.S. cheeses.

The dairy industry was encouraged when U.S. Department of Transporta-tion (DOT) Secretary Ray LaHood in January shared with Congress and the government of Mexico an initial con-cept document for a long haul cross-border Mexican trucking program that officials say prioritizes safety while satisfying the United States’ international obligations. (See “DOT releases concept doc for cross-border trucking program,” Jan. 7, 2011, in Cheese Market News’ article archive at www.cheesemarketnews.com.)

“The U.S. dairy industry appreci-ates the work between the U.S. and Mexico governments to craft a satis-factory resolution,” NMPF and USDEC say. “Furthermore, NMPF and USDEC are looking forward to a swift process by the Department of Transportation to complete a final agreement.”

Mexico has announced that once a final agreement has been

reached, Mexico will suspend its retaliatory tariffs on dairy products by 50 percent and will suspend the remaining 50 percent when the first Mexican carrier is approved to cross the border.

“We commend the efforts by the U.S. and Mexican government to work together to seek a final resolution to this old dispute,” says Tom Suber, president, USDEC. “These are encour-aging developments for U.S. exporters of dairy products that today have to pay a higher rate to enter Mexico. Mexico is our largest market, and we want to ensure that we remain the No. 1 source of dairy products.”

Jerry Kozak, president and CEO of NMPF, adds that world markets, and in particular Mexico, are essential to helping grow sales opportunities for U.S. dairy farmers.

“This agreement is welcome news since it would help re-open doors for our dairy products at a time when rebuilding markets for U.S. milk is critical to the well-being of our dairy producer community,” Kozak says.

NMPF and USDEC stress the importance of keeping the U.S. and Mexico agreement intact and urge members of Congress to support this agreement.

“It is imperative that members of Congress support the efforts of the Obama administration in resolv-ing the Mexico trucking dispute once and for all,” they say. CMN

DISPUTEContinued from page 1

Reprinted with permission from the March 4, 2011, edition of CHEESE MARKET NEWS® © Copyright 2011 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com Reprinted with permission from the March 4, 2011, edition of CHEESE MARKET NEWS® © Copyright 2011 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com


NEWS/BUSINESS

ANALYSISContinued from page 1

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been $1.90 per hundredweight higher during 2009, raising farm revenue by $3 billion.

NMPF notes its analysis also points to real-world experience where farmers did respond to advance incentives urging them to reduce milk output — notably, three years ago in California, when the state’s largest cooperatives instituted limits on the amount of milk a farmer could send to market each month. That production-limiting plan had the im-mediate effect of reducing the state’s milk production in 2008 and 2009, while production in other states without that plan tended to rise, NMPF says.

“That’s why the Informa analysis found that penalties on growing milk output were relatively smaller in Califor-nia compared to other states — because producers in the largest dairy state already had been given the signal to cut production,” NMPF says, noting that all of the other states cited by Informa as incurring the largest penalties in 2009 are on that list simply because they are the largest dairy-producing states.

“As the California example vividly demonstrates, dairy producers will react strongly to economic signals that milk they produce, in excess of a given volume, has a lower value,” Kozak says. “Such a

response would mean that farmers, if DMSP were in effect, would not be penal-ized for producing excess milk because they would reduce their output. Thus, the estimate of hundreds of millions of dollars in penalties is highly suspect because farmers would seek to avoid the penalties by shipping less milk.”

In response to the study, Peggy Armstrong, vice president of com-munications at IDFA, says that when IDFA commissioned Informa Economics to analyze the proposed DMSP, IDFA asked them to look at the facts, “and they did.”

She notes that Informa reviewed more than a decade of data to determine what impact DMSP would have had if it had been in effect during that period.

“Informa did not try to predict, spec-ulate or hypothesize about the potential behavior of producers. IDFA has consis-tently said that supply control programs will harm our industry, particularly our ability to capture new and growing international markets for dairy,” Arm-strong says. “IDFA is ready and willing to work with NMPF to help establish a margin insurance program that would be a real safety net for dairy farmers, not a program like DMSP that creates a new federal bureaucracy.” CMN

less for their milk in the next month or two, they’ll act accordingly. But you won’t find any acknowledgment of that reality in the Informa study.”

In an analysis of the economic impact of the DMSP, Peter Vitaliano, NMPF vice president for economic policy, estimated the behavior of dairy producers during the months when the program would have been triggered in the past two years. NMPF’s analysis shows that had the DMSP been in place in 2009, the average U.S. all-milk price would have

Kozak adds that the Informa report was “incredibly one-dimensional” in that it did not make an effort to acknowl-edge that when pricing signals are bad, farmers react fairly quickly.

“Real-world experience tells us that farmers respond to incentives and pen-alties, like all rational economic actors,” Kozak says. “If they know they’ll get paid

CHAKAN, India — Tetra Pak has broken ground on a packaging material plant in India to meet growing market demand.

Tetra Pak’s packaging material fac-tory in Chakan, India, is designed to meet growing demand for carton packaged dairy beverages and fruit-based drinks in India, South and Southeast Asia and the Middle East.

The new plant will have an initial annual production capacity of 8.5 billion packages, with the potential of increas-ing to 16 billion packages. It will produce packaging material for such packages as Tetra Brik Aseptic, Tetra Fino Aseptic and Tetra Classic Aseptic.

The Indian commitment follows similar recent investments to increase

Tetra Pak breaks ground on facility in Indiaproduction capacity in China, Pakistan, Russia and Brazil.

The new packaging plant will feature a machine rebuilding center providing technical services such as start-up sup-port and machine renovation to custom-ers. It also will have a Product Develop-ment and Innovation Center (PDIC), which will have a laboratory, a pilot processing plant and a pilot packaging plant to meet the product formulations and development needs of customers.

The new plant also will include several environmentally-efficient fea-tures such as the use of renewable and non-conventional energy and materials, heat recovery to generate air condition-ing and rain water harvesting. CMN

APPLETON, Wis. — WOW Logistics is now accepting applications for its 2011 scholarship within the paper industry. The annual WOW Logistics/Harold E. Schiferl Scholarship is open to sophomores, juniors or seniors in good academic standing at the University of Wisconsin-Stevens Point who are seeking a degree in paper science and engineering.

The annual $1,000 scholarship is awarded to two qualified students. It was created in 2010 and bears the name of WOW Logistics’ founder, Harold E. Schiferl, who understood the importance of the paper industry to the state of Wisconsin and the U.S. economy. WOW Logistics works

WOW Logistics announces 2011 scholarshipclosely with more than 50 customers in the paper industry to handle and store more than 500,000 tons of paper products each year. With this annual scholarship, WOW hopes to encourage and promote careers within the paper manufacturing industry.

To apply, visit www.wowlogistics.com/scholarships/paperscience/. Ap-plications must be completed and re-turned to WOW Logistics by April 29. The winning applicants will be announced May 26 at the Wisconsin Paper Council Annual Meeting in Neenah, Wis.

For more information, contact Chad Collett, vice president of marketing, WOW Logistics, 920-830-4803 or e-mail [email protected]. CMN

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