Market Reports with Annie AcMoody 2

A review of the California FMMO outreach

meetings

Dean Foods launches single national brand

Water Board OK’s mandatory cuts

3

WUD hosts labor workshops this month

FDA seeks comments on dairy drug residue

risk assessment

CMAB Social Media Workshop, May 13th

CDFA dairy digester research & development

program proposals due May 15

WUD Golf Tournament coming Fall 2015

4

Inside this issue:

WUD pleased with announcement of

state milk pricing hearing in June

In an official hearing announcement last Friday, CDFA Secretary Karen Ross provided notice that the California

Department of Food and Agriculture, on its own motion, is calling a milk pricing hearing to be held June 3 in

Sacramento. The leadership of Western United Dairymen was pleased to hear the news and looks forward to

serious consideration of proposed amendments to the Class 4b pricing formula.

WUD, in joint effort with other dairy trade associations, has been committed to finding a way to bring change to

the California milk pricing system that will create a fair pricing structure for the state’s dairy producers. As a

result of the work done by these dedicated industry partners, the opportunity to express the position of the dairy

industry has become a reality.

“I was happy to see the announcement on Friday, and even more pleased to see Secretary Ross’ support for im-

mediate action,” said Frank Mendonsa, WUD president. “I encourage dairymen to be present at the hearing and

make sure CDFA hears directly from the family run dairies this pricing will affect.”

In 2014 the Department held various meetings with the California Dairy Future Task Force and its work groups

to create a revised milk pricing system. Although improvements were not made at that time, WUD is optimistic

the Secretary is ready to address the issues which have continued to impact the pricing system. In Friday’s an-

nouncement, Secretary Ross said, “While the industry must continue to work towards long-term structural re-

forms to address these issues, I am concerned that the current conditions impacting the production of milk and

the marketing of dairy products may warrant short-term adjustments to the current pricing levels. Thus, the

Department is calling a hearing on its own motion.”

The public hearing will begin at 8 a.m. on June 3 in the CDFA auditorium, 1220 N Street, Sacramento. Alterna-

tive proposals are due May 20. To view the official announcement from CDFA click here.

2015 California Dairy Leaders Program participants selected

Ten highly qualified individuals have been selected to participate in Western United Dairymen’s (WUD) Califor-

nia Dairy Leaders Program, a leadership development course designed to create strong leaders in the dairy in-

dustry.

The program consists of regular classes to study issues affecting dairy producers in today’s industry. Topics in-

clude: environmental issues, the state and federal legislative process, dairy pricing and economics, biotechnologi-

cal developments, marketing and promotion, and public relations skills. Participants will develop a more thor-

ough understanding of the dairy industry and society through communication and team building exercises.

The primary goals of the Dairy Leaders Program is to: develop informed producers who will take leadership roles

in the next generation of dairy organizations; increase dairy producers’ awareness of and exposure to state and

federal legislative and regulatory processes; improve understanding of our dairy industry with emphasis on the

California milk pricing and pooling system; create leaders who understand and are able to effectively work with

media sources in promoting dairy issues; and expand the horizons of our future leaders by promoting knowledge

and appreciation for non-dairy aspects of our society.

“It takes strong, informed and engaged leaders to keep the California dairy industry moving forward,” said Lucas

Deniz, WUD member and chairman of the Dairy Leaders Program. “As a dairy producer our greatest responsi-

bilities lie with our cows and consumers, but we have to also be proactive advocates who share our story, repre-

sent our industry and work collaboratively with others to improve the business environment for those involved in

every aspect of dairy production.” To learn more about the Dairy Leaders Program, call Western United Dairy-

men at (209) 527-6453.

2015 California Dairy Leaders Program participants:

May 8, 2015

W E E K L Y U P D A T E

W e e k l y U p d a t e d e l i v e r y o p t i o n s

Send change of address or request for Update delivery to Western United Dairymen by phone or fax, or email to info@westernuniteddairymen.com.

1315 K Street, Modesto, CA 95354 Telephone: 209.527.6453 Fax: 209.527.0630 www.westernuniteddairymen.com

M i s s i n g S o m e t h i n g ? S u b s c r i b e

t o W U D H e a d l i n e N e w s

Industry leaders turn to Western United Dairymen’s daily e-newsletter to keep up on the latest developments. California Dairy Industry Headline News is a reli-able source for the latest news on pricing, industry events and meet-ings, state and federal legislation, and environmental regulations. Want to sign up to receive WUD Headline News? Please email basconsulting@outlook.com

L ike us on Faceb o ok !

Western United Dairy-men has a Facebook page. “Like Us” today and join in on the conversation about California dairy families. We can be found at https://www.facebook.com/pages/Western-United-Dairymen/

Gregory Fernandes, Tulare, FernOak Farms

Kurtis Monteiro, Tulare, M.S. Monteiro & Sons

John Cardoza, Manteca, Sustainable Conservation

Tim Van Beek, Tipton, Van Beek Brothers Dairy

Jason Evangelo, Hanford, D & E Dairy

Catherine Machado, Madera, Machado Farms

Rachel Lourdeaux, Petaluma, Bivalve Dairy

Landon Fernandes, Tulare, Fernjo Farms

Erin Nutcher, Newman, Hidden Valley Dairy

Kathi Thomas, Fresno, Western United Dairymen

*Actual announced prices are in BOLD, estimates are in Italics

Commod ity M ar kets : CME – Ca l i forn ia P la nts

E s t i m a t e d * P r o d u c e r C W T . P r i c e s

PAGE 2

What’s up and what’s not—your weekly market update

By Annie AcMoody, MS, Director of Economic Analysis

The Mayweather/Pacquiao fight wasn’t the only

thing that didn’t provide much entertainment

value this week; the CME block cheese was equally

boring. Although in the case of cheese, it’s not nec-

essarily a bad thing. The price was steady all week,

with a slight gain on Friday (+0.25 cents). This

brings the price to $1.6125/lb – the highest level

since December 2014. Looking at March trade

data, cheese exports fared surprisingly well. Year-

over-year, export volume was still trailing last year by 5%, but looking at last month, March was 4%

higher than February (on a daily basis). March volume was also the highest export volume since

March 2014. Considering the outside forces that created road blocks for our export competitiveness

(weak cheese prices, strong U.S. dollar, etc), those numbers are good news.

Unlike American Pharoah at the Derby this weekend, the butter price was slow out of the gate Mon-

day, losing 2 cents. However, the rest of the week mirrored the winning horse’s pace, rapidly picking

up speed the following days. Butter made it down the stretch strongly, with a leap of 7.5 cents. The

impressive net gain of 13.5 cents brought the price to $1.985/lb – the highest since December 2014.

U.S. domestic demand and slower butter production (March production was down 3% year-over-

year) seem to be providing support because global competition continues to create issues for butter

trade. Indeed, March trade data points to disappointing numbers, with butter exports down 82%

from last year. March exports were the lowest volume since October 2014, and to top it off, March

butter imports were higher than exports for the second month in a row.

After three weeks of losses, the California nonfat dry milk price finally took a turn this week, gain-

ing 1.97 cents to $0.9557/lb. DMN western states’ price average dropped half a cent, to $0.95/lb. Ac-

cording to USDA’s Dairy products report, March powder production (nonfat dry milk plus skim milk

powder) was up 4% year-over-year. Stocks continue to be above year-ago levels (+18%). While this

may seem disappointing, it was actually the smallest year-over-year change since June 2014. Strong

March exports are certainly part of the explanation. Indeed, March powder exports were not only up

7% from last year, it was also the first positive year-over-year change since July 2014 and the high-

est monthly volume since June 2014. U.S. powder prices have been more in line with international

prices as of late, and it looks like they may hover at low levels for a while if they want to remain

competitive. Indeed, global prices don’t seem ready to recover yet, with the latest Global Dairy Trade

(GDT) auction skim milk powder price average dropping 9 cents to $0.93/lb.

The Western dry whey price resumed its decline this week, dropping half a cent to 43.5 cents per

pound. DMN reports “buying interest for new transactions is tempered by no great sense of urgency

in completing transactions. Contract deliveries are flowing smoothly for the most part. Whey inven-

tories continue to build as cheese production is at very high levels.” March whey exports were down

22% from last year.

It seems that Mother Nature’s timing was as good as it could have been in the Midwest, as rain hit

the ground just after a busy week of planting. Future markets reacted accordingly, with December

2015 corn hitting $3.77/bu Thursday – the lowest since September 2014.

USDA Dairy Market News

Butter

9 sales, 4 bids unfilled, 2 offers uncovered. Butter prices gained 13.5 cents this week. Produc-tion is active throughout the country, although churning operations are mixed. Some operators are only able to make enough for contract obligations, while others are able to build inventory levels. Most manufac-turers would like to build stocks for future obligations. Demand is steady to lower. Cream sup-plies are mixed with some com-panies selling extra cream in-stead of churning.

Cheese

8 sales, 3 bids unfilled, 0 offer uncovered. Block prices gained 0.25 cent this week. Cheese production nationally is strong and milk supplies are plentiful. Customer interest keeps some manufacturers sold out for com-ing weeks. In some cases, orders for barrels are going unfilled. Current pricing is viewed as favorable to holding cheese for future use by a num-ber of buyers. NASS reports March 2015 U.S. total cheese production, 987.2 million pounds, leads March last year by 1.8% and February this year by 11.3%.

Milk Production

Milk processors in California report overall farm milk intakes are declining from week to week. Some processors who have been regularly buying weekly spot milk loads indicate spot offers dried up this week. Sales into bottling are steady while ice cream and frozen dessert manufacturers took slightly higher volumes to match increases on some pro-duction lines.

Dry Products

Prices on both Western low/medium heat nonfat dry milk series are lower and higher on a mixed market. Brokers and end users seem to be viewing the potential upside risk for NDM pricing as more significant than the downside re-ward. That realization has brought a few more buyers into the market, but price is still part of the equation in putting purchasing deals to-gether. NDM production is ongoing throughout the west, but cheese manufacturing continues to siphon off some milk volumes in a few multi-end product operations.

Source: USDA Dairy Market News

May 8, 2015 Weekly Update

Month Class 1 4a 4b Overbase Quota

March $16.68 $13.42 $13.97 $13.82 $15.52

April $17.05 $13.36 $14.22 $13.85 $15.55

May $17.21 $13.75 $14.55 $14.15 $15.85

Average AA Butter NFDM 40# Blocks Barrels Dry Whey

April $1.7737 $0.9582 $1.5785 $1.6019 $0.4415

May $1.8715 $0.9557 $1.6103 $1.6230 $0.4375

May 8 $1.9850 $0.9557 $1.6125 $1.6200 $0.4350

Week to date 13.50 cents 1.97 cents 0.25 cents 0.25 cents 0.05 cents

PAGE 3 May 8, 2015 Weekly Update

A review of the California FMMO outreach meetings

By Annie AcMoody, MS, Director of Economic Analysis

USDA held public outreach meetings this week to provide a forum to review propos-

als received regarding a California Federal Milk Marketing Order (FMMO). Before

allowing those who drafted the proposals to explain the technical details of their

submission, USDA enlightened the audience on the FMMO rulemaking process. Of

particular interest is the fact that USDA will likely decide by late summer on

whether to hold a California FMMO hearing or not. If a hearing is held, it will be

presided over by an administrative judge and any interested party will be able to

testify. USDA will use testimony to draft a final rule, but ultimately producers will

have the last word on it: a yes vote on two-thirds of the voting producers or two-

thirds of the voting milk would allow implementation of a California order. While

USDA did not specify a precise timeline, according to industry speculation a vote is

not likely to occur before 2017.

Representatives from the three coops went into the details of their carefully crafted proposal. After their presentation, attendees

were allowed to submit written questions on the technical aspects of the proposals; opinion based questions were off the table. Fol-

lowing the coops, the Dairy Institute detailed its processor-friendly proposal. While opinion based questions were not allowed, the

amount of questions pertaining to depooling, quota and price levels pointed to concerns in the audience regarding that proposal. The

producer-handler association and Ponderosa dairy also presented their proposal, followed by question and answers. Both of those

parties are basically looking for special treatment that is not incorporated in any of the other proposals.

At the end of the meeting, a question of interest to everybody in the room was asked: “what is the economic impact of the propos-

als?” The coops analysis suggests prices could have been higher by $1/cwt last year with their proposal. DI responded it would be

difficult to calculate an impact for their proposal due notably to its loser pooling rules; a lot of assumptions would have to be made

to come up with a number. USDA stated they are currently analyzing each proposal. If USDA decides a hearing is warranted, the

results of that analysis will be published. An unbiased study will certainly be valuable to the industry. As a reminder, no proposal

on its own will be chosen in its entirety; rather, USDA will use arguments and facts laid out by each party to determine what would

be most appropriate set up for a FMMO in California – that is, if a hearing is called. WUD will continue to keep you updated and in

the meantime. You can view all the proposals and meeting presentations <here> or contact me for more information at aacmoody.wud@gmail.com.

Dean Foods launches single national brand

This week Dean Foods—the largest milk producer in the country—announced it is taking a huge gamble on reversing the current

fluid milk consumption trend by creative a single national brand for “white milk” called DairyPure.

Starting this week, a national ad campaign will launch in print and TV for DairyPure, which places all of the milk produced at

Dean's 30-plus regional operations under one label. DairyPure will automatically become a $2.5 billion brand, making it one of the

top consumer packaged goods lines in the U.S. In a unique branding experiment, it will combine the DairyPure name with the local

name on all labels and regional advertising. The company has done similar co-branding in the past when it created TruMoo choco-

late milk and executives say chocolate milk sales have since grown "exponentially."

The national commercial centers around a group of teenage talking cows and combines humor with a message about health and

quality. "Starts pure, stays pure, DairyPure," the ad says, before one cow replies, "Like, moo." The company will highlight that its

milk is antibiotic free, and emphasize its farmers pledge not to use artificial growth hormones, as well noting the nutrition benefits

of milk.

Water Board OKs mandatory cuts

On Tuesday evening, the California State Water Resources Control Board adopted an emergency regulation requiring an immediate

25 percent reduction in overall potable urban water use statewide, as demanded by the governor. A 25 percent savings in potable

urban water use amounts to more than 1.2 million acre-feet of water over the next nine months, or nearly as much water as is cur-

rently in Lake Oroville.

Tuesday’s board action followed release of water production figures for the month of March which registered only a slight increase

from the amount of water saved in the prior month. The amount of water conserved in March 2015, as compared to March 2013 was

3.6 percent, up less than 1 percent from February’s results. Since the State Water Board adopted its initial emergency urban conser-

vation regulation in July 2014, voluntary statewide conservation efforts have reached 9 percent overall.

Following Board adoption, the regulation will be submitted to the Office of Administrative Law, which has 10 days to approve or

deny the regulation. If approved, the regulation will take effect immediately and remain in effect for 270 days from that date.

Pictured above, more than 100 people attended USDA’s federal order meeting in Fresno on Wednesday.

PAGE 4

WUD hosts labor workshops this month

On May 11 and 20, WUD will host workshops to explain the details of the new paid sick leave law, heat illness prevention require-

ments, as well as other important labor related issues. The first workshop is May 11 at the Stanislaus County Farm Bureau, 1201 L

St, Modesto. The second workshop will follow on May 20 at the Merced County Farm Bureau, 646 South State Highway 59, Merced.

Both events will take place from 10:00 a.m. to 12 noon.

Anthony Raimondo of Raimondo & Associates Law Firm will be on hand to answer questions and provide insight. The state's new

sick leave law took effect Jan. 1, 2015; however, the right to accrue and take sick leave under this law begins July 1, 2015. Plus, new

heat illness prevention rules officially went into effect on May 1. Be sure to attend one of the workshops to learn more.

FDA seeks comments on dairy drug residue risk assessment

The U.S. Food & Drug Administration (FDA) is seeking public comment on a risk assessment of drug residues in milk and milk prod-

ucts.

According to FDA, the risk assessment – titled “Multicriteria-Based Ranking Model for Risk Management of Animal Drug Residues

in Milk and Milk Products” – was developed in response to a request from the National Conference on Interstate Milk Shipments

(NCIMS). NCIMS is made up of representatives of the dairy industry, including producers and processors, state and federal dairy

regulatory agencies, academia and consumers. FDA collaborates with the NCIMS under a memorandum of understanding between

the two entities.

The risk assessment is a tool to assist with reevaluating which animal drug residues should be included in milk testing programs

and may also be used to identify and prioritize research needs.

Comments will be accepted until July 29. To electronically submit comments to the docket, visit http://www.regulations.gov and type

FDA-2015-N-1305 in the search box.

To submit comments to the docket by mail, use the address below. Be sure to include docket number FDA-2015-N-1305 on each page

of your written comments.

Division of Dockets Management - HFA-305, Food and Drug Administration, 5630 Fishers Lane, Room 1061, Rockville, MD 20852.

CMAB Social Media Workshop, May 13

A Social Media workshop will be held by CMAB on Wednesday, May 13, 2015 at the Stanislaus County Ag Center from 11am-5pm.

The workshop is open to any California dairy producer. The event includes a session entitled “Social 101” from 11:00 a.m. - 1:00 p.m.,

1:15 p.m. - 2:15 p.m. Deutsch Overview of CMAB Social Pages, and 2:30 p.m. - 4:30 p.m. Social Media Best Practices Seminar.

RSVP to Kris Costa via email at kcosta@cmab.net or phone/text 209-678-3466.

CDFA dairy digester research and development program proposals due May 15

The California Department of Food and Agriculture (CDFA) is accepting proposals for the Dairy Digester Research and Development

Program (DDRDP) Phase II (Research). CDFA was appropriated $12 million from the Greenhouse Gas Reduction Fund to provide

financial assistance for the installation of dairy digesters and research that will result in reduced greenhouse gas (methane) emis-

sions. Applicants are invited to submit grant proposals electronically to grants@cdfa.ca.gov no later than Friday, May 15, 2015 at 5

p.m. PDT.

Applicants can access the 2015 Request for Research Proposals <here>. Proposals must align with at least one of the program’s re-

search priorities and must demonstrate quantifiable greenhouse gas reductions.

WUD Golf Tournament coming fall 2015

Western United Dairymen will host a single golf tournament this year, com-

bining the north and south valley tourneys into a single event in the fall.

The date, location and other tournament details about this popular event

will be provided as they become available.

May 8, 2015 Weekly Update