Normally, I don't read the Northeast Milk Marketing Area administrator's monthly bulletin. (It's boring.) Even Jim Dunn, ag economist at Penn State says, "It's usually all technical and little economics."
But December's bulletin was an eye-catcher, and not because pooled milk increased 3.5% from November's or because total volume in the 2013 Northeast pool rose 3.2% over 2012. The pool includes all of New England (except Maine), most of New York, New Jersey, Delaware, Maryland, parts of Virginia plus southeast Pennsylvania.
The eye-opener was that total milk used in the Northeast Order's Class I (drinking milk) dropped 2.7% in 2013. And Class II milk – from which yogurt-makers draw their "juice" – increased 2.9%.
Growth in Greek-style yogurt, notes the report, has been the driving force behind the substantial rise in Class II volume during the last three years, according to the December report. Class I and II are where the biggest bucks are for dairy farmers.
The shift to Class II does seem to be slowing though. Reason: Dairy states in the Midwest and West are catching onto the benefits of the Greek yogurt craze.
Fat-to-protein component shift
Component prices continue to offer record-level incentives to shift genetics to capture premiums for protein and nonfat solids. Prices paid to Northeast producers for butterfat dropped 3.5% from 2012, to $1.66 per pound. Conversely, the 2013 price paid for protein rose 8.5% to $3.30 a pound – third highest on record. (See table for how 2013 compared to 2012.)
And, the nonfat solids component price jumped 32.6% to $1.52 per pound – a record high. The 2013 value of other solids dropped 0.8%, averaging $0.40 per pound, also third highest ever.
While genetic gains in milk component values come slowly, producers in the Northeast Order made gains in 2013. Average producer butterfat tests were 3.77%, up 0.04% from 2012 – a new record.
The average producer protein test was 3.08%, up 0.02% from 2012 – also a record high. Producer other solids dropped 0.02% to 5.73%, tied for the second highest annual average.
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