Jun. 01, 2018

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Weekly Roundup
#Listrak\DateStampLong# The latest news from the State Capitol

Update on the Dairy Industry
Below, I have posted two stories from a dairy industry publication about the state of dairy economics in the U.S. and across the globe.

Of interest, farmers in New Zealand need to cull their herds to fight a bacterium. While this is bad news for New Zealand farmers, it will cause a gap in dairy supply that could boost prices for U.S.

Another story indicated that global demand for U.S. dairy product exports could increase in the coming months. The combination of these two things could help dairy farmers see some profit.

There is a little more good news – most of the dairy farmers that lost their contracts have since been placed with other processors. Still, U.S. dairy prices are down and they can use any bit of economic good news out there.

New Zealand Mass Dairy Cull Will Create Global Milk Supply Gap
By: Shan Goodwin
Source: Farmonline

Plans to cull as many as 150,000 head of dairy cattle in New Zealand (NZ) in an attempt to eradicate a bacterium will likely drain up to three per cent of milk supply from the global market.

With supply and demand balanced at the moment, that is considered a substantial loss and should put significant upward pressure on prices at both the export and farmgate level, market analysts said.

Australia will be well-placed to pick up the gap caused by less NZ supply, particularly in Asian markets.

Commonwealth Bank analyst Tobin Gorey said world milk price futures had already gained in the past day as a result of the news.

In announcing the plan to eradicate mycoplasma bovis (M bovis), which is prevalent in every other dairy-producing region in the world, NZ politicians and industry leaders estimated it would cost close to $900 million, compared to a cost of around $1.2b to manage.

Around 23,000 head have already been culled with the first infected farm found last July. The process will continue for the next two years.

M bovis causes illness including udder infections or mastitis, abortion, pneumonia and arthritis.

It does not affect humans and has no food safety implications in either milk or meat.

The bacterium was first identified in Australia in 1970 and is today estimated to be present in around 1pc of dairy herds.

Professor John House, from the University of Sydney’s livestock veterinarian teaching and research department, said losses were minimal where producers knew what it is and how to manage it.

“It disappeared for some years in Australia before re-emerging with a number of outbreaks in 2006,” Pro House said.

There is no effective treatment. In clinical cases, cows are sent to slaughter.
A challenge is subclinical cases are difficult to identify so disease can spread without being seen.

It is present in all dairy regions of Australia, Pro House said, and also in some beef feedlotting operations where it contributes to respiratory disease.

Because it would be very expensive to eradicate, and was mostly managed successfully, it was very unlikely any attempt would be made in Australia to follow NZ’s lead, he said.

The NZ dairy industry estimates the cull will result in a 2-3pc reduction in the herd size.

Some analysts say the resulting fall in NZ milk production will be of a similar magnitude, however Rabobank’s NZ dairy analyst Emma Higgins believes her country’s milk production needle won’t shift much this season.

The NZ herd had been contracting anyway since the dairy downturn and high beef prices from 2015 prompted significant culling, she explained.
“But production has actually only decreased marginally, due to good seasons,” Ms Higgins said.

“Where this plan poses challenges for the future is in whole herds being culled, so the next generation of stock is going.

“It adds to the message NZ’s milk supply is set to slow down over coming years.
“We are facing a number of headwinds in the environmental regulation space which will also drive this.”

The news of the eradication plan was not surprising to NZ producers, she said.
“It’s a very ambitious plan, and a tough call, and it has been made around the significant risk to dairy productivity and the wider economic impact of that,” she said.

Farmers will be compensated for loss of income and stock.

Ms. Higgins believes the majority will purchase replacement herds and continue in dairy, although some older farmers will take pause.

Source: https://www.farmonline.com.au/story/5434898/nz-mass-dairy-cull-to-create-global-milk-supply-gap/

Exports Provide U.S. Milk Prices With a Glimmer Of Hope
By: Anna-Lisa Laca
Source: Milk Business

While basis continues to be significantly suppressed in most of the country, exports are up going into the summer nudging milk futures higher too.
Mike North of Commodity Risk Management says there’s still hope for milk prices to reach breakeven levels in 2018.

“We had a really good [export] run the first quarter. We’re waiting on April numbers yet but that looks to be a fairly decent month,” he explained to U.S. Farm Report host Tyne Morgan. “Bottom line is that as we talk about the landscape, the global economy has been very strong this year.”

An uptick of interest for dairy products throughout Southeast Asia, and growing demand in the Middle East and North Africa is promising for milk markets, he said.

“Higher crude oil prices have put more revenue in their economies and they’ve been buying more milk powders and proteins,” he said adding this kind of demand surge is hard to predict because you don’t know how these countries will spend their increased GDP.

“We saw this on the last run in crude and so as crude oil prices came down their demand softened,” North explained. “Now that it’s on the way back up and we have $71.50 crude we’re seeing again some increase interest for dairy products.”
Still, farmers are struggling with extremely weak basis, North explains.

“So, the prices that are paid above and beyond the base levels that are what you see on the board that the USDA announces every month there’s been a premium that’s historically especially in the upper Midwest that’s been paid above and beyond that,” he said. “Those have shrunk as greater milk volumes have been present processors as they’ve had to go back and sell milk into the open market at a discount have taken too steep of a loss and as a result, premiums have softened over the course of the last year.”

According to North, the futures values we’re seeing today which are hovering around $15 don’t quite get most producers to breakeven point.
“But by the time we get to summer and we’re looking at $16, $16.50, those values do,” he said.

Despite the current series of price runs, whether or not milk markets can sustain their current trajectory remains unknown.

“The reality is last year we had a really strong start demand looked really good and then it softened or maybe a better phrase ‘it didn’t live up to its expectations’ for the third quarter and as a result we didn’t see the drawdowns in inventory the way we had hoped,” he said. “So, it was kind of a very flattening event for the market and it forecast some pretty negative price forward into 2018.”

According to North, analysts hope exports can help give the market a nudge in the third quarter.

“Well the reality is profitability is a function of both feed costs largely on the input side and milk price,” he said. “And so, if we have a runaway on the grain market that’s going to keep pressure on that profitability all through the summer. One thing that would be helpful is a great crop year, an abundant supply of feedstock. If there’s plenty of feed in the country, that will help maintain a little better profitability going into the fourth quarter.”

Source: https://www.milkbusiness.com/article/exports-provide-milk-prices-a-glimmer-of-hope

Protecting Children from Horrors of Abuse
In response to two state appellate court cases, legislation I supported will be before the governor in the coming days to ensure that certain sexual offenders continue to be required to register their whereabouts.

House Bill 1952 seeks to expand upon Act 10 of 2018, which re-implemented the Adam Walsh Act, commonly known as Megan’s Law. Both House Bill 1952 and Act 10 were needed to close any loopholes that may have allowed sexual offenders who were convicted before 2012 to skip the registration process.

Specifically, the legislation conforms the Adam Walsh Act (Megan’s Law) to a decision by the Pennsylvania Supreme Court and requires those sex offenders who have not yet finished their period of registration to continue to register with the Pennsylvania State Police.

The overall legislation seeks to put back in place the important safety net to protect Pennsylvania’s children from dangerous sex offenders.

More information about Megan’s Law is available here

Better Informing Parents of Child Care Quality
To better educate parents about the choices and quality of child care options, the House Children and Youth Committee last week advanced bipartisan legislation to publicly post information about a child care center’s quality.

House Bill 1742, which now goes to the full House for consideration, would require all state-licensed child care centers to post their Keystone STARS rating in a prominent location, on their websites, and in informational enrollment and application materials given to parents.

The Keystone STARS program, operated by the state Office of Child Development and Early Learning within the Department of Human Services, sets quality requirements for early childhood educators based on a four-star rating system. All licensed child care centers that meet the state’s health and safety requirements are required to be part of the Keystone STARS system.

The Keystone STARS performance standards are grouped into four levels. The standards address staff qualifications and professional development, early learning programs, partnerships with family and the community, and leadership and management.

The overall intent is to encourage low-rated child care centers to improve their programs.

Celebrating State Park System’s 125th Anniversary
In keeping with Pennsylvania’s long history of conservation, House Resolution 901 was unanimously adopted by the state House last week to recognize the 125th anniversary of the state park system, which is operated by the Department of Conservation and Natural Resources.

The first State Forest Reserve was established with the purchase by the Commonwealth of 7,000 acres in Clinton County at the end of the 19th century. Today, 2.2 million acres of forestland, in 49 of our 67 counties, are sustainably managed by DCNR. The parks offer a variety of activities, including hiking, camping, fishing, hunting, boating and picnicking.

Also in 1893, the Commonwealth set aside the hallowed land of Valley Forge, the site of the third winter encampment of Gen. George Washington’s Continental Army during the American Revolutionary War, thereby creating the first state park in Pennsylvania. The Commonwealth presented that park to the federal government as a gift for the nation’s bicentennial in 1976, but 121 other state parks have been created on nearly 300,000 acres of land in the intervening 125 years since its creation.

The resolution also commemorated the internationally recognized conservation efforts initiated in the Commonwealth by the General Assembly and Gov. Robert Pattison in 1893, and the contributions of Gifford Pinchot, Rachel Carson and many other individuals to promote and preserve the Commonwealth’s resources in the 125 years since.

More information about the state parks is available here.

Download PA’s Happy Traveler Guide for Summer Fun
Pennsylvania has thousands of places for summer fun, and the state’s official travel guide, the Happy Traveler Guide, is available for downloading online here.

Categorized by region, the guide includes nearly 100 pages of attractions, lodging options, dining and many other recreational activities, stretching from Lake Erie to the City of Brotherly Love. The attractions are specially marked for these traveler categories: adventure, arts and culture, family, foodie, history buff, party animal and shopper.

Tourism is one of Pennsylvania’s largest industries, generating more than $40 billion annually from visitor spending and supporting nearly half a million jobs. Each year, Pennsylvania hosts almost 200 million travelers from across the United States, nearly 2 million visitors from Canada and 1 million from overseas markets.
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