Economic Outlook

Figure 1:

Figure 1. Projected Outlays in the Agriculture Improvement Act of 2018, by Title (Five-year projected mandatory outlays at enactment, billions of dollars, FY2019-FY2023)

Outlays in the Agriculture Improvement Act of 2018, by Title (Five-year projected mandatory outlays at enactment, billions of dollars, FY2019-FY2023)

Budget Issues That Shaped the 2018 Farm Bill

Budget Issues That Shaped the 2018 Farm Bill

Figure 1. Projected Outlays in the Agriculture Improvement Act of 2018, by Title (Five-year projected mandatory outlays at enactment, billions of dollars, FY2019-FY2023)

Source: CRS. Compiled from CBO, “Baseline Projections,” April 2018; at the title level (unpublished); and CBO cost estimate of the conference agreement, December 11, 2018.

Figure 2. Projected Agriculture Outlays in the Agriculture Improvement Act of 2018 (Five-year projected mandatory outlays at enactment, billions of dollars, FY2019-FY2023)

Source: CRS. Compiled from CBO, “Baseline Projections,” April 2018; at the title level (unpublished); and CBO cost estimate of the conference agreement, December 11, 2018.

Figure 2: Projected Agriculture Outlays in the Agriculture Improvement Act of 2018

(Five-year projected mandatory outlays at enactment, billions of dollars, FY2019-FY2023)

Figure 2. Projected Agriculture Outlays in the Agriculture Improvement Act of 2018 (Five-year projected mandatory outlays at enactment, billions of dollars, FY2019-FY2023) of the crop insurance, commodities, and conservation outlays. The outlays are expressed in billions of dollars and represent the Farm Bill currently in place. Some numbers will no doubt change when the new bill is in place later this year or early next. Many of the benefits of these outlays cross over to other facets within agriculture, but it is humbling to see just how small a slice is directed specifically at dairy Since nutrition programs account for 75% of the Farm Bill, it can become a sticking point in negotiations. Recall back in 2018 that Congressional Republicans wanted to separate nutrition programs from the bill. That effort was met with Democratic opposition. If separating nutrition from the Farm Bill is attempted again in 2023, it will face solid opposition in the Democratcontrolled Senate. Another potential area of contention is the conservation and climate-related issues of the Farm Bill. Democrats may be less pressured to add funding in these areas since the Inflation Reduction Act was passed in August of 2022, allocating $19.5 billion for “climate programs.”

Sources: , April 2018; at the title level (unpublished);

Notes: PLC = Loan Deficiency Payments, EQIP = Environmental Quality Incentives Program Conservation Stewardship , RCPP = Regional Conservation Partnership Program, FFP = Food for Progress, NAP = Noninsured Crop Disaster Assistance Program

Sources: CRS. Compiled from CBO Baseline for USDA Mandatory Farm Programs, April 2018; at the title level (unpublished); and CBO cost estimate of the conference agreement, December 11, 2018.

Source: Congressional Research Service Report (CRS)

Still, there are many pieces of the Farm Bill in which Republicans and Democrats are aligned. Among these are commodity and crop insurance programs that include Dairy Margin Coverage. Another is bipartisan support for the development and adoption of new farm technologies. Dairy groups are also aligned in their support for the Emergency Food Assistance Program (TEFAP), a food distribution program.

Notes: PLC = Price Loss Coverage, ARC = Agricultural Risk Coverage, LDP = Loan Deficiency Payments, EQIP = Environmental Quality Incentives Program, CRP = Conservation Reserve Program, CSP = Conservation Stewardship Program, ACEP = Agricultural Conservation Easement Program, RCPP = Regional Conservation Partnership Program, FFP = Food for Progress, NAP = Noninsured Crop Disaster Assistance Program

Budget Issues That Shaped the 2018 Farm Bill - EveryCRSReport.com

Another is the expansion of U.S. markets globally and is listed as a top priority of both Democrat and Republican members of Congress. Senator John Boozman (R-AR), Ranking Member of the Senate Agriculture, Nutrition and Forestry Committee is credited with this statement: “When it comes to agriculture, for every five customers we have in the U.S., 95 customers exist outside our country. A top priority must be to open more markets in which they can sell their commodities.” Democrat representative Jim Costa (D-CA) said: “Opening and growing new markets for American-made products is critical to building our agricultural economy. Food is a global issue, and we must do all we can to reverse disruptions in trade and grow our new partnerships that help deliver American products around the world.”

Most dairy groups appear to be on the same page supporting the reauthorization or making permanent key issues that will be addressed in the new Farm Bill, such as dairy margin coverage, dairy forward pricing programs, indemnity payment programs, milk donation reimbursement programs, dairy donation programs, dairy business initiative programs, and others. A few dairy groups are asking that Congress mandate periodic plant cost of processing studies followed by updates in milk pricing formulas to keep current.

There is still little news to report regarding the second USMCA challenge against Canada’s continuing violation of its dairy obligations in the agreement. Jan. 31 was when the Office of the U.S. Trade Representative (USTR) filed another complaint. The U.S. was awarded a victory after the first complaint was ruled. That ruling however has been ignored by Canada, and it continues to sidestep its dairy quota pledges under the agreement. Many members of Congress and officials, including Secretary Vilsack, have issued statements. There seems to be little progress toward a resolution. President Biden spent a few days with Canada’s Prime Minister, Justin Trudeau, at his home in Canada in late March. One can only wonder if the USMCA dairy issue was ever brought up for discussion when the Trudeaus served the president his favorite dessert: ice cream. The name of the flavor was “friend-chip” ice cream that was made in a local Canadian shop.

Federal Milk Marketing Order reform could be on the horizon as the National Milk Producers Federation’s Board of Directors finalized and endorsed their proposal to modernize the system. Among their proposed changes is returning to the “higher of” for the Class I mover formula, discontinuing the use of cheese barrels in the protein component formula, updating the component factors in Class III and IV price formulas, more frequent reviews of plant cost studies, updating price formulas, and updating Class I differentials.

In response to FDA’s proposal to allow non-dairy products to be labelled “milk,” a bipartisan group of Senators are fighting back by introducing a bill known by its short name, the DAIRY PRIDE Act. The name is a shortened acronym for the cumbersome Defending Against Imitations and Replacements of Yogurt, milk, and cheese to Promote Regular Intake of Dairy Everyday Act. This act would prohibit plant-based products from using terms like dairy and/or milk. If passed, the FDA would have 90 days to develop new labeling guidelines for non-dairy products marketed as “milk,” “cheese,” or “yogurt.” The Act would also require an FDA report to Congress two years after the law was enacted with an update on its enforcement progress.

Lawmakers, mostly Republicans, were quick to respond to a USDA proposal to reduce the amount of milk available to families receiving benefits under the program Women Infants and Children (WIC). More than 6 million lower-income families rely on WIC benefits for a large part of their nutritional needs, and dairy fills a major part of this. The idea that an estimated 43% of all infants in the U.S. rely on WIC benefits is alarming. Many nutrition and agricultural groups and members of Congress have expressed opposition to these proposed dairy reductions in WIC food packages with both the Biden Administration and USDA Secretary Vilsack.

A piece of federal legislation that may be of interest to the northeast, known as the Protect Local Farms Act H.R. 353, was introduced by Congressional representative Brandon Williams (R-Syracuse/Utica) in mid-January. It is a reintroduction of a bill initiated by former Congressman Chris Jacobs, who did not seek reelection in 2022. The bill would establish a federal standard for agricultural employees that would mandate hours could not be reduced below 60 per week. The federal mandate would supersede state decisions and level the playing field across the nation. The bill has a growing list of cosponsors, all Republican, from various states. New York’s Farm Laborer’s Wage Board, a tiny trio of unelected bureaucrats, determined in January that the overtime threshold for farm workers be lowered from 60 to 40 hours a week. Congressman Jacobs and the bill sponsors have said, “Albany is out of touch and this Act is to combat that ignorant decision.”

Speaking of farm labor, on Friday March 17, the Vermont Senate Committee on Economic Development, Housing, and General Affairs received public testimony on S.102, a bill that would allow agricultural and domes- tic employees to collectively bargain for wages and working conditions. Vermont law presently follows the federal standard 1935 National Labor relations Act and does not allow agriculture and domestic workers to collectively bargain. The bill was favorably voted out of the 13-member committee after testimony. The advocacy group Migrant Justice testified in favor of the bill. Migrant Justice, a nonprofit farmworker-driven human rights group from Burlington, Vermont, created the Milk with Dignity Program. This program seeks to bring together farmers, employees, milk buyers, and consumers in seeking $ premiums for milk. A Milk with Dignity Code of Conduct has been established that outlines the standards for compliance.

Two reports were published in March detailing interesting statistics on individual states’ per capita milk production. One was published by Hoard’s Dairyman and the other by the office of the Central Milk Marketing Administrator. The two reports have maps and tables showing state milk production in relation to that states’ population. It is a portrayal of how many potential consumers there are in the state in relation to the milk supply generated within the state. Some states are net exporters of milk and dairy products, while others are net importers, depending on their production per capita. State population and milk production both change over time, therefore, milk production per capita is constantly evolving. Per capita milk production is also an indicator of how individual states can structure in-state programs to benefit their producers. States with large populations in relation to their milk production have greater flexibility to create programs that benefit in-state producers without harming consumers or running afoul of interstate commerce rules. States with substantial milk supplies, but a small number of citizens, must look to export most of their surplus to other states or countries at competitive prices. Exports could be in the form of bulk or value-added finished products.

The top 6 states in per capita milk production in year 2022 are:

Vermont is in fact fourth among the top five states nationally.

February milk production for the 24 major producing states was up 1% from February 2022. This increase was the result of a seven-pound increase in the average output per cow and 54,000 more cows than February 2022. Compared to February of last year, New York milk production was up 2.9%, Vermont was down (-1.0%), and Pennsylvania was down (-0.1%). Wisconsin was up 0.3%, while the largest milk producing state of California was down (-0.9%). Idaho was up 3.4%, Texas was up 5.5%, Ohio was up 2.1%, and Florida was down (-11.4%).

Both the USDEC and USDA report that U.S. dairy products are still priced competitive internationally. However, some reports say that prices are falling in some regions that compete with the U.S. Butter prices for Oceana and Western Europe are presently trending below U.S. butter prices. The U.S. price remains competitive globally for cheddar cheese, nonfat dry milk, and dry whey.

Among the northeast states, Vermont stands clearly out in front as the top milk producing state per capita.

The USDA is forecasting just under 1% growth in milk production for 2023, with fewer cows but an increase in average output per cow. The projection for exports is down in 2023 on both a milkfat and skim solids basis. While the U.S. remains globally competitive with exports, competitors’ milk production is growing, and their prices are falling. The USDEC, USDA, and some economists feel the 2023 export market could be more challenging for the U.S. than it was in 2022. Imports for 2023 have been estimated higher on both a milkfat and skim solids basis. Domestic use forecasts have risen on both a milkfat and skim solids basis. Restaurant sales are expected to pick up and remain robust in 2023.

USDA projections for cheddar cheese were lowered, while dry whey, butter, and nonfat dry milk were raised. The lower expected average price of cheese lowered the Class III price forecast in 2023 by $0.32 to $17.56 per cwt. The Class IV price was raised $0.05 to $18.30 per cwt, assuming higher projected prices for butter and nonfat dry milk. This puts the expected all-milk price at $20.45 per cwt, a decrease of $0.25 from USDA’s previous forecast. The 2023 all-milk price forecast of $20.45 per cwt compares to $25.56 per cwt in 2022, and $18.53 in year 2021.

Gary Latta is a dairy product specialist consultant for the Northeast Dairy Foods Association, Inc. He has more than 30 years of experience in providing economic analysis, statistics, and information to the dairy processing industry.

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