USA Dairy debate likely stalled 2012 farm bill

MADISON — If it wouldn’t have been for the contentious dairy debate, the federal farm bill might have been passed by Congress in 2012 rather than being pushed off until 2013, a Wisconsin dairy expert said Jan. 23.

Mark Stephenson, director of dairy policy analysis at UW-Madison, said if there hadn’t been a deep divide between dairy factions on the components of the Dairy Security Act in the farm bill, the farm bill package might have been approved on schedule last fall.

t’s been a very contentious issue in Washington,” Stephenson said at the Wisconsin Agriculture Outlook Forum.

During his outlook for the Wisconsin dairy industry for 2013, Stephenson was asked to speculate on what the dairy provisions of the 2013 Farm Bill might look like.

“I know the Dairy Security Act is going to be the starting point for any new farm bill discussion in Washington, but I don’t know if it will be the ending point,” Stephenson said. “I am quite sure we are not going to have a (Milk Income Loss Contract) program in the future. We will most likely move toward some type of insurance program, like what is in the Dairy Security Act, but we might not see the full package. It’s just a guess at this point.”

Stephenson predicted the “same fight by the time we get toward September or the end of the year.”

“If we end up with something that’s dramatically new, producers will have to think about whether they want to participate in that program and at what level,” Stephenson said. “It will be quite a change from the programs we have in place now.”

Stephenson is forecasting a 2013 milk price of about $1 higher than the 2012 price, but he said it’s still a guessing game.

“Projections are quite flat for 2013, but there may be more of an opportunity for (a price increase) in the second half of the year,” he said.

Stephenson said futures prices also indicate a likely decline in feed prices in 2013, but that projection is shaky due to weather uncertainties.

“We could have tight feed supplies or we could see feed supplies escalate through the roof,” he said. “From the planting intentions I’ve seen, I would anticipate some decline in major crop prices.”

Livestock prices

Brenda Boetel, a UW-River Falls associate professor agricultural economics and UW-Extension agricultural marketing specialist, said the U.S. will probably see a decline in meat production in 2013, resulting in stable to slightly higher beef, pork and poultry prices.

“We know we’re going to have less meat produced, so with export numbers still strong, that basically means less meat products available,” Boetel said. “That means we’ll have less meat consumption.”

Meat consumption has dropped by 9 percent over the last five years and is at the lowest level in 22 years, Boetel said.

Beef consumption per capital peaked at 94.4 pounds in 1976 but fell to 57.5 pounds in 2012. Consumption is likely to continue its downward trend in 2013, she said.

Pork consumption per person was at 45.5 pounds in 2012, which is 14 percent below its recent peak of 53.1 pounds in 1994. An earlier peak of 60.6 pounds was reached in 1971.

Per-capita poultry consumption was at 80.4 pounds in 2012 and is down 7 percent over the past six years. She said it will likely continue its decline in 2013.

Boetel predicted that retail meat prices will be higher in 2013. She said beef prices are likely to rise by 8 to 10 percent from the current level of $5 per pound.

“Beef is already the most expensive of our protein products and it has strong competition from pork and poultry,” Boetel said. “Because of that competition, we won’t see the price go up very much.”

The cattle industry continues to contract, Boetel said, with the number of cattle and calves on farms now at about 90 million, compared to 132 million in 1975. The 2012 calf crop was the smallest in 63 years.

Lamb production rose in 2012 for the first time in a decade, driving prices down about 20 percent, Boetel said. A 6 to 8 percent drop in production is forecast for 2013.

Lamb prices were depressed late in 2012 and will need “an impressive recovery” to average higher in 2013