Pizza (MPC in Mozzarella) Makes a Case for Specter-Casey s.889

Pizza Makes a Case for Balancing Imports & Exports and Garnering Your Support for Specter-Casey s.889  

 

In my opinion, here is the “fair, free” market system as it applies to Pizza cheese, MPC and our fluid milk price.

I heard a keynote speaker say we sell our milk in circles -- pizza that is. However, that's not true anymore. Today, 30 to 40 percent of pizza cheese is potentially produced with MPC from mainly subsidized or low cost potentially under regulated milk from Europe, New Zealand, China, and India.  This low-priced MPC is available to U.S. cheese manufacturers under current trade law. 

A study from the Dairy Products Technology Center at California Polytechnic State University concludes you can increase cheese yield by 30 to 40 percent when using MPC in the cheese-making process.

In turn, U.S. cheese manufactures are free to spike importing of sometimes artificially, low-priced MPC from these subsidized-dairy farming areas of the world. They over produce with these low-cost inputs and flood the market.

Now, cheese storage facilities are filled and all of the excess milk goes to milk powder and the fluid milk market collapses. Throughout this “fair, free system”: 1) consumers’ prices drop slowly 2) cheese and powder manufacturers’ profit margins skyrocket 3) raw milk prices collapse.

This brings U.S. dairy farmers’ profit margins to the negative margin and makes them dependent on government subsidies, such as MILC, more than ever.

I have two predictions:

1) I predict we will never get out of this low milk price cycle unless 20 to 30 percent of U.S. dairies close their milk houses or milk powder or milk fat prices run the market up again because of free market, outside forces.

2) I also predict CWT program isn't going to be big enough to help us recoup our losses. As I have demonstrated in writing before, MPC import spikes have an uncanny inverse relationship with Class III Milk futures.

In closing, these “fair” market forces cannot be overcome with efficiency or low cost, regardless of how large your herd size is. My supporting argument is that MPC imports, for the most part, are priced artificially low. If this weren’t true, then they would not be coming into the U.S. in the name of “free trade.”

Your real competition is not your farm neighbor, it is not the dairy producer on the other coast. It is the legislation allowing unbalanced dairy import and exports to continue. The Specter-Casey Bill s.889 is the only idea, to date, that provides an import/export balancing mechanism. It also puts all manufactured milk on the same price level. In this manner, aquifer-draining, short-term, low-cost cheese production in southwestern U.S. doesn't jeopardize necessary, stable and long-term markets near population centers in other areas of the country. We need to remove control from CME and lessen the likelihood of future manipulation..

Whatever solution dairy farmers’ support and future U.S. food policy must meet two goals:

1)     Maintaining our homegrown food supply

2)     Removing opportunity for manipulating U.S. food-producing farmers’ livelihood and future

 

Have a good day.

Bryan Gotham