Archive for the ‘Columnists’ Category

Opinions & sacred cows: A lot of water under Expo bridge

By Ron Goble

It’s hard to believe World Ag Expo is 44 this month and still going stronger than ever. Even through hard economic times, the largest agricultural exposition of its kind in the world continues to defy the odds. You might say, “Old Expo” still has the competitive heart of a young marathon runner.

In the beginning, World Ag Expo wasn’t much more than a vision in the minds of three Tulare businessmen. These visionaries – Kent Keough, Bill Huvelle and Jack Smith – had caught a glimpse of a small farm show in northern California during a road trip. They envisioned the agriculturally rich San Joaquin Valley becoming the center of the farm show universe with Tulare nestled right in the middle.

Farmers, ranchers and equipment dealers proved a winning combination. They gained support from the Tulare Chamber of Commerce, Tulare County Farm Bureau and numerous community leaders. The die was cast, and the first “Tulare Field and Row Crop Equipment Show” was held in 1968 at the Tulare County fairgrounds. The three-day show drew 28,000 visitors and 157 exhibitors.

As you all figured by now, it didn’t stop there. The second year saw attendance and exhibitor involvement double. By 1971, agriculture leaders, businessmen, and educators joined the stampede for Tulare every February. It was the first year they had educational seminars – 23 of them.

Also in ‘71, Tulare legend and two-time gold medal U.S. Olympic decathlon champion and U.S. Congressman, Bob Mathias came to the show. It was the place to be in February. So did an obscure, unknown farm writer from a San Joaquin Valley newspaper, covering the event for the first time. I’ve been involved in Expo in some way or another ever since.

A lot water has passed under the bridge since that first show. I covered Expo while working the ag beat for Visalia and Fresno newspapers in the 70’s and 80’s. I’ve seen a lot of changes…mostly improvements, but some we’ll just call learning experiences. I’ve seen a winter storm tear down some of the huge tents and delay opening of the show by a day. And I’ve been blessed to experience firsthand the down-to-earth- heartbeat of our nation’s farm and dairy community.

Come Tuesday, Feb. 8, World Ag Expo will once again be teeming with some 1,500 exhibitors, 1,500 volunteers and more than 100,000 visitors during the three-day event, who will make the Expo grounds rock with excitement. And once again, Expo will be in the spotlight, center stage in the world of agriculture. The show comes by its name honestly. Visitors literally come from all over the world.

Oh, and yes, there will probably be another rookie newspaper reporter getting his or her first taste of a show to top all shows! Along with him, take time to attend one of our Dairy Profit Seminars at the Seminar Center between “R” and “S” Streets. A shuttle will take you right to your destination, in the southeast section of the show grounds near the Wine & Cheese tent. The seminar program will get rolling about 10:30 each morning. You might learn something and you’ll surely meet up with old friends there. Stick around and enjoy a good lunch program and hear great speakers. Check the schedule on page 12 and we’ll see you at Expo!

Have an opinion or response? E-mail Ron Goble, Associate publisher/editor, Western DairyBusiness at: rgoble@dairybusiness.com


A shadowy start: It’ll be a long winter for dairy producer margins

NATIONAL PERSPECTIVES by Dave Natzke

Milk market watchers predicted dairy producer margins would be scary in the first half of 2011. The shadow appeared early. Dig in, dairy groundhogs.

December 2010 federal and California order prices for manufacturing classes of milk were all down from November, and January 2011 Class I & 1 prices were also lower than the month before. Declining milk prices, combined with higher feed prices, pushed the December 2010 milk-feed price ratio to its lowest level since August 2009. At 1.97, the preliminary ratio is down from November’s revised estimate of 2.23, and compares to 2.42 in December 2009.

The monthly milk-feed price index, an indicator of milk income relative to feed costs, represents the pounds of 16% mixed dairy feed equal in value to 1 lb. of whole milk. December’s ratio was the 37th straight month below 3.0.

The 2010 average index was 2.26, the highest in three years. However, even though 2010 milk prices will end up 20%-25% higher than 2009, the end-of-year feed price trends will carry into the start of 2011.

There is some good news: Dairy prices – especially butter and powder – have rebounded somewhat during the first week of January.

With that economic shadow as a backdrop, USDA’s Dairy Industry Advisory Committee (DIAC) was preparing to meet, Jan. 11-12, to finalize dairy policy recommendations to U.S. Ag Secretary Tom Vilsack.

Preliminary recommendations were voted on in December, and the stickiest issues did not draw a consensus. The committee voted on and accepted approximately 20 recommendations for policy changes. According to reports, they narrowly recommended all states be mandated to adopt California’s higher standards for milk solids, and approved a proposal to implement a mandated “growth management” program.

Among other proposals receiving greater approval, DIAC recommended stricter somatic cell count standards; federal order reform, including consideration of the elimination of end-product pricing; improved risk management products; adoption of farm savings accounts, modifications to the Milk Income Loss Contract program; and possible elimination of the Dairy Product Price Support Program.

Final recommendations will be posted at www.fsa.usda.gov/DIAC. Whether these recommendations add sunshine to the dairy plank of a 2012 Farm Bill rests in the political process.

A new year brought staff changes to DairyBusiness Communications.

Cliff Passino, national accounts manager, was named publisher of Western DairyBusiness and Eastern DairyBusiness magazines. In his new role, Passino will manage operations of the two magazines, as well as DairyLine Radio Network and DairyProfit Weekly newsletter, related web sites and electronic products.

He joined the company in 1998, working first at HolsteinWorld, before joining the DairyBusiness magazines’ marketing staff. He previously held marketing and field positions with Holstein Association USA, and worked on a large dairy in New Mexico. He’ll continue to work from a satellite office in Vermont.

Karen Knutsen was named publisher of HolsteinWorld magazine, adding to her current role as editor. She will manage operations of the monthly magazine and extensive Internet operations, which serve nearly 10,000 print subscribers and about 40,000 website visitors each month.

Knutsen joined the HolsteinWorld staff in 2002, becoming editor three years later. Raised on a Maryland Holstein farm, she earned a degree in animal science from the University of Delaware. She previously held a number of communications positions with leading AI firms. She is based in the East Syracuse, N.Y. office.

Finally, Susan Harlow, a member of DairyBusiness Communications staff since 1999, accepted a position as senior writer/editor at Antioch University New England, in New Hampshire, effective in early January 2011. Most recently, Susan served as associate editor for Eastern DairyBusiness and Dairy Profit Weekly.

Harlow departs on a high note. For the sixth time in her career, she recently received a Harold L. “Cap Creal” Journalism Award, presented by the New York State Agricultural Society and Cornell’s Alpha Gamma Rho fraternity. Her winning article, “Green for Green: Funding the Power of Digesters,” was published in the February 2010 issue of Eastern DairyBusiness. The award was created in 1978 to foster more coverage of the positive aspects of agriculture in New York state.

One final addition of note to the DairyBusiness Communications’ family. DairyLine Radio welcomed Dr. Mike Hutjens as a weekly contributor to its radio program. Hutjens is Extension specialist with the Dairy Department of Animal Sciences at the University of Illinois at Urbana-Champaign.

Well-known in the dairy industry, Hutjens has spoken at conferences in 46 states and 18 countries, sharing his knowledge and special TMR of humor. Hutjens’ “Feed Facts” segment will be broadcast every Friday on DairyLine Radio. Broadcast stations and times are available at www.dairyline.com.

FYI

■ To offer your own opinion or response, e-mail Dave Natzke, national editorial director, DairyBusiness Communications, e-mail: dnatzke@dairybusiness.com.

Accounting for Profits: Tax planning for 2011 & 2012

By Ralph Lizardo

Most of you are likely gathering your 2010 tax information to give to your accountants and the last thing on your mind are the new tax laws. It’s best that you are aware of the new tax laws that will affect you, and your Company as early as possible so that you can plan ahead.

Most of the tax laws that were in effect during the Bush-era were set to expire at the end of 2010.  Accountants anxiously waited on how President Obama was going to tackle this issue. Accountants knew that a “change” was coming, but the specifics were not definite.  With numerous debates between Republicans and Democrats, our beloved leaders finally gave us something to work with, at least for the next 2 years.

In December 2010, the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010,” also known as the Tax Relief Act of 2010 was enacted. The new tax law extended some of the Bush-era tax cuts and revised others provisions. The new tax laws are temporary and are expected to expire at the end of 2012.

This is what is in store for you:

Personal tax

• The tax rate 2011 and 2012 will remain the same. The top rate is 35% on ordinary income and 15% on qualified dividends and long-term capital gains.

• Social security tax for 2011 will be reduced from 6.2% to 4.2% for employees and from 12.4% to 10.4% for self-employed workers. However, the employer portion of social security on behalf of the employee remains at 6.2%. The Medicare tax remains the same.

• The $1,000 child tax credit is extended to 2011 and 2012

• A two-year AMT patch for 2010 and 2011 provides a slight increase in AMT exemption. In 2009, the AMT exemption was $70,950 for married couples filing jointly. Without the new law, the AMT exemption would have been $45,000 for married couples filing jointly. The new tax provided an AMT exemption of $72,450 for married couples filing jointly.

Previous to the new law being enacted, there were reports stating that Congress was planning on disallowing mortgage interest as an itemized deduction. For the time being, at least for 2011, the new tax law allows mortgage interest to be deductible.

Estate tax

In 2001, President George W. Bush signed into law the Economic Growth and Tax Relief Reconciliation Act of 2001. This tax act, among other changes, revised the federal estate tax. It gradually reduced the top federal estate tax rate from 55% to 45%. It also gradually increased the exemption amount from $1,000,000 in 2002 to $3,500,000 in 2009. It also legislated the repeal of the estate tax in 2010 but is scheduled to return in 2011 with the tax rate and the exemption amount reverting back to 55% and $1,000,000, respectively.

The new law revamped the estate tax for 2011 and 2012. The top rate will be 35% and the exemption amount will be $5,000,000 per individual. The exemption is portable between spouses. With the new exemption amount, the majority of estates will not be subject to any federal estate tax. Many individuals now feel that estate planning is less important. Please remember that the new law is only in effect until 2012 and the importance of estate planning has not changed.

Business tax

The 2010 Tax Relief Act provided one of the most generous deductions for businesses that own depreciable property. President Obama wanted to provide businesses incentives to invest in machinery and equipment by allowing for faster cost recovery for business property.

Typically, businesses are allowed to deduct the cost of capital expenditures over their useful lives. In previous years, Congress allowed businesses to write-off 50% of the cost of new properties placed in service in 2008, 2009, and 2010.

The new law provided that new property placed in service after Sept. 8, 2010 through Dec. 31, 2011 is allowed 100% additional first-year depreciation. In other words, the entire cost of qualifying property placed in service during that time frame can be written off, without limit. There are additional requirements on what will qualify for this special depreciation. The machinery and equipment must be brand new and have a recovery period of 20 years or less. For properties placed in service in 2012, the write-off reverts back to 50% of the cost.

As I mentioned earlier, the new tax laws are temporary. Some provisions will expire in 2011 and others in 2012. Unless the President and Congress establish an agenda to permanently fix our tax laws in 2011, the tax benefits we are seeing today will soon be extinct. With election 2012 right around the corner, who knows what 2013 will bring?

FYI

Ralph Lizardo, CPA, senior manager, Moore Stephens Wurth Frazer and Torbet, LLP, in Brea, Calif. Contact him by e-mail at: rlizardo@mswft.com or call, 714-990-1040 Ext. 178.

Success Strategies: Thinking for a change

By John Ellsworth

Hopefully, I grabbed your attention with the title of this article. My intention certainly was not to suggest that you had not been thinking. On the contrary, I wanted to talk to you about how you can improve your thinking. In my last article, “Don’t just Survive, Thrive!” I talked about being able to change your thinking. Many of us are at a point in the dairy industry where we absolutely need to develop a plan to move forward in a positive and constructive manner. Remember this quote from last time?

“Reasonable men adapt themselves to their environment. Unreasonable men try to adapt their environment to themselves. Thus all progress is the result of unreasonable men.” – George Bernard Shaw

What is the best way to change your thinking? Change your focus. What is the best way to change your focus? Determine what you want to accomplish and then establish a path to get you there.

Here is a system that I have introduced to my clients recently. I believe it goes beyond simply setting goals. I call it “Creating a Brighter Future.” If you would like a copy of it, just send me an e-mail and I’ll send you one free of charge.

This form helps us focus on seven primary areas of your dairy operation and asks the question:

“What are the top three tasks that we can complete to achieve at least a 20% improvement in the following areas?”

The areas I am suggesting we focus on include production, reproduction, feed efficiency, herd health, team development, profitability, and lender relationships. In the event that you feel any of these areas is unimportant, think about what would happen if you chose to skip any one of them. Ignoring the first four could put you out of business in a fairly short time, as you already know, and neglecting your team’s development could put you out of business, too, with the assistance of your Team. I once had a manager at one of the banks I previously worked for state, “We cannot afford to spend a lot of money training people. There is nothing worse than training them and then having them leave for the competition.” I suggested that there was one thing worse, and that was not training them and having them stay!

Train your team and help them excel at their jobs. I believe if you focus on taking the steps necessary to excel in the areas of production, reproduction, feed efficiency, and herd health, and then work on your team’s development, your profitability will take care of itself. Of course, improving any or all of these areas will definitely assist in building stronger lender relationships. However, going forward, I believe every producer will need to increase his or her focus on the relationship they have with their lenders. Loan officers will continue to receive greater levels of scrutiny and review of their loans, so help them out by building their case and giving them the information they need to get you the financing you will need.

So, what should you do next? Take these seven areas that I have listed (and others if you want to) and select the “Top Three Tasks” you could accomplish to improve your results in that area by at least 20%. Now, please note that I did not say 20% by tomorrow or even next week. However, it is crucial that once you list what your “top three tasks” are in each area, decide who will be responsible for making sure that these items get done. Finally, set a deadline for their completion.

Then, I suggest that you check on these items periodically. Those items that are monitored get improved, and those items that are written down and monitored will be improved even more. This is not like the kitchen gadgets from RONCO where “You just set it and forget it.” It will pay huge dividends to put these items on your calendar and check on their levels of progress at least twice per year.

As you enter the new year and face the challenges that every one of them brings, I suggest you give this system a trial run. You’ll love the results. As one of my clients recently shared with me, he had pulled out his goals sheet from five years ago and was amazed to learn that we had accomplished every one on his sheet. I congratulated him and pointed out that we will be setting new ones for him next month…

Again, if you would like a copy of the “Creating a Brighter Future form, just send me an e-mail requesting it and I will send it to you free of charge. What’s next? It’s your move.

“Everyone in their life experiences calamity, frustration, and failure, but it’s the way you respond to it that sets you apart.”

~Sumner Redstone, chairman & CEO, National Amusements, Inc.

FYI

John Ellsworth of Modesto, Calif., is a consultant with the financial and strategic consulting firm Success Strategies. He can be reached at 209-988-8960, or by e-mail: john@success-strategies.com.

On the Edge of Common Sense: Headin’ and heelin’ on the High Plains

By Baxter Black, DVM

You’ve heard the old adage, “headin’ and heelin’ on the High Plains?”

Imagine the header clinging to the rack on the back of a flat-bed, chasing a cow across the high plains of Colorado with the hazer banging along beside him in a quarter-ton Ranger with a vet-box in the bed.  Cowboy stories are about wrecks; horse wrecks, cow wrecks, dog wrecks, financial wrecks, Tyranosaurus Wrex, and flat-bed, mad cow, Ranger-with-a-vet-box-in-the-bed, wrecks!

Lump-jaw

Rancher Tom had Dr. Stan-the-Man out to his place. Whilst there, they spotted a cow with a big lump on her jaw.

“Better lance it,” suggested Doc to Tom, “Ya never know.”

It was getting late, no way to gather the bunch. “Just rope her,” said Doc.

Tom put his son, Junior, in the back of the flat-bed. Son had been roping since high school and Dad figured maybe he could reap some payback for all the miles, horses and entry fees it had cost haulin’ him to junior rodeos since he was 12!

On the run

Tom got the cow runnin’ down the tracks of the feed wagon. Junior was leanin’ out like a flag pole on the Titanic! The deck rocked violently as Tom swerved and slid to stay on the left side of the cow. In one wild lunge, when the flat-bed hit a dip and came off the ground, Junior threw his loop! “A beeyootiful catch!” thought Tom, as he turned off and watched the slack go out of the rope.

Back on the deck Junior realized he had about as much control of the situation as he would have ropin’ a doggin’ steer off a bareback bronc…no place to dally!

Time to regroup

They regrouped. “I’ll try and run over the draggin’ rope with a tire!” said Tom.

Junior clambered back on the flat-bed and Dr. Stan lined up on Tom’s right side. Across the plains they flew!  Tom chased that rope, duckin’ and divin,’ sluicing and careening in hot pursuit like a pinball machine gone haywire!

The cow reached a cross fence and turned in front of the flat-bed. Tom’s right front tire caught the rope at the same time that Dr. Stan, who was hazing, hit the fence, cutting off her escape!

It took several minutes to heel the cow, restrain her and untangle Doc’s windshield wipers, side mirrors and antennae from the bob wire. They congratulated themselves for the great job, as only cowboys would do after such a successful wreck. Oh, and the abscess popped itself in the collision, so lancing was not necessary. Talk about efficient! They all took credit, of course, and Doc sent’em a bill for consulting and navigation.

FYI

Baxter Black is a cowboy poet and ex-veterinarian raised in New Mexico and now lives in Benson, Ariz. He has written 12 books and recorded more than a dozen audio and video tapes, and is a syndicated columnist and radio commentator. Books, videos, CDs and tapes by Baxter Black can be purchased through www.baxterblack.com.


Guest Column: Much ado about cheese

Cheese Reporter editor responds to NY Times

By Dick Groves

Dick Groves is publisher/editor of the Cheese Reporter, a weekly newspaper serving the dairy industry. He can be reached via e-mail: dgroves@cheesereporter.com

They say there’s no such thing as bad publicity, but in the case of a recent New York Times article about cheese, we’re not so sure. And as negative as that article was, some of the responses posted online were even worse.

In case you missed it, the Times published a lengthy front-page article about cheese, more specifically about how Dairy Management Inc. and USDA are promoting increased consumption of cheese at the same time USDA is telling people to cut back on their intake of saturated fat.

The article is less than flattering about cheese, to put it mildly. In addition to an anti-cheese tone, the article also contains at least a few pieces of misinformation or misleading information that has, judging by responses posted online, led to some pretty inaccurate conclusions by some uniformed observers.

For example, the article refers to Dairy Management Inc. (DMI) as a “marketing creation” of USDA. Actually, DMI was created by the National Dairy Board in March of 1994; the National Dairy Board, of course, is funded by a mandatory assessment on dairy farmers.

And the assessment that funds the NDB, and therefore DMI, wasn’t created by USDA, it was created by Congress. Specifically, the promotion and research program is conducted under the Dairy Production and Stabilization Act of 1983.

The Times article mentions that DMI received $5.3 million last year from USDA to promote dairy sales overseas (exports). We’re not sure what’s wrong with that, for several reasons, just a couple of which we’ll mention here.

First, the Obama administration has a stated goal of doubling U.S. exports within five years. U.S. dairy exports are on pace to top $3 billion this year, so it would seem like the government’s expenditure here is a pretty good deal and in line with the administration’s overall export goal.

Second, there is, without a doubt, growing global demand for dairy products. The federal government basically has two choices when it comes to that growing demand: help the U.S. dairy industry fill it, or let other countries ramp up their dairy production to fill it.

If USDA wants to help the U.S. dairy industry capture some of that market, that’s not such a bad thing. Indeed, we recall the infamous Flanigan report of 1973, which was requested by President Nixon and which recommended that the U.S. import some 25% of its manufactured dairy products by 1980.

The current approach, with the U.S. helping to supply growing global dairy markets, is far superior to the Flanigan report’s recommendation that the U.S. rely on the European Union and others to supply its manufactured dairy products.

The Times article points out that the majority of the milk people drink has fat removed to make the lowfat or nonfat milk “that Americans prefer.” Frankly, the only reasons Americans prefer these milks is, first, because the government has been telling them to prefer these milks for decades now; and second, because it’s getting more and more difficult for young consumers to find whole milk at all in schools.

The Times article points out Americans now eat an average of 33 pounds of cheese per year, nearly triple the 1970 rate, and quotes Dr. Neal D. Barnard of the Physicians Committee for Responsible Medicine as follows: “If you want to look at why people are fat today, it’s pretty hard to identify a contributor more significant than this meteoric rise in cheese consumption.”

Okay, there are a couple of problems here. First, it’s worth noting that per capita cheese consumption exceeds 50 pounds annually (that’s about a pound of cheese per week) in France, but the French have one of the lowest rates of obesity among developed nations, so tying obesity directly to rising cheese consumption is ridiculous.

Second, PCRM and Neal Barnard are hardly objective nutrition analysts. The article refers to Barnard as president of “the physicians’ group,” but in fact PCRM’s own website says the “PCRM family includes physicians, healthcare professionals, veterinarians, and compassionate laypersons.”

More bluntly, the Center for Consumer Freedom (itself a coalition primarily of food companies and restaurants) calls PCRM “a fanatical animal rights group that seeks to remove eggs, milk, meat and seafood from the American diet.” Hardly an objective “physicians’ group.”

Beyond the article itself, some of the reaction to it has been misleading if not downright laughably incorrect.

For example, a number of observers have referred to DMI as a USDA agency or branch (one even referred to DMI as a “USDA-funded organization”), which as explained earlier is completely false.

The Times article implies the government’s dietary advice is always sound; for example, it notes that USDA’s Center for Nutrition Policy and Promotion “promotes healthy diets.”

But the government’s dietary advice is constantly changing, and some of its advice from the past has been changed pretty significantly (or at least should be). If you don’t think this is true, just talk to someone who has been involved in the egg business for a few decades.

Maybe the most disturbing thing about this whole debacle is how many observers are expressing shock and surprise that a government-created organization (DMI) would have the unmitigated gall to actually promote increased consumption of cheese. And at the same time the government is encouraging people to consume less fat.

But of course the dairy checkoff was created to do just what it is doing: promote increased consumption of cheese, and other dairy products. Oh, and the dairy checkoff was created in 1983, or three years after the first edition of the government’s Dietary Guidelines recommended the following: “Avoid too much fat, saturated fat, and cholesterol.”

FYI

Dick Groves is publisher/editor of the Cheese Reporter, a weekly newspaper serving the dairy industry. He can be reached via e-mail: dgroves@cheesereporter.com.

Active Listening: The Lifeblood of Great Communication

PEOPLE POWER

By Robert Milligan

At the conclusion of a recent workshop I conducted, many participants indicated their greatest insight came from a section on “active listening.”

To explore that topic, begin by thinking of a recent time when someone – an employee, colleague, partner, family member or friend – was not listening when you had something important to say. Describe your feelings in one word. In workshops, feelings such as frustrated, angry, ignored, unimportant and upset were common.

To avoid situations where we leave others with these feelings, we need to become better active or empathic listeners.

We tend to view listening as a passive activity. Active listening is a very proactive way to enhance communication with others. The listener takes  “active” responsibility for understanding both the content and feelings behind what is being said.  An underlying theme is for the listener to use active listening to help others solve their own problems.

Let’s look at an example. An employee approaches you and says: “The deadline to finish bedding the calves is not realistic.” The typical response would be to insist the deadline is realistic.

An active listening response, however, could be: “It sounds like you are concerned about whether you can meet the deadline.”

The advantage of this response is twofold. First, you show understanding for the employee’s position. Second, you and the employee can now talk about both the employee’s feelings and the practical issue of meeting the deadline.

Active listening opens the door for effective communication, reducing the likelihood of a confrontation, and increasing the probability of excellent performance.

The following contrasts our usual approach to listening and the active listening approach:

• Our usual listening: Listening to the other person in order to respond to what they are saying; often even to use what they are saying against them in an argument.

• Active listening: Listening carefully to truly understand what the other person is saying and how they are feeling about what they are saying.

An open communication climate is created through active listening. The listener better understands what a person means, and how the person feels about situations and problems. Active listening is a skill that communicates acceptance and increases interpersonal trust between employees and their supervisor, partner or friend.

This column often addresses the importance of fairness. The chance of an employee leaving a conversation perceiving they have been treated fairly is heightened by the use of active listening.

Think about all your communications. What percentage of the time would you categorize your listening level is:

1) paying little or no attention.

2) listening, but also thinking about other things.

3) listening, but also thinking about how you are going to respond to what is being said.

4) listening with nothing else in your mind, thinking about how to respond only after he/she has finished speaking.

We normally think of listening level 3 as good listening. The problem is that, not unlike level 2, we are multi-tasking, because we are also thinking about how to respond, distracting us from fully – actively – listening.

Active listening might suggest the last choice should be 100%. That is unrealistic and unnecessary. My challenge to you is to establish a realistic goal for the percentage of time you will make that choice – listen with nothing else in your mind. Now, work to meet your goal.

Many, perhaps most of us, do not fully listen to what is being said, nor do we ask follow-up questions to elicit greater understanding or additional information.  More often than not, when someone initiates a conversation, they have spent time thinking about the idea, the issue, the concern or the situation. Interjecting our off-the-cuff ideas and responses before they completely explain their thinking both loses the fruits of the time they spent, and diminishes the quality of the interpersonal relationship with that individual.

The following are two listening practices to help you become a better active listener:

1. Pause 1-2 seconds before replying. This practices has three advantages:

• It shows you are carefully listening

• You avoid or at least reduce the risk of interrupting

• You actually hear the other person better

2. Ask questions for clarification. I find these two to be especially helpful:

• “What do you mean?”

•“Tell me more?”

The 1-2 second pause is especially helpful on the telephone, where interrupting is an even greater danger. In addition to being rude, interrupting often renders the conversation ineffective.

I find the “tell me more” phrase to be extremely effective when listening to someone who is quiet, has difficulty expressing their thoughts, or someone who is not certain whether I am interested in what they are saying.

The consequences of failing to allow others to fully express ideas, opinions and feelings and/or to not fully listen are often two-fold. First, the current conversation is not brought to successful conclusion. Second, you have communicated the message that you do not want to listen and even more significant future ideas, concerns and feelings may never be communicated.

FYI

Robert Milligan, senior consultant with Dairy Strategies LLC, can be reached via phone: 888-249-3244, ext. 255, e-mail: rmilligan@trsmith.com, or website: www.dairystrategies.com.

PROMOTION: Dairy’s legacy

Evoke it to build public trust and grow sales

By Tom Gallagher

Change…it’s been a topic of numerous columns I’ve authored over the last few years. We have seen consumers change, including how they feel about the companies and industries providing the foods and beverages they purchase.

The 2010 Edelman Trust Barometer, an annual survey developed by Edelman Public Relations, measures changes in consumer trust and perceptions of credibility toward organizations and entire industries. It concluded that, while quality and performance remain a core component to consumer trust, an industry’s perceived performance as a good citizen and “steward of society” is now equally important.

This new paradigm offers challenges and opportunities to the dairy industry. Americans are increasingly disconnected from agriculture; the agricultural sector now employs less than 2% of the nation’s workforce. Also, we know anti-animal agriculture activists who are well-funded, well-organized – and increasingly focused on dairy – create an increasing threat to ongoing consumer trust in dairy sales.

To address this, we are going to become increasingly proactive in telling the dairy producer story. Producers and the dairy industry are in a better position than ever to assure trust in dairy, due to checkoff initiatives that offer increased strength: systems and science, commitment to community and multiple pathways to reach consumers.

Systems and science

Over the past several years, the dairy industry and dairy checkoff have formed several key systems to provide reassurance to consumers. For example, through the Innovation Center for U.S. Dairy, a DMI-formed entity that allows the entire dairy industry’s “value chain” to work together to help grow sales, the industry recently completed a scientific study of dairy’s carbon footprint, setting the record straight on the U.S. dairy industry’s actual impact regarding greenhouse gas emissions. The Innovation Center also formed an industry task force to address food safety challenges and solutions in dairy processing and manufacturing plants.

Further, the National Milk Producers Federation has developed its Farmers Assuring Responsible Management (FARM) animal care and quality assurance program, which has the support of producers representing more than half of the nation’s milk supply.

Finally, dairy producers have a decades-long history of funding credible, third-party nutrition and product research showing the health and nutrition benefits of consuming dairy products.

Commitment to community

Dairy producers’ commitment to community starts with your long-standing legacy of stewardship for the land and water. Your commitment extends to the people you employ, and the other businesses you support in your community – from the feed and equipment you purchase, to financial services and on-farm management consulting you require to run your farm business. The public needs to know this.

Producers also reinforce their commitment through dedicated children’s health and wellness efforts to provide nutritious foods, including dairy, and physical activity in our nation’s schools through the Fuel Up to Play 60 program. Dairy producers are the driving force in forming a public-private partnership to help solve childhood obesity, the nation’s leading public health issue.

To support Fuel Up to Play 60, DMI has created a new foundation with the goal of raising $10 million annually to reward schools that provide for better nutrition – including kid-friendly foods like milk, cheese and yogurt – and physical activity. This effort is a critical part of reinforcing the reputation of dairy producers within their communities.

Pathways to build trust, loyalty

Through the dairy checkoff, producers have multiple paths to build trust and loyalty among consumers. One example is the Innovation Center’s Consumer Confidence Committee, which works to help the entire industry speak with one unified voice to food retailers, foodservice restaurants and others about key industry topics, such as health and wellness, animal care, food safety and environmental stewardship.

Another path is through dairy marketing partners that reach millions of consumers. They would like to help dairy producers tell their story. Through partnerships with companies such as McDonald’s® and Domino’s Pizza®, we can share dairy-friendly messaging through packaging, in-store promotions and other activities. This also holds true for Fuel Up to Play 60 partners who can communicate with consumers through Foundation efforts to demonstrate that dairy is part of the solution to combating childhood obesity.

Another critical path is the vast human resources of the dairy industry itself. Thousands of people employed by dairy promotion, co-ops, processors and manufacturers call on businesses, institutions and schools every day. There is a great opportunity to activate them to help share dairy’s story with the public.

When these strengths work together, they can create a tipping point to a new foundation of consumer trust, where positive voices can drown out the negative. The dairy industry will build this trust from its reputation embodied in America’s dairy producers, who:

• Feed the world

• Fight childhood obesity

• Address hunger and malnutrition

• Bring jobs to local communities

• Provide a path to energy independence

• Assure food security for America

• Care for the land and their animals

That’s the legacy of America’s dairy producers and the U.S. dairy industry. Now is the time to proactively tell this story to build a new foundation of consumer trust in dairy.

FYI

■  Tom Gallagher is chief executive officer of Dairy Management Inc.™. For more information,
visit www.dairycheckoff.com.

CSI-Dairy: The Lameness Mystery

A Cow-Side Investigation Into The Lameness Mystery

Numerous ‘culprits’ exist on dairy farms, robbing herd performance and injuring the dairy’s bottom line. Identifying and arresting the offender isn’t always easy, and often requires a full investigation, gathering and analyzing evidence on the farm and in the lab. It’s cold right now, but you still might be puzzled over last summer’s mystery: lameness.

By Dr. Jeff DeFrain

My cell phone rang early one hot and humid summer morning. On the other end of the line was “Jim”, whose dirt lot facility I’d visited several times. It had been more than two years since we’d implemented a claw health (hoof trimming) record-keeping protocol to help Jim’s team measure the effectiveness of their lameness prevention and management practices.

Dr. Jeff DeFrain is a research nutritionist at Zinpro Corporation. Contact him via phone: 800-445-6145) or e-mail: jdefrain@zinpro.com.

“We’ve recently experienced a significant spike in lameness incidence, and production levels have dropped,” Jim explained. “We need your help to determine what is causing the lameness and identify what needs to be done to get the herd back on track.”

The investigation

Before visiting Jim’s dairy, I asked him to provide herd claw health records for the past 12 months. These records contain invaluable information during a lameness investigation, including: date of treatment, event type (trim vs. lame), cow ID, primary lesion type (white line, sole ulcer, digital dermatitis, etc.) and treatment details (wraps, blocks, etc.).

After reviewing the information, answers to three key lameness questions were revealed:

1) Is the nature of the lameness infectious or non-infectious?

By comparing the sum of all infectious events (digital dermatitis and foot rot) vs. the sum of all non-infectious events (sole ulcer, white line lesion and toe ulcer), records revealed Jim’s dairy was plagued primarily by non-infectious lesions (mainly sole ulcers; some white line lesions).

2) What are the monthly trends?

By adding up the total claw lesion events on a monthly basis, the records provided insights into a seasonal factor (heat stress) that appeared to be impacting lameness. The spike in lameness incidence during July-October mirrored the spike in Temperature-Humidity Index (THI) during the same time period (see Figure 1).

The spike in lameness incidence during July-October mirrored the spike in Temperature-Humidity Index (THI) during the same time period

3) What is the ratio of sole ulcers to white line lesions over time?

In general, the ratio of sole ulcers to white line lesions is 1.5-2.1 in most herds (Cook, 2006). This ratio can double in summer, especially in herds with minimal heat abatement. A high incidence of sole ulcers is usually associated with standing/lying time.

With these findings, I headed out to Jim’s dairy to continue the investigation. The high incidence of non-infectious sole ulcers, combined with findings from the monthly trend analysis, allowed me to narrow the focus of the on-site visit to evaluate three key areas in order to find answers to additional questions.

• Dry lot facility design. Is there adequate space available (on a per cow basis) to ensure sufficient resting, shade and feeding space is achieved?

• Heat abatement. Do the cows have an ample supply of available drinking water? Is there sufficient use of fans, soakers, misters and shade throughout the facility?

• Time budget. How much time is available to the cows for lying down? Daily lying time is an important factor that can predispose cattle to lameness.

All signs point to heat abatement

Results from the on-site visit confirmed what the claw health records had initially indicated: The cows were experiencing a high incidence of sole ulcers due to lack of heat abatement. The full investigation revealed the need – and also likely a profitable return – to invest in additional shade structures to increase lying time and decrease the degree of sole ulcers experienced during peak summer heat stress.

Evaluating the results

The next summer, I visited Jim’s dairy to find out how his herd was handling the heat. “Heat stress has not been as much of a problem this year since we added the new shade structures,” he said. “We’ve been able to avoid the significant fluctuations in production levels and our claw health records show the incidence of sole ulcers is way down.”

FYI

Dr. Jeff DeFrain is a research nutritionist at Zinpro Corporation. Contact him via phone: 800-445-6145) or e-mail: jdefrain@zinpro.com.

Each month, DairyBusiness Communications will check the case files of lead dairy ‘investigators’ to uncover another ‘CSI-Dairy’ mystery. Episodes will be archived at www.dairybusiness.com.


Dairy Financial Times: Dairy industry in review

By Pete Hoekstra

The year 2010 is quickly coming to an end and the pain of 2009 is still very fresh in our memory. The question that comes to mind for most dairy farmers is, “what have I accomplished in the past 12 months and what will happen in 2011?”

For the most part the dairy industry has improved dramatically as compared to the year ended 2009 when most dairies throughout the nation lost $700 to $900 per cow! The dairy farmer’s financial picture went from moderate debt per cow to the maximum amount their banker would allow them to borrow. The equity position of the dairy farmer plummeted; cash flows were negative and account payables increased.

Equity erosion

The banking industry became well aware of the equity erosion and began to tighten their lending requirements. Asking for additional loans to feed or replace cows became nearly impossible for some dairymen since banks were unwilling to accept additional risk because of the uncertainty in the dairy industry.

There were a handful of banks that made a decision to no longer loan money on dairy operations, which make it very difficult, if not impossible, for dairy farmers to find an alternate means of financing their operations. This decision forced many dairymen to sell assets, refinance other assets, or borrow money on life insurance policies, just to feed their cows.

Feed vendors saw their accounts receivables climb from 30-45 days outstanding to 60-120 day outstanding. Feed companies became very aggressive in finding ways to insure payments on their accounts payables by obtaining security positions on cows, land and personal assets. From the bankers and feed vendors perspective they want to see cash flow to reduce the dairy farmer’s debt. The dairy industry must be profitable in order to insure good relationship with their banks and feed companies.

So what has happened in 2010 that has brought improvement to the dairy industry?  First we saw the average Class III price of milk in 2009 of $11.35 climb to a predicted average of $14.40 for 2010, a $3.05 increase or 26% over 2009 average. We are still experiencing major fluctuation is milk pricing, which makes budgeting for the future a difficult job.

A second reason for improvements in our dairy price is due to exports of milk products, which have climbed substantially from 2009.

A third reason is the milk-feed price ratio. The historical milk-feed price ratio average for 2009 was 1.78. The average milk-feed price ratio through October of 2010 is 2.28, an increase of 28% over 2009.

And last of all is the ability of our marketing cooperatives to pay healthy dividends to their patrons. Their ability to sell our milk products at a profit even as their patrons were losing money put additional monies into the pockets of the dairymen. Will we see profits in 2010? The answer is yes, more than likely at a range of $200 to $350 per cow on an average.

This does not mean that every dairy will show profits. Some of our dairy farmers maintained good feeding and reproductive practices while others were not able to do so because of severe financial constraints. This will cause great disparity of profit per cow in 2010.

How about commodities?

On the other side of the equation we saw corn prices in January of 2010 at $3.45 per bushel and rising to over $6 per bushel in October/November of this year and falling back to $5.22 for December delivery. At its high corn prices increase over 70% since January of 2010! Other commodities such as soybeans, cottonseed, hay, and corn silage, just to mention a few, have all increased along with the corn prices. The milk-feed price ratio was 2.23 in October of 2010. If the Class III milk price drops $3.27 per cwt to $13.65 in December and our feed prices remain at the October 2010 level, the December milk-feed price ratio will drop to the 2009 level of 1.84, a level at which most dairymen will not be profitable. The rapid increase in feed prices and the oversupply of milk in the pipeline will have a negative affect on our profitability and cash flow in 2011.

Looking at reality

Every month our hope is the milk prices will increase and/or feed prices will drop and once again we will be profitable. The problem with this premise is that it is not based on facts. We continue to produce more milk than we did last year. Our cost of production continues to escalate as feed prices rise. Our cheese stocks continue to rise. As long as dairy farmers continues to produce a more than adequate supply of milk to fulfill the needs of our suppliers and consumers, why should we expect to get paid more for our milk?

We live in a country were supply and demand sets the price we receive for our products. A classic example of this is the corn market. We have the third largest crop in history this year and corn prices continue to rise.  The reason is the demand for the product.  Ethanol consumes about 30% plus of all our corn. Exports of grain products are strong. If the support for ethanol would disappear in December under new legislation would it not be safe to assume that corn prices would react in a very negative manner due to less demand for the product?

I do not claim to have all the answers to solve this problem. What I do know is when dairy farmers produce more product than the market needs, our milk price will remain at levels which will not be profitable. I am not advocating that we short the market on milk products, but what I am advocating is some common sense, supply and demand still rule our economic model.

Supply and demand dilemma

Why would anybody pay more for our milk products if they know that there is more than an adequate supply to meet their needs?  Do we really want to rely on the government to provide us with a level of profitability or do we want to create our own profitability without the assistance of the government?  The industry must find a way to measure the demand for milk products and balance that demand with supply. Until we find an answer to that question we will continue having highs and lows in the market. The organization that has the best ability to accomplish this is our marketing agencies.

As dairy farmers we continue to produce milk, increase the size of our herd and find new ways to increase our production per cow without a thought as to who will purchase our products, since we rely on our co-op or other milk processors to market our milk.

I am not in favor of limiting anyone from starting a new dairy operation or expanding their existing dairy operation, but our marketing organizations must take some responsibility when they allow dairy farmers to expand and/or start new dairy operations.

A number of marketing co-ops and independent marketing agencies have allowed, or even requested, that their patrons expand their operation to provide more milk to be marketed. Obviously their must be demand for more milk products or they would not allow the dairy farmer to expand their operations. So this begs the question, why isn’t the dairy farmer receiving a better price for his milk?

What about the dairy farmer?

Are our marketing organizations selling the milk products at a lower price just to keep their plants at full operation and thereby being more profitable? What about the dairy farmer? Who is looking after his need to be profitable? I strongly believe that our marketing cooperatives have a responsibility to take into consideration the profitability of the dairy farmer when they market our milk products.

There appears to be a disconnect between the price the dairy farmer receives for his milk and our marketing cooperatives when it comes to sale of our milk products. Dairy farmers depend on our marketing organizations to market our milk. Our pricing problems can be solved if only the marketing cooperatives and the diary farmers work together whereby both parties can be profitable.  Help us find new ways to control the supply of milk products to better equal the demand of the consumer.

FYI

Pete Hoekstra, CPA, and managing partner in Modesto, Calif., with Genske, Mulder & Co., LLP, a certified public accounting firm representing clients who produce 12% of the nation’s milk in 29 states. Pete can be reached at 209-523-3573 or e-mail pete@genskemulder.com

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