Archive for May, 2009

Watch your COP – in good times and bad

By Mark Mapstone

Ever notice how the topic of cost of production tends to come up often during periods of low milk prices? My observation is that when milk prices dip to very low levels, a producer’s cost of production determines their degree of operating loss.  In other words, the higher the cost of production, the bigger the operating deficit.  So during periods of low milk prices, producers tend to explore ways of lowering cost of production to help minimize the equity they bleed.

The habit of focusing on cost of production just during the low milk price cycles frustrates me as a farm business consultant.  It’s  just as important – if not more – during the good times as during the bad times.  This is because a producer’s cost of production is the same factor that determines their level of profit during high milk price periods.  
In short, producers need to realize that a management strategy that helps them capture as much profit as possible from the marketplace during the good times should be the same basic strategy they use during the bad times to minimize losses.  A management strategy that results in a below average cost of production accomplishes both.

Cost of production is one of the least understood terms in the industry. One reason is that there are several different ways to measure cost of production in an operation. Farm Credit’s Northeast Dairy Farm Summary has used net cost of production (NCOP) for the past 30 years to measure cost of production and determine profitability on Northeast dairies.  We’ll use that the measure in this article.

The average farm in the Northeast Dairy Farm Summary had a cost of production of $17.88 per cwt.  That was up $1.58 per cwt., primarily as a result of higher input costs.  The bigger story was in this year’s range in net cost of production between the top 25% profit group and the bottom 25% profit group of $5.45 per cwt. The top 25% profit groups cost of production averaged $15.90 per cwt. and the bottom 25% profit group’s cost of production averaged $21.35 per cwt.

With milk prices averaging $19.59 per cwt. in 2008, the difference in cost of production between top and bottom group represented 28% of the milk price received.  In essence, the top 25% profit group was able to capture 28% more of the milk price as profit than the bottom 25% profit group did.  To put this in perspective, using an average-sized farm in the benchmark of 272 cows, the top 25% profit farm made a profit of $223,817 while a bottom 25% farm lost $106,753. 
Let’s face it, milk is a commodity –  you don’t have a significant amount of influence on the price you receive for your product.  A producer should do everything he or she can to achieve the highest milk price possible, but your best way to get a competitive advantage in the industry is to work on keeping your cost of production low.  

Keeping cost of production low is the best indicator of viability in the dairy industry because it allows you to maintain strong profit margins and remain competitive in the industry through both good times and bad.  A reasonable goal to shoot for is to keep your cost of production below the Northeast summary average by $1.00 per cwt. at all times.

Steps to improve your dairy’s net cost of production

Step 1
Use the attached worksheet to calculate your 2008 net cost of production.  When comparing your farm to benchmarks, always use the top profit group benchmark. 


Step 2
Use the flow chart to see whether you have an expense problem or a production problem.  Remember that a production problem could be a per-cow production issue or an under-capacity issue with facilities. 

If production per cow is the issue, determine the most probable underlying issues and work to improve on each. 

Example: poor cow comfort, poor reproductive performance, high SCC, poor forage quality, poor water etc. Getting more milk from existing cows may be the quickest way to impact cost of production, especially if no additional capital investment is required.

If you have the potential to milk more cows and ship more milk but never seem to be able to keep your existing facilities full, you most likely have an internal herd growth problem  resulting in undercapacity. You need look at your like milking herd cull rate, your youngstock noncompletion rate or your herd’s reproductive performance and work to correct it.  

If the big picture problem is with expenses, “drill down” farther and determine what areas you need to improve.  Pay particular attention to the following: The exercise of separating variable from overhead expenses can tell you a lot about why your farm’s cost of production is the way it is.  

Variable Expenses. If variable expenses are higher than benchmark, it’s an indication that you need to work on production efficiency. Production efficiency measures how effective you are at converting raw materials (your variable inputs) into finished product (milk). Variable costs are those costs that tend to change with each additional cow milked or hundredweight sold.

Note: Expansion generally does not help improve production efficiency. If production efficiency is low, expansion only magnifies the problem.

Overhead Expenses.  Capacity measures how effectively you are using your dairy’s facilities and equipment to their potential.  Overhead (or fixed costs) as a percentage of sales is a good financial measure to track and measure capacity or capital efficiency for any business. Overhead or fixed costs include those costs that tend not to change with every additional cow milked or hundredweight of milk sold. 

Achieving more milk per cow should be the first focus to help reduce overhead costs.  If production per cow is strong, expansion may help dilute fixed expenses per hundredweight as long as your variable expenses (cost of goods sold) is average or better than benchmark.  


Step 3
Develop action plans with your team for improvement in a particular area. Involving your farm professionals like your vet, your nutritionist and your business consultant is always a good idea.  If you haven’t considered starting up a dairy profit team for the farm, now may be a good time.

Step 4
Set goals and monitor performance. Adjust the action plan if goals are not being met. Hold people accountable.  This is a proven way to make progress on improving cost of production in your operation.

mapstone-chart3

Changes simplify and extend LGM-Dairy program

USDA expanded the Livestock Gross Margin-Dairy (LGM-Dairy)  program to Kentucky, New Mexico, Tennessee and Washington, to bring the total to 33 states in the program.
LGM-Dairy, administered through the federal crop insurance program, allows producers to insure the gross margin on their milk production – market value of milk minus cost of feed.
Other c
hanges to the program will make it simpler to use, said Alan Zepp, risk management specialist at Pennsylvania’s Center for Dairy Excellence.
Producers will have the  option of using their own feed prices or using the default feed coefficients added for the LGM for Dairy program. Currently, producers calculate their basis and convert their own soybean and corn purchases into feed coefficients.

The window to purchase a policy will be extended from a 12-hour period to a 24-hour period each month. Prices are announced the last business Friday of each month – producers will have until 8 p.m. the next evening to purchase a policy based on those prices, Zepp said.
Changes to the program go into effect in July. For more information, talk to a crop insurance agent. A list of agents authorized by insurance providers to write LGM for Dairy policies can be found on USDA Risk Management Agency’s website: www.rma.usda.gov.
Contact Zepp at 717-346-0849 or email: azepp@centerfordairyexcellence.org.

Milk quality: Making quality worth it

This article appears in the June 2009 issue of Eastern DairyBusiness

Everyone should have an incentive to strive for top quality milk

By Susan Harlow

Grandé Cheese, the Wisconsin company that buys Greg Ziegler’s milk, is strict about the quality of milk that comes out of his tank and is willing to pay enough to make the effort that goes into top quality worthwhile.

Ziegler and his father, Leo, own the Middleton, Wis., dairy where they milk 700 cows. The dairy’s somatic cell count (SCC) runs 130,000 to 180,000 in the summer and 120,000 to 160,000 in the winter.

Early last winter, Ziegler began awarding his milkers monthly bonuses based on SCC. “I see results – every dollar counts,” he said. “It more than pays for itself.” 

The quality premiums from Grandé give him a 3-to-1 return, and that’s not even counting his savings in mastitis treatment.

Ziegler pays bonuses to each milker based on these SCC levels in the bulk tank:

<200,000 – $50 <160,000 – $100

<180,000 – $75 <50,000 – $150

The dairy employs seven milkers, all of whom have been at the dairy at least five years. New milkers are trained by Ziegler or his five sons. He is especially particular about how milkers dry off teat ends and sweep mats free of manure. “Those are two critical things I look for.” 

Four milkers work each shift  in the 48-stall Westfalia-Surge rotary parlor, milking 270 cows per hour, 3X. They are trained to follow this routine:

The first milker rubs dirt off cows’ teats as they get on the rotary to stimulate let-down, and sprays on predip. 

The second milker, 20 seconds later, dries off teat ends.

Ninety seconds after the cow steps onto the rotary, a third milker attaches machines and checks for slippage and leaks on the first half of the rotary.

The fourth milker, positioned on the far side of the rotary, also checks for leaks and slippage, and makes sure cows milk out cleanly. Ziegler works this position two out of the three daily milkings; on the night shift, a 12-year employee takes that spot.  “I can see milk weights or if they have sore feet or need treatment or Udder Comfort from that position,” he said. “I look at the bottom of the teats – if they’re sore, I have a choice of two post-dips.” One is a more effective bactericide; the other a good conditioner that he’ll use once daily, or twice in cold weather. Udders are singed every 6 weeks to 2 months.

Ziegler, who is on DHIA testing because his herd is in a genomics program with Genex, combs through his DHIA records for the cows with the highest cell counts and addresses their problems. A cow may be dried off a month early and treated to give her more time to improve, be taken out of the milking string for treatment or shipped.

 Zieglers also watches for cows down in milk production or with swollen quarters. “If she’s got white milk and a swollen quarter and is close to heat, I’ll use Udder Comfort, an IV of saline solution and an aspirin,” he said. “Ninety percent of the time that fixes it, because she’s been bumped while in heat.”

If her milk is off-color, Ziegler treats her immediately with Quartermaster or Ceflax, and an IV of Banamine  until the quarter is soft, and moves her into a separate pen. Ziegler vaccinates with J-5 four times a year.

Controlling mastitis does more than just earn quality premiums, Ziegler said. The less mastitis in the herd, the faster milking gets done and the less electricity he uses. 

Ziegler attributes the dairy’s low SCC to:

• Moving close-up cows onto a bedded back 21 days before freshening. The pack is bedded twice daily with good quality cornstalks. “Keeping cows spotless before they calve is huge. If they start out with mastitis, it may recur,” Ziegler said. 

• Alley scrapers that run three times an hour in the three freestall barns to help keep manure levels low.

• Liming mattresses every milking and adding sawdust every other day.

• Good pre- and post-dips. Ziegler uses Oxycide and Dermacide.

 

Grandé believes that producing good milk is an attitude, and it’s up to the owner or manager to decide what quality means on their farm, said Greg Siegenthaler, director of milk procurement for Grandé Cheese, which makes Italian-style cheeses and Grade A whey products.

But the company has an incentive to encourage producers to ship good milk. The quality of the milk affects not only the quality of the final product but its consistency as well. “Producers who have a quality focus produce a more consistent product,” Siegenthaler said. “Quality also affects yield. Having a lower SCC allows us to harvest all the available casein in the milk.”

SCC also provides a measure of animal health on a dairy. “It’s almost a litmus test for animal welfare.” 

The cheese company samples each dairy’s delivery for components, SCC and three levels of bacteria. It offers producers a monthly bulk tank culture and a weekly composite sample to monitor for contagious mastitis outbreaks. “That’s especially helpful if a producer is buying a lot of cows,” Siegenthaler said. “It also helps track how milkers are doing – coliform counts give them an indication of what kind of job they’re doing on milk prep.”

Under Grande’s Milk Management Assistance program, veterinarian Dr. Andy Johnson consults with dairies, doing a full farm evaluation where he goes through the milking system, evaluates milking procedure, does teat end scoring and checks cow comfort. 

All Grandé’s premiums are tied to quality – it pays no premiums unless the milk meets the minimum allowable SCC of 349,000. Premiums are based on the federal milk marketing orders’ formula, and for every 1,000-point improvement in SCC, producers earn more premium.

 

 

 

 

Technology: Is innovation important?

This article appears in the California/Arizona edition of the June 2009 issue of Western DairyBusiness

Dr. Thomas Elam answers the question, “is innovation important?” And peers into his crystal ball for dairy industry analysis.

By Ron Goble

VISALIA, Calif – Dr. Thomas Elam, of FarmEcon LLC, a well-respected authority on agricultural technology, innovation and analysis, told a group of dairy producers attending a meeting sponsored by Elanco here recently that technology and innovation hold the key to providing adequate food and fibre to feed and clothe the world.

The world population continues to grow while acres per person shrinks. Demand for food, however, is growing faster than population. We have an “intensive vs. extensive” food production battle on our hands. Intensive is more land-efficient, but extensive substitutes land for yield-enhancing technology. Harvested acres per person around the world has dropped significantly from 1.00 acre to 0.40.

“The good news,” said Elam, “was that the birth rates are declining and farm yields continue to increase along with technology and animal efficiency.”

The bad news is: agricultural land base not increasing as fast as food demand. Incomes will continue to grow; farming is using 1 billion of 2.96 billion U.S. acres; efficiency increases based on innovation challenged by a vocal minority; increasing niche market for organic/natural foods is land intensive; demand for animal products outgrowing population; and biofuel demand competes for food and land.

The United Nations says by 2050 there will be 9 billion people in the world, up from the current 6.6 billion today, almost a 50% hike.

“As we reduce technology use we lower yields and higher costs, and those two usually offset each other. You get about the same returns,” Elam said. “In Europe, 10 years ago when they had full access to modern technology in poultry, they were a net exporter. They are now a net importer of poultry meat. The same is true for beef – net exporter to net importer. They can’t compete with those countries in the world that use modern technology.”

On the subject of organic production and land use, Elam pointed to the following facts: 

• Organic milk and meat production systems produce at about 1960 productivity levels.

• Organic land productivity is 33-50% of modern levels.

• For many, production organics cost 2-3 times as much to produce.

• And 10% of U.S. milk and meat supplied by organic farms would need more than another Ohio’s crop acreage to produce their feed.

According to USDA figures, organic beef and dairy operations account for 0.21% of beef production and 0.96% of dairy animals.

“There is a squeeze on the amount of land available. So we need to look for ways to produce more food off each increasingly scarce acre,” Elam said. “Animal efficiencies do conserve land, ultimately. But we need tools, incentives, and freedoms to farm productively.

“Interest groups opposing innovation do not see the big picture,” he declared. 

On 2009-2010 milk and feed outlook, Elam sees:

• Higher costs driving the milk/meat system.

• Record high production reductions are coming. “We are going to cut meat production this year by 2 to 3 billion pounds in the US. The biggest reduction on record,” he said. 

•  No let-up in sight.

  ~ 2009 corn acreage is going to be down a little bit. 

  ~ Reduction in total planted acres, about 7 million acres.

  ~ Ethanol economics will help keep feed costs up, as ethanol producers used about 30% of the corn crop. The renewal fuel standard for 2009 is 10.5 billion gallons.

  ~ Economic recovery = higher oil/feed prices; again?

Elam outlined how feed costs are related to energy prices and energy policy:

• Higher energy prices, plus biofuel subsidies, equals higher corn demand.

• Higher corn demand, equals higher corn prices.

• Higher corn prices, equal less acreage, and higher prices for other crops.

• Higher corn prices, equal higher costs for all feed ingredients.

“Basically, according to Elam, two things are driving us right now. The underlying demand structure hasn’t changed, but what has changed are the drivers. 

1) “Global recession has taken a lot of purchasing power out of not only the US, but Europe, Asia, Latin America and result in less spending on food. Spending in the US in the fourth quarter 2008, in real terms (corrected for inflation), declined by more than 4% – the biggest decline since the Depression. People have less income and they are saving more. Savings went from zero to 3% in 1 year. They are cutting back on discretionary purchases: eating out at restaurants, buying cars, and buying houses,” he said.

2) “Higher costs coming out, corn going from $2 a bushel in the Midwest, to $4 a bushel since 2005, driving our costs up, which means producers that use the product, have to raise our prices to offset that…everyone is feeling the pain – dairy, beef, chicken, pork, turkeys, General Mills, Kraft Foods. We are all feeling the pain.,” Elam said.

He outlined the costs of California dairy feed ingredients comparing the 2004 average price with April 2009 prices. Corn/cwt up 50%; corn/bushel up 50%; soybean meal/ton, up 27%; canola meal/ton, up 21%; whole cottonseed/ton, up 22%; almond hulls/ton, up 3%; alfalfa, Modesto, good quality, down 7%; DDGS, 10%/ton, up 20%.  

The Southern California Class 2 milk price/cwt. was down 24% from $13.37/2004 average to $10.20 in April 2009.

The 2009-2010 Corn Outlook, according to Elam, should show corn acres down slightly. In 2009, ethanol production capacity far exceeds demand and corn prices bid up to variable cost breakeven for ethanol plants. These high-cost ethanol plants are losing money as seen by 27 closures on 1/29/09 and 38 closed by 5/05/09. He expects farm level Midwest corn price around $4.

Concerning his feed cost summary, Elam said, “We are likely to see small increases in protein and fat prices; somewhat higher grain prices are likely, but not a disaster; and about a 10% increase in overall feed costs. But, the oil market can drive this thing. If oil goes above $75/barrel we’ll start seeing some significant increases in feed prices. And if oil goes back to $150/barrel, we’ll have $7 corn in the Midwest and $9 corn in Stockton. I’m not painting a disaster, and I think we’ll be alright for 2009-2010.”

The dairy outlook for ‘09-2010, according to Elam, shows the “current price/cost balance is clearly not sustainable. I’m hearing numbers like milk prices at $10/cwt and feed costs at $9. I hear of some large dairy operations going through a half million dollars a month in cash and equity trying to stay in business. This isn’t going to last.

“However, costs are unlikely to come down from where we are today. I just painted that picture. You’re not going to see feed costs drop significantly. Therefore prices will increase, the only question is, how long will it take?” he questioned. 

“The milk cow herd – including the CWT program – will likely shrink 2.5 to 3% from January to December and milk production is likely to drop 1 to 2%. Will that be enough? Probably, enough to get our prices up.

“The big problem we have is export demand,” Elam declared. 

The drivers for 2009/2010 look like this: “Export demand weakness is driving production declines. However, domestic use of milk products is up a bit this year, so far. Part of that is lower prices that encourage people to drink more milk and use more dairy products in spite of reduced income,” Elam said.  “Cheese and butter prices have started to come back a little bit, but nonfat dry milk is stuck at the support level and it appears it is going to be there for awhile. Futures markets are pointing to higher prices and the good news is that with today’s feed costs, a $15 all milk price will get us back someplace close to the 2008 margin over feed. It won’t take $20 milk to get us back to a reasonable margin over feed cost.”

Elam’s milk production forecast for 2009 shows the second quarter at more than 48 billion pounds, dropping to 46 billion pounds in the third quarter and down to nearly 45 billion pounds by the end of 2009.

Elam predicts “milk exports will remain weak. Although price forecast, we should see the lowest of the year in the first and second quarters, strengthening somewhat to $14/cwt in the fourth quarter. Not a prosperous forecast, but maybe something that is a little more survivable than what we have today.”

The 2010 outlook, we are likely to see significant improvement in the overall economy, Elam said. “Given all the stimulus that the federal government has put in…export prospects are likely to be improved as economies recover around the world. We should start to see some significant price recovery next year. Some of the numbers I’ve seen are in the $15-$16 range.  But, there are major risks on feed costs, especially late 2010, depending on what happens in the oil markets we could be seeing corn back in the $5 to $6 range.

Beyond 2010, we are likely to see inflation and interest rates start to head a bit higher. Interest rates in today’s terms are at record low levels.

Finally, when the marketplace tells you to produce more milk, what is the most cost effective way to increase milk production? Elam asked. 

“I know that sounds a little farfetched at the moment, but think about the fact that we are cutting production at a time when domestic use is fairly stable, and in 2010 we are likely to see some increase in export and domestic demand while production has fallen. 

“More cows, or more milk per cow?

Elam said studies show that cow productivity increases have been sliding for the last 20 years in percentage terms. “We’ve been producing more milk by adding more cows, which adds costs for cows, land, facilities and labor,” he explained. 

“Let’s say that we wanted to increase milk production in the US by 1% in 2010. If we did it just by adding more cows, no change in milk per cow, it would cost the following: $29 million facilities investment, $31 million cow/heifer investment, $250 million in annual feed costs, $35 million in annual labor costs, $28 million in other variable costs, $60 million increase in fixed costs, $313 million increase in variable costs with $16.70 per/cwt, plus $60 million opportunity cost investment.

“That’s the high-cost approach the dairy industry has taken,” he said.

However, that same 1% increase in production using rBST, with no change in cow herd numbers, produces the following cost-effective scenario: $0 million facilities/animal investment, $97 million in annual feed costs, $2 million in annual labor costs, and $89 million in rBST cost. There is no increase in fixed costs, but a $188 million increase in variable costs with $10.05 per/cwt.

Elam concluded his remarks with a five-year planning horizon that expects feed costs to likely remain volatile, but milk price recovery expected to be complete by 2010. He sees the export market trending higher with inflation more of a threat, but a return to historical profitability averages and higher range of returns to the producers. During those years he expects milk production to grow 1 to 2% a year.

FYI

  To contact Dr. Thomas Elam of FarmEcon LLC, e-mail thomaselam@farmecon.com or call 317-414-7026.

Sweeney Dairy: SCC at rock-bottom levels

This article appears in the June 2009 issue of Western DairyBusiness


By Ron Goble

VISALIA, Calif. – The sign hanging at the end of a dead-end road north of here says it all: 

SWEENEY DAIRY

A Quality Milk Producer for

Leprino Foods, Lemoore, California

Milk quality is the name of the game as far as dairyman Jim Sweeney is concerned. 

Sweeney is a perennial winner of the Tulare County Dairy Herd Improvement Association’s annual low SCC honors. This year’s average for Sweeney Dairy was 82,000. In the dairybusiness for 21 years, this small open open-corral dairy near the Sierra foothills could easily have been a snapshot from the1950s or 60s, but over those two decades he has averaged an SCC in the 80,000s – an amazing fete.

He milks 280 head, 2X in his double-four side-opener style 1940 vintage parlor. He still feeds grain in the milking barn and has three employees who he says he has trained in his specific management style.

About a third of his cows are Jerseys or Jersey crosses. Of the 70 or 80 Jerseys, maybe 20 are crosses. While they do all A.I. breeding, they run Jersey bulls with the heifers to work cleanup.

Sweeney was a city boy, living his first dozen years in San Francisco. At 13, his family moved to Sonoma and he and his brothers started working on dairies and raising drop-calves, moving irrigation pipes and other dairy chores. He began buying registered Holsteins as a 4-H project and kept them at other people’s dairies. He eventually sold them to pay his way through college.

“It got to the point that you either start a dairy or sell them,” he said. “When someone else is milking them you’re not making any money, and you have a lot of money tied up in them.”

After graduating from Fresno State College in 1981, Sweeney worked as a herdsman for three years at Quist Dairy near Fresno. Then he was self-employed fitting cattle for livestock shows and was able to travel the world and see a wide variety of dairy operations. 

In 1988, Jim married Amelia and a few months later they leased their own dairy – a small “hole-in-the-wall” facility in Caruthers, Calif. in Fresno County. It was a one-side flatbarn where they were milking about 100 cows that he had bought and raised after college. They ran that dairy for three years until they maxed out the facility with 120 cows.

“First, I did all the work myself,” Sweeney said. “Then I hired one worker. Amelia has always done the bookkeeping for the dairy.”

Sweeney was on DHIA testing from the beginning. He has seen the system evolve from a huge paper trail to the era of computerized instant access. “Dairymen have enough things to worry about. They don’t need to worry about their numbers because they are available on every cow without flipping through the papers.”

The first three years he and Amelia were in business, they recorded SCCs ranging from 42,000 to 60,000. He credits Jim, and his late father, John Bos, for helping him develop the discipline required to maintain a low SCC and manage his operation well. Sweeney had housed most of his animals at Bos Dairy until he could afford to lease a facility.

Fast-forward to 2008, where Sweeney’s DHIA herd averages were: 25,122 lbs. energy corrected milk (EMC) and 887 lbs. fat.

 

Learning at Sweeney Dairy

“First of all, I train every milker myself,” declared Sweeney. “I don’t let my workers train each other. In fact, I try to hire someone who has never milked cows before. Probably 99% of our workers have never milked cows before. After I train them, I know I can count on them to do things the way we want them done – no shortcuts.

“You must be sure they are not afraid of cows. The guys who are afraid of cows will never make good milkers,” he said. “A producer can have a very expensive parlor, but if milkers don’t do things right, he’ll have a mess and it hurts his bottom line.

“Milking the cows is the most important job on the dairy, and most dairymen pay the least amount of attention to it,” he declared. “Dairymen have a responsibility to produce the best product possible – every day.”

 

The Sweeney System

The dairyman stresses that milkers never milk wet cows; only clean, dry cows. Before milking the cows stand in the wash pen where sprinklers work 8 to 12-minutes to clean off the udders. Once the sprinklers are off, he lets the cows stand in the wash pen, so when they let them into the parlor, they are dry. 

Sweeney predips with 1% iodine (actually a postdip solution, but he uses it as a predip).  They use as many paper towels as it takes to wipe them off. 

He said milkers wipe the teats closest first, and then when they strip them, they start with teats that are farthest away and work toward themselves, so they are not dragging their hands across teats that have already been opened up.

“After milking, I have them strip teats again. You either find mastitis at the very beginning or at the very end of milking,” he explained. “We use Udder Gold 4XLA for postdip and Udder Gold Five Star in the winter and work from the farthest teats to the closest.”

Sweeney was taught by his veterinarian that iodine dips won’t spread mastitis, but the barrier dips like he uses for postdipping can. That’s why after postdipping he has his milkers dump out the small amount of solution residue remaining in the cup.

For cows they are drying off, Sweeney uses separate alcohol pads – one for each teat – after postdipping. “We rarely have a cow in the dry pen get a bad quarter,” Sweeney said. “We won’t dry a cow off with mastitis. We milk her until the mastitis is gone, unless we just want the calf and we are going to beef her as soon as she delivers.”

He teaches his milkers how to spot mastitis and sends his animals to the hospital pen at the first sign of the malady.

“When we treat a cow with mastitis, we do it the same way as we do with a cow that we dry off,” he said. “Those cows are always milked last and each one has two leg bands to mark her. We cull cows that are mastitis problems, but we don’t cull cows because they might have a high somatic cell.”

He pointed to an individual cow that had a SCC of 2.4 million one month and by the next DHI test she was down to 250,000 without treatment. “Sometimes if the high SCC persists for a couple months, we’ll bring them into the hospital pen and make sure they get milked out right. I think not being milked out well is a lot of the problem,” Sweeney said.

He commented that on a small dairy like his it’s very easy to turn a problem cow out into the hospital pen. However, some of the large-herd dairies may have more difficulty worrying about one cow when they’ve got 50 or 60 others in the parlor at the same time.

Sweeney said his milkers also use Bag Balm on a regular basis to keep cows’ udders and teats from getting dry and irritated. “During winter, cows’ udders get cold and wet, especially in open corrals. You have to keep their teats in good condition,” he said.

It’s all about taking good care of your cows, Sweeney said.

 

Quality and the bottom line

“Some producers think it costs you money to get premiums to boost your bottom line. But, when you are milking clean cows, they give more milk. If a cow has a scarred teat from bouts with mastitis, that quarter will never produce like a healthy one. And those are the quarters that would have high somatic cell counts,” he explained. “The way it affects the bottom line is, your cows milk better. It’s like giving them rbST without having to give, or pay for, the shot.”

Liners are another important element in maintaining good udder health. He changes liners once a week and more often if needed. When cows are giving more milk, the liners have to work harder, he said. Whenever a cow kicks off a machine, the milker needs to check the liner to make sure it’s not damaged. If it is damaged, it’s replaced with a new one.

“When we milk cows we want everything to be done the same, every time.” 

He beds his cows with straw during the winter because he says it “keeps their teats warm and dry.” He keep adding straw until winter is over and then they push the straw out and compost it for spreading on fields.

“It’s real important to have good uddered cows and that should be the No. 1 thing each dairyman is breeding for,” he said. “We select bulls for high components and high udder composites. And we’re more interested in components than milk. That’s why we use bulls that are high in fat and protein. 

“Our genetics – like our animal care and management practices – are extremely important to our success.”  

 

FYI

  To contact Jim Sweeney at Sweeney Dairy in Visalia, e-mail him at: japlus3@aol.com. 

Northwest kids learn about dairy

WHATCOM COUNTY, Wash.– Whatcom County Dairy Women and Whatcom Farm Friends held the 16th Annual Milk Makers Fest recently along with many other volunteers and sponsors.

More than 1,700 first grade students in 64 classes from Whatcom County schools and some 350 teachers/chaperones participated in the event. “They all had a wonderful time learning about the dairy industry,” said Cheryl I. DeHaan, WFF community education program manager in Lynden, Wash.

 “Thank you so much for a wonderful, milk makers experience. My class learned so much,” said Anne Franzmann, of Birchwood Elementary School. 

“Wow!  We had such a wonderful time at the Milk Makers Fest. Every station was fantastic and all the volunteers were amazing. It is such a wonderful experience,” said Gayle O’Malley, Columbia Elementary School.

DeHaan said their approximately 40 daily volunteers had a great time as well! There were two sessions daily, with 12 classrooms visiting six stations during the nearly two-hour “tour” of the dairy farm. A group leader greets the classroom, tags each student with a color tag, and leads this group from station to Station. Station leaders shared their part of the dairy industry at the various stations, DeHaan explained.

In the milking parlor, students saw a real cow, “Trista,”  up close and personal. They  got a chance to feel the machine pulsation as they learn about the daily milking procedure.  Here they also have the opportunity to “milk” our model cow “Twister.”  

When they visit the calf and health care station, they see different breeds of dairy animals and learn about raising and caring for them from calves, to heifers, to joining the milking string.

The “Circle of Farming” takes the students through a day at the dairy. They learn about how everything that happens on the farm is dependent upon something else. A cow needs to eat a nutritionally balanced diet including grass, silage and grains. She also drinks a lot of water each day. Her manure is not a waste but is used as fertilizer to grow more feed for the cow. And along with that fertilizer, water is used to irrigate and increase crop yields. All this contributes to producing that wonderful end product we enjoy – milk.

The kids get to see and smell a variety of feed products. At the dairy products station, The dairy ambassador treats each student to a single-serve chocolate milk and shares nutrition information with the students in a fun and interactive way. As they sing along, they learn how chocolate milk can fit into a well-balanced diet and help build strong bones and teeth. The students are introduced to many different farm animals and pets in the giant Straw Maze. They also enjoy a tractor pulled wagon ride while on a scavenger hunt, searching for things a farmer might come in contact with each day like boots, coveralls and wildlife. 

“The goal is to introduce the students and consumers to a little piece of Whatcom County agriculture,” DeHaan said. “As society becomes further and further removed from food and fiber production it’s important for farmers to tell their story. The community needs to know that the food they eat doesn’t just miraculously appear on their store shelves.”

6/09 Opinions & Sacred Cows: Milking cows, while Rome burns…

 

By Ron Goble, Editor

Western DairyBusiness

Well, Rome really isn’t burning, but countless dairies are certainly being consumed in the current economic fire storm. Dairy producers nationwide are seeing their equity disappear month after month as they continue to produce wholesome and healthy milk and milk products for a very unhealthy return that doesn’t begin to approach break even.

 

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

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

It seems obvious that the CWT program – while doing its part to cut milk production – is not enough. That means that the industry needs to take a greater role in solving its constant oversupply problems. 

Good things are happening in that regard. Rob Vandenheuvel, general manager of Milk Producers Council (MPC) in Chino, Calif., reports that the Holstein Association USA has taken MPC’s Growth Management Plan, added their own ideas and announced the Dairy Price Stabilization Program (DPSP). He called the DPSP a “tremendously positive development, as they represent 30,000 members from every dairy area throughout the U.S.” 

National Milk Producers Federation (NMPF) and Dairy Farmers of America (DFA) are each setting up a task force to examine proposals like the DPSP. It is encouraging to see some of the largest cooperatives in the nation exploring the options to deal with the age-old problem of milk price volatility.

In the midst of all this, a small grass-root effort was started by a few California dairymen who wanted to see “Do Not Ship Milk Days,” in an effort to make a statement concerning their frustration with the oversupply problems out West. The “Do Not Ship” effort was called off, but they are determined to work to bring California cooperatives together to discuss and initiate a 5% reduction in milk production by dairies in the state. 

An informational meeting was held in Tulare in May that drew an estimated 220 producers and representatives from allied industry. “We have a dismal, dying crumbling industry … and everyone in this room is going broke because we are producing $20 milk and selling it for $10 per hundredweight,” declared Syp Vander Dussen, MPC president who moderated the meeting, voicing his frustration, and urging action. Only time will tell what comes of it. 

In the meantime, the NMPF and DFA activity is very positive news. We also are seeing similar efforts in the Northeast with “Dairy Farmers Working Together” announcing their support for the DPSP. 

Vandenheuvel encouraged all milk producers to contact their cooperative and trade association leadership to voice their concern for the future of the industry. It is going to take all segments of the dairy community coming together, each doing their part to resolve the supply issues. 

 

 June is ‘Dairy Month’ don’t forget!

We hope all producers are involved in promoting dairy. A good example is Whatcom County Dairy Women and Whatcom Farm Friends’ 16th Annual Milk Makers Fest in the Pacific Northwest. They sponsored outstanding events that spread dairy’s positive message. Some 1,700 first grade students and more than 350 teachers/chaperones were educated about your industry. To read about the promotion, visit http://dairywebmall.com/dbcpress/?p=2970.

Take a bold step forward – do something positive for the dairy industry. 

6/09 CALF CONNECTION: Water: Essential element for profitability

By Sam Leadley

What’s “normal” water intake? When water is offered free choice to calves starting the second day of life, we expect three major factors to influence consumption:

• Individual animal variation

• The greater the amount of milk or milk replacer fed, the lower the level of water intake

• The higher the environmental temperature, the higher the level of water intake 

On one hand, individual calf variation is a huge factor.  You probably have had a calf that started drinking water at day two. Or remember the calf that would not touch water until you drastically cut back the milk or milk replacer? One study found that even though the average amount drunk was 2.4 quarts daily, the individual variation was from none to 19 quarts. So much for “normal.”

On the other hand, probably at least two-thirds or even three-quarters of our calves do fit a pattern.  During week one there may be minimal consumption.  By week three, many calves offered free choice water are regularly drinking at least one quart daily.

One study feeding acidified milk replacer free-choice found that calves would drink a lot of milk and very little water. At 7 weeks calves were up to 13.6 quarts of milk replacer daily and less than 1 quart of water.
 For those of us manually feeding calves, the difference between 4 and 6 quarts a day probably won’t have much effect on water consumption. With calves in cold housing, we’ve all observed how low water intakes fall during subfreezing weather. Jim Quigley, director of calf operations for American Protein Corp., measured water intake with air temperatures between 32 and 95 degrees (See www.calfnotes.com Calfnote #68). An 18-degree change in temperature from 32 to 50 degrees increased water intake by about 0.4 quarts daily.  But a much smaller, 9-degree change from 86 to 95 degrees increased intake 0.5 quarts daily.  Increases at higher temperatures mean drastically greater increases in water needs than similar temperature changes when it is cool. 

 

A research project measured the effect of the availability of clean water on growth rate.

A research project measured the effect of the availability of clean water on growth rate.

Clean water in clean pails

One common challenge is regularly providing clean liquid water in clean pails. A research project measured the effect of the availability of clean water on growth rate (Table 1).  Researchers assumed that calves would drink more water if it was fresh and in a clean container. For preweaned and transition calves they varied the interval at which the water pails were rinsed and cleaned.

In both instances the researchers measured 0.2 pounds per day difference between clean and “not so clean” water. This supports their assumption that fresh, clean water in clean pails and tubs promotes higher growth rates. With higher water consumption associated with greater dry matter intake (DMI), the calves gained 0.2 pounds average daily gain, or 14%, more than calves with lower intakes. Similar findings came out of a comparison of the placement of water and grain pails. When the pails were separated physically or by a barrier there was a 33% increase in water consumed and an 18% improvement in body weight gain per day.

Calves with free choice water consumed 45% more starter grain than the calves without water. 

Calves with free choice water consumed 45% more starter grain than the calves without water.

The biggest benefit to providing free choice water to preweaned calves is increased DMI.  This translates into a higher rate of gain and indirectly to improved health. In Table 2, we see that calves with free choice water consumed 45% more starter grain than the calves without water. 

These “free-choice water” calves also gained 60% more weight in the first four weeks. Estimates are that for efficient feed conversion, calves need to consume at least four pounds of water for each pound of DMI.  

 

Practical summer tips

For summer management many farms keep an extra supply of water pails.  A number equal to about 20% of calves on milk makes sense. Then each day of the week, one-fifth of the pails can be replaced with clean ones and the dirty ones can be scrubbed for the next day. In five days all the pails have been cleaned.  Algae and mold are controlled. 

For calves in the weaning process or already weaned, water consumption in hot summer weather is often very high.  Many will drink more than ten quarts daily.  This may be a point where larger pails may be added to the hutches or pens.  Some farms have a collection of 5-gallon pails that are clipped to the hutches or pens around weaning time.  These larger pails permit once-a-day watering.

 

FYI

Sam Leadley is a replacement consultant with Attica Veterinary Associates, Attica, N.Y. Contact him via e-mail: sleadley@rochester.rr.com; phone: 585-591-2660; or visit http://atticavet.entrexp.com.

6/09 Promotion: Teaming up on dairy promotion

Unique markets provide unique promotion opportunities

By Allen Merrill

One of our dairy promotion checkoff’s most important strategies is to coordinate our dollars in ways that make more efficient use of our resources.  As dairy farmer board members, we helped lay out a national Unified Maarketing Plan several years ago.  In concert with this plan, we also realize our individual markets present opportunities for unique promotions to extend national themes and messages.  

Midwest Dairy Association’s approach is the creation of teams in each of our major markets that bring together staff members working in school nutrition, integrated and nutrition communications, retail marketing and industry image.  Together, they identify possibilities for adding components to existing promotions, or creating events or new efforts that serve the market. 

For example, Midwest Dairy Association funded Dairy Fully Fueled, a project of our team in St. Louis that includes the St. Louis District Dairy Council.  Dairy Fully Fueled is an interactive school program that builds on the Food Groups to Encourage and Nutrient Rich themes we use regularly with schools.  Our Kansas City and Minneapolis-St. Paul teams signed on to the project and extended it into their markets.  More than 50 schools and several consumer events were included in the tour, reaching more than 11,000 kids in the school visits alone.

Our Minneapolis-St. Paul team participated in the Twin Cities Food and Wine Experience, sampling Minnesota-made cheeses and recruiting dairy farmers to work a booth where attendees could ask their questions about dairy production practices.  

In Iowa, our team has worked closely with the board members, processors and the Department of Agriculture to provide a food bank donation so that nutrition education materials and dairy information would get to the people who access community assistance.  

North Dakota”s staff team is developing a display and video of local dairy producers that can be used at educational events to help tell the farm production story to kids who attend events there.

 Our Chicago market team arranged a dairy farm tour for school “thought leaders.” The tour capped off with an event at the Chicago Bears training facility so attendees could learn more about the key role dairy foods play in child health and wellness.  The wellness strategy is part of the checkoff’s partnership with the NFL, and its goals were shared with the group.

That NFL partnership often works well for these unique local market efforts. While one team might be willing to have us bring a retailer into the mix and drive sales through the partnership, another might be able to do a kids’ training camp.  Still another might be able to help us drive participation in our schools programs.  We used this approach for a project in our Ozarks region, where we used St. Louis Rams game tickets to encourage student participation in our Fuel Up to Play school health and wellness effort.  The schools participating were able to win a school visit from an NFL player.  

Here in my home state of South Dakota, we hosted a sports clinic and camp for middle school students.  Vikings player Chad Greenway and alumnus Brad Johnson helped us emphasize child health and wellness, and chocolate milk as a sports recovery drink.  We’re also working on a Junior Sportscaster program with a sports merchandise retail partner and a college team.  

It’s likely your own state or regional promotion group is using similar techniques to expand the impact of our national promotion programs.  If you haven’t reviewed what they are doing currently, it might be time to visit their website, make a phone call to a staff or board member or better yet, ask if there is a role for you in one of their efforts.  Dairy promotion today is a whole new ball game, and although your funding automatically makes you a participant, finding out more about what’s going on in the game might turn you into an enthusiastic spectator.  Or like me, you could become a big fan. 


FYI

Allen Merrill serves on the South Dakota Division and Corporate Boards of Midwest Dairy Association, the producer checkoff group for nine Midwest states.  Merrill and his family milk 150 cows and farm 1,400 acres at Merrill Farm.    

6/09 Marketing: Don’t forget seasonality

By Matt Mattke 

The continued drop in milk prices is overshadowing one important market dynamic milk producers need to keep in mind:  seasonality.  Right now the milk market is comparable to harvest time for grains.  Milk and cheese production are at peak levels, and cheese inventories are building. 

This trend will not continue indefinitely through year’s end.  Milk and cheese production will likely peak in May or June, and cheese inventories will likely peak in June or July. 

Some may argue that it does not matter if cheese inventories do peak along seasonal lines; prices will stay depressed because inventories are so much heavier than last year.  Here is our response to that thought.  Don’t focus on the absolute level of inventories of cheese.  The focus needs to be on the direction of inventories.  If inventories are growing, prices will drop in response, and if inventories are dropping, prices will rise in response.

Market conditions are favorable for cheese inventories to drop seasonally in the last half of 2009.  At the time of writing this article, corn futures are at $4.30/bushel, soybean futures are at $11.85/bushel, soymeal futures are at $380.00/ton, and May to August milk futures are averaging a mere $11.50/cwt.  And don’t forget the potential impact of adverse weather on milk production.

Bottom line, this is not the time to be piling into forward contracts or hedge positions in last half of 2009 contract months.  After a 12-month slide already in milk, forward pricing your last half of 2009 production at the time of peak milk and peak cheese does not put the odds in your favor.  The summer months have historically provided better pricing opportunities.

 FYI

 Contact Matt Mattke, Market360® adviser at Stewart-Peterson, via e-mail: mmattke@stewart-peterson.com, phone: 800-334-9779 or visit www.stewart-peterson.com.

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