Archive for September, 2009

Finance: More than passing interest

Weak dairy and livestock economies leave an imprint on credit conditions and land values.

By Dave Natzke

Add land values to the things on the decline in major U.S. dairy states. USDA’s 2009 Land Values and Cash Rents report shows the value of agricultural real estate, cropland and pasture declined in most dairy states, but rental rates held fairly steady (see Table 1).

U.S. farm real estate values, a measurement of the value of all land and buildings on farms, averaged $2,100/acre on Jan. 1, 2009, down 3.2% from 2008 and the first decline since 1987. Regional changes ranged from virtually no change in the Northern and Southern Plains, to an 11% decline in the Mountain region. The highest farm real estate values remained in the Northeast, at $4,830/acre; the Mountain region had the lowest, at $922/acre. Among dairy states, largest declines (on a percentage basis) were in Idaho, Florida, California and Oregon.

U.S. average cropland values declined by $110/acre (about 4.0%) to $2,650/acre. Among major dairy states, largest cropland value declines (on a percentage basis) were in Arizona, Florida, Idaho and Virginia.

USDA economists cited the overall economy for the declines, resulting in less demand for commercial and residential development and recreational land in many regions. Livestock and crop commodity prices also declined, weakening producer and investor interest.

Cash rent

Nationally, cash rent for cropland rose 5.3%, while pasture rents remained unchanged for the 2009 crop and grazing year. Cropland cash rents paid in 2009 averaged $90/acre, compared to $85.50/acre for 2008. Pasture cash rents averaged $10.50/acre, consistent with 2008, but above the 2007 average of $10.00/acre.

USDA’s 2009 Land Values and Cash Rents report shows the value of agricultural real estate, cropland and pasture declined in most dairy states.

USDA’s 2009 Land Values and Cash Rents report shows the value of agricultural real estate, cropland and pasture declined in most dairy states.

Federal Reserve Bank districts

Second-quarter 2009 surveys of Federal Reserve Bank district lenders indicated land values were showing signs of stabilizing, but credit conditions deteriorated with cash flow.

In the Federal Reserve Bank of Chicago (covering all or portions of Illinois, Indiana, Iowa, Michigan, Minnesota and Wisconsin), average farmland values (see Table 2) were steady in the second quarter, but declined 3% from the previous year, according to David Oppedahl, business economist, writing in the bank’s quarterly AgLetter. In contrast with a year ago, corn and soybean prices have become a drag on farmland values, since the expected stream of earnings from crop production diminished.

Credit conditions in the district worsened, with loan repayment rates sliding to the lowest level since 2006. Loan renewals and extensions grew, and collateral requirements increased.

Interest rates hovered near the levels of the previous quarter (see Table 3), and bankers reported the Farm Credit System share of the ag loan market grew in the first half of 2009.

In the Minneapolis Federal Reserve district (covering all or portions of Montana, North and South Dakota, Minnesota and northwestern Wisconsin), a weak first quarter was followed by a second one not much better. The livestock sector – especially dairy – continued to suffer. Profitability the previous 3-5 years helped some producers absorb losses. Farm income, household spending and capital expenditures all decreased significantly in the second quarter, according to Tobias Madden, regional economist.

Loan repayments rates did not improve, while loan renewals and extensions increased. Loan demand increased slightly, as did collateral requirements. Interest rates stayed nearly constant; only variable loan rates for machinery increased.

Land values and cash rents were flat to lower in the second quarter.

District farmland values stabilized in the Federal Reserve Bank of Kansas City (covering Colorado, Kansas, Nebraska, Oklahoma, Wyoming, the northern half of New Mexico and the western third of Missouri), according to Jason Henderson, branch executive, and Maria Akers, assistant economist. Irrigated cropland and ranchland values posted slight increases.

Bankers in states with high concentrations of livestock operations expected lower farm incomes, contributing to a rise in loan demand and further declines in loan repayments. Farm interest rates held steady.

Persistent drought conditions added to the economic strain in the Federal Reserve Bank of Dallas (covering all or portions of Texas, New Mexico and Louisiana). Ranchers in the driest areas liquidated cattle herds at a loss because of limited water and forage availability and high supplemental feed costs. A higher share of bankers reporting a decline in loan repayment rates, increased collateral requirements and greater demand for loan renewals. There is growing concern among respondents about the future viability of some producers, especially dairy farmers who have suffered large losses due to record-low milk prices.

Second-quarter 2009 surveys of Federal Reserve Bank district lenders indicated land values were showing signs of stabilizing, but credit conditions deteriorated with cash flow.

Second-quarter 2009 surveys of Federal Reserve Bank district lenders indicated land values were showing signs of stabilizing, but credit conditions deteriorated with cash flow.

FYI

• For the full report on U.S. farmland values and land rental rates, visit http://usda.mannlib.cornell.edu/usda/current/AgriLandVa/AgriLandVa-08-04-2009.pdf.

• For quarterly updates on agricultural credit conditions and farmland values in specific Federal Reserve  bank districts, visit: www.minneapolisfed.org/Research/data/district/usstates.cfm.

Public Relations: Communicating Values

2nd Annual AFACT Summit stresses solutions through communications.

By Dave Natzke


Emotion plays a role in food-buying decisions. Farmers – including dairy producers – must put a “face” back on their products to rebuild relationships with consumers – while maintaining their own ability to operate a profitable business, according to leaders of the American Farmers for the Advancement and Conservation of Technology (AFACT).

The organization hosted its 2nd Annual AFACT Summit, July 22-23, in Minneapolis, Minn. Theme for the event was “Working Together to Create Solutions.”

Carroll Campbell, fourth-generation Kansas dairy producer and AFACT co-chair, admitted the economy has many producers in crisis.

“We take great pride in what we produce,” he said. “In the current economy, we are losing equity, and we may have to come up with an exit strategy. But one of the most important things we have learned in AFACT is that, while we make business decisions based on science and the facts, that’s not the way to reach consumers. We have to talk about our values.”

“This is an incredibly difficult time for those of us in the dairy business,” added Indiana dairy producer LuAnn Troxel, AFACT communications team leader. “We realize we all have choices to make. We can get depressed, become discouraged and continue working silently.  Or, we can keep putting out a high-quality, safe food and tell the world our story.”

Liz Doornink, Wisconsin dairy producer and AFACT co-chair, noted the organization has learned a lot about consumers and food retailers by conducting focus groups.

“They want to understand what we do,” Doornink said. “They want to know who farmers are, why we farm and how we farm. Over the years, farmers have been so busy working that the connection to consumers has been broken. We need to bring that connection back. When we have that relationship, they’re more apt to appreciate and accept what we’re doing. Everybody understands that more food will be needed to feed a growing population, but they don’t understand how we’re going to do it.

“It’s time for us to come out of hiding and share our stories,” she continued. “It’s not a ‘choice’ anymore. It’s something we must do.”

Social networks

One means to do that is through understanding and embracing “social networks” via the computer. AFACT is helping producers tell their stories through “AFACT Advocate” training, and building familiarity with social networking tools.

“Dairy producers may not be able to spend a day (traveling and speaking to consumer groups),” Doornink explained. “But they can share their thoughts and values online.”

Michele Payn-Knoper, founder of Cause Matters Corp., helps people – especially those in agriculture – with advocacy training. She provided Summit attendees a crash course on Facebook and Twitter, noting social media is the most valuable tool for ag consumer advocacy – besides face-to-face meetings – in her eight-year experience.

Payn-Knoper said there currently are 225 million users of Facebook, and Twitter grew 1,400% between February 2008 and 2009.

“These are large groups of consumers who agriculture can reach out to and inform,” she said. “By using these tools, a personal relationship can be built, even while sitting hundreds of miles apart.”

Payn-Knoper said social media is called “social” for a reason. A picture and small biography are essential for building producer/consumer relations. However, she warned, the window of opportunity is closing.

Other highlights

AFACT was created a couple of years ago by dairy farmers concerned over the potential loss of recombinant bovine somatotropin (rbST) as a tool for improved milk production efficiency. Since then, animal rights’ activists have been successful in advancing restrictions on some livestock management practices, and media and marketing blitzes surrounding “green,” “sustainable” and “local” generally attempt to portray modern agriculture negatively. AFACT Summit organizers sought to reach beyond dairy, and included presentations by:

• Egg producer Ryan Armstrong and dairy farmer Ray Prock Jr. shared their experiences with California’s Proposition 2.

• Minnesota swine farmer Gary Thome shared his farm’s experience with People for the Ethical Treatment of Animals (PETA).

• Len Corzine, Illinois crop farmer, discussed technology restrictions in crop production.

• Alex Avery, director of Research and Education at the Hudson Institute, discussed movements that restrict new technologies in food production, and the implications for future global population growth and food needs.

• Washington State University scientist Jude Capper shared her research showing that U.S. dairy cow numbers have dropped from 25 million in 1944 to about 9 million today, noting dairy’s “carbon footprint” has declined sharply.

Panel discussion

A diverse panel featured Vonda Johnson, consumer/mother from Minnesota; Andrea Gauthier, employee at Taher Food Management Services, with responsibilities for foodservice and school lunch program food purchasing; and Mitch Davis, general manager of Davisco Foods Int.

Johnson and Gauthier said they use the Internet to evaluate food product claims, trying to visit multiple sites to get a balanced message. Both said they would appreciate the ability to link to local producers for information.

“It would be great to connect directly with a producer,” Johnson said. “The science might make me think, but if I trust somebody, that would help me decide.”

Johnson, who grew up on a Wisconsin beef farm, said she is amazed at the technology utilized in dairy farming today.

“The cow is so well taken care of. To produce on a bigger scale, there has to be technology. I don’t worry about technology affecting the food,” she said. “I think the media drives the consumer. Oprah has a lot of power. Producers have to combat ‘empty-headed listening.’”

Davis finds irony in the debate over technological advances in food production.

“In my business travels throughout China, Asia, Europe and the Middle East, those who have technology and are benefitting from it take it for granted and try to distance themselves from it; those who don’t have technology are desperate to get it,” he said.

Davis addressed the hot-button issue – rbST – that led to AFACT’s creation.

“We’ve had a lot of interaction on ‘rbST-free’ milk,” Davis said. “I believe firmly that fluid milk processors and retailers created the rbST issue in a short-sighted move to cannibalize the available market. Instead of promoting milk’s nutritional value, they shoved their competitors out of the way by differentiating their product. Now, consumers are confused and frustrated.”

The fight affected his family’s business. “We had a large customer who wanted to market a reduced-fat cheese produced from cows not supplemented with rbST,” he explained. “We told them we needed a few days to determine the premium we would need for our dairy producers. We surveyed our producers, and came back to them in eight days. When we went back to the customer, they told us there was no need for discussion, because a large plant in California said they would do it ‘free.’

“Milk is a commodity product” he continued. “You can add value to a commodity product, but to differentiate it as ‘good’ or ‘bad’, I think the whole category suffers. It seems like a lot of what we do in this industry is a disservice to our consumers. Nutrition is our opportunity.”

FYI

For more information, visit www.itisafact.org. AFACT can also be found on Facebook by searching for AFACT, or follow on Twitter, under itisAFACT.

AFACT will be represented at World Dairy Expo, located in the Exhibition Hall lobby, directly across from the Hall E entrance.

Human Resources: Focus on performance, efficiency to improve parlor profitabIlity

By Felix Soriano

What is my parlor operating cost? Labor cost? Labor efficiency?

I was recently asked these and other questions by a client trying to reduce operating costs. Due to low milk prices, he wanted my opinion about implementing changes in the milking routine and milking process.

Understandably, many dairy producers are trying to cut costs – any way and place they can. However, before making any drastic decisions, it is important to have a good knowledge of parlor operating costs, performance and efficiency.

Excel at monitoring parlor performance, productivity, efficiency and operating cost.

The saying that “you can’t manage something that you can’t measure” is true for good parlor management decisions. By closely and periodically monitoring parlor performance and efficiency, you can:

1. Better evaluate the potential impact of any management change (going from 3X to 2X milking in a low group).

2. Better evaluate your current parlor operating process, efficiency and profitability.

3. Motivate change among employees by showing parlor and milking shift data.

It is important to identify periodic parlor monitoring parameters used to define or implement key performance indicators, make management changes to improve parlor productivity and profitability, and communicate with employees to set up goals and expectations.

What should be monitored?

Keep things simple, but at the same time obtain the necessary information to help make better decisions. Performance indicators should be related to productivity, efficiency and profitability. Parameters I encourage my clients to monitor weekly and monthly include:

1. Cows per hour/turns per hour. A major component of parlor efficiency and labor productivity, it is determined by the number of cows milked per hour or the times each side is filled in one hour. A typical benchmark is four turns per hour, with a goal of five turns per hour. However, this target may vary depending on the type of parlor, number of employees and other parameters. Work with your consultant and parlor manager to define benchmarks and goals. Once you establish these numbers, monitor them periodically and communicate with your employees about how things are going.

2. Milk flow in the first 15 seconds and first 30-60 seconds. Useful as monitors of milk letdown and udder preparation, these parameters allow the parlor manager to evaluate proper parlor procedures and routines. (See www.apndairy.com for more detailed information.)

3. Somatic cell counts. Monitor bulk tank SCC daily, posting the information for employees. Communicate benchmarks and goals. Everyone should be focused on improving milk quality, and every employee should have a basic understanding of the meaning and importance of having low SCCs. Milking team training and refresher programs can be helpful. If necessary, work with a consultant who can communicate in your employees’ native language.

4. Pounds of milk sold per full-time employee. A major component of parlor efficiency, this should be evaluated at least monthly, depending on type of parlor and operation. Although a standard benchmark should be in the range of 800,000 to 1 million lbs. of milk per worker, highly efficient parlors should strive to obtain >1.5 million lbs. of milk per employee.

5. Revenue per full-time employee. This is calculated by the total income of milk sold divided by the number of full-time employees. A benchmark and challenging goals should be established. Find areas that can be improved, and areas where costs can be reduced.

6. Income over parlor operating cost. A major component of parlor profitability, this is calculated by the total income of milk sold divided by total parlor operating costs. Detailed information of parlor operating costs is important for an accurate assessment.

The most effective way to control costs is often by focusing on resources. Remember, the most important resources in the parlor are your employees. To improve parlor efficiency, you need an efficient and hard-working labor force. Work on your employees’ attitudes, skills, knowledge and motivation. The milking crew must have a clear understanding of their jobs and roles.

Questions

Here are some questions I ask dairy producers to help evaluate their workforce:

• Do you have a defined milking routine and standard operating procedure (SOP) for both milkers and cow pushers? When was the last time you reviewed your SOPs and tried to improve the process?

• Are all your employees properly trained? Do they understand the importance of doing a consistent job and always following the SOPs?

• When was the last time you had a meeting with your employees to discuss parlor performance, benchmarks and targets?

• When was the last time employees shared any ideas to make their job better and the parlor operation more efficient?

• Do you have an orientation program in place for new milkers and cow pushers? Who is in charge of training new employees? Are they trained in how to be a good trainer?

If the answer to one or more of these questions is “no,” there is work to do.

Summary

The dairy economic crisis as an opportunity to review parlor performance and efficiency. Find common goals for your parlor team to improve milk quality and reduce operating costs.

Have monthly employee meetings to discuss parlor performance and efficiency goals, providing feedback on how they are doing and what needs to improve.

Use an outside consultant, if necessary. Their experience with other dairies may provide a different perspective on your dairy’s parlor process, identifying areas for improvement.

FYI

Felix Soriano is a labor management and human resource consultant with APN Consulting LLC, Warrington, Pa. Contact him via phone: 215-738-9130, e-mail: felix@apndairy.com or visit www.apndairy.com.


A dream come true: Gioletti dairy gets new milk parlor

By Ron Goble

TURLOCK, Calif. – It’s been a long time coming, but Robert “Bob” Gioletti is milking his cows in a brand new, state-of-the-art parlor with BouMatic rotary technology.

Gioletti, along with his wife Eloise, dairy with their sons, Justin and Devin, a few miles west of this Central California community. They made a gigantic leap forward on July 14 to a spacious new 72-stall rotary, a far cry from what they milked in for decades.

Their original double-10 flat barn built in 1942 (one of the oldest in the county) handled 20 cows tail-to-tail that were milked by hand into cans in the early years. As the herd numbers increased Gioletti added 8 stalls in 1975 and another 8 in 1988, and in 1995 they built six more specifically for the hospital string.

“Building this new high-tech parlor has been a serious dream of mine for more than 10 years,” Gioletti said. “We’ve been saving for a long time.”

The new parlor came just in time as Gioletti was having trouble finding parts to keep his old milking equipment running smoothly and he had outgrown the facility.

More than a dairy

Today, besides milking 1,800 cows, R. Gioletti & Sons Dairy also includes farming 1,500 acres of alfalfa, corn, oats and almonds. They also do custom harvesting, running their own choppers and bailers.

Except for the commodities they use in their ration, the Giolettis grow all their own feed and raise all their replacement heifers. “We run a closed herd and haven’t bought an animal from outside for more than 20 years,” Gioletti declared.

If that didn’t keep Gioletti and his two sons busy enough, they also operate a cement batch plant, which provided cement for their freestall barns and other dairy projects over the years.

In fact, Gioletti mixed and delivered all the cement for his new milking parlor, including transfer lanes. Turlock Dairy & Refrigeration’s (TDR) performed all the construction and supplied all the milking equipment for the new facility.

The dairyman was extremely happy with how the huge project came together. Gioletti did all the preliminary earth moving required for the milking barn project and is currently working on a new 1,000-cow freestall barn adjacent to the parlor.

Justin commented on how rapidly the cows adjusted to the new facilities. “It only took one day to get their herd accustomed to the rotary,” he observed.

Their conception rate for their cows is 36-38% and their pregnancy rate is 23%, Justin said, and with the use of sexed semen they have had 92% heifers.

“We’ve culled heavily,” added Devin, “and have a lot of fresh heifers coming on now. With our new parlor system we have all our heifers and cows on RFID and collect daily milk weights for all animals.

“We still have three milkers and a pusher working in the parlor, but they only work two, 8-hour shifts rather than two, 12-hour shifts,” Devin said. “We are saving 12 man-hours of regular time and 12 overtime man-hours per day because of the rotary capacity and efficiencies.”

Family tradition

Robert Gioletti has followed in the footsteps of his grandfather Giovanni Gioletti, who immigrated to the United States from Italy in 1920. After going through Ellis Island, Giovanni landed in San Francisco and worked for several years as a janitor before starting a small dairy in the Turlock area with his brother.

Giovanni had two sons, George and Tony. George, who was blind from 7 years of age, married Emma in 1942.

“My mother-in-law gave us 40 cows and 10 heifers for a wedding gift,” Emma recalled – a gift that helped she and George start dairying on their own. She milked cows and for several years working along side her husband, who kept braille milk records and knew every cow by touch. They had two sons, Robert and Ricky.

When Robert started running the dairy in 1970, he was milking 300 cows 2X. Over nearly 40 years he has increased his herd six times the original herd size.

Today, they have the ability to increase their milking herd to 2,500.

“I’ve been working all my life for this milk barn and it has been well worth the effort,” Robert Gioletti declared. “Justin and Devin spent several years researching rotary barns and milking equipment before choosing TDR. The boys saw the project through from start to finish.”

What’s in the parlor?

• 72-stall BouMatic 360 Excaliber rotary

• Perfection milk meters

• 2060 controller assembly w/BouMetrix ISO cow ID w/dual sort gates

• BouMatic Pulse-O-Rater

• Lightweight milking cluster w/Flo Star claws and Milk Rite IP3-LMV liners and IP3 shells

• BP-500 Air Star vacuum pump

• Three 7,000/gal BouMatic Glacier milk tanks

• TDR Tank/Refrigeration Control System including:

• 8-plate BouMatic falling film chiller

• AGC plate cooler

• “DISCUS” compressor units w/air condensers

• Fill and hot milk alarms

• CIP wash system w/auto chemical injection

FYI

To contact Marc Sanders, Turlock Dairy & Refrigeration, e-mail marc@turlockdairy.com or call 209-667-6455.

To contact R. Gioletti & Son’s Dairy e-mail giodairy@sbcglobal.net.

Dairy Financial Times: Enforcement of the PMO SCC

By Michael Converse

This month marks my 10th year with Genske, Mulder & Co., LLP.  You can become all too comfortable when you work in one place for that long. I came to expect that a domestic dairy industry would always be waiting for me when I walk through the doors in the morning. Sure we have had our cycles of good times and bad, but nothing quite like this. We embark on the eighth month of milk prices averaging 55% of the cost to produce, with virtually no action taken to remedy the situation. As a matter of fact, to this point, any and all efforts made to turn our fortunes around at the cooperative level, or those at the federal level have amounted to nothing more than a band-aid for a bullet wound.

Gary Genske would tell me, “Anybody can prepare a tax return, and anybody can review a financial statement,” what sets us apart is that we get to know our industry, and we make the fight for a greater share of the retail dollar, our fight.

For months now, Mr. Genske along with many other representatives of this nation’s dairy producers have been working diligently to find some broadly agreeable solutions to our current crisis, only to have these suggestions ignored by the cooperative level.  Aren’t these people responsible for marketing your milk? At what time in the last eight months of losing $4 per cow, per day was the situation acknowledged for what it is, market failure, by anyone other than the producers?  And for that matter, in what business is such inaction in the face of such huge losses, not demand a change in leadership.

This article will be the first in a series that will address what actions our cooperative level could take to bring about both short term, and long term solutions to our current crisis. These points come directly from many producers, and their advocates. They were presented to, and to date have been ignored by the National Milk Producers Federation Strategic Taskforce. Some proposals are more aggressive than others while some are simply demands for application of the laws we already have. The current article will begin with recommendations concerning somatic cell count.

Our market place is choked with a reported overabundance of milk. Whether this over production is a matter of excess domestic capacity, or disguised importation is a matter for another article. For now, what is critical in fixing this imbalance between supply and demand, is to eliminate excess supply. There is an opportunity here to realize some quality improvements, in not just our domestic supply, but in exportation, through proper enforcement of the rules governing somatic cell count for Grade “A” milk.

It has been reported that milk in excess of 750,000 somatic cell count, accounts for anywhere between 1-2% of the milk or milk products labeled Grade “A” in this country.This is the result of sub Grade “A” cows, not sub Grade “A” producers. The bulk tank is tested “approximately” monthly. If 3 of 5 consecutive samples test greater than 750,000, the Grade “A” license is suspended until corrections are made.

Consequentially, five months of milk crowd into the pool from cows that should likely have gone to beef already. The attitude that it is good enough to blend such milk with that of a higher quality, if that is indeed what happens, is not acceptable in the language of the Pasteurized Milk Ordinance (PMO). If the count is higher than 750,000, it isn’t Grade “A”, and if it is produced by a permitted Grade “A” producer, or sold to, or exposed for sale to a cooperative as Grade “A” this is a violation, and this milk should be degraded.

Another item concerning our federally provided standards for milk, is that they are far more lenient than those of our industry’s biggest international competition. New Zealand, Australia, and many parts of Europe adhere to a somatic cell limit of 400,000, while our neighbors to the North have a 500,000 limit. There is no reason our limits could not be similar. One could suggest that our milk faces an international public perception challenge, especially considering the rarity at which I have seen somatic cell counts over 400,000 let alone 750,000.

I concede that 1-2% of milk supply reduction through proper enforcement of the PMO isn’t going to solve our supply problems, but it may serve to increase the effectiveness of other programs designed to staunch the purported excess milk flow. Enforcement of the rules governing somatic cell count is a small adjustment to our industry that could translate into fewer inventories, and improved consumer perception and confidence in the wholesomeness of our industries product.

FYI

Michael Converse, CPA with Genske, Mulder & Co., LLP, a certified public accounting firm representing clients who produce 12% of the nation’s milk in 28 states. Mike works primarily with dairy and ag clients in the Southwest. He can be reached at 949-650-9580 or e-mail him at mike@genskemulder.com


Cropping: 30 zero-till lessons learned

By DairyBusiness staff

Earlier this year, international pioneer for Zero Tillage (ZT), John Landers of Brazil, spoke to a group of farmers at Tom Barcellos’ ranch near Porterville. He talked about the advantages of adopting zero-tillage farming practices.

Barcellos has been involved in zero-till farming for several years and is considered one of the leaders of that practice in California and the West.

“We’ve reduced trips through the fields from 10 to as few as three,” said Barcellos, referring to planting, fertilizing, weed control and harvest.

“The expense of time, labor, equipment and fuel are cut significantly,” said Matt Kidder, who works closely with Barcellos. Kidder said this year they followed a wheat crop with zero-till corn for silage.

Landers provided the following 30 lessons learned during zero-till production and research with the system in Brazil. While some of his lessons learned are related to farming in the tropics, most all will translate into practices in North America.

Landers’ lessons include:


1. Adoption of Zero Tillage (ZT) must be on a soil with all physical and chemical limitations removed – hoe and plough pans especially need to be removed by cultivation.

2. Generation of adequate biomass (>6 ton/ha/yr) and vigorous root development are crucial to restructuring of soil, which takes time – old root holes and crumb structure accumulate and create high rainfall infiltration.

3. Long term fertilizer strategy should be to fertilize the system and not the individual crop – only attainable with high fertility status but gaining much planting time with no plant fertilizer.

4. Crop rotations must contain a gramineous summer crop for adequate biomass production – inclusion of a leguminous cover crop enhances carbon sequestration by removing nitrogen (N) deficiency;

5. Marking techniques for spraying must be adapted to the ZT situation, where wheel marks are indiscernible, especially in the wet-dry tropics.

6. Phosphorus and potassium status improve under Zero Tillage and should permit reductions in the use of these nutrients.

7. On the other hand, surface crop residues sequester nitrogen (when surface-applied) and N rates on maize and upland rice need to be increased by 25% to 30% in the early years of ZT.

8. Surface-applied urea suffers losses up to 70% without rain under ZT conditions in the tropics because crop residues may contain urease, which volatilizes the fertilizer as ammonia – N side-dressings should be incorporated.

9. Water economy under sprinkler irrigation varies from about 15% to 25% in tropical regions, depending on the thickness of the crop residue.

10. Diseases, pests and weeds are controlled in the first instance by rotations.

11. Integration of crops and pastures in a rotation reduces pest, disease and weed levels and increases total income and profit for both, also recuperating soil structure.

12. Low application rates of desiccant herbicides after the summer crop help reduce weed problems in the following second crop, with benefits for the next summer crop  –  such additional herbicide costs should be imputed to this crop.

13. Cover crops preceding main crops reduce and sometimes eliminate post-plant herbicide requirements, e.g., early millet before soybeans – only feasible on later planted crop.

14. Rolling of black or white oats  (Avena strigosa and A. sativa) between panicle initiation and the milk stage kills the crop without recourse to herbicide. This does not function with pearl or finger millet, with tillers of different ages.

15. Grazing or cutting of millets before panicle initiation provokes re-sprouting and tillering, “perennizing” the plant.

16. Soybeans can be successfully zero tilled into degraded or native pasture providing a small tine is used (12/15 cm deep).

17. Only 70% of soil cover eliminates most erosion – elimination of replanting and gullying reduce costs.

18. If the timing of entry into ZT coincides with the need for heavy replacement costs of tillage machinery or tractors, considerable economy can accrue to the non-purchase of this equipment and purchase or adaptation of ZT planters and/or drills instead.

19. Either plant immediately after desiccation (before green plants lose turgidity) or wait until the residue is dry and brittle – wilted green stalks are hard to cut and “hairpin” into the seed slot; this is more a problem of systemic herbicides.

20. Planting before desiccation is risky because if weather or breakdowns impede application until seedling emergence, the extra costs or yield penalties are high.

21. With considerable green matter being desiccated, planting should be delayed up to three weeks, to avoid alelopathic breakdown products from residue decomposition, especially of roots.

22. Decompaction should never be necessary with adequate biomass generation – in Brazil, with high biomass generation, a heavy clay soil has been continuously zero-tilled for 35 years and tests with subsoiling have been inconclusive.

23. In an extreme case where ZT was started without removing a hardpan, a chisel plough or subsoiler, fitted with a trash disc, will leave up to 70% or more of the residue on the surface.

24. Weed fallow is very variable and generates low biomass – it is a last resort.

25. Slug problems can occur under tropical irrigated conditions and sub-tropic conditions with high biomass – carbaryl or other baits are effective but labour intensive. A high amount of sugar in residues may encourage slugs – e.g. millet better than maize, try beetroot as a trap crop.

26. Maintenance liming can be applied on the soil surface and should be reduced compared to CT, max 1-2 ton/ha, depending on texture.

27. Over liming in surface applications leads to micro-nutrient imbalance (e.g. of manganese in soybeans or zinc in maize) this effect also appears to favor nematodes.

28.  Even distribution of residues is essential for good planting – use straw choppers when biomass is high, spreaders with low biomass – with windrows of residues plant diagonally to clear the planter/drill.

29. All problems are challenges to be overcome.

30. There are no limits to a farmer’s creativity.

Opinions & Sacred Cows: A lot of talk, not much action…

by Ron Goble

“When producers are losing their equity at record rates, and profitable processors go on with business as usual, something is very wrong with that picture.”

Agriculture Secretary Tom Vilsack took his “Rural Tour” to California’s Central San Joaquin Valley late last month and fielded a few questions from a room full of dairy producers and farmers, but provided little assurance that anything would change in the near future.

Producers, many dressed in red to signify the red ink they are bleeding, were asking Vilsack and Congressman Dennis Cardoza (D-Merced) for “action now.” Linda Lopes of Turlock, president of California Dairy Women’s Association, said that while they appreciated the government raising the support price for milk, “we need the support price to be much higher, in place longer, and we need it floored. Right now, all of us are surviving on our equity and unless we have help for a longer period of time, the next time (crisis strikes) there won’t be any equity to borrow against.”

Vilsack said the government is on the tail-end of the fiscal year and wouldn’t have any new funding until after Oct. 1. He tried to assure the crowd that he and Congress would be working to find a long-term solution. I don’t think many in the audience, estimated at nearly 400, believed it would happen.

Gary Genske, a dairyman and principle in the CPA firm Genske, Mulder & Co., handed officials his white paper on supply management and was the first to speak during the “listening session.”

“We are literally, financially suffocating across the country. There is approximately 60,000 dairy farmers losing somewhere around $4 per cow per day, which times 9 million cows is $36 million a day and about $1 billion a month in true operating losses,” declared Genske.

“We don’t see any plan put into place to change that. Our coops tell us that a year from September things will get better. While there are several bills that have been introduced and several growth management plans from the industry that have considerable dairy support, we need help and we need it right away! Dairy producers’ nerves are on the edge…and without a change in the way our milk is priced, within a month there will be hundreds, if not thousands forced out of business. We need a little help from the federal government to get us through this time,” Genske pleaded.

Many of those at the event with real bottom-line questions for Vilsack, were ignored and the vast majority of those called on were in the “VIP” section of hand-picked political supporters of Congressman Cardoza, who served up softball questions that Vilsack could pontificate on. He failed to hit anything out of the ballpark.

Many producers left more frustrated than when they arrived. It was no different from any other political “road show” – emphasis on show. It was a lot of rushing around and commotion – not to mention expense – for nothing.

If the dairy industry has to rely on politicians to save it, we are in deep manure indeed. The bottom line of the bottom line is….processors (coops) continue to do quite well financially through these tough times for dairymen. It is strange that processors are not running in red ink like those who make the product they process and sell. It is time dairy producers and processors develop a system that pays dairymen a fair price for their milk with flexibility to adjust for increases in production costs.

When producers are losing their equity at record rates, and profitable processors go on with business as usual, something is very wrong with that picture.

FYI

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

Your Dairy Checkoff At Work: The checkoff is working

By Tom Gallagher

Today’s dairy producers are facing unprecedented challenges with low on-farm milk prices, high input costs at the farm level and extremely tight credit markets. And while your dairy checkoff cannot address all of the factors with these economic challenges, we continue to work hard to do what we CAN do – grow dairy product and ingredient sales over the short and long term.

Making budget adjustments

To that end, the producer directors who oversee your national dairy checkoff program have adjusted 25% of the total 2009 program budget (more than $30 million) to capitalize on opportunities to grow immediate- and short-term sales. Our strategic business plan, which was developed more than five years ago, allows us to do this by working with and through the dairy, food and beverage industries.

Activities to generate sales include:

• Growing pizza cheese use at foodservice. To help build cheese sales, dairy producers partnered with Domino’s Pizza® to introduce Domino’s American Legends, which are six new specialty pizzas that use up to 40% more cheese than traditional Domino’s pizzas. Producers have invested $12 million over two years, while the chain will invest up to five times that amount.

In July, the chain kicked off the second phase of their marketing plan to build sales with aggressive television and online marketing. Domino’s also ramped up promotion and online offers for their cheese-friendly items –at no additional cost to dairy producers. This partnership sells more cheese. Other pizza chains are taking notice and offering more cheese-focused promotions. If every pizza were made with one additional ounce of cheese, it would require an additional 2.5 billion pounds of milk annually.

• Protecting pizza sales at school. The dairy checkoff also is committed to protecting and promoting pizza’s place in schools as a healthy, satisfying and popular item among students. Pizza is the No. 1 entrée in schools – 25% of all school meals include pizza. DMI and state and regional dairy checkoff organizations are working with industry partners on a program to build the “perfect pizza” that not only tastes good, but also meets increasingly restrictive school nutrition standards.

• Increasing dairy sales at McDonald’s.® Due in part to a multi-year partnership between dairy producers and McDonald’s to increase dairy sales, the world’s largest restaurant chain recently launched a national marketing campaign to promote its Angus Burgers, which use two slices of cheese per sandwich. Estimates indicate the Angus Burgers may use up to nearly 6 million pounds of cheese this year (600 million pounds of milk). This includes one sandwich using Swiss cheese – a first for the chain. Beyond cheese, McDonald’s continues to promote its single-serve milk through a special tie-in with “Ice Age: Dawn of the Dinosaurs,” a popular children’s movie that was in theaters this summer. Milk was featured prominently in TV and print advertising and in-store signs. These two efforts are in addition to the chain’s new McCafe® specialty coffee drinks (which consist of up to 80% milk) that are now available in nearly 14,000 restaurants across the country.

• Creating new opportunities in the lactose-free category. To help grow milk sales by reaching out to the nearly one in four Americans who have left or are at risk to leave the fluid milk category, dairy producers are partnering with a leading milk processor to help grow the lactose-free milk category. Collaborative marketing and education efforts will help demonstrate to these consumers that lactose-free dairy meets their needs for taste, variety, nutrition, and convenience – thereby introducing or reintroducing consumers to dairy. The partnership kicks off with a branded retail coupon offer this fall that, based on past efforts, may increase sales between 30% and 60%.

• Uncovering new reasons to drink milk. Emerging science, originally funded by dairy producers, suggests that chocolate milk is an excellent post-exercise beverage due to its protein and other essential nutrients. DMI partnered with Shamrock Farms® to test the sales opportunity for their chocolate milk product, “Rockin’ Refuel,” which as additional protein and naturally occurring electrolytes.

Tests indicate the product is popular with men ages 18 to 25 and moms looking for new and health options for their families. Now, DMI is working across the industry to identify sales opportunities for post-exercise dairy beverages through other flavors and packaging options, as well as new places to buy the product, including schools and vending machines.

• Developing new opportunities for dairy as an ingredient. General Mills,® owner of the Yoplait® brand, and DMI have worked together to develop yogurt chips that are blended with eight ounces of milk to make a nutritious smoothie. In 2008, the company tested the product in club stores and, at the conclusion of the test, stated that it was one of the most successful product tests ever. As a result, General Mills, in collaboration with DMI and state and regional dairy promotion organizations, is rolling out the products in grocery stores across the country this summer and fall. Dairy checkoff staff will help build sales through in-store sampling events.

These examples fit the strategy of meeting unmet consumer demand – giving our consumers and customers the products they want – when, where and how they want them. This is how we can build sales and help the industry grow … both for today and over the long term.

FYI

Tom Gallagher  is chief executive officer of Dairy Management Inc.™ (DMI), the domestic and international planning and management organization that works to increase sales of and demand for U.S.-produced dairy products and ingredients on behalf of America’s dairy producers. For more information on dairy checkoff programs, visit www.dairycheckoff.com.

On the Edge of Common Sense: Not one more acre!

By Baxter Black

How do you put your mind around oppression for the common good and eminent domain? The explanation most times is “follow the money.”

I lived in Colorado for many years. I have watched it grow from 2.9 million to 5.1 million, most of it on the suburban front range. Colorado has unparalleled beauty, an eco-sensitive majority and an under-the-radar abundant productive agricultural industry.

The clash between country vs. city grows with each new tourist who comes to visit and stays. What used to be a principled debate between ‘conservationists’ and ranchers and farmers has become a crass, closed-door battle between The Government-Conservation-Realtor-Construction Complex and isolated bands of native defenders of private property rights. To wit, southeastern Colorado ranching communities vow to allow “Not One More Acre!” to be condemned, co-opted, coerced, seized or bamboozled by the government to expand Ft. Carson Military base’s Piñon Canyon Maneuver Site at the expense of their homes and livelihood.

We’ve all watched family residences condemned to allow shopping malls to be built. We’ve seen towns nationwide moved wholesale by dam construction or highways. Not to mention feedlots or dairies sued by cities that grew out around them. Colorado, our grand Colorado, has become the poster child for blatant efforts to beg, buy or steal water rights and land to supply the Front Range’s voracious growth.

What are these Not-One-More-Acre ranchers’ chances of succeeding? If they were Eskimos or baby seals being routed from their habitat, I’d say a good chance. If they were Snail Darters, Spotted Owls, or Dolphins there would be a hue and cry in their defense. It is ironic that there are probably fewer ranchers than there are Blue Whales. Why not, “SAVE the RANCHERS!” They are the truly endangered species. But to understand what is at stake you must put yourself in their position. Imagine you are a painter and the government decrees you must offer up all your life’s work to be destroyed.

“Don’t worry, Mr. Russell,” they say, “Here’s some money, you can paint more.”

How can they do that, you ask? “I’m sorry,” says the general, the politician, the real estate developer, the dozer driver, the lawyer, the wheeler dealer and the executioner, “It’s the way it is. It’s not personal.” IT’S NOT PERSONAL. Somehow they must think that absolves their conscience for taking their Judas 10%.

But that may be the reason the ranchers will win. Because for them IT’S ALL PERSONAL. Their lives and livelihood and those of their children, their neighbors and their communities are in unexaggerated grave danger. Their determination should not be taken lightly. Someone once learned the hard way that if you back a mama bear in the corner, you better have your ducks in a row. And I don’t hear a lot of quacking.
ja@not1moreacre.net

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.

Farm Financial Standards Council elects new leadership

Phyllis Parks, CPA, CVA, an accountant from Danville, Ill., was elected to serve as the president of the Farm Financial Standards Council. She succeeds Alan Miller, a professor at Purdue University, who will now serve as immediate past-president on the organization’s Executive Committee.

Prior to assuming the top leadership position with the group, Parks had served as the group’s vice president.

Elected to new vice president status is Owen Thompson, regional credit team leader with AgStar Financial Services, ACA, based in Mankato, Minn. Thompson had previously served as the organization’s treasurer. He will succeed Parks at the group’s meeting in 2010.

Elected to serve as treasurer of the Council is Kathy Rancour, CMA, accounting manager for Christiansen Land and Cattle Company in Kimball, S.D. She had previously been chairman of the Council’s communications committee.

New board members elected to three year terms with the Council are: Dr. Paul Gorman, South Central College, North Mankato, Minn.; Everett Chambers, Kalmika Consulting, Tomah, Wis.; Brenda Duckworth, Johnson Miller & Co., Hobbs, N.M.; Michael Peachey, Miller & Miller CPAs, LLP, Lancaster, Pa.; and, Thomas Murphy, Thomas Murphy and Associates, Western, Neb.

The Farm Financial Standards Council is a non-profit organization consisting of professionals representing producer groups, banking, the Farm Credit System, accounting, insurance companies, academics and others involved with agricultural production and finance.

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