Archive for October, 2009

Op-ed: Community level impact of Idaho’s changing dairy industry

By Bob Naerebout

Executive Director

Idaho Dairymen’s Association

During 2008, the Idaho dairy industry generated an estimated $2.15 billion in milk sales. That amounts to 34% of Idaho’s farm cash receipts; which places dairy ahead of all other agricultural commodities produced in Idaho.

Obviously life down on the farm is changing.

In turn, entire communities are changing.

Dairies have brought prosperity and growth to struggling rural communities. That unprecedented growth in the dairy industry has created numerous jobs that have drawn foreign-born dairy workers to our rural communities. The current perception is that the influx of those new employees has brought additional burdens to schools, jails and health care services.

In an effort to understand and quantify those concerns in January of 2008 the Idaho Dairymen’s Association commissioned a study with the University of Idaho to determine what impacts foreign-born workers are having on southern Idaho communities. That study is now completed and it should ease most of those concerns

The study involved surveys through phone calls to over 1,300 southern Idaho residents and also in-depth interviews with 63 key community members such as teachers, judges, church leaders, etc. Thorough scientific analysis of the information revealed many important conclusions, some surprising others anticipated, including the following:

  • On average these workers are making about $2,000 per month after paying taxes, a worker with questionable documentation will limit their community involvement.
  • Education is extremely important to the Hispanic families and recognized it as the vehicle to raise the standard of living for future generations but the lack of mastering the English language is holding their children back in our rural schools.
  • Some rural communities feel the social impacts of this Hispanic influx more than neighboring communities. The cities of Twin Falls and Jerome capture more of these workers’ incomes, but the workers may actually live in neighboring counties.
  • Private businesses have been able to “turn on a dime” and profit from this Latino influx, but public schools and the justice system by their very nature can’t adapt quickly.
  • Foreign-born workers do not get more free health care services or commit more crime than other community members.
  • A majority of long-time residents do not perceive these workers or dairies as having negative impacted southern Idaho.

This study demonstrated that changes in certain policies and practices are in order, a few of those are:

  • A stable and predictable immigration policy needs to be adopted at the national level.
  • There is a need for programs that promote the economic prosperity of this workforce.
  • The dairy industry along with the University of Idaho Extension should consider developing a community outreach liaison, who is a native Spanish speaker who would be responsible to present opportunities for building bridges between the industry, Latino workers, schools, the health care industry and law enforcement.

The Idaho dairy industry is committed to following the guidelines established in the study and will continue to work with the University of Idaho, state agencies and local communities to accomplish that goal.

To read the study, go to www.idahodairymen.org

Wisconsin dairy industry at risk

Wisconsin’s 13,000 family dairy farmers are facing what may be the most severe economic crisis in the history of the dairy industry.  On average, dairy farmers will lose $1,000 on each cow in their herd this year alone, resulting in statewide losses topping $1.25 billion.  While Wisconsin’s family farmers are losing money at record pace, State and Federal agencies are in the midst of implementing and proposing a daunting series of new regulations that will make it even more difficult for the Wisconsin dairy industry, the cornerstone of our state’s economy, to remain competitive.

Wisconsin’s dairy farmers support prudent regulations that protect the soil, air and water.  “We have a greater understanding of environmental stewardship than ever before.  We recognize our responsibility to protect the natural resources.  We drink the same water and breath the same air as our neighbors,” said DBA President Jerry Meissner.  “We support the ‘zero discharge’ standard that all permitted dairy facilities must meet to protect Wisconsin’s precious water resources.  However, we believe it’s time to pause from this race to overregulate and truly understand the science and impact of our existing regulations before adding more.  It seems to be ‘open season’ for adding new regulations to dairy farmers and they come with enormous costs.”

WPDES-permitted dairy farms–those with more than 700 dairy cows–already comply with the most stringent regulatory standards placed on livestock operations in the country.  The law requires these farms follow strict facility design criteria and apply the valuable nutrients found in manure in a way that assures there is not a discharge to any body of water or adverse impact to the environment.

“We need to protect both the environment and the dairy industry at the same time…and we can do both,” said Laurie Fischer, Executive Director of DBA.  “Many in the environmental movement appear determined to turn back the clock on dairy farming in Wisconsin.  Their continued attacks along with additional regulations are putting the entire industry at risk in Wisconsin.  And that industry isn’t just farmers, its cheesemakers, ag lenders, farm machinery dealers and any other number of families in our rural communities whose very livelihood depends on a vibrant dairy economy in the state.”

While many farms in Wisconsin are larger than 20 years ago, these farms are often more financially viable and able to invest in new technologies, environmentally friendly practices and technology, and they have complied with new regulations.

Here are some of the new regulations that dairy farmers are or will be facing:

  1. Restrictions on land applying manure on land designated as having “W” Soils (areas that are possibly seasonally wet.)  Over 50% of the State has these types of soils and farmers are told where these soils are located from maps that were developed over 40 years ago.  These maps are inaccurate and were never intended to be used for regulation.
  2. Restrictions on land apply manure on land designated as having “R” Soils (areas that may have bedrock near the soil surface).  Again, these maps are inaccurate and were never intended to be used for regulation.
  3. Farmers are mandated to comply with a new technical standard for feed storage areas even though it is not required in the law.
  4. The technical standards for design and construction of manure storage structures are being expanded without any determination that the existing standards are inadequate.  Unnecessary changes in design standards result in more costly construction of manure storage.
  5. Total Maximum Dairy Loads (TMDL’s) in State Watersheds are being developed with little oversight and will implement further restrictions based on computer models that assign phosphorus contributions to the waterway from all types of runoff including wetlands, forests, urban areas and farmland, as well as discharges from industry and municipal treatment.
  6. Phosphorus Reduction Standards will be implemented for all farmers who are not located in watersheds that have TMDL standards.
  7. Modifications will be made to Natural Resource Code 151 which addresses pollution from runoff.  Modifications to NR 151 will only be made for farmers, while others including municipalities or other industries are exempt.
  8. State Climate Change legislation will likely add a low carbon fuel standard making fuel derived from Canadian oil shale and biofuels more costly.  This will raise fuel prices in Wisconsin and make it more costly for Wisconsin farmers to pay for the fuel they need to grow their crops.
  9. New regulations are being considered that will give local governments the power to further limit the amount of nutrients that can be applied on farm fields.
  10. Additional water bodies may be added to the list of outstanding and exceptional resource waters which could limit the amount of crops farmers can grow because new setbacks will likely be needed around these water bodies.
  11. Farmers with a WPDES permit will be required to undergo a permit modification each time land is removed or added to their nutrient management plan.  As little as one acre change would require a permit modification, thus requiring additional staff resources and work from the DNR.
  12. The WDNR is planning to develop new air emission regulations before the national scientific study is completed.  This means the air emission regulations will not be based on the science from the national study.

Dairy is the largest industry in Wisconsin, employing 150,000 people and contributing $26 billion to the state’s economy.  Maintaining a viable milk supply is the foundation of Wisconsin’s dairy industry.  The constant barrage of new and expanding regulations puts that foundation at risk.

About DBA

The Dairy Business Association is an industry organization comprised of dairy producers, corporate and allied industry supporters. DBA promotes the growth and success of all dairy farms in Wisconsin by fostering a positive business and political environment. For more information about DBA, please visit our website at www.widba.com.

IDFA: IOM recommendations limit dairy options in school meals

The National Academy of Sciences’ Institute for Medicine (IOM) today released recommendations for updates to the nutrition and meal standards for school feeding programs. The International Dairy Foods Association (IDFA) believes the recommendations for flavored milk and cheese are overly restrictive and could have negative effects on the nutritional health of American children.

While the report recommends that one cup of milk be served with every breakfast and lunch served in schools, it limits the type of milk to white and flavored skim milk and white one-percent lowfat milk. It also recommends allowing only lowfat versions of cheese and yogurt to limit the saturated fat content of school meals.

Dairy foods provide critical nutrients that help improve children’s overall diet quality and health, which is why they play such an important role in child nutrition programs. Government statistics show that kids, especially teenagers, are falling short of the recommended three daily servings of milk and dairy products, as well as the calcium they need to stay healthy.

According to the Milk Processor Education Program, 60% of flavored milk currently sold in cafeteria breakfast and lunch lines is one-percent milk. Skim flavored milk accounts for 33% of school sales.

IOM also called for adding more fruits, vegetables and whole grains to school cafeteria menus. The report notes that the cost for breakfast might increase by about 18%, mostly to cover the added fruit. Lunch costs could increase by about 4%.

The National School Breakfast Program feeds 10 million children a day, and the National School Lunch Program feeds more than 30 million students. Fluid milk is a required menu item for all federally funded school lunches and breakfasts. During the 2008 academic year, school purchases accounted for 5.9% of all domestic milk sales.

Schools also purchase cheese, yogurt and frozen juice pops to include in these meals.

A summary and the full report, “School Meals: Building Blocks for Healthy Children,” are available here.

NMPF: USDA decision on large producer-handlers victory for dairy farmers

National Milk Producers Federation’s long-term objective of limiting the pricing advantage enjoyed by the largest farms that bottle their own milk is about to be realized with a USDA decision to close the loophole for the largest such bottlers.

In a decision published Wednesday in the Federal Register, USDA recommended that the producer-handler definitions in all federal milk marketing orders be amended so that only farms with bottled milk sales of three million pounds or less per month remain exempt from the pooling and pricing provisions. Producer-handlers with sales more than that will be treated the same as other bottling operations not owned by farmers, and will have to share their Class I proceeds with other farmers in their respective Federal Order Regions. The recommended decision will be open to public comment for 60 days.

“Once it is finalized, this ruling will accomplish what NMPF sought in its initial petition: to stop about a half-dozen large producer-handlers from cherry-picking Class I milk sales at the expense of other producers in Federal Order pools, and to discourage other handlers from growing through the use of this unfair exemption,” said Jerry Kozak, President and CEO of NMPF. “These largest operations should no longer enjoy a regulatory loophole intended for smaller players. Once you’re bottling three million pounds of milk monthly, you’re a large plant, and should contribute to the marketing pools just like any other large Class I handler.”

Under present rules, a milk bottler of any size can avoid paying into the Federal Order pools in its market if it produces all of its own milk. This regulatory exemption provides a large pricing advantage, and reduces average pay prices for other producers who lose out on shared Class I revenue.

NMPF and the International Dairy Foods Association (IDFA) jointly petitioned for new limits on these handlers back in January. In May, USDA held a hearing on the matter, and today’s ruling is the result of evidence presented at that two week-long hearing.

In addition to ending the exemption for farm-owned bottlers, the decision would also tighten the requirements in the Arizona and Pacific Northwest Federal Order markets, which previously had limited producer-handlers to three million pounds of sales in each market. The USDA website has extensive information on the issue. USDA’s decision supports NMPF’s position and frequently cites NMPF’s testimony in its conclusions.

Comments on the decision are due on December 21, 2009, and according to the timelines required under the 2008 Farm Bill, a final decision would be due February 22, 2010. This was the first hearing initiated under new timelines advocated by NMPF in the latest Farm Bill.

Survey: Financial status

In preparation for the November 2009 editions of Western DairyBusiness (WDB) and Eastern DairyBusiness (EDB), editors surveyed dairy producers on how their financial situations impacted their businesses in 2009, and what plans they were making entering 2010.

Herd sizes of survey respondents ranged from 100 to 6,000 cows (WDB); and 55 to 1,400 cows (EDB). As in previous surveys, there were some regional differences.

First, we asked producers which areas of their enterprise suffered under the financial strain of 2009. Included on the list were: calf/heifer management, environmental management, herd health, reproduction, milk quality, milk quantity, feed/feeding management, risk management (inputs), risk management (marketing milk) and quality of labor. While all areas received votes, milk quantity and feed/feeding management received the most responses from EDB readers; calf/heifer management and risk management/inputs were cited most often by WDB readers.

When asked to identify the single area that suffered the most, EDB readers cited milk quantity; WDB readers identified feed/feeding management.

We asked producers where they would invest money in 2010. Paying down debt and rebuilding equity were on the low end of the scale; investing in land and increasing hired labor rated highest in both regions, perhaps to correct areas before they can pay down debt and improve the balance sheet. The next investment tier included environmental/manure management and milking parlor/systems (EDB); and milking parlors/systems and technology to reduce labor (WDB).

When asked to identify areas where they would focus more management in 2010, labor and environmental/manure management topped both regional lists.

Finally, we asked producers to identify topics they’d like to read more about. They overwhelmingly identified marketing and risk management.

Congratulations to Maureen Baginski, dairy producer from Othello, Wash., who was drawn as the winner of the $100 VISA gift card from all those completing the online survey.

LIMBER UP: Is your dairy business ‘agile’?

You had to be an economic contortionist to survive 2009. Are there things you can do to be more “agile” in 2010 and beyond?

By Dave Natzke

In a recent BusinessWeek article, C.K. Prahalad, University of Michigan Ross School of Business professor, wrote a column titled, “In Volatile Times, Agility Rules.” While it was written for the general business world, it raised many questions – after all, has any industry been more “volatile” than dairy? Thus, must dairy producers become more “agile”?

I hear your doubts. In terms of time, how can a business that invests two years in a heifer calf, and then waits another couple of lactations before she pays you back, be agile? How can a business that locks large amounts of capital in animals, land, facilities and equipment be financially agile? Where does agility fit in a business that must follow the laws of economics and biology at multiple levels?

Obviously, “agile” is not the business model for dairy. Or is it? Or must it?

Before you close the door on the concept, consider this: Owning and managing a business in an ever-changing regulatory and environmental climate, evolving markets, fluctuations in the availability and quality of capital and labor, and accessibility and adoption of technology means you are already agile. Those rigid and brittle are already gone.

Getting started

To begin my exploration of dairy business agility, I turned to my computer database of dairy producers, consultants, academia and others. I e-mailed a comprehensive list of questions focussing on the concept of business agility as it pertains to dairy farming, and waited for them to hit the “reply” button.

I may have been a little overzealous. One respondent said my questions made his head hurt. Another called the questions overwhelming. Some started to respond, but let me know they gave up. Some didn’t want to be “on the record.”

But many did reply, and the depth and breadth of their insights are the impetus for what I envision will be a multi-part series on dairy business agility. If Prahalad is correct with his statement, “In volatile times, agility rules,” than probably no question is more important in dairy today: “Is your dairy business agile?” Nearly all production and business management processes must adapt to it.

Before we begin, however, we must take stock. For an athlete, being agile first requires “being in shape.” For many producers, the past 12-18 months have been devastating, destroying the muscle of equity and assets, eroding will and perseverance, and limiting vision. For some, it was worse.

“Short-term implications of these recent economic changes have included ‘not dealing with’ many difficult decisions and even, in the case of several California producers, suicides,” said John Ellsworth, Success Strategies Inc.

For many then, agility must be preceded by healing – of psyche and checkbooks.

According to Gary Sipiorski, dairy development manager for Vita-Plus, “The next 1-2 years will be a rebuilding of equity. Balance sheets have been devastated. With the current pricing system for milk, ‘volatility’ will continue to run with higher highs and low lows. Rebuilding the equity shock absorber will be a must.

“For the next 3+ years, lenders will have some tough decisions to make as they evaluate balance sheets, realistic cash flows and who has the money management skills, as well as overall management ability, to cope with the new economics of volatility,” he added. “Who will the lenders allow to continue in business?”

“These economic times have cut deeply into equity and caused managers to maximize capital efficiency (not necessarily production efficiency),” said Wayne Weiland, regional business manager, Standard Dairy Consulting.  “It will take 1 to 2 years just to get healthy on the balance sheet from an equity position.  Financially savvy dairymen will replenish their equity before expanding, so I expect little growth in the industry on the short term. Only the very high risk takers will expand before equity positions are healed.”

“Tough decisions will be made as to whether or not to continue in the dairy business,” said Ken Bolton, UW-Extension Center for Dairy Profitability. “When the answer is ‘yes,’ plans will be made to recover from the current situation by paying down debt.”

Digging out from accumulated debt won’t be accomplished in a vacuum. Some of the same economic factors which got dairy’s financial body out of shape will take time to reverse – if they do.

“We are not pulling out (of this economic period),” said Alvaro Garcia, associate professor in South Dakota State University’s Dairy Science Department. “This is just the beginning of a new economic order and, until we adjust to it, dairies are going to be at risk. Short term, a decrease of confidence in the system could lead to poor decisions. The problem is that the new system requires fast decisions.”

Longer term, Weiland expects post-recovery dairy management to take a familiar path – improving efficiencies and/or expansion.

“Since most people have wrung out the inefficiencies during the tough times, that means more aggressive expansions and further industry consolidation, in my mind,” he said.  “Certainly environment and legislative restrictions might slow or limit this, but I still see it happening at a ever more rapid pace.”

It could be a roller coaster ride.

“Many of the demand factors that drove milk prices sky high a couple years ago are dormant, but still with us,” said Ron Curran, manager, Market Development, AgSource Cooperative Services. “Third World economies are, in some cases, recovering faster than ours. As they do, their populations will want more dairy products. Dairy has entered a new era that grain farmers found in the early 1970s, when a significant amount of sales materialized in export markets. This brings market volatility that will make our heads spin. We’ll have years when profits will hit stratospheric levels, and other years like we are experiencing now.”

“Dairies will be struggling under tight lending requirements longer than they will suffer from low milk prices,” warned Scott Stewart, president and CEO, Stewart-Peterson. “As a result, producers will learn to take care of their lender, as well as the cows.”

“In both the short-term and long-term scenarios, we will be operating in a very different industry,” Ellsworth said. “As my business coach, Dan Sullivan, so accurately stated, ‘It is economic times like these that allow us to stop doing things that no longer make financial sense…’ In essence, we can limit ourselves to only those choices and tasks that have a genuine payback. This will be a plus for both the industry and its participants,” Ellsworth said.

Wisconsin dairy producer and Professional Dairy Producers of Wisconsin president Doug Knoepke agrees: “I think challenging times can sharpen your competitive edge. You look at every aspect of your dairy to save without costing pounds of milk or milk components. Do we learn from these boom or bust cycles and protect prices and bank money for the lows?”

“I believe the economic downturn will lead the most progressive dairy producers to adapt their management techniques and decisions to essentially become more agile,” Ellsworth said.

As I write this, there are glimmers of hope. Although there are fits and spurts, 2010 futures prices are moving closer to the cost of production than they’ve been for more than a year. Maybe we can start thinking about the future.

But what about all those questions? Will volatility remain, or grow? What’s an “agile” dairy business? How do you monitor, measure and manage agility? Are there any tools for an “agility toolbox?”

We’ll continue the discussion next month.

FYI

If you’d like to join the discussion, request a list of questions or offer your own opinion, e-mail dnatzke@dairybusiness.com. Include ‘Dairy Agility’ in the subject line.

Agility  is…

“Agility means being able to cash in the good times while minimizing the losses in the bad ones. In order to do this, dairies will have to review their approaches on the needed assets to operate efficiently. They will have to focus more on return on equity.”

Alvaro Garcia, Associate Professor

Dairy Science Department

South Dakota State University

“Agility means having the ability, fortitude and financial capability to swim upstream, so to speak. Agility also means being able to jump on new research that indicates large return on investment increases can be made.”

Ron Curran

Manager, Market Development

AgSource Cooperative Services

“Agility is the ability to plan for and adjust to business contingencies. Volatility seems to now be a given; our challenge is to learn to manage it.”

Ken Bolton

UW-Extension Center for Dairy Profitability

“Agility is the ability to adapt to changes quickly, realizing that we are never going to get 100% of the decisions correct. However, delaying until you think you have ‘perfect’ information is not feasible either.  Increased volatility will force producers to increase their agility. The dairy business is becoming more and more like the rest of the global business world. Thus, it needs to be run like a business. Dairying is a great way of life, if it is run as a business. However, it is a horrible business when it is run as a away of life.”

John F. Ellsworth

Success Strategies, Inc.

“Agility in a dairy business is the flexibility to shift resources and inventory to optimize economic results based on market and personal situations.”

Mike Hutjens

University of Illinois dairy specialist

“Agility is the ability to adapt to change.  Business agility would therefore be being able to adapt your management style to changes in the dairy business environment.”

Mark L. Kinsel, CEO

AgriMetrica LLC

“Agility is having the capability to pounce on opportunity. Market volatility can be seen as a negative, or it can be seen as the best opportunity for producers to demonstrate agility.”

Scott Stewart, President and CEO,

Stewart-Peterson


Dairy economic crisis: Two eras compared

Using the milk-feed price ratio as a measure, the ongoing dairy economic crisis could rank among the worst, according to a USDA report. “A Collapse in Demand Distinguishes the Current Dairy Crisis from the  56-Month Crisis of 1972-1977,” by Dale Leuck, dairy economist, with USDA’s Farm Service Agency, was included in the Oct. 16 USDA dairy outlook report.

The report notes that, at 1.5, the milk-feed price ratio, a widely used indicator of profitability in the dairy sector, reached its lowest level in nearly 35 years in May 2009. The ratio has been below the long-term average of 2.74 for 21 consecutive months, from January 2008 through September 2009.

Leuck places dairy’s current economic crisis “at least a close second” to a 56-month crisis that extended from December 1972 through July 1977.

Comparing eras: Similarities

The current crisis shares one characteristic with the crisis of 1972-1977 – and has one important difference, Leuck noted.  The similarity is that both crises were at least partially precipitated by sharp increases in dairy feed costs.  Feed costs had been relatively stable from January 1970 through the fall of 1972.  However, as news of sudden and significant feed and food grain purchases by the (now) former Soviet Union as a result of several years of poor harvests emerged in late 1972, feed prices began to sharply increase.  With continued shortfalls in its grain production, the Soviet Union remained a major purchaser of U.S. feed and food grains, contributing to dairy feed ration costs that more than doubled by August 1974.  The dairy feed ration cost remained quite variable during the early crisis and thereafter, but at around a level roughly double its pre-crisis level.

Between the fall of 1972 and August 1973, the milk-feed price ratio dropped to 1.6 from near its long-term average of 2.74.  The decline occurred entirely because of the sudden increase in dairy feed costs, as the all-milk price generally continued to increase.

The milk-feed price ratio then began to increase in August 1973 as a result of higher dairy support prices (tied to parity) mandated in the 1973 Farm Bill.  In spite of the 1973 Farm Bill and other policies aimed at ameliorating this earlier dairy crisis, the crisis

persisted for an additional 3 years, which were characterized by general inflation and a 16-month recession extending from November 1973 to March 1975.  However, an important underlying cause of the 1972-1977 dairy crisis was that the

dairy sector had not adjusted to a doubling of its feed costs.

The current dairy crisis was also precipitated by higher feed costs, but initially these were largely offset by a nearly concurrent dairy-price-enhancing-surge of dairy product exports.  The cost of dairy feed doubled from a relatively stable average of about $4/cwt. from early 1998 to summer 2006, to more than $8/cwt. by spring 2008.  The sharply higher feed costs were not trade-induced as in the 1970s, but occurred at least partially because of policies that mandated higher ethanol use, along with higher oil prices that also encouraged more use of ethanol and strong grain exports encouraged by a weak U.S. dollar.

Increases in feed prices that began in the fall of 2006 were followed by proportionately greater increases in the all-milk price, as U.S dairy products surged onto world markets in 2007 that were growing as a result of strong world economic growth, a favorable U.S. exchange rate, and reduced supplies among major U.S. dairy competitors in Oceania (Livestock, Dairy, and Poultry Outlook. June 17, Special Section: Dairy Trade, at http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1350).

Comparing eras: Differences

The major difference between the current dairy crisis and the 1972-1977 crisis is that this year’s collapse in the all-milk price was brought about partially by the collapse in world demand and partly by decreased domestic demand as a result of the U.S. recession.  While feed prices have also declined from their high in early 2009, they have not fallen in proportion to the decline in the all milk price.  USDA forecasts that feed prices are likely to remain significantly higher next year and into the foreseeable future than they were in the 8 years preceding the beginning of the increase in grain prices in fall 2006 (http://www.usda.gov/oce/commodity/).  Thus, in response to the current crisis, dairy producers must not only adapt to higher feed prices but also to international demand, which is unlikely to return to the 2007 level in the near future because of slower global economic growth and a resumption of more-normal dairy production in Oceania.

How long will it last?

While milk prices are forecast to increase and feed prices are expected to remain low relative to early-2009 levels for the remainder of this year and through at least 2010, the milk-feed price ratio is unlikely to exceed 2.74 before the end of 2010, based on October World Ag Supply and Demand Estimate forecasts.  The milk-feed price ratio would therefore remain below its long-term average for at least an additional 15 months.  Added to the 21 months from January 2008 through September 2009 in which it has already been below its long-term average, that would place it at least 36 months below its long-term average, making this crisis a close second as the worst dairy crisis in more than 40 years.

The August 2009 ERS Farm Income release projects average net dairy farm income down 94% in 2009, to $9,200 from $152,000 in 2008. (http://www.ers.usda.gov/Briefing/FarmIncome/Gallery/businessincome.htm).

The milk-feed-price ratio is published by NASS, and is defined as the number of pounds of a 16% protein mixed dairy feed equal

in value to the value of 1 pound of whole milk.  The price of commercial prepared dairy feed is based on current U.S. prices received for corn, soybeans and alfalfa hay.  The modeled feed uses 51% corn, 8% soybeans and 41% alfalfa hay.

Prior to 1984, NASS used a survey to determine the price paid by farmers for 16% protein mixed dairy feed.  That series was discontinued in the mid-1980’s and replaced by the current formula that uses the prices of corn, soybeans, and alfalfa hay.   Leuck recalculated the milk-feed-price ratio for months prior to January 1984 from data provided by the University of Wisconsin website that estimates the price of a 16% protein mixed dairy feed ration (http://future.aae.wisc.edu/tab/costs.html#16)  using the current NASS method to develop to long-term consistent price series for the milk-feed-price ratio.  The recalculated series indicates that the milk-feed-price ratio in May and June of 2009 was the lowest since August 1974, while the unadjusted series as reported by NASS indicated that the milk-feed-price ratio in May and June of 2009 was the lowest since December 1983.

‘Dairy Department of the Future’ unveiled at 2009 Worldwide Food Expo

Aisle Reinvention Could Increase Overall Dairy Department Sales by $1 Billion

Rosemont, Ill. — 2009 Worldwide Food Expo audiences will get a first look at the “Dairy Department of the Future” in a presentation showcasing results of a three-year, dairy farmer-funded project that will help shape the future of the retail dairy aisle. Dairy Department of the Future proves that a revitalized dairy aisle can increase dollar sales by 1.5% and dairy unit sales by 2% to 3%. The reinvented dairy department not only makes it easier to shop, but educates and engages shoppers while optimizing space.

Dairy Department Reinvention: Path to Growth and Differentiation will be presented by the Innovation Center for U.S. Dairy and Willard Bishop, LLC, on Friday, Oct. 30, 8-9 a.m. at the Worldwide Food Expo at McCormick Place in Chicago, room S402A.

“The dairy industry continually explores innovative ways to increase demand for naturally nutrient-rich dairy products,” says Thomas P. Gallagher, chief executive officer of the Innovation Center for U.S. Dairy and Dairy Management Inc.™(DMI), which manages the national dairy checkoff program on behalf of the nation’s dairy farmers. “That’s why we worked with industry partners to reimagine how dairy is merchandised at retail. After comprehensive testing and research, it’s clear that there is a significant opportunity for the dairy industry and retailers alike to increase dairy department sales by as much as $1 billion over a one-year period.”

In 2006, DMI, The Dannon Company and Kraft Foods formed a coalition to focus on a “shopper-centric” approach that would grow overall retail dairy department sales. The coalition learned that in a reinvented dairy department, shoppers spend more time in the aisle, have a more enjoyable shopping experience, and are more likely to purchase additional items overall.

According to coalition research, customers who include dairy in their purchase spend more time in the store and more money at a substantially faster rate as compared with most shoppers. For example, the average shopper spends 19 minutes in a store and spends $25 on their total purchase; while milk buyers spend 26 minutes in a store and spend $45.20 on their total purchase.

The coalition analyzed 343,000 shopping trips, audited 22,000 retail grocery stores, spoke with 2,500 consumers, and implemented category and total dairy aisle reinvention efforts in more than 1,000 stores.  Results of space optimization as well as category and total dairy reinvention have shown that dairy unit sales can be increased by more than 2 percent.

Shoppers described their experiences in the reinvented dairy department more favorably than before the enhancements. They said they liked how the new department was presented, believed the changes made shopping easier and indicated that the new look created a more welcoming experience.

At the Worldwide Food Expo, Paul Weitzel, managing partner, Willard Bishop, LLC; David Bishop, managing partner, Balvor; and Scott Dissinger, senior vice president, DMI, will discuss benefits of dairy aisle redevelopment, including the opportunity to create differentiation and build sales. Their presentation will offer a sneak preview of some of the best practices and design principles that have shown results in this ongoing initiative.

In addition to Dairy Department Reinvention: Path to Growth and Differentiation, the Innovation Center for U.S. Dairy is speaking on a range of other business-critical topics at Worldwide Food Expo, including Is Your Company Crisis-Ready?; Dairy Products: Health and Wellness in a Package; and International Dairy Market. The Innovation Center for U.S. Dairy also is sponsoring the expo’s Sustainability Pavilion, which will include presentations by dairy industry leaders about how to implement new and sustainable practices that make good business sense. Dairy2020, the Innovation Center for U.S. Dairy’s interactive booth, will offer processors, manufacturers, suppliers and others in the dairy industry information on cutting costs, growing revenues and reducing greenhouse gas (GHG) emissions. Log on to IDFA.org and USDairy.comfor more information.

Prevent manure spills, run-off

By Scott Gunderson, Manitowoc County UW-Extension Dairy Agent

and Jerry Halverson, Manitowoc County Soil and Water Conservation Department Director

Over the next two months, millions of gallons of manure will be transported from manure storage facilities and applied to farmland to be used by crops in the 2010 growing season.  This is an essential part of animal agriculture, and the nutrients from this manure are an excellent source of fertilizer for crops.  Making sure that the nutrients from the dairy manure get applied and incorporated into the soil and do not cause surface or groundwater contamination is critical.

The following information was taken from two guides published by the Manitowoc County UW-Extension Office and the Manitowoc County Soil and Water Conservation Department.  The first portion deals with preventing manure spills from manure storage facilities, while the second part  deals with preventing manure run-off from fields both during and after application and incorporation.

Preventing manure spills from storage facilities

Monitor manure level in the facility.

Keep manure level at least one and one-half (1½) feet from the top of the storage facility.

A contingency plan shall be implemented when the manure level reaches 1½ feet from the top of the manure storage facility.  The plan should include how to handle unexpected volumes of animal waste that could cause the system to overflow before scheduled emptying can occur.

Consider the following:

- Available neighboring manure storage facilities with storage space available.

- Land that is flat and far away from streams, ditches, lakes, bedrock, tile inlets, and sinkholes and that complies with your Nutrient Management Plan.

- Neighboring farm fields.

- Emergency application shall meet local and state regulations.

Routinely inspect storage facilities for leaks.

Maintain pumps and check valves regularly.

Remove enough manure (between emptying cycles) to avoid overflows.

Preventing manure run-off during and after application

The following ideas are recommended in order to ensure that manure stays on farm fields and does not run off and contaminate water.

Identify and inform applicators and employees of critical sites including: wells, channels, ditches, waterways, streams, rivers, lakes, ponds, tile inlets, broken tile lines, sinkholes, and bedrock near surface.

Watch the weather forecast prior to, during, and after application.

Till the soil around the entire field a distance of fifty feet from the edge of the field

Loosen the soil across the entire field prior to application if soil is compacted (e.g. extended dry periods, headlands, and corn that was harvested for silage).

Check equipment prior to and during use.

Properly train and inform all individuals involved in manure application and incorporation.

Hire a reputable contractor if you do not apply the manure yourself.

Monitor application equipment constantly.

Apply manure based on crop need.

Incorporate manure near critical sites immediately (i.e. directly behind the applicator)

Incorporate manure near non-critical sites as soon as possible to decrease odors (by up to 90%), decrease the possibility of runoff and increase the nitrogen credits from manure.

Think ahead—if it looks bad, don’t do it!

Follow requirements indicated on spreading maps provided by the county Soil and Water Conservation Departments.

For more detailed information, farmers, crop consultants and custom manure applicators are encouraged to contact the Manitowoc County UW-Extension office (683-4175) and request the following documents:

• Preventing Manure Spills and Run-Off

• Responding to Manure Spills and Run-Off

• Manure Spill and Run-Off Emergency Response Plan

These documents are also available on the Manitowoc County UW-Extension website: www.uwex.edu/ces/cty/manitowoc/ag/index.html

Northeast: New Yorkers trust their dairy farmer neighbors

New York consumers have a high level of trust in New York dairy farmers to produce a safe, healthy and abundant supply of food, according to a recent survey.

The consumer survey, conducted in spring 2009 by The New York Animal Agriculture Coalition, with grant support from the New York Center for Dairy Excellence, surveyed over 600 New York state residents living within six miles of an active dairy farm in six farming communities.

Key consumer attitudes identified by the New York Animal Agriculture Coalition survey are:

The vast majority of respondents (85%) have a very favorable impression of dairy farming in New York. Agricultural benefits were cited as the main reason for their favorable impression by 27% of respondents. “It’s good to know that the products we buy are close to home,” and “It is an important economic resource,” are some of the comments from respondents.

Between 85% and 96% of respondents agree that dairy farms have a very positive impact on New York and provide residents with many benefits. Over 50% of respondents cite the “availability of local products” as the greatest benefit of dairy farming in New York.

Respondents most often cite availability of local products, providing milk and other dairy products to the community, and support for the local economy as the primary benefits of dairy farming in New York State. Secondary benefits identified by respondents were: add to the quality of life in Upstate New York, create jobs, environmental stewardship, and help young farmers get started in agriculture.

Farmers are a trusted source for information. Nearly half of respondents (46%) view dairy farmers as the most preferred/effective vehicle for communicating messages about dairy farming in New York, followed by agriculture and markets representatives, dairy farm organizations, veterinarians and county extension educators.

The impact of the New York Animal Agriculture Coalition’s campaign messages, which included billboards and public service announcements featuring farmers, as measured by the survey, is:

The majority of respondents (77%-87%) who have seen the TV ads and billboards about dairy farming in New York consider them to be very believable.

Nearly three-quarters of respondents who saw these TV ads and billboards about dairy farming also indicate that they result in a much more favorable image of dairy farming in New York for them.

Surveyed communities included Auburn/Cayuga County, Avon/Batavia, Rochester/Ontario County, Black River/Watertown, Geneva and Albany/Saratoga. A total of 647 online interviews were completed, lasting approximately 10-15 minutes each. NYAAC has received funding from the United Soybean Board to conduct this survey again in 2010.

The New York Animal Agriculture Coalition is a farmer founded and funded organization and exists to reconnect the public with animal agriculture by facilitating: media engagement, public education, and interaction between industry stakeholders. Visit the Coalition’s Web site at www.farmskeepnygreen.com for more information.

background_banner