Archive for May, 2010

Milk quality: Take action to improve

By Dr. Ellen Jordan, dairy specialist

Texas A&M University Extension

Producing high quality milk pays dividends through increased milk income. Capture more milk quality premiums by reducing somatic cell counts (SCC) in the milk you sell. If you haven’t already, implement the National Mastitis Council’s five-point control plan of:

• Dip every teat of every cow after milking

• Dry cow treat every cow

• Practice proper pre-milking procedures

• Check for proper function and operation of milking equipment

• Treat clinical cases of mastitis with appropriate antibiotic therapy

Greater reductions possible

Although these steps help reduce somatic cell counts to less than 400,000, greater reductions are possible. Attitude is a key component in improving milk quality. As a manager, show your employees that you are dedicated to producing high quality milk.  Work with employees to set a somatic cell count goal for your herd.

Once you set a farm goal to improve milk quality, share that goal with everyone from the herdsman to the milkers and the consultants. Include the outside crew that maintains housing facilities. To reach the goal of reducing somatic cell counts requires consistent attention to detail. Although not in the original five-point program, the following practices help improve milk quality as well:

• Remove udder hair

• Clean free stalls or areas where cows lie regularly

• Check dry cows for clinical mastitis

• Provide clean calving pens

• Keep milk from fresh cows out of the bulk tank the prescribed amount of time

• Dip teats rather than spray

• Provide nutrient supplementation for springing heifers and dry cows

• Milk only dry, clean teats

• Culture clinical cases of mastitis

• Develop an inventory control system so critical supplies are available

• Train new employees and retrain current employees

Seasons make a difference

Seasonal variations in somatic cell counts occur.  These occur in arid climates such as NM, as well as in more humid climates such as in Texas.

With summer approaching, the level of mastitis and somatic cell counts rise as temperature and humidity levels move upward.  Somatic cells are elevated in response to environmental stress – such as high summer temperatures – and it may take weeks or months for them to decrease.  Environmental mastitis increases during summer as well because of the increased likelihood of teat end exposure to bacteria.

Cattle are physically more stressed during the summer.  Research has shown high circulating levels of stress hormones interfere with the ability of the immune system to destroy bacterial invaders.  Somatic cells enter the udder as part of the immune response.  When somatic cells are depressed by stress hormones, they cannot function fully to protect against mastitis organisms.

What can be done to help reduce stress?

• In dry lots, provide shade.  Keep the area under the shades groomed so it stays dry and provides a clean place for cows to lie.

• In free stalls, take extra steps to keep bedded areas dry and maintain free stalls to minimize cows lying in the alleys. Bacteria require a warm, moist environment to multiple, so bacteria counts on soiled bedding can increase rapidly during the summer.

• In pasture situations, provide portable shades. Move shades frequently to reduce manure build up.  Although, trees provide a good source of shade and reduce stress; muddy, wet areas around trees result from manure accumulation.  This is a source of environmental organisms that increase clinical mastitis.  Also, high cow density can kill trees.

• Provide plenty of clean water.  Locate troughs on the exit lanes as well as in the housing areas. Cows drink about 50 percent more water when the temperature is 80 degrees versus 40 degrees.  They need water to cool themselves through increased respiration and perspiration.

Employee feedback important

Provide continual feedback to employees by posting somatic cell counts with the goal marked. Then employees can monitor progress.  Working together you can reduce somatic cell counts which can increase milk income.

These steps add up in the battle against high somatic cell counts and mastitis, either by reducing the stress-promoting hormones or by decreasing the growth sites for environmental mastitis organisms. Watching, implementing and correcting management practices to reduce summer SCC increases milk production and your herd’s health; thereby improving dairy profitability.

Western Pulse: California/Arizona

Dairy industry loses respected radio editor, reporter Roy Isom

FRESNO, Calif. – Roy Isom, who died April 15 after a short battle with an aggressive form of cancer, dedicated 45 years to covering agriculture, including dairy events and news in Central California as an editor and reporter for KMJ radio.

During his career he worked for two radio stations and one television station in Central California. Most recently he worked for 50,000-watt KMJ for 28 years as their farm reporter and editor.

Mr. Isom will be remembered for his love and dedication to his family and to the broadcast industry that helped get agriculture’s message to his listening audience for so many years.

Colleagues say Mr. Isom would rise early in the morning to begin working on his 5 a.m. farm broadcast that could be heard throughout the region.

“As an ag writer/editor in Central California myself for nearly 40 years, it was not unusual to be covering the same agricultural events with Roy,” recalled Ron Goble, editor of Western DairyBusiness. “He was a man of outstanding character and integrity, who brought the real world of California agriculture to the general public on a daily basis. His contribution toward helping educate urban dwellers was unsurpassed.”

As evidence of this commitment to serve his listening public well, Roy was named the California Farm Bureau Federation Agricultural Reporter of the Year in 1994. A native of Kingsburg, Calif., Mr. Isom served in the U.S. Air Force in the 1950s.

He is survived by his wife of 45 years, Pat Isom; son, Richard Isom; daughters Jennifer Isom Schmidtke and Catherine Isom; and seven grandchildren; all of Fresno. Pat said he loved his family, his work and his community.

A memorial fund for a scholarship in Isom’s name has been established at Ag One Foundation/College Development, California State University, Fresno.

The farming community and those of us who write about agriculture will miss Roy Isom.

Nutritionists Terrible and Colburn start Alpha Dairy Consulting, LLC

Joe Terrible and Tyler Colburn, both of Visalia, have partnered to establish Alpha Dairy Consulting, LLC, serving the dairy industry in throughout Central California.

Terrible was formerly a nutritionist with Western Milling LLC, headquartered in Goshen, Calif., and Colburn was formerly a nutritionist with Virtus Nutrition. They made the decision to start their own dairy consulting firm and were open for business in mid-April.

For information on Alpha Dairy Consulting, contact Joe or Tyler at their website: www.alphadairyconsulting.com.

Wayne Conrad joins World Wide Sires

World Wide Sires has named Wayne Conrad to the World Wide Sires team in May, as business development manager. In this role, Wayne will work with the WWS distribution team around the world to develop business and sales plans.

“Wayne has been a leader in the industry and was very successful in his previous work as West Coast manager for another organization. He will be a great asset to the WWS teams around the world with business and sales plans,” said John Schouten, WWS chief executive officer.

Wayne brings 30 years of experience in building solid, sustainable business systems in the highly competitive Western U.S. dairy market. He grew up on a registered beef operation in Colorado and currently resides in Visalia, Calif., with his wife.

Joe & Joey Airoso honored as 2010 Farmers of the Year

TULARE – Dairy farmers Joe Airoso and his son, Joey, were honored recently as Farmers of the Year by the Kiwanis Club of Tulare. Joe’s grandfather came to Central California from the Azores in 1912 with his nine children.

The Airosos milk 2,300 cows at its two sites and has placed in the top 10 Tulare County herds for production for many years. The farming operation consists of about 1,700 of alfalfa, wheat, oats and corn for silage.

Joe has been chairman of the Springer-Heifer Committee at the Tulare County Fair, president of Tulare County DHIA, vice president of the California Holstein Dairy Association. president of the Fatima Celebration, board member for St. Aloysius School and member of the Dairy Cooperative Creamery Association finance board. He is a member of St. Aloysius Church and a lifetime member of the Knights of Columbus.

Joey, in partnership with his father on the dairy, serves on the high school farm advisory council and is a member of the College of the Sequoias Agriculture Advisory Committee and the California Junior Ag Advisory Board. He has served on the Tulare DHIA boar for 18 years and is a past president. He also is a past president of the California Holstein Association and the Southern San Joaquin Holstein Club. He serves on the Farm Credit West and Western United Dairymen boards and is a Land O’Lakes delegate.

Joe and wife, Diane, are parents to Joey, Frankie, Julie Locke and the late Charles Airoso. Joey is married to Laurie and have two children, Joseph, a partner with his dad in the dairy, and Amanda, a teacher in the Sacramento area.

Luke Shuh receives Brock Jarrett Toledo scholarship

Luke Shuh, a Lemoore High School (LHS) senior, has been selected the 2010 recipient of the Brock Jarrett Toledo memorial scholarship. Luke is the son of Bill and Diane Shuh. He will continue his education at Cornell University in the fall.

Shuh is ranked number one in his senior class of 457 with a grade point average of 4.57. He is a lifetime member of California Scholarship Federation, National Honor Roll Society and a Bank of America Achievement Award winner. He is a four-year letterman in football and three years varsity golf. He is president of LHS FFA and has raised and shown dairy replacement heifers.

This scholarship was established by the Toledo family in memory of their son Brock who passed away in February 1996. It is awarded annually to a graduating senior who shares Brock’s enthusiasm for agriculture and the love of the livestock and dairy industry.

Dairyman testifies before Congress ag committee, calls for need of ‘fair’ and ‘effective safety net’

FRESNO, Calif. – The U.S. House Committee on Agriculture heard testimony from farmers, ranchers and a dairyman recently in Fresno, Calif., at a field hearing to review U.S. agriculture policy in preparation for the Farm Bill of 2012.

Speaking for the dairy industry, and specifically for Western United Dairymen and California Dairies Inc., was Jamie Bledsoe, a dairy producer from Riverdale, Calif.

He put California dairying into perspective when he told the six-member panel that the California dairy industry is responsible for more than 443,000 jobs and the typical California dairy farm generates $33.1 million in economic activity and 232 jobs.

Bledsoe said the economic situation this past year was “ruinous.” And while things have improve slightly, dairy families are still experiencing negative margins. “Margins haven’t just been low, they simply haven’t existed,” he declared. “Dairy families all over the state are losing what took them years and even generations to build.”

Production costs have climbed steadily – up nearly 20% in California in just the last three years. He mentioned environmental costs with new water and air regulations that cost an additional $45,000 to $65,000 per year per farm.

In addition, while producers have led the way in adopting renewable energy technology to help this country decrease its dependence on foreign sources of energy, state and/or local regulators have imposed new restrictions that resulted in the forced idling of that technology.

“Dairymen have shut down their digesters for more than a year now because of air quality regulations that cannot be met,” Bledsoe said. “State and federal regulators must work together better in order to hasten the march to energy independence.”

“Some commodity prices are moving upward but profitability remains a distant prospect for most dairy farmers…California producers, who felt the impact of lower prices two months before the rest of the country along with the sting of extremely high feed costs, reduced production dramatically in 2009,” he said. “In fact, California milk production has been down…for 20 out of the last 21 months.”

Though prices are expected to increase as we move through the second half of 2010, a return to breakeven simply will not undo the damage done to dairy farmers over the past 18 months. “Whether you’re a 100-cow producer who lost $10,000 per month or a 1,000-cow farmer who lost $100,000 a month, everybody’s equity took a major hit,” he said.

The Riverdale dairyman told the committee that dairy farmers needed an effective and fair economic safety net. They face new challenges from higher input costs. Several factors contribute to high grain, forage and energy costs. An economic safety net based on milk price alone will no longer be sufficient. Going forward, the new economic safety net must be herd size and region-neutral and must not send signals that more production is welcome when farm milk prices are low.

Dairyland, Sweeney dairies take top awards

Dairyland Farms of Tipton captured top herd honors at the 2009 Tulare DHIA awards dinner recently. The dairy had a herd average of 28,846 pounds ECM, slightly ahead of the second-place recipient, Rib-Arrow Dairy of Tulare at 28,787 pounds ECM.

The low SCC herd was once again Sweeney Dairy of Visalia with an average of 90,000 SCC.

The Tulare DHIA annual report was dedicated to memory of the late Max Wayne Corbett Jr., a long-time ag teacher at Tulare Joint Union High School.

The number of herds in California were reduced by 109 during 2009, said Ron Koetsier, president of Tulare DHIA. “Even though the cow numbers are declining, the quality of the herds continues to improve. We had an annual increase of 48 pounds of milk and 4 pounds of fat per cow,” he reported.

Other top herds included:

Ribeiro Dairy Farms, Tulare, 3rd high herd, 28,004 pounds; Machado Dairy & Farming Inc., Tulare, 4th high herd, 26,934 pounds; Riverbend Dairies, Tulare, 5th high herd, 26,926 pounds; Denali Dairy, Tulare, 6th high herd, 26,687 pounds; Oakview Dairy, Tulare, 7th high herd, 26,418 pounds; Tony P. Cardoza Dairy, Tulare, 8th high herd, 26,383 pounds; Sousa Farms, Tipton, 9th high herd, 26,210 pounds; and M.F. Gomes and Sons Dairy, Tulare, 10th high herd, 25,955 pounds.

Seven of the 10 herds honored are 3X milking operations.

Other low SCC herds included: Sweeney Jerseys, 96,000; Curti Family, Inc., 119,000; Shining Star Holsteins, 124,000; Triple H Dairy #2, 124,000; Amstel Farms, 125,000; Oak View Dairy, 125,000; H & T Dairy, 128,000; Terra Linda Dairy, 130,000; and Rob Van Grouw Dairy, 140,000.

Scholarship winners at the event were: Amanda Meneses, Miranda Fernandes, Preston Fernandes, Elizabeth Gerling, Addison Nunes, Andrea Rivera, Morgan Sousa and Andrew Tiemersma.

Renee Rippchen Smith added to Virtus Nutrition  Central Cal sales team

CORCORAN, Calif. – Virtus Nutrition® announced that it has hired Renee Rippchen Smith to be part of their sales team, managing the California sales efforts.

Rippchen Smith, who has spent a significant portion of the last 10 years working with California dairy producers to improve profitability, will provide support for Virtus Nutrition’s line of quality feed ingredients that improve animal performance and reduce the cost of production.

“With her dairy experience and marketing knowledge, Renee is ideally suited to work with California dairy producers in implementing the use of the latest technologies in rumen inert fats for improved health and reproduction,” said Kevin Murphy, technical and sales director for Virtus Nutrition.

Virtus Nutrition, based in Corcoran,
Calif., is a leader in strategic nutrition for dairy producers, providing unique value through its Omega-3 and Omega-6 fatty acid products, called Strata G® and Prequel 21® respectively. Significant breakthroughs in the past five years in research on the feeding of these ‘omega’ products has created new opportunities for dairy producers to improve both reproductive and productive performance. Virtus Nutrition  is also the maker of EnerG II®, a well recognized and used rumen inert fat supplement.

Prior to joining Virtus Nutrition, Rippchen Smith filled a number of roles in the dairy industry, including marketing and sales lead for BioEnergy Solutions and numerous sales and marketing roles for Monsanto Dairy Business. Rippchen Smith is an honors graduate of the University of Wisconsin-Madison with a double major in Agricultural Journalism and Dairy Science and is currently located in Bakersfield.


Southwest DairyBusiness: DDGS helps feed efficiency

By Texas A&M University Extension

COLLEGE STATION, Texas – Traditionally, corn has been the major energy source for dairy rations because of the high starch content. The starch provides energy needed for high milk production; however when too much starch is added at the expense of forage, rumen pH decreases. When rumen pH falls, intake decreases as does fiber digestion and milk fat concentration.

Increased competition

The recent surge in ethanol production for fuel has resulted in increased competition for corn. A side benefit of the ethanol industry has been an escalating quantity of byproducts, which can be used by nutritionists in formulating rations. These byproducts present an opportunity to develop rations with energy provided from alternatives to corn. Consequently, rations may be developed that minimize the negative impacts of feeding too much starch.

One of the major ingredients available from ethanol production is distillers grains. For each 56-pound bushel of corn processed for fuel, 18 pounds of distillers grains is generated in addition to the 2.7 gallons of ethanol and carbon dioxide. Both wet and dry distillers grains (WDG and DDG) are available.

Drying distillers grains improves shelf life and ease of handling, while reducing freight charges. If too much heat is applied in the drying process, digestibility declines, as well as palatability. Although some think color is an indicator of overheating, a burnt odor is more accurate.

Distillers grains with soluble (DGS) is produced when part of the “stillage” is added back to the grain. In recent research from South Dakota, substituting dry DGS (DDGS) and soyhulls for the starch from corn was evaluated. Four different rations were fed with 0, 7, 14 or 21% DDGS. Starch declined from 29 to 26 to 23 to 20% in the four rations as DDGS increased. The rations consisted of 27% corn silage, 22% alfalfa hay and 51% concentrate. Soyhulls were added along with the DDGS to maintain crude protein at 17% across the four rations.

As the percent DDGS increased, dry matter intake declined in a linear fashion; however neither milk production or composition of fat or protein changed.

Consequently, feed efficiency tended to improve as the starch was replaced by the nonforage fiber from soyhulls and DDGS.

Results from this research indicate that DDGS, in combination with soyhulls, can partially substitute for the starch from corn without negatively impacting production. At the time of the trial, the calculated feed cost declined from $4.91 to $3.49 per cow per day and income over feed cost increased from $7.02 to $8.44 per cow per day as starch from corn decreased from 29 to 20% of the ration and DDGS increased from 0 to 21%.

Helps control costs

The price of various feed ingredients continue to change with time, but by-product feeds provide alternatives to control cost and maintain productivity. Work with your consultant to identify which ingredient combinations might improve your bottom line.

For further information on a variety of other topics, visit the Texas A&M website at: http://texasdairymatters.org/.

Young Dairy Leaders Institute applications now available

Applications are now available for the Young Dairy Leaders Institute (YDLI). A program of the Holstein Foundation, YDLI is an innovative leadership and communication skills development program that has touched the lives of over 400 young adults since the program’s inception. The next class, Class 7, will begin in March 2011. Applications can be downloaded from the Holstein Foundation Web site and must be postmarked by August 2, 2010 to be eligible for consideration.
YDLI is a three-phase program that takes place over thirteen months, and is open to young adults (ages 22-45) with an interest in the dairy industry. The class will meet in Albuquerque, N.M. for Phases I and III, with a series of projects to complete in the months between meetings. The program is designed to be both relevant and edgy, covering the hot topics facing today’s industry.
“YDLI is a program that is all-encompassing,” said Kathryn Walker, Class 6 graduate from Oregon. “It is so much more than learning how to be an advocate for the dairy industry. It taught me how to be a better member of the organizations I belong to and has allowed me to create a national network of colleagues.”
Phase I focuses on individual leadership and personal development. Workshops cover topics such as working with different personality types, developing an understanding of consumer relations and building media communication skills through hands-on practice.
During Phase II, participants complete a series of assignments in their community, which emphasizes the advocacy and outreach skills gained during Phase I.
The final on-site training, Phase III, features sessions on advanced media training, meeting and board skills, influencing public policy and continued advocacy. Throughout the program, an emphasis is placed on communication and networking amongst peers, a benefit that carries on long after a YDLI class is complete.
The class will meet in Albuquerque, N.M. for Phase I, March 2-5, 2011 and for Phase III, February 29-March 3, 2012. For more information about YDLI or to obtain an application, visit www.holsteinfoundation.org or contact Jodi Hoynoski at 800-952-5200, ext. 4261 or jhoynoski@holstein.com.

New on-farm dipstick test for ketones in milk

The PortaBHB milk ketone test is a new on-farm dipstick test for sub-clinical ketosis screening. It is easy to use –- just dip the test strip in milk and compare results to a color chart.

PortaCheck, Inc. introduces the PortaBHB milk ketone test, the first rapid dipstick milk test that is readily available in the United States for on-farm sub-clinical ketosis screening.

Ketosis tests currently on the market in the United States require a urine or blood sample. The PortaBHB test measures the levels of beta-hydroxybutyrate (BHB) in milk.  BHB is the major ketone produced in disease states, and is the ketone tested when blood samples are sent to a laboratory. Urine tests currently on the market test for other ketones, typically acetoacetate.

“The PortaBHB milk ketone test makes it much simpler for dairy producers to screen for sub-clinical ketosis, since all they need is a milk sample,” says Dr. Wai Law, President of PortaCheck.  “Producers now have a test that can provide results within a minute, without the added difficulty of obtaining urine or blood samples.”

This product uses a dipstick that changes color in the presence of BHB.  The level of BHB is determined by comparing the dipstick color to a color chart. Validated against blood tests for BHB , the PortaBHB test is proven as a useful screening tool for sub-clinical ketosis.  It has also shown a very high correlation to other milk ketone tests sold overseas, but has a dramatic price advantage and does not require refrigerated shipping.

The PortaBHB milk ketone test is now available in the United States through Nelson-Jameson, Inc., Marshfield, Wis.; 1-800-826-8302.  For more information, visit PortaCheck at www.portacheck.com or call 1-866-500-7722.

PortaCheck, Inc. aims to become a leader in on-farm testing with a full product line that assists producers in making management decisions and improving animal health.  Always a champion of milk quality, PortaCheck also provides the PortaSCC milk test for dairy cattle and dairy goats.  This reliable tool has been proven in the U.S. and in more than 60 countries worldwide.

Alltech Symposium Debate: Triple Bottom Line of People, Profits and Planet

During Alltech’s 26th Animal Health and Nutrition Symposium, the 3rd annual ‘Great Debate” ended the session on Tuesday. Debating nine relevant agricultural issues, lively and controversial discussions were held by the four panelists and moderated by Alltech’s Vice President, Aidan Connolly.

Professor Patrick Wall, former chairman of the management board of  the European Food & Safety Association (EFSA),  Ireland, Trent Loos, radio, print and agribusiness commentator, USA, Osler Desouzart, Consultant, Brazil and Gordon Butland, Director, G&S Agri Consultants, Thailand took the stage to discuss their ideas in front of more than 1,500 delegates representing top global agribusinesses.

Three key messages that were addressed by the speakers during the debate was the issue of education among the public, the issue of addressing the problem of global hunger and confronting criticism within the industry.

Wall spoke to combining the use of education to address hunger. “Hunger is linked to poverty. Education and training is the key, not providing aid. We were designed to be hunter gathers. We use the BSE theory: Blame Someone Else.  To tackle obesity we can’t put it on one industry but it is a group effort. Everyone’s most available resource is their head.” Butland answered back by stating, “The solution is simply education, education and more education.”

Nothing was held back as panelists were asked to address hot button issues like global warming. “Global warming is the largest man-made hoax the world has ever seen. One person starts to say something and we get a bunch of other people clamoring along wanting to chime in,” stated Trent Loos.

Another topic discussed was whether buying local was really something that should be encouraged. Desouzart answered by stating, “This is the latest. It is not the last but it is the latest. It’s “buy local.”  I went to Finland and asked them for a local pineapple. Most unfortunately they had none available that week. And then I came here to Kentucky and said ‘I refuse to buy any coffee that is not produced in Kentucky, please serve me.’ I have been drinking tea ever since.”

Visit www.alltech.com/symposium for more information and to watch the recap of the ‘Great Debate’.

Alltech is the proud sponsor of the Alltech FEI World Equestrian Games to be held in Lexington, Kentucky, September 25 – October 10, 2010. Visit the official site of the Alltech FEI World Equestrian Games at www.alltechfeigames.com for complete information about the event or to purchase tickets.

MPC’s Vandenhevel details H.R. 5288

“Dairy Price Stabilization Act of 2010” introduced in the House of Representatives
By Rob Vandenheuvel, General Manager, Milk Producers Council

This past week, Representative Jim Costa (Fresno) and four of his colleagues in the House of Representatives introduced H.R. 5288, the Dairy Price Stabilization Act of 2010.  In short, the legislation would create a tangible financial incentive for all U.S. dairy farmers to better manage their growth in milk production.  Also co-sponsoring the bill are Reps. Peter Welch (Vermont), Rick Larsen (Washington), Joe Courtney (Connecticut) and John Larson (Connecticut).  The text of the bill and summaries can be found at www.stabledairies.com.

H.R. 5288 is the product of several years of work in developing a production management program that allows our nation’s producers to continue growing to meet our increasing demand for dairy products, while at the same time creating a financial incentive that will help ensure that not all 65,000 producers expand their production at the same time, collapsing the value of milk and dairy products every few years, as our producers have become painfully familiar with.

The bill utilizes industry analysis that’s been done over the past three years regarding the root causes of milk price (and farmer profit margin) volatility, which has continued to grow and become more violent with each “boom” and “bust.”  Multiple economic forums have been held over the past couple years to look at milk price volatility, and additional work has been done by Dr. Mark Stephenson (Cornell University) and Dr. Chuck Nicholson (Cal Poly University, San Luis Obispo) on the specific issue of finding the driver for this increased volatility.  Those efforts have revealed that much of the volatility in the value of raw milk can be attributed to cyclical patterns, some of which result from government policies that mute direct market signals to individual dairy farmers.  The goal of the H.R. 5288 is to create a direct economic signal to the dairies that will help individual farmers make more informed decisions when deciding on future growth of their individual milk production.

As a recap for anyone who isn’t familiar with the details of the Dairy Price Stabilization Act, here are the top five things you need to know about H.R. 5288:

  1. Each individual dairy is treated as its own entity, just as the MILC program treats dairy farms today.
  2. Prior to each quarter, USDA will determine – based on a set of triggers clearly outlined in the bill – an “allowable year-over-year growth” in milk production that each dairy can produce without being considered an expansion.  In most cases, this will be 3 percent annual year-over-year growth, allowing for every dairy to find efficiencies in their operation without be considered an “expansion.”  The set of triggers that would determine the allowable growth percentage utilizes the milk/feed ratio as an indication of the general economic condition of the dairy industry.  Under the bill, as producer margins get tighter (indicating a supply of milk that is exceeding demand), the allowable year-over-year growth is adjusted downward to zero, and can even be adjusted to negative three percent under extreme situations of low producer margins.
  3. For dairies that choose to exceed this allowable growth (i.e., plan an expansion in milk production or start a dairy as a new entry), a market access fee is determined prior to each quarter by USDA.  This fee is also based on a set of triggers outlined clearly in H.R. 5288.  These triggers also utilize the milk/feed ratio as a general indication of the economic condition of the dairy industry.  For example, as producer margins widen, demonstrating a higher level of demand and a need for additional milk, the market access fee is reduced to minimal levels.

    There are two ways that expanding producers can pay these fees:
    * Producers can choose to pay a fee only on the milk produced in excess of the dairy’s “allowable year-over-year growth,” which will range from $0.15 – $2.50 per hundredweight, depending on the economic conditions of the dairy industry, as determined by the milk/feed ratio; or

    * Producers can also choose a separate option, which allows producers to pay a much lower fee, but pay that fee on all the milk produced by the dairy facility.  This fee would range from $0.03 – $0.50 per hundredweight, depending on the economic conditions of the dairy industry, as determined by the milk/feed ratio.

    Note:  The authors of the H.R. 5288 continue to explore the structure of these triggers, and while the best information available today indicates that the milk/feed ratio will be sufficient to adjust the program’s parameters up and down to reflect general conditions in the dairy industry, the authors are open to alternative economic indicators, such as the income-over-feed-cost figure being developed by the National Milk Producers Federation.

  4. 100 percent of the funds collected as market access fees will be distributed to the dairies that did not exceed their allowable year-over-year growth in milk production.  This is a key piece of the Dairy Price Stabilization Act, as these funds create the tangible financial incentive for dairies that are not in “expansion mode” to maintain their production within their allowable year-over-year growth.
  5. A Producer Board would be established to oversee operation of the program.  The Board would not be authorized to make any changes to the prescribed triggers in the bill unless a 2/3 majority of the Board approved such a recommendation.  The composition of the Board would largely mirror the composition of the National Dairy Promotion and Research Board, with each dairy region of the country getting a base level of representation, and additional representation distributed based on milk volume.

So as you can see, H.R. 5288 is straight-forward and simple.  It creates a tangible incentive that dairies would consider when planning their expansions in milk production.  The bill, as structured, would not serve as a significant barrier for any dairy wishing to start operation or expand production.  Rather, the bill is aimed at giving the remaining dairies – those that are not in “expansion mode” – a tangible incentive to maintain their year-over-year production within the three percent annual growth outlined in the bill.

Contrary to what is being said and written by some critics about the Dairy Price Stabilization Act, the program actually puts our industry in a much better position to grow in the long-term and meet an increasing demand for our products.  Not only is the industry in a position to be a strong competitor in the world market, but this industry is also primed to delve into additional domestic markets.  Dairy product processors are constantly finding additional ways to fractionalize milk and find additional domestic and international markets outside the traditional bottled, butter, powder and cheese markets.  However, the violent boom/bust nature of the milk price makes it difficult-to-impossible to maximize these markets.  H.R. 5288 can reduce those extreme booms and busts and allow our industry to maximize the domestic and international demand for American dairy products.

One of the most common questions that comes up when discussing the DPSA is how the bill would impact our ability to continue exporting dairy products, as well as minimize the products that are imported into the U.S.  While the authors of the DPSA believe the program would not prevent us from participating in global markets and competing with products that other nations want to import into the U.S, they felt it was important to include a “safety valve” that gave producers an opportunity to review the success of the DPSA after three years of operation before continuing the program further.  If the data clearly shows that the program is not working as intended, either because volatility has not be reduced or because our import/export balance has been greatly impacted, producers will be able to eliminate the program, and the industry can re-evaluate the best long-term policy.  This is an important distinction between the Dairy Price Stabilization Act and some of the other alternatives being floated around the industry.  Some are proposing that the industry eliminate basic producer safety nets as part of their long-term plan.  The authors of H.R. 5288 chose not to include that drastic measure, as a step like that truly takes the U.S. dairy industry down a path of no return.

More explanation on the “triggers” in the DPSA

In the bullets above, a set of triggers are mentioned as the drivers used to determine the allowable year-over-year growth and market access fees.  The table below outlines those triggers.  Existing dairies that are planning to expand would choose either the “new-milk” or “all-milk” market access fee, whichever is cheaper for their specific planned expansion.  New dairies facilities would pay the “all-milk” market access fee, as this would be the cheapest option for them.

Milk/Feed Ratio Allowable Year-Over-Year Growth “New Milk” Market Access Fee “All-Milk” Market Access Fee
> 3.00 3% $0.15 per cwt $0.03 per cwt
2.50 – 2.99 3% $0.65 per cwt $0.13 per cwt
2.00 – 2.49 3% $1.25 per cwt $0.25 per cwt
1.75 – 1.99 0% $2.50 per cwt $0.50 per cwt
< 1.75 -3% $2.50 per cwt $0.50 per cwt

Find current information on H.R. 5288 at: www.stabledairies.com. If you have any questions, contact MPC at (909) 628-6018 or e-mail at rob@milkproducers.org.


Helping cows manage heat stress saves real money

More than ever, dairy producers need to save money wherever they can.  Especially during the summer months, cows under heat stress can cost producers big bucks.  Research has shown that milk production losses alone range from $1.50-$3/cow/day.

In addition, reproductive losses from heat stress may include missed heats, low conception rates, low birth weights, difficult births and metabolic problems after calving. With total losses ranging from $3 to $4 per cow daily, it is easy for heat stress to cost a producer $10,000 or more per month for every 100 cows.

The ideal ambient temperature for a dairy cow is between 41 and 77° F. At temperatures above 77° F, cows have to use energy to cool themselves through heat loss via panting. As ambient  temperature increases, it becomes more difficult for a cow to cool herself adequately.

Cows tend to stand rather than lie down, and seek shade in hot weather. It’s common to find heat-stressed cattle standing in mud or shady areas. As body temperature rises above 102.5° F,  cattle eat less.  They’ll be panting to cool down, in order to compensate for limited sweat glands,  increasing their respiratory rates. Cattle also eat less often and during cooler times of the day, but consume more at each feeding, which can lead to acidosis.

Since milk consists of 87% water, hydration is the best place to start managing heat stress. High-producing cows may drink up to 50 gallons of water per day in hot temperatures.  In fact, water consumption can double when temperatures rise, so make sure plenty of cool, fresh water in clean tanks is available to cows.  Cooling fans or misters are also helpful to reduce cows’ body temperatures.

High-producing cows are also more sensitive to heat stress because of their high feed intake. Dry matter intake starts to drop (8%-12%), and milk production losses of 20%-30% (which may exceed 10 to 25 pounds per day) occur when temperatures exceed 90° F.*  It is imperative to maintain intake in order to minimize these production losses.

Feeding direct-fed microbial (DFM) products can help aid digestion, improve feed utilization and keep dry matter intake up during hot weather.  Good-quality DFMs provide high levels of microorganisms, including rumen/intestinal origin bacteria and digestive enzymes.  Some DFMs include yeast, which provide enzymes and B vitamins and help maintain intake during hot weather.

When feeding DFMs, it’s important to maintain the viability of the live microbials, especially during hot weather.  Producers should look for DFM products packaged in foil-lined bags or pouches that provide a better moisture barrier than regular plastic or paper.  Packages should be kept closed or resealed between feedings to maintain microbial integrity.

Electrolytes, adequate ventilation, fresh water and proper feeding work together to reduce the effects of heat stress.  Supplementing cow rations with good-quality microbial and electrolyte products will assist rumen fermentation, reduce susceptibility to acidosis, and help heat-stressed cows maintain appetite and milk production.

Heat management tips

• Provide plenty of cool, fresh water

• Clean water tanks

• Keep cows shaded if possible

• Use proper ventilation

• Use misters, sprinklers and/or fans

• Balance ration for actual dry matter intake

• Add some water to TMR or ration

• Feed during cooler parts of the day

• Feed a quality DFM

For more information, contact: Ron Martin, Bio-Vet, Inc. Product Manager, phone: 608-437-8891; e-mail: ron.martin@bio-vet.com

Bio-Vet, Inc., founded in 1991, researches, manufactures and markets direct fed microbial and nutritional products for dairy and beef cattle, small ruminants and horses. Bio-Vet is a leader in using beneficial bacteria to improve animal health and productivity. The company holds U.S. patents for its innovative products. For more information, contact Bio-Vet at 1-800-246-8381 or visit www.Bio-Vet.com

* “Reducing Heat Stress for Dairy Cattle,” Authors: Gerald M. Jones and Charles C. Stallings, professors and Extension dairy scientists, Department of Dairy Science, Virginia Tech.


Dairy business bankers offers insights into dairy financial strategies

By DairyBusiness Staff

TULARE, Calif. – Credit and financing are two extremely important elements in determining your success or failure as a dairy producer.

The relationship you have with your lender is a delicate one and must be just as much a priority as your milking protocol and herd health programs.

John Ellsworth, Western DairyBusiness columnist and financial advisor to dairy producers from California to Iowa, pulled together a panel of financial experts with successful long-term track records in working with the dairy industry. They were Sean Haynes of Rabobank in Modesto, Marc Ehlers of Bank of the West in Visalia, and Mitch Millwee of Farm Credit West in Bakersfield.

The panel, moderated by Ellsworth, fielded questions from dairy producers during Dairy Profit Seminars at World Ag Expo earlier this year in Tulare. Here are some of the issues raised and responses from the experts.

Q: Where are interest rates heading and should we be looking at locking in long-term?


HAYNES: Can interest rates go any lower. Can you borrow money for free? No. So chances for rates going up are better than they are for going down. Don’t know when it will happen. Do you lock yourself in on all of your finances. Don’t lock all of it. Lock half and cut your risk in half. You can look at it as a forward lock. Not looking for rates changing right now, pretty low and have to go up quite a bit before you feel the pain, but maybe a year from now your rate is fixed. So flow for a bit and take the gamble that rates are going to rise during that period of time and then convert to a fixed rate with a little less pain. A good time to look at it because with lower rates on the short side, rates are very low and will pull down that curve for long term market. Now is a good time to lock it up. Half and half hedge so you have room to move if it doesn’t go up.

EHLERS: Part has to do with the time frame your looking at. We look out three years  and think the economy is going to increase enough to generate enough demand to force some type of inflation, which is the biggest issue I see out there. If you take half of it your basically hedging your position, but half of your payments will be twice as much as they are today. Every interest rate out five years will probably be double what a 30-day or 90-day rate is. If I really knew what it was I wouldn’t be speaking here…Sean hit it on the head. It’s not going to get any lower on a short term basis. Question is, is it going to get any higher on a long-term basis? What’s going to drive it?

MILLWEE: I think you have to look at what your overall blend of debt is. Are you carrying a lot of commercial debt? Have you blended that with mortgage? Have a balance within your debt stricture. With mortgage rates, I think right now it is just good to keep in touch with your lender and find out how they are doing. Keep a portion – as much as you can – on the variable rate…and see where it is going. Things can get away from your pretty quick. Checking in regularly with your lender is a good strategy, because if you start to see things move, maybe that’s the time. It is pretty tough to lock yourself into an interest rate that is going to be quite a bit higher at a time when break even or some losses are occurring.

Q: What is the availability of funding, bank financing, for a startup operations, specifically dairies industry?

EHLERS: If you have a track record in something that is related, it is going to be easier. If you have no track record I would put it at pretty close to impossible from a standard of what the industry is financing today. Your capital level is going to have to be significantly higher than they were historically. When I was in the Midwest we had a lot of startups and those wouldn’t get financed today at the levels they were financed then. The access to capital from a bank standpoint…because cost has gone up when you get to the equity side of it that cost has gone up significantly too. Nobody really wants to get rid of their money on the equity side unless it is a pretty significant advantage.

MILLWEE: I’d agree with Marc. Experience is important and capital is very important. If that’s not there, maybe a reliance on some outside guarantor…But it needs to be a constructive business, something that is profitable and makes sense…a lot of operations can start up with a pretty good amount of debt, but in this environment you’ll have to startup with more equity when you are beginning.

HAYNES: I think the startup thing is a hard question. There are some programs you can look at but at the same time have to look at credit scores and maybe requires someone to sign for you. As a lender, I look at it as an investor in your startup operation which is capital intensive and not much equity to burn through when things are bad. A lot of times looking at startup or mature operations we’ve got to say what’s the survivability? That’s part of the startup nature, startup and build the capital base and…look at what levels do I have to have in business to demonstrate to the bank that I can survive a downturn and make myself a good credit risk.

Q: Is there a shift taking place in how lenders look at financial deals?

MILLWEE: Yes, I think so. Let me just talk about risk management. I think it is important…as a producer you need to be proactive, and work to reduce your expenses and be more efficient. Ultimately it is your business.

As a bank we always look at cash flow. The balance sheet has been there to support it and we look at averages because we see those cycles and the years you’ve had losses and look at overall the trends and how the business is going so the well capitalized businesses are able to ride those out verses those that are no so well capitalized.

Going forward in today’s environment you see those wider variances in these spikes between highs and lows. Somehow have to work to level those out because seen what has happened here and a lot of equity lost. To me it’s not so much what you can make on the upside, but what you can preserve on the downside.

Discussions have been about using option pricing – puts on milk, calls on feed – trying to match that up, and not so much trying to ride out a $20 market to get it all back. But maybe have some options there to perhaps ride that, but then have a floor, because you can survive with a $14 milk price better than at $9.

Those are some strategies to look at and to talk to your lender about. Dairymen are becoming more efficient as production per cow is increasing and more efficient at herd replacement with a tremendous number of heifers coming online. So the efficiencies are there on that side, but where can we come with efficiencies on the expense and pricing side?

HAYNES: Speaking to your cash flow question, as a commercial bank that’s what we worry about first. Is there going to be cash flow enough to pay-off your debt over time? We have to look at, what is your break even cost? Are you going to be in a position where more times that not, are you making more money than you are losing during a downturn. That’s the first thing we look at…on the foreseeable chance that we will get paid back?

One of the things that has changed, on the whole in the banking business is, there is more concentration on the balance sheet as well, with the volatility in the market, everybody is going to understand that it’s not “if,” but “when” you’ll be losing money again. “I have this cash flow, and I think it’s going to be okay, but I can’t look out even more than a year – maybe six months – as far as what’s that cash flow going to be doing? Against your peers how well do you do produce milk. What’s your cost of production? Are you $17 break even or $12 break even? Your Risk of losing money at $12 is much less than a guy with a break even  at $17. That‘s my cash flow component.

As a lender look at the balance sheet, okay when we lose money again when milk is at $9 again, and I’ve locked my feed in like in 2008-09, so I need $18 milk to pay for it. How long can I do that for? That is the “burn rate.” How long can I burn directly before I hit levels that the bank is uncomfortable?

That will determine whether you will get a loan going forward. A dairyman has to ask himself, at what point do I want to be a minority owner? Looking at the balance sheet the dairyman might have a net worth of $10 million, but the bank has invested $30 million.

For the complete panel discussion via podcast, please visit www.DairyLine.com and click on “Dairy Profit Seminars.” Then click on “WDB Seminar #3: Ag Lending.”


U.S. dairy exports march on

U.S. dairy exports improved in March 2010, with their strongest showing since September 2008.

In March, exports were equivalent to 11.1% of U.S. milk solids production, with record-high shipments of cheese and increases in exports of milk powders, whey proteins, butterfat and lactose. Meanwhile, imports as a percent of milk solids production were just 2.7% in March.

The value of March 2010 U.S. dairy exports were estimated at $296 million, up 32% from February 2010, up $123 million from March 2009, and the highest monthly total since September 2008.

The value of U.S. dairy imports was up 11% in March 2010, to $219 million, but $19 million less than March 2009.

Y-T-D fiscal year 2010 (October 2009-March 2010) exports total $1.43 billion, up 18% from the same period in FY ’09. Y-T-D FY ’10 imports total $1.30 billion, down 20% from the same period last year. The FY ’10 trade surplus is estimated at about $132 million.

March 2010 cheese imports were valued at $77 million, up 16% from February. Y-T-D FY ’10 cheese imports were valued at $520 million, down 8% from a year ago.

Product information

Exports of nonfat dry milk/skim milk powder (NDM/SMP) jumped in March. Suppliers shipped 25,599 tons, up 63% from a year ago. In the first quarter, U.S. exports of NDM/SMP were 54,034 tons, up 7%. In the January-March period, shipments to Mexico were up 14% and exports to the Philippines were up 19%. In addition, new sales were seen in China and the Middle East.

Exports of whey proteins were in line with the levels seen over the last six months. Dry sweet whey exports were 19,233 tons, down 5% from March 2009. Exports of whey protein concentrate were 15,184 tons, up 26%. Shipments of whey protein isolate were 1,601 tons, down 2%. Total whey protein exports were up 6% from the prior year. Year-to-date, U.S. exports of whey proteins were 105,588 tons, up 29%, led by gains of 78% in shipments to Southeast Asia and 34% in sales to China. In addition, exports to Mexico were up 23%.

Cheese exports in March were a record-high 13,433 tons (29.6 million lbs.), up 70% from March 2009. In the January-March period, U.S. exports of cheese were 32,860 tons, up 33%. In the first quarter, sales to Japan (+125%), South Korea (+43%) and the Middle East (+61%) were considerably higher. Exports to Mexico, our largest market, were down 4% from a year ago.

U.S. suppliers exported 19,703 tons of lactose in March, up 14% from last year. Year-to-date, U.S. exports of lactose were 53,647 tons, up 19%. Leading customers were Southeast Asia, Japan, China, Mexico and New Zealand.

Butterfat exports in March were 4,132 tons, more than triple (+204%) last year’s volume. Year-to-date, U.S. exports of butterfat were 9,439 tons, up 83%. In the first quarter, about a third of our sales went to the Middle East, with Saudi Arabia the largest buyer. Russia, Egypt and Morocco all made purchases after making none last year.

Among other key products:

• Fluid milk: March +101%; YTD +20%

• Food preps: March -14%; YTD -8%

• Whole milk powder: March +139%; YTD +121%

• Ice cream: March +9%; YTD +5%

In the first quarter, exports (by value) were up to nearly all destinations compared with the prior year. Shipments to Mexico, the largest U.S. market, were up 28%; with large gains also posted to Southeast Asia (+93%), China (+98%), the Caribbean (+69%), Japan (+36%), the Middle East (+59%) and South Korea (+60%).

In the first quarter of the year, U.S. exports were equivalent to 26% of the NDM/SMP produced, 62% of the whey proteins, 58% of the lactose, 2.9% of the cheese and 4.7% of the butter.

Sources: USDA, U.S. Dairy Export Council

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