Archive for June, 2010

USDA/DOJ holds dairy competition ‘workshop’

The U.S. Department of Agriculture and the Department of Justice held a joint public workshop June 25, in Madison, Wis., to explore the appropriate role for antitrust and regulatory enforcement in the dairy industry. The workshop, led by Agriculture Secretary Tom Vilsack and Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney, examined competition in the dairy industry and featured panel discussions on trends in the dairy industry, market consolidation and market transparency. The workshop included significant opportunity for producers and the public to comment on trends in the dairy sector.

This is the third in a series of five workshops intended to promote dialogue among interested parties and foster learning with a diverse group of stakeholders regarding competition and regulatory issues in the agricultural marketplace. These workshops are the first-ever to be held by the Department of Justice and the USDA to discuss competition and regulatory issues in the agriculture industry. Additional information about the workshops can be found at www.justice.gov/atr/public/workshops/ag2010/index.htm#overview.

“The dairy industry has been hit particularly hard over the past eighteen months, and, like other agricultural sectors, is experiencing consolidation and shrinking farm numbers,” said Vilsack. “A fair and competitive marketplace is important not only for producers, but also for consumers, and today’s open and transparent dialogue with producers and experts will provide us with a understanding of the complex issues in this important industry and help us determine how we ensure competition and fairness in the dairy industry.”

“American agriculture provides the livelihood for an enormous portion of the workforce and sustenance for the rest,” said Varney. “Today’s discussion on the important issues facing the dairy industry has been immeasurably helpful as we consider the ways in which government can help to ensure efficiency and competition in the dairy industry.”

Secretary Vilsack and Assistant Attorney General Varney began the workshop with opening remarks before leading a roundtable discussion on competition issues in agriculture and the dairy industry, followed by a panel of dairy farmers from across the country to share their first-hand experiences and perspectives on the industry. In the afternoon, a panel of academics and farmers discussed trends in the industry. Later, a second panel of professionals explored issues associated with consolidation. Lastly, a third panel of professionals examined farm prices for milk, contracts and related issues from a public policy perspective. The second hour-long public testimony period concluded the workshop.

The workshop was held in Madison, Wis., at the Wisconsin Union Theater at the University of Wisconsin – Madison, and was attended by several key federal and state leaders. In addition to Senators Herb Kohl and Russell Feingold, Congresswoman Tammy Baldwin, Governor Jim Doyle and the Wisconsin state Secretary of Agriculture Rod Nilsestuen were present.

Videos and transcripts from the’s workshop will be available for review at a later date on the Antitrust Division’s website at www.justice.gov/atr/public/workshops/ag2010/index.htm#dates. Individuals seeking more information on the workshops should contact agriculturalworkshops@usdoj.gov.


Sanders introduces Senate version of “Dairy Price Stabilization Act of 2010”

U.S. Sen. Bernie Sanders (Vermont) introduced S. 3531, the “Dairy Price Stabilization Act of 2010.” Joining Sanders in co-sponsoring the legislation were Senators Patty Murray (Washington) and Patrick Leahy (Vermont).

S. 3531 is virtually identical to the legislation introduced last month in the U.S. House of Representatives by Reps. Jim Costa (California), Peter Welch (Vermont), Rick Larsen (Washington), Joe Courtney (Connecticut), and John Larson (Connecticut).  That bill, H.R. 5288, is also titled the “Dairy Price Stabilization Act of 2010.”

“The introduction of this legislation in the U.S. Senate is a huge step forward for the dairymen and organizations who have been working on the ‘Dairy Price Stabilization Program’ for more than a year,” said Rob Vandenheuvel, general manager of California’s Milk Producers Council.  “After almost two years of devastating losses by our nation’s dairy farmers, the industry greatly appreciates the leadership of these three Senators in introducing S. 3531 and bringing this much-needed industry dialogue to the halls of the U.S. Senate.

“S. 3531 and H.R. 5288 are specifically designed to send economic signals directly to individual dairy farmers, which will better equip our nation’s dairies in balancing our milk production with the market demand for our dairy products,” added Vandenheuvel.  “This rational concept is something that has been painfully missing in our industry and has resulted in chronic imbalances of supply and demand, and a devastating boom-bust nature to our milk price that has cost our nation’s dairy farmers decades-worth of hard earned equity over the course of the past two years.”

Earlier this month, the National Milk Producers Federation, representing many of our nation’s cooperatives, outlined their “Foundation for the Future,” a package of policy proposals intended to provide the U.S. dairy industry with long-term stability.  Included in that package is a “Dairy Market Stabilization Program,” which is a proposal aimed at giving the industry a tool to better align supply and demand.

“As we can see with S. 3531, H.R. 5288 and National Milk Producers Federation’s ‘Foundation for the Future,’ there is broad support amongst dairy farmers that long-term stability in the industry starts with equipping ourselves with a tool to better align milk production with demand.  The ‘Dairy Price Stabilization Act of 2010,’ which is based on economic analysis and industry discussions conducted over the past three years, will play a key role in shaping that important piece of our industry strategy for reducing milk price volatility and giving our dairy farmers hopes for long-term sustainability.

“Having virtually identical legislation introduced in both the House and the Senate, with co-sponsors from coast-to-coast, is a clear indication that our industry is closer than ever to taking the steps necessary to  ensure our nation’s dairy farmers more stability and sustainability for the generations to come,” concluded Vandenheuvel.

In short, S. 3531 would do the following:

1. Each quarter, USDA will announce – based on a set of “triggers” clearly outlined in the legislation – two numbers: (1) an allowable year-over-year growth rate and (2) a market access fee.

2. The allowable year-over-year growth rate is the amount that any farmer is allowed to increase production from the same quarter of the previous year without being considered an “expansion” (under the bill, this will normally be 3% year-over-year growth in milk production).

3. The “market access fee” is a fee that dairies wishing to expand beyond the allowable year-over-year growth rate would pay for the first year after an expansion.  The fees outlined in the legislation are identical to the fees outlined in H.R. 5288.

4. The market access fees paid by expanding dairies each quarter would be distributed as a dividend among those farmers who kept their growth within the allowable growth rate, serving as an incentive for those dairies to manage their production.

5. Three years after this program is established, there will be a dairy farmer referendum vote on whether to continue it.  This ensures that dairymen – not the government – decide whether or not the program is working.

6. The program will be overseen by a 15-member industry board.  This board will include 12 dairy farmers, elected by their fellow farmers, and 3 representatives from the consumer and processor sectors.  Only in cases where the board can find broad support (a two-thirds majority) will they be able to make adjustments to the parameters laid out in the legislation.

While both S. 3531 and H.R. 5288 are based on economic analysis and modeling conducted over the past three years, additional modeling is currently in the works.  Dr. Mark Stephenson (currently at Cornell University, but soon to be at University of Wisconsin-Madison) and Dr. Chuck Nicholson (California State Polytechnic University in San Luis Obispo) have been contracted by a broad coalition of dairy farmer groups and cooperatives to conduct additional economic modeling on this proposal, as well as other major proposals (like pieces of the National Milk Producers Federation’s “Foundation for the Future”).  Their modeling and analysis is expected to be available next month.  The sponsors of both S. 3531 and H.R. 5288 are anxiously awaiting those results to determine what, if any, adjustments need to be made to make these proposals as effective as possible.

More details on S. 3531 and H.R. 5288 are available at www.stabledairies.com.  Milk Producers Council will also continue to examine these bills in upcoming issues of its weekly newsletter.

Supreme Court rules on Roundup Ready(R) Alfalfa

ARDEN HILLS, Minn., June 21 /PRNewswire/ — The Supreme Court found that a lower court was in error when it placed a nationwide ban on the planting of genetically engineered alfalfa seeds. In a 7-1 vote, the court reversed a federal appeals court ruling that prohibited the selling of Roundup Ready® alfalfa seeds, which are resistant to the popular weed killer Roundup®. Justice Stephen Breyer did not participate in the case.

“We are pleased with the Supreme Court’s decision and look forward to the USDA giving its approval, which is necessary to clear the way for bringing Roundup Ready® alfalfa back to the U.S. market in the near future,” said Mark McCaslin, President of Forage Genetics International. “We believe the Court’s ruling is a strong indication that decisions about agriculture technology should be based on solid data and sound science. We are especially encouraged by the Supreme Court decision, and we look forward to the USDA’s decision, which could once again enable growers to utilize this important technology and reap the benefits it provides.”

For more information, go to www.roundupreadyalfalfa.com.

Forage Genetics International, LLC. (www.foragegenetics.com), a wholly owned subsidiary of Land O’Lakes, Inc., is the world leader in the development, production and marketing of alfalfa germplasm and traits that add value to their seed customers, and to livestock producers and other alfalfa end users.

USDA proposes livestock marketing protections

Agriculture Secretary Tom Vilsack announced that on June 22, 2010 USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) will publish a proposed rule, as required by the 2008 Farm Bill and through existing authority under the Packers and Stockyards Act, that would provide significant new protections for producers against unfair, fraudulent or retaliatory practices.

“Concerns about a lack of fairness and commonsense treatment for livestock and poultry producers have gone unaddressed far too long,” said Vilsack. “This proposed rule will help ensure a level playing field for producers by providing additional protections against unfair practices and addressing new market conditions not covered by existing rules.”

The proposed rules address concerns that have been discussed for many years and were developed at the direction of the 2008 Farm Bill, which requires USDA to carry out specific rulemaking to improve fairness in the marketing of livestock and poultry.  During farm bill discussions in 2007, over 200 organizations across the country urged Congress to include a livestock title to improve market fairness and competition for producers.  Additionally, USDA identified other areas where new rulemaking is needed to ensure the marketplace is fair and competitive for producers.  Many of the concerns addressed in the rule were raised during the dozens of Administration Rural Tour stops attended by Secretary Vilsack last year, and the joint USDA-Department of Justice Competition Workshops held this year.  Additionally, GIPSA held three public meetings in 2008 to gather comments, information, and recommendations from interested parties.

Many of the concerns were related to increasing consolidation and vertical integration in the livestock and poultry marketplace, and shrinking farm numbers.  For instance, there were over 666,000 hog farms in 1980, but only roughly 71,000 today.  In the cattle industry, there were over 1.6 million farms in 1980, but only roughly 950,000 today.  In the hog industry, producers received 50% of the retail value of a hog in 1980, but only 24.5 percent in 2009.  For cattle, producers received 62% of the retail value of a steer in 1980, but only 42.5% in 2009.  In the poultry industry today, a grower makes 34¢ per bird, while the processing company however on average makes $3.23 a bird.

According to Vilsack, the proposed rule would provide the following protections:

• Provide further definition to practices that are unfair, unjustly discriminatory or deceptive, including outlining actions that are retaliatory in nature, efforts that would limit a producer’s legal rights, or representations that would be fraudulent or misleading.  Additionally, the proposed rule reiterates USDA’s position that a producer need not overcome unnecessary obstacles and have to always prove a harm to competition when they have suffered a violation under the Act ;

• Define undue or unreasonable  preferences or advantages;

• Establish new protections for producers required to provide expensive capital upgrades to their growing facilities, including  protections to ensure producers  have the opportunity to recoup 80 percent of the cost of a required capital investment;

• Prohibit packers from purchasing, acquiring or receiving livestock from other packers, and communicate prices to competitors;

• Enable a fair and equitable process for producers that choose to use arbitration to remedy a dispute.  Additionally, clear and conspicuous print in the contract will be required to ensure producers are provided the option to decline the use of arbitration to settle a dispute.

• Require that companies paying growers under a tournament system provide the same base pay to growers that raise the same type and kind of poultry, including ensuring that  the growers pay cannot go below the base pay amount;

• Provide poultry growers with a written notice of a company’s intent to suspend the delivery of birds under a poultry growing arrangement at least 90 days prior to the date it intends to suspend the delivery;

• Improve market transparency by making sample contracts (except for trade secrets or other confidential information) be made available on GIPSA’s website for producers;

• Outline protections so that producers can remedy a breach of contract;

• Improve competition in markets by limiting exclusive arrangements between packers and dealers.

The proposed rule will be published in the June 22, 2010, Federal Register. GIPSA will consider comments received by August 23, 2010.  Comments may be sent via e-mail to comments.gipsa@usda.gov or sent by mail to Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW, Room 1643-S, Washington, D.C. 20250-3604.  Copies of the proposed rule and additional information can be found at: www.gipsa.usda.gov by clicking on Federal Register.

Milk Producers Council blasts comments by IDFA’s CEO regarding supply management

California’s Milk Producers Council expressed outrage regarding comments made by Connie Tipton, CEO of the International Dairy Foods Association (IDFA), regarding dairy producer efforts to establish a supply/growth management mechanism.

In a speech to IDFA’s Washington Conference, June 16 (“Drawing a Line in the Sand against Supply Management” http://www.idfa.org/news–views/details/4848), the speech offered sharp criticism towards efforts within the dairy farmer community to develop a tool to balance milk production with consumption.

“Coming from a representative of our nation’s processors, these comments should anger every dairy farmer across the country,” said Rob Vandenheuvel, MPC general manager.   “As an industry, dairy farmers have gone to great lengths to provide our processors with opportunities to profitably operate.  With virtually guaranteed profit margins in the form of ‘make allowances’ and a government price support program that guarantees a buyer for some of their products even when dairy markets collapse, processors have been largely insulated from market risk.

“So why would IDFA, representing many of these processors whom dairy farmers have protected for so many decades and continue to protect, be so strongly opposing efforts to maintain better balance between the production of milk by our farmers and the demand for that milk?  It’s simple: These processors want to control the supply of milk and ultimately control the dairy farmers.”

In her speech, Tipton mentioned two main efforts to implement a “supply management” proposal in Congress: H.R. 5288, the “Dairy Price Stabilization Act of 2010” (www.stabledairies.com).

“This is a stand-alone proposal that would provide dairies with a tangible, financial incentive; not a ‘quota,’ as described by Ms. Tipton, to manage future growth in milk production, while continuing to provide an opportunity for any dairy that wishes to expand or any individual that wishes to start a dairy,” Vandenheuval said.  “Ms. Tipton’s description of this proposal in her speech, using words like ‘quota’ and ‘tax,’ is a clear indication that she doesn’t have a real understanding of H.R. 5288,” said Vandenheuvel.

The second proposal is a broader proposal outlined by the National Milk Producers Federation (NMPF).  The multi-pronged approach includes a “Dairy Market Stabilization Program,” which resembles the concept of H.R. 5288 – giving the industry a tool that will help keep the supply and demand for milk and dairy products in better balance (www.nmpf.org).

“The extreme ‘booms’ and ‘busts’ that are becoming commonplace in the dairy industry are destroying both the dairy farmers and the end-users of dairy products,” continued Vandenheuvel.  “Dairy farmers have seen the economic devastation of the ‘busts’ – with industry experts estimating that the 65,000 dairies in the U.S. lost more than $10 Billion in 2009 – and our consumers pay the price of the ‘booms’ – most recently with record-high prices at the stores in 2007 and 2008.  The dairy industry is market-driven, so while it is unrealistic and unwise to aim at eliminating price volatility, we can successfully reduce these extreme price swings if we do a better job of producing what the market needs, rather than arbitrarily producing as much as possible.  And that’s the simple goal of these two proposals blasted by Ms. Tipton.

“It’s unconscionable that the one sector of our industry that is largely protected from this volatility – the processors that stand between the farmers and the consumers of dairy products – would take such a bold and negative position against the dairy farmers’ attempts to achieve better balance and economic sustainability.

“For many years, IDFA has advocated the expanded use of forward contracts between dairy farmers and the processors that purchase their milk.  These contracts in and of themselves are a form of ‘supply management.’  But a key difference between that form of ‘supply management’ and the proposals blasted by Ms. Tipton is that under forward contracts, processors dictate the terms of the milk production and control the supply of milk.  Dairy farmers across the country have seen that type of system used broadly in the poultry and pork industries, and have seen the result: a farmer community that is dominated by the processors of those livestock products.  That is why dairy farmers have resisted these policies in the past and are continuing to explore proposals to achieve better balance in the supply and demand of milk, while maintaining control over our own production and our own future.”

Ms. Tipton noted in her speech that “there is no starting point with room for discussion on supply management – we oppose it in all of its forms and permutations.” To that point, Vandenheuvel concluded, “I strongly urge Ms. Tipton and the rest of IDFA to engage dairy farmers in how we can improve the proposals being discussed, rather than spreading the propaganda that is littered in Ms. Tipton’s speech.”

Wisconsin livestock siting standards committee named

Technical standards used in permitting new or expanding livestock operations will be reviewed by a Livestock Siting Technical Expert committee named recently by Secretary Rod Nilsestuen, Wisconsin Department of Agriculture, Trade and Consumer Protection.

Nilsestuen convened the technical committee to review water quality, odor, runoff management and other standards used by local governments in permitting livestock operations under the Livestock Facility Siting Law.

The work of this committee is part of DATCP’s four-year review of the siting law, which began with the department’s presentation of an evaluation report to Board of Agriculture, Trade and Consumer Protection at their May meeting.

“By law we must appoint a committee of technical experts to provide advice on the siting standards and the Livestock Facility Siting Rule which is also known as ATCP 51,” Nilsestuen explained. “The committee can provide expert guidance to address the lessons learned over the past four years of the siting law and the comments expressed during the listening sessions that were held earlier this year on the law and rule.”

The 16 experts appointed by Nilsestuen come from both public and private sectors, and possess expertise similar to that of the group who assisted with the livestock siting rule development in 2004. In addition to expertise in the areas of permitting livestock operations, air emissions, odor, nutrient management, runoff management, and agricultural engineering, the committee has members with expertise in areas such as land use planning.

The committee will review the current siting standards to ensure they provide for responsible growth of an operation while correctly balancing other considerations such as public health and safety. Specifically, the committee will consider the following standards in light of the latest research, field experience and other factors:

  • Livestock structures and their location on the property which would include structural and manure storage setbacks from property lines.
  • Odor and air emissions including an assessment of odor credits for structures and manure handling practices.
  • Nutrient management which includes identifying required documentation within the nutrient management plan.
  • Waste storage facilities as well as clarifying waste generation calculations.
  • Runoff management including the consideration of federal standards for controlling leachate from stored feed.
  • Determining the completeness of the application materials for a siting permit.

The appointments to the Technical Expert Committee are:

  • Tom Bauman, agricultural runoff management coordinator, Wisconsin Department of Natural Resources
  • Dave Buss, private sector nutrient management consultant, Waterloo
  • Patricia Cicero, Jefferson County resource management specialist
  • Jeff Endres, farmer experienced with nutrient management and land use planning, Town of Springfield, Dane County
  • Dennis Frame, co-director, Discovery Farms Program
  • Jerry Halverson, Manitowoc County conservationist
  • Brian Holmes, professor, biological systems engineering, University of Wisconsin – Madison
  • Carrie A.M. Laboski, soil science professor, University of Wisconsin – Madison
  • Michael A. McGinley, consultant and national expert in odor evaluation, Lake Elmo, Minn.
  • Pat Murphy, state resource conservationist, USDA Natural Resources Conversation Service (NRCS)
  • Ed Odgers, chief of conservation engineering, DATCP
  • Dean Perlick, Dodge Planning & Economic Development
  • John M. Roach, professional engineer, Roach & Associates, LLC, Seymour
  • Robert L. Thiboldeaux, toxicologist, Wisconsin Department of Health Services
  • Jeffery Voltz, Wisconsin Department of Natural Resources representative from the Cooperative Environmental Assistance program
  • Richard Wagner, engineer and co-owner of Quantum Dairy, Weyauwega

The committee will be co-managed by DATCP staff Ed Odgers and Richard Castelnuovo.

The committee will be assisted in its work by advisors including John Ramsden, NRCS State Conservation Engineer; Andrew Craig, DNR Nutrient Management Specialist; Larry Jacobson, Professor and Extension Engineer, University of Minnesota; and Mark Powell, professor, Department of Soil Sciences, University of Wisconsin-Madison.

The committee will hold their first meeting in July.

To be included on a mailing list for updates on the work of the technical expert committee or for information about the committee, contact Mike Murray, livestock siting specialist, (608) 224-4613 or mike.murray@wisconsin.gov.

Pennsylvania: ‘Stranded’ premiums never made it to farmers

Dairy producers, consumers applaud PMMB decision as first step, but questions remain about ‘stranded’ milk premiums

Pennsylvania Senate sets June 29 hearing

HARRISBURG, Pa.—An estimated $60 million in over-order premiums were paid by Pennsylvania consumers in state-minimum retail milk prices last year, but conservative estimates are that $16 million did not reach dairy farmers, who are the intended recipients. This issue of ‘stranded’ premiums was revealed in testimony during a public hearing on milk price transparency conducted last December by Sen. Mike Brubaker, chairman of the Senate Committee for Agriculture and Rural Affairs.

This premium portion of the consumer milk price rose from 21¢/gallon at the start of 2009 to more than 25¢/gallon by November. For June 2010, it is close to 27¢/gallon ($3.18/cwt).

Set by the Pennsylvania Milk Marketing Board (PMMB), in accordance with the Commonwealth’s Milk Marketing Law, the over-order premium is intended to help Pennsylvania dairy farmers when the federal minimum milk prices are insufficient to cover production costs. Last year, dairy farmers received milk prices that averaged $100 per cow per month less than it cost them to produce the milk, and this year’s prices hover around breakeven.

“If Pennsylvania consumers have to pay the 25¢ extra per gallon, they want to know this money is going to the farmers,” observes Lance Haver, director of the Consumer Affairs Office for the City of Philadelphia. “The milk dealers and retailers already have their cost recovery and a profit margin built separately into the retail price that we as consumers pay for milk. Then there is this premium consumers pay that is specifically meant to help the dairy farmers in undue times. If some of this money is not being passed through, then who is keeping it?”

The Dairy Policy Action Coalition (DPAC) of grassroots producers would also like to know the answer to this question. DPAC is focused on milk pricing and market transparency at the federal level, but the coalition’s state issues action group has been attending PMMB hearings and meeting with state lawmakers, seeking transparency and future direction for Pennsylvania’s Milk Marketing Law.

Part of the problem is milk plants on the state’s borders have been able to ‘swap’ their in- and out-of-state milk purchases and sales through creative accounting. Until now, regulations allowed milk handlers to reduce their obligation to Pennsylvania farmers by the percentage of out-of-state milk they purchased—even if they had regulated Class I fluid milk sales within the state that were equal to the amount of milk they purchased from in-state farms.

In February, the PMMB staff, with the support and blessing of Governor Ed Rendell and the Pennsylvania Department of Agriculture, brought a proposal to the Milk Marketing Board seeking to end the ‘swap.’

In a 3-0 decision on June 2, the Board favored the staff’s proposed change in the premium calculation for dealers and handlers that have sales of Class I fluid milk products within the state and purchase the milk from both in- and out-of-state farms. The move is expected to recover between $5 and $7 million in ‘stranded’ consumer-paid premiums to be passed through in the price paid to farmers.

According to the PMMB decision, effective Oct. 1, 2010, the full over-order premium rate will be payable by milk dealers to Pennsylvania producers on either the pounds of milk purchased from in-state farms or the pounds of Class I fluid milk sold to in-state consumers—whichever is the lower.

“Any step toward collecting any ‘stranded’ premiums should be applauded, but we are a long way from the end,” said Annville dairy farmer and DPAC vice-chair Daniel Brandt. “That might account for $5 to $7 million, but there are still concerns about where the rest of this money is going and how well it is distributed to the dairy farmers.”

“We are on a long road toward regaining the original purpose of the PMMB,” adds Womelsdorf dairy farmer Zach Meck, also a DPAC charter board member. “The decision of the PMMB in June is only one small piece of the entire puzzle.”

Richland dairy farmer and DPAC board member Nelson Troutman sees the PMMB’s recent unanimous decision as an example of what can be accomplished if people “work together and don’t give up. If we as farmers had not been involved in talking with our legislators or being present at the PMMB meetings, we may not even be at this point,” he relates. “As dairy producers, we need to stay informed and involved through the DPAC network.”

Vigilance may be more important than ever. During the PMMB hearing in February, witnesses stated that a board decision in favor of the farmers could prompt dealers to replace Pennsylvania milk with more out-of-state milk for sale to Pennsylvania consumers, or to divert Pennsylvania milk to out-of-state distribution centers before resale to Pennsylvania retailers and consumers, thus avoiding any obligation to pass the premium through to the farmers.

“It doesn’t matter if the dealer’s milk comes from in or out of state, that premium should not even be figured into their business model,” says Brandt. “That premium should be set aside for the dairy producers. There should be no incentive to the milk dealers to get out-of-state milk. Every penny of that premium should go into a pool and be paid back to the farmers because the law says that is what that premium is designed for.”

The concerns of farmers and consumers are not lost on the Pennsylvania State Legislature. In early December, Senator Mike Brubaker (R-36th), chair of the Agriculture and Rural Affairs Committee, conducted a public hearing on milk pricing transparency.

Later that month, DPAC sent letters to the State Attorney General and State Auditor General asking them to look into the issue of ‘stranded’ premiums. Attorney General Tom Corbett’s office responded with an information gathering meeting on April 1, and Auditor General Jack Wagner’s office sent an April 20 reply, stating that it would monitor the concern in consideration of a performance audit.

Since then, DPAC dairy producers have had separate meetings with Sen. Brubaker, Senate President Pro Tempore Joseph Scarnati (R-25th) as well as House Ag Committee Chairman Mike Hanna (D-76th) and House Ag Committee Minority Chair John Maher (R-40th) on the issues surrounding the state’s Milk Marketing Law. On June 29, ‘stranded’ premiums will be the subject of a Senate Ag Committee hearing at the Capitol.

“This is a bi-partisan issue,” notes Meck.. “We appreciate the interest of the Governor and lawmakers because there are more loopholes to sew up. That was obvious at the PMMB hearing in February, where a witness for the milk dealers actually stated they would find ‘new shell games’ if the Board voted in favor of the PMMB staff’s request. This shows us that changes in the law are necessary to carry out PMMB’s original purpose, which has become unrecognizable today. Much has changed over the past 10 to 20 years while we as farmers were busy working hard, taking care of our animals, and planting and harvesting our crops.”

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DPAC is a coalition of grassroots dairy producers actively participating, with a unified voice, in the policies and issues affecting milk pricing. The coalition was formed in November 2009 and has a 20-member board made up of active dairy producers from Pennsylvania, Ohio and New York, along with adhoc producer members serving on action groups from Tennessee, Kentucky, and Indiana. Funded by donations instead of dues, DPAC is corresponding with producer groups in seven states and with more than 2000 producers in 23 states. For more information, visit www.dpac.net or call 800.422.8335.


Fresh cow repro: Taking it to next level

CLOVIS, NM – What do we think about when we ponder fresh cow repro? Probably many things, but ask yourself how much of that thinking is outside the box of what we actually do?

Pfizer Animal Health has taken out-of-the-box thinking on fresh cow reproduction to a new level as part of their dairy wellness plan management program. Their technical service veterinarians and outside programmers, focused on training territory managers on how to use extensive amounts of computer software data.

“This helped to make it fairly simple for us to look at the fluctuation of data across the board and be able to say everything looks good, except here,” said Carlton Flatow, Pfizer’s New Mexico territory fresh cow reproduction manager. “Then we have the option to go back to the dairyman’s software program and drill down on that a little further.”

Pfizer noticed when tracking herd movement and progress from this program and keeping up to date with the dairyman, things on the dairy seemed to go better.

“Whether it meant sales of our products or not, overall the herd was happier, economically they performed better, and when they did use our products, they were used more appropriately,” said Flatow.

From significant positive feedback and the help Pfizer was able to provide the dairyman, a fresh cow reproduction team was born. Pfizer’s Chris Roeder was able to develop a task force of territory managers to implement this program.

“It’s really founded upon evidence-based selling. We look very aggressively at the records as a starting point and then we are out with the cows and the people at the dairy. Following the good things as well as the bad and looking for ways to make the facility more efficient,” said Flatow.

From that point, Pfizer representatives will get together with the dairy’s veterinarian, nutritionist, and AI company to figure out what the challenges are and determine the direction they are going to go to make the dairy more efficient, better economically, and have a happy, healthier herd.

“Everybody gets together and works for the common good. There is always so much going on at a dairy that it becomes routine. When team members from the outside visit, they can often see ways to improve the operation,” Flatow stated.

Collaborative effort

Pfizer pulled together a collaborative team from across the country; people who have masters and PhDs along with people from the industry that they can bounce ideas off of to get better results for the dairymen. The team has three goals in mind: 1) appropriate use of the products, 2) economic health of the dairy, and 3) the overall health of the dairy.

Through research and communication on the dairy they are able to resolve things that could be potential problems. Flatow works with all managers: the dairyman, herdsman, milkers, and feeders to find out what they think is happening and compares all of the information. With that, he is able to find out how things are being done and what needs to happen to improve efficiency and herd health.

With the current state of dairy industry economics, the fresh cow repro team members are dotting their I’s and crossing their T’s. “We are going through protocols making sure cows are being treated with the correct drugs for the right amount of time, and making note of the proper withdrawal times on those drugs,” Flatow declared. “We are like a business partner on the dairy and have a different stake in the business. We are able to facilitate communication between various participants and how they all come together.”

How does it all work?

Dutch Valley Farms of Clovis, NM sheds some light on how the fresh cow repro management program has worked for them. “As we grew we knew we needed to work together as a management team and find a good product and a good system to be working with,” said Dan Visser owner of Dutch Valley Farms. Visser has been with the fresh cow program for a few years and found he was able to use what he was doing and share ideas back and forth.

“What turned us on to the fresh cow repro program was that they were willing to work with us as a management team and with our employees, because it’s not just a medicine program. Pfizer wants to help you educate your employees,” said Visser.

“It’s a huge plus, it helps them and the employees, and its one of those things if you teach them – if it’s here or somewhere else in life – it’s a win for us and a win for them,” Todd Silveira, dairy manager said.

The program helps educate the employees and makes them realize they are important. As well as giving them a better understanding of why certain protocols are adopted and need to be followed.

“If you are not educated about your role on the dairy, then they have no clue what they are doing either, or why they need to be doing it,” interjected Visser. “It becomes a disadvantage for us if they don’t understand what they are doing.”

The program for Dutch Valley becomes a friendly reminder for all parties involved and makes clear what they need to be doing. “Sometimes you become stale in the job you are doing and you need to be reminded what you should be doing,” said Brian Visser.

As the dairy industry and bovine world are ever changing with drug protocols and animal welfare, it becomes very important to keep up with it all. Dutch Valley Farms believes that with the program it is a good constant reminder of keeping up your protocols and engaging and educating your employees. Without proper education, it’s hard to expect employees to know what they are doing and why it is so important to follow through.

This year Pfizer has been putting on specific schools for maternity crews, hospital and parlor managers, which has helped employees become better at their jobs.

“You get guys together from different dairies and they talk and they educate. Then we can take what we want from that and put it into place if we don’t already have it in place,” said Silveira.

The educating and training becomes a joint effort between the dairymen, manager and employees and it brings everyone on to the same page. “Pfizer’s Dr. Juan Pedraza, being fluent in Spanish, creates a comfortable atmosphere for our employees to sit and listen and he facilitates a lot of interaction,” observed Dan Visser.

The program has provided fine-tuning for specific jobs on the dairy, while holding people responsible. “You cannot put enough emphasis on education, because a lot of the people that work on the dairy are not well educated,” Visser stated.

“It’s making them care, especially out here on the dairy, if they care here then they are going to care at home,” explains Silveira.

“They understand more of the science behind it too, besides just what they see,” said Brian Visser.

“Dairymen are good at just hiring people and throwing them out there to do a job. But, if you don’t teach them, how are they ever going to know what is right and what is wrong?” Silveira declared.

Changes implemented on dairy

The management tool that Pfizer provided has given Dutch Valley a leg up on different practices to become more efficient. They went from locking cows up and working them twice, to one time a day. They saw the trend of intakes going down, reversed to intakes coming up.

“Everything we do we try to improve on and do our homework,” Silveira explained.

“As a dairyman, I think it makes me feel a little more comfortable, because we are working as a team on these programs. It also makes you feel more comfortable when you can see things are being done properly,” Dan Visser said.

Pfizer has help Visser and his team focus on individual groups such as the hospital herd, calves and maternity. From there they are able to pin point specific problems.

“We live with this operation daily, so when the Pfizer management team comes in every couple of weeks they often spot something that we are missing,” stated Silveira.

“What’s nice about Pfizer is that it’s not just a medicine company it’s a management company,” said Visser. “They have found that no longer is it just about the medicine, it’s about the management expertise that can be provided to large dairies, and tools of support that help to make the dairyman better.”

One of Dutch Valley’s main goals before they came into this program was to streamline their vaccinations program on all areas of the dairy. Their other goal was to educate their employees. Both goals have been met successfully, declared Visser.

“The work is ongoing. It’s not like we have accomplished everything. So we continually tweak our operation,” he said.

The program has been great for Dutch Valley and Visser praised Flatow and Dr. Juan Rodrigo Pedraza for the work they have done.

“It has become a business relationship that has developed into a friendship, and we hold them all in high regard,” declared Silveira.

FYI:

■  To contact Dan Visser at Dutch Valley Farms, Clovis, NM, call 575-791-8538 or e-mail him at, visser01@msn.com

■  To contact Carlton Flatow, Pfizer Animal Health, call 575-749-5440 or e-mail him at,
Carlton.Flatow@pfizer.com


Handle sexed semen with care

By Joseph Dalton

Herd managers, veterinarians and consultants monitor production data, health events, and reproductive protocol compliance regularly; however, little time is spent evaluating semen storage and handling. Unfortunately, this is a critical oversight, as every successful AI program begins with proper semen handling.

Common practice

The use of sexed semen has become common. It is important to remember, however, that sexed semen is a different product than conventional semen. To achieve 90% purity of a specific sex, sperm are treated with a fluorescent dye and X and Y chromosome bearing sperm are sorted with a flow cytometer/cell sorter based on intensity of fluorescence following exposure to a laser.

At North American AI studs, on-site sperm sorting services are currently provided by Sexing Technologies (Navasota, TX; www.sexingtechnologies.com).

There is ample data in dairy heifers describing an average conception rate to sexed semen of 70 to 80% of the conception rate to conventional semen used at first service.

The specific reasons contributing to lower fertility following AI with sexed semen, as compared to conventional semen, are currently unknown. Nevertheless, given the potential negative effect of the procedures necessary to sort sperm, it is clear that it is important to handle sexed semen with great care to optimize fertility.

All frozen semen must be stored, thawed and handled properly to maintain sperm viability and offer the greatest opportunity to obtain optimal fertility. Commercial AI studs, through stringent collection, processing and quality control, provide a highly fertile product to their customers. When semen is purchased and transferred to a farm or professional AI technician’s liquid nitrogen tank, the maintenance of male fertility is in the hands of the producer, farm employees, and AI technicians.

The liquid nitrogen tank consists of a “tank within a tank,” with insulation under vacuum between the inner and outer tanks. Liquid nitrogen tanks should be stored in a clean, dry area, preferably on a wood stand to avoid possible corrosion (due to contact with wet or damp concrete). Also, the liquid nitrogen tank should be securely fastened during transportation to avoid tipping the tank over and damaging the tank, which usually results in the premature loss of liquid nitrogen.

Avoid exposure

A detailed inventory of semen should be easily accessible, so that straws may be located and removed from the tank quickly to avoid exposure of semen to ambient temperature.

When removing a straw from a liquid nitrogen tank, it is imperative that the technician keep the canister, cane and unused semen straws as low as possible in the neck of the tank.

A best management practice is to keep all unused straws below the frost-line in the neck of the tank. Keep in mind that although the temperature of liquid nitrogen is -320°F, there is a temperature gradient in the neck of the tank.

Temperature variation

For example, a tank with a neck tube that measures 6 inches long may have a temperature of -103°F in the middle of the neck (3 inches below the top), while the temperature at 1 inch below the top may be +5°F.

Why is the temperature in the neck of the tank important? Because sperm injury (as judged by sperm motility) occurs at temperatures as low as -110°F. Furthermore, injury to sperm cannot be corrected by returning semen to the liquid nitrogen.

As would be expected, the temperature in the neck of the tank becomes warmer as the liquid nitrogen level in the tank decreases. Therefore, another best management practice is to monitor the liquid nitrogen level in your tank regularly, and never let the tank go dry.

More sensitive to errors

Sexed semen for commercial use is currently packaged in 0.25-mL straws with each straw containing 2.1 million sperm. Although 0.25-mL straws containing sexed semen may be handled similarly to 0.5-mL straws, the smaller diameter makes them more sensitive to semen handling errors. Recent research from ABS Global demonstrates the decline in sperm motility over time when sexed semen is not handled properly (Figure 1).

As shown in Figure 1, providing thermal protection for sexed semen at normal body temperature (98.6°F) results in the greatest maintenance (least decline) of progressive motility, as compared with sexed semen held at 108°F (heat shock) or 40°F (cold shock), both of which result in sharp declines in progressive motility over time.

Maximize potential

To maximize the potential fertility in each straw of sexed semen, extreme caution must be exercised during semen handling. Conception rates will most likely be maximized when AI personnel:

n Accurately identify heifers in estrus.

n Follow the AI stud’s recommendations for thawing semen.

n Maintain thermal protection of straws during AI gun assembly and transport to the heifer.

n Use appropriate hygienic procedures.

n Deposit semen in the uterus of the heifer as soon as possible (within 5 to10 minutes after thawing).

Frozen semen must be stored, thawed and handled properly to maintain fertility and offer the greatest opportunity to obtain optimal conception rates.

In a recent report of commercial data compiled by Select Sires, Holstein heifer herds that reported ≥ 50 services to sexed and conventional semen had an average conception rate to sexed semen (for all services) of 45% (range 27 to 70%) compared to 56% (range 34 to 83%) for conventional semen.

The range in fertility achieved following the use of sexed (and conventional) semen is quite large and may be due to many factors, including semen storage and handling errors. Handle sexed semen with care – and consider evaluating semen handling procedures regularly as every successful AI program begins with proper semen handling.

FYI:

■  To contact Joseph Dalton at University of Idaho, Caldwell Research and Extension Center, call 208-880-1050 or e-mail him at, jdalton@uidaho.edu


The flexible irrevocable trust

It’s your money

By Verlyn de Wit

One reason many of our business transactions are irrevocable is to get the tax treatment we desire. Consider that:

• Gifts to charity are not tax deductible if you can take it back later.

• You must “cut all the strings” of  income and enjoyment, or property given to children will be in your taxable estate.

Revocable vs. Irrevocable

I can’t think of any area of the law where the concept of revocable (ability to change or undo) and irrevocable (you get the picture) is more important than in the area of trusts.

For example, assume that your revocable living trust provides a $100,000 gift to your church at your death. You won’t receive a charitable deduction now since you can remove the gift provision from your trust at any time. However, if you place $100,000 in a qualified irrevocable trust, you will receive a charitable deduction today and continue to receive income from the trust even though the money doesn’t pass to charity until your death.

Irrevocable trusts can be powerful!

Leaving “goodies” on the table

Folks have a natural aversion to doing anything irrevocably.  Unfortunately, substantial benefits are sometimes left on the table to avoid the unlikely event of a negative turn of circumstances.

One key area where I have seen people forfeit great gain because of fear of the unforeseen is with life insurance ownership.  Life insurance is taxable in your estate if you own the policy, or have any “incidents of ownership.” These “incidents” may be as small as the ability to borrow from the policy or change its provisions, even if the powers have not been exercised. The penalty of having life insurance included in your taxable estate is huge – up to 45% of the policy death benefit can go to taxes. A $1 million policy can be whittled down to a mere $550,000 with Uncle Sam as the unexpected beneficiary.

The irrevocable rescue

To avoid this disaster, folks need to establish an irrevocable trust as the owner of their life insurance. If properly drafted, this irrevocable trust would save $450,000 in taxes in our example above. But now the questions arise, “What if one of my children goes off the deep end?” or “What if my children need the money in the trust before I die?”  These are good questions that need to be asked.  And you know I wouldn’t ask them unless I had an answer!

Irrevocable and flexible intersect

One key requirement of the irrevocable life insurance trust is that the Grantor (person who establishes the trust, and usually is the person on whom life insurance is purchased) may not change the terms of the trust. It’s like the country song, “What part of irrevocable don’t you understand?”

However, in the last number of years I have seen leading-edge attorneys draft irrevocable trusts that establish the position of “Trust Protector” (TP). All trusts have a trustee, but the TP role is entirely different. The TP can change the terms of the irrevocable trust while it is in operation. The irrevocable becomes flexible.

The provisions which can be changed are limited, and it would probably be best not to have the grantor’s attorney, or a beneficiary of the trust act as the TP. All of this requires competent legal expertise – we are now performing brain surgery on an irrevocable trust!

Here are some of the powers I have seen given to the TP:

• Terminate the trust.

• Impose terms and conditions under which the beneficiaries may receive property.

• Change the beneficiary(ies) of the trust to another trust.

• Modify the financial powers of the trustee.

• Modify the terms of the trust to achieve a desirable tax result.

• Remove the trustee.

Conclusion

The TP may be a new concept to some attorneys, and therefore viewed as “risky”.  So don’t subject your counselor to an immediate on-the-spot exam.  If you want to sound sophisticated and informed perhaps you’ll want to say, “I have reading about using a Trust Protector in an irrevocable life insurance trust, can I come over next week to talk about it?”

Your attorney will probably say, “That’s a good idea, after all, It’s Your Money.”

FYI

Verlyn De Wit helps successful dairy producers make smart decisions about their money.  He can be reached toll-free at 1-888-468-1728 by e-mail at vdewit@sammonsrep.com or snail-mail at 1270 Eastside Dr., Sioux Center, IA  51250. Securities offered through Sammons Securities Co., LLC. 4261 Park Road, Ann Arbor, MI  48103. Member FINRA and SIPC.

Neither Western DairyBusiness nor Verlyn De Wit is qualified to offer legal or tax advice. Consult your attorney and/or tax professional for a qualified opinion regarding your personal situation.

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