Archive for August, 2010

Frontier Equipment introduces new corn heads to boost harvesting performance

Frontier Equipment offers two wide-row (36-inch and 38-inc) corn heads, the CH2208, eight-row, and the CH2112, 12-row, with new design features to increase harvest capacity in the field.

Frontier Equipment offers two wide-row (36-inch and 38-inc) corn heads, the CH2208, eight-row, and the CH2112, 12-row, with new design features to increase harvest capacity in the field. The corn heads feature an 18-inch diameter cross auger for increased crop handling capacity. Reverse auger flighting lessens ear tossing and improves dry-trash feeding. Dual auger strippers also reduce grass, vine or wet downed corn from wrapping around the auger. Gravity guides corn into the lower entrance of the auger bed floor. This stops free grain loss, prevents back feeding and decreases ear damage. Cleanout doors on each end of the corn head minimize time that operators need to spend cleaning under augers.

Rugged gathering chains also feature larger, taller lugs, which significantly improves movement of the corn through the row units. Gathering chains only need to be adjusted once per season, reducing overall maintenance. Adjustable Perma-Glide™ points and deck covers are easy to fold up for better row unit access. This improves serviceability and makes trailer transport safer and easier. For more information on the new Frontier Equipment CH2208 chopping and CH2112 non-chopping corn heads, see your local John Deere dealer or visit www.JohnDeere.com.

New Kuhn bale processor

The new Kuhn Primor 3570 bale processor can process large square bales up to 4' x 4' x 9', as well as round bales that are 4' wide and up to 6' 6" in diameter.

The Kuhn Primor 3570 bale processor is ideally suited for the distribution of bedding in bedded-pack barns, as well as direct feeding of hay, silage and baleage. This machine can process large square bales up to 4′ x 4′ x 9′, as well as round bales that are 4′ wide and up to 6′ 6″ in diameter, and is well equipped to meet the needs of producers with medium- and large-sized operations.

The Primor’s adjustable feed regulation system provides greater consistency in bale processing, with 6″ to 12″ cutting lengths, and also consistent distribution to handle varying materials. The bale chamber has been lengthened versus previous models, increasing the total capacity and making it better suited for direct loading of silage with a bucket. The increased length has also improved handling of large square bales and allows loading of up to two round bales simultaneously. The Primor 3570, with drawbar attachment and standard CV-PTO, is maneuverable in tight spaces. Operator convenience is further enhanced by the addition of the optional 300° swivel chute with controls integrated into a single joy stick for simple adjustment.

Kuhn North America, Inc., of Brodhead, Wis., manufactures agricultural and industrial equipment, specializing in spreaders, mixers, hay tools, and tillage tools. Kuhn- and Kuhn Knight-brand products are sold by farm equipment dealers throughout the United States, Canada and many other countries.

For more information, visit www.kuhnnorthamerica.com or e-mail: scott.borgwardt@kuhn.com.

BUFFER-LYX® receives patent

Patent number US7718187 has been issued for BUFFER-LYX® dairy low-moisture block supplement, a CRYSTALYX® product, for maintaining rumen health in ruminants. This newly patented product demonstrates the effectiveness of a specifically formulated Low-Moisture Block (LMB) product in helping ruminants – such as lactating dairy cows and feedlot cattle – avoid issues caused by factors that can lead to ruminal acidosis.  High grain diets, irregular or interruptions in feed delivery or consumption, persistent hot weather, inconsistent feed particle size, among others, are all factors that can lead to disruptions in rumen fermentation resulting in significant performance losses and poor animal health.

A study, conducted in July, August and September of 2009, compared two groups of cattle that were producing 100-plus lbs. of milk.  The research showed  milk production from the cattle on BUFFER-LYX® had only a slight drop-off in milk production, while the cattle without BUFFER-LYX® lost about 8 lbs. of milk production due to multiple days of heat stress.

“Dairy cattle are always fighting to overcome obstacles that keep them from consuming the nutrients they need on a consistent basis for optimum milk production and health,” Dr. Dan Dhuyvetter, director of research and nutrition services for Ridley Nutrition Services, said. “Warmer temperatures during the summer will intensify these problems. It can be difficult to detect subacute ruminal acidosis due to the subtle decline in performance. But those declines can add up to a dramatic decline in overall milk production.”

BUFFER-LYX® is a LMB made of molasses that has buffer and alkalinizer ingredients. It is specifically designed so the block is consumed by licking, rather than chewing. The licking action increases salivation, a key component of the patent and effectiveness of the LMB, which acts as a natural buffer for the maintenance of overall rumen health. Learn more at www.dairylyx.com. For more information, contact Dr. Dan Dhuyvetter, Ridley Nutrition Services, e-mail: dan.dhuyvetter@ridleyinc.com or phone: 507-388-9488.

Renovation: Sometimes a better option

By Ron Goble

HILMAR, Calif. – Dairy milk parlor construction activity is way down across the West, especially in California where some construction firms are experiencing  one of their biggest lulls ever.

“We’ve had three or four dairymen who originally planned on building a new parlor from the ground up, but decided to go with extensive remodels instead, which utilized a significant portion of the existing structure,” said Kevin Clarot, partner with John Pereira in Modern Dairy Inc., Turlock, Calif. “In these tough times, resorting to a renovation allowed them to stretch their resources while realizing overall parlor efficiency upgrades that penciled out for them.”

Pereira said Modern Dairy has also felt the effects of the economic downturn. They have gone from 44 to 31 employees during the last 18 months. Most cutbacks have been on the installation side of the business. Their service side of the operation is still going strong. “This is the first time in four or five years that we haven’t had major construction projects scheduled well down the road,” Clarot said.

Recent remodel

One of the last major renovations they completed was for Wickstrom Jersey Farms, Inc. in Hilmar, Calif. A family corporation between Duane, Mike and Scott Wickstrom, this renovation included turning a 40-year-old double-7 herringbone into a holding pen, which will funnel cows into a new 60-stall WestfaliaSurge Magnum rotary built adjacent to it.

“Mike and Scott have told us more than once that they couldn’t afford NOT to do the renovation,” Kevin said. “They needed to improve efficiency so they could be profitable again.”

“The old parlor was so inefficient and repair bills were a constant drain,” Mike said. “Not only was the parlor 40 years old, but we were spending way too much money keeping up with the repairs. We started the renovation project when milk prices were still pretty good. When the low milk prices hit bottom, we had no choice but to finish what we started.”

From generation to generation

Mike said he and Scott represent the third generation of Wickstroms dairying in the area. They’ve always had Jerseys and shipped their milk to Hilmar Cheese. Today they are also stockholders in Hilmar Cheese, which he called a good investment.

Their grandfather, Oliver Wickstrom, was the first generation to dairy in Central California. Their father, Duane and his brother Vern were partners for a time and then split their herd in 1968 to have their own operations. Duane was milking 400 cows on a leased facility when he built the current facility in 1973. It featured twin double-5 herringbones when he and wife, Pat, first started on their own. He later converted the parlor to double-7s.

Mike, Scott, Duane and Pat, incorporated in 1980 after the boys earned dairy science degrees from Cal Poly, San Luis Obispo. Their registered Jersey herd grew to 1,500 milk cows over time and after the rotary came online, cow numbers increased to 1,800.

Besides their original dairy, they have leased a 500-cow dairy (Wickstrom Bros.) also in Hilmar, and are 50-50 partners with the Nyman family in another operation milking 4,000 cows at Redtop Jerseys near Chowchilla.

Duane, 76, is still involved in the dairies, but spends most of his time overseeing construction projects at Redtop Dairy.

Renovation

Wickstrom explained their renovation process this way: “We took the roof structure off where the old holding pen and milking pits were all in a line and put a new roof over it that included cover for the expanded rotary right next to the old pits. We upgraded the electrical service to handle the new parlor, including new water lines and drainage systems. We also added two new 7,000-gallon milk tanks in a space once used for our office and electrical service room.”

Wickstroms went with a WestfaliaSurge rotary outfitted with a BECO pulsation monitoring system. Mike said their new parlor is extremely high tech and will provide data that will help them make wiser management decisions. “It is a matter of a few key strokes on the computer and you’ve fine-tuned and tweaked the parlor system where it needs it. That will benefit us and make us more efficient in the long run,” he explained.

The computerized system provides them with baseline numbers so they are able to see where they are, and determine where they need to go from there. “We’ve taken some of the problem areas out of the workers’ hands and the system dictates when certain parlor practices are done,” he said. “It allows us to keep the milking machines from being attached too early in the rotary cycle. That way the cow has adequate time to be stimulated for good milk letdown, so when the machine is put on her, she milks out quicker and better.

“We like the consistency of the cow flow with the rotary. The milkers don’t have to walk nearly as much as they did in the old herringbone parlor,” he recalled. “It also allowed us to be on 3X milking schedules.”

Wickstrom said their somatic cell count is right around 200,000, an improvement over the days milking in the old parlor. Milk production is fluctuating between 62 and 66 pounds per cow, generally up 4 pounds per cow per day since their remodel. Butterfat has been at 4.8 and protein at 3,8 – great numbers for excellent cheese production.

Cow comfort

Wickstroms have relatively new freestall barns, but still have a couple old outdated ones that will eventually be replaced. A mister system and fans keep cows cool at the feed bunk and in the holding pen on their way to the parlor.

They process their dairy cows’ manure for all their freestall bedding. They use US Farm Systems to separate the manure solids, which are windrowed and dried, so the finished product is suitable to use as bedding.

“We’ve been using this system for the past four or five years and it has worked well for us and for our cows,” said Wickstrom.

A family operation

Mike and wife Margaret have two children, son Brent and daughter Ashlan. Scott and wife Cindy have two grown children, son Steve and daughter Jennifer. Steve attended Cal Poly and now works with the Wickstrom Bros. Dairy and is involved in their farming operation. Jennifer works for Central Counties DHIA. Brent is a dairy science student at Cal Poly, looking forward to joining the family business after graduation, and Ashlan is a high school senior.

The Wickstroms farm about 400 acres of cropland – both owned and leased ground. It provides about 80% of their livestock silage needs, Mike said.

MIG-L Construction of Hilmar was responsible for all the structural cement work and cinder block additions and extensions for the parlor and the holding pens.

GEA Farm Technologies – 60 stall WestfaliaSurge Magnum Autorotor; Hydraulic drive backup system; Metatron 21 Select milk meters; Ear tag RFID; DairyPlan C21 herd mgmt. software; Stimopuls Apex pulsator; Classic 300 E milking unit; 20 HP Air Force Vac Pump; Dual 30 HP Koolway packaged chiller; 210 gal. milk wash resevoir; Magnum Promotion crowd gate; 120 gal., Super Heater Heat Recovery.

MUELLER – Two 7,000 gal. vertical silos; Accu-Therm 130 plate heat exchanger.

BECO – PulsNexus networked pulsation monitoring.

FYI

■  To contact Kevin Clarot and John Pereira, Modern Dairy Equipment, call 209-668-5350.

■  To contact Wickstrom Jersey Farm, e-mail wjfi@live.com.

Dairy policy forum moves to Midwest

By Dave Natzke

It remains to be seen whether Congress will approve dairy policy legislation this fall. But, like a political campaign, the national debate  continues. That discussion moved to the Midwest on Aug. 18, where the  the Professional Dairy Producers of Wisconsin (PDPW) and Wisconsin Farm Bureau Federation (WFBF) hosted a Dairy Price Forum.

Kicking off the program, Bill Bruins, dairy farmer and WFBF president, said the major challenges facing the U.S. dairy industry include fixing domestic policy issues while addressing the potential for growing global markets.

“To do that, we need to be united,” he said. “For the past couple of decades, we’ve been entrenched in regional warfare over nickels and dimes.” he said.

Bruins said the dairy industry appears to be closer than ever on dairy policy consensus – or at least are in agreement current policies are not working. He also said a recent survey of his organization’s membership found two-thirds  were “bullish” on the future of agriculture.

Shelly Mayer, Wisconsin dairy farmer and PDPW executive director, identified three things the U.S. dairy industry must do to move forward:

1) be a “transitional” industry, giving the next generation of producers, processors and allied industry the ability to serve the next generation of consumers.

2) be financially fit.

3) be socially acceptable, requiring education throughout the food chain, from producer to consumer.

All of this required one ground rule, Mayer said: “We have to look at our industry in a new way, looking for common ground. Our passion can often be our bottleneck. We must focus on our brand – milk. We have to learn, listen and lead, working together.”

DIAC update

Bob Cropp, University of Wisconsin-Madison dairy economy professor emeritus, provided an update on the USDA Dairy Industry Advisory Committee (DIAC). Cropp has participated on DIAC since the death of Rod Nilsestuen, Wisconsin ag secretary, earlier this summer.

Cropp said DIAC’s three subcommittees are scheduled to issue reports at the group’s next meeting, Sept. 23-24. Using recommendations from the DIAC, USDA secretary Tom Vilsack will issue preliminary policy recommendations by December 2010, with a final report due by March 1, 2011, to help direct dairy policy within the 2012 Farm Bill.

Given the diversity of DIAC membership, Cropp expects both a “majority” and ”minority” reports. In addition, he expects any final recommendations will not include any budget increases for dairy programs.

USDEC update

Tom Suber, president of the U.S. Dairy Export Council, provided a summary of the Bain Report, a study of U.S. dairy export opportunities discussed previously in Dairy Profit Weekly/Eastern DairyBusiness (http://dairywebmall.com/dbcpress/?p=4821). He said the U.S. dairy industry had the potential to take advantage of a growing world market, but indicated current dairy policies hinder that potential.

Addressing several topics in a question/answer session, Suber said:

•  banning technologies such as recombinant bovine somatotropin might lead to small, incremental growth in export sales to the European Union and Japan, but would not result in long-term increases.

•  a special federal milk marketing order milk class specifically for export markets would not be legal under World Trade Organization rules.

• the current dairy product price support program provides “disincentives” for dairy product innovation and marketing.

• the vast majority of dairy imports – but not all – meet U.S. standards. He said, however, costs related to 100% compliance would be prohibitive.

• while trade agreements are a step toward doubling U.S. exports, a goal of President Obama in his State of the Union message, trade treaties are political “hot potatoes” subject to “technical shenanigans.” He said the top two barriers to increased U.S. dairy exports are the complexity of the U.S. pricing structure and a pricing structure that does not provide incentives for innovation and marketing.

Foundation for the Future

Jerry Kozak, CEO and president of National Milk Producers Federation (NMPF), detailed provisions of NMPF’s Foundation for the Future (FFTF) dairy policy proposal (http://www.nmpf.org/washington_watch/ordersandpolicies/foundation_for_the_future). He noted that, with escalating feed and production costs, the program was designed to protect producer income margins, not raise minimum milk prices.

“We have to stop chasing price in our domestic policy,” Kozak said in defending the plan’s Dairy Producer Margin Protection program. “We have to shift focus to margin.”

FFTF would eliminate both the current Dairy Product Price Support (DPPS) and Milk Income Loss Contract (MILC) programs. Kozak said MILC pitted producer against producer.

“The most destructive issue in in our producer community is no longer regional,” Kozak said. “It is small vs. large. We are not going to change the natural evolution of the industry by placing limits on size.”

“When we look at the 2012 Farm Bill, we have to look at what is possible,” said Kozak, who noted federal budget constraints mean there will not likely be additional monies for dairy programs.

Kozak said no program could eliminate dairy price volatility, but FFTF attempts to moderate the extremes and develop tools to manage volatility.

Panels respond

Two panels – one processor panel, one producer panel – discussed the potential impact FFTF and other dairy policy proposals.

On the processor panel,  Dave Fuhrmann, president of Wisconsin-based Foremost Farms cooperative, said the Upper Midwest’s reluctance to fully accept supply management proposals is due to the fact there is regional  dairy reinvestment and expansion, making up for losses in the past. Nonetheless, Fuhrmann said he accepted National Milk’s Dairy Market Stabilization Program because it was less intrusive than supply/growth management measures offered in other proposals. As a supply management tool, FFTF would be more effective in sending market signals to dairy farmers, he said.

Fuhrmann, who served on an NMPF federal milk marketing order task force, said federal order reform is difficult, due to the system’s complexity and regional differences, as well as the resulting unintended consequences. While not advisable, Fuhrmann said the Upper Midwest would be well suited to survive complete dismantling of the system.

Fuhrmann said he knows of one Midwest company looking at building a processing center for milk protein concentrates, but that investment is too risky under current federal order pricing formulas.

Mark Schleitwiler, vice president of BelGioioso Cheese, headquartered in northeast Wisconsin, said FFTF’s margin insurance and voluntary export assistance provisions offered better policy direction than current federal policy. Reforms that increased dairy product innovation would benefit the producer and consumer, he added. Schleitwiler said any dairy policies that increased taxpayer costs would not likely be accepted.

As a cheese processor/milk buyer, elimination of end-product pricing would create competitive pay prices and higher milk prices paid to farmers, Schleitwiler said. He added that his company would eventually like to see just two classes of milk under federal orders: one for fluid milk and one for milk used for all manufactured products.

Mike North, senior risk management advisor with First Capitol Ag, said he was happy to see FFTF’s emphasis on margin insurance, because it would call greater attention to “business” management. He also favored eliminating the DPPS and MILC programs. He suggested margin protection would drive risk management, and steps to include supply management would be counterproductive.

Producer panel

Cashton, Wis. farmer Miranda Leis said the dairy economy of 2009 was stressful on her young family and dairy, which marketed about 9 million lbs. of milk last year.  Although careful attention to marketing enabled her dairy to be profitable last year, she said current policy does not provide adequate protection. In addition, she said bankers are becoming leery of lending to dairy farmers, especially young farmers.

Unlike many other industries, dairy producers cannot turn production off and on or change jobs. “It’s not a change of careers, it’s a complete change of life,” she said.

After extensive study, Leis said FFTF appears to be a viable solution to the future of her farm. “The more I read the program, the more it broke down my defenses.” She said current dairy policies were no longer effective, and that FFTF  was a creative, budget-neutral  attempt to address policy problems.

Leis said she fears anything resembling a quota, because it would stifle the industry’s ability to expand and serve a growing global market.

Mel Pittman, Pierce County, Wis. dairy farmer, said he still had several questions regarding FFTF, especially how milk produced over the “base” would be handled, and whether current federal funding would be adequate to fully fund the base margin insurance program. He said margin insurance was more attractive than the current DPPS and MILC programs.

“We’re going to have to live with some volatility, and we need to participate in the world market,” he said.

Linda Hodorff, who operates dairy farms in Wisconsin and Nebraska,  said she supported current efforts for mandatory price reporting of dairy product prices.  She is luke-warm on publicly-funded margin insurance, saying she and her husband already insure margins through private means, including forward contracting both feed and milk.

Hodorff said she favors reforms of the federal order system, but noted previous reforms have often resulted in unintended consequences.

While her dairies lost equity in 2009, she has concerns regarding supply management, noting quota systems in Canada have not preserved farm numbers. Additionally, while other emerging dairy regions of the world seem to be moving toward freer markets, supply management runs counter to that trend.

Hodorff, who also markets dairy genetics, said U.S. dairy cattle are desired worldwide for their productivity and efficiency, and wonders whether supply management would alter U.S. genetic selection.

She echoed comments that unity was required. “Our perfect storm is forcing us to work together to get over our differences,” she said.

Proposal analysis

Finally, Mark Stephenson, former Cornell University dairy policy specialist who recently moved to the University of Wisconsin-Madison, described historical milk pricing patterns, noting several economic “shocks” impacted milk prices simultaneously entering 2009. He  warned forum participants to not overreact with supply management and other policies based on those shocks.

Stephenson provided analysis of both FFTF and, to a lesser extent, Costa-Sanders legislation, which is similar to California Milk Producers Council/Holstein USA growth management proposals. While more detailed analysis will be provided in the coming weeks, Stephenson said both would help reduce volatility, although in different ways.

“Our modeling shows that both programs work,” he said. (FFTF) would be more reactionary to low-margin situations, and doesn’t kick in until there is a crisis, but it hits the problem hard and prices could recover quickly. The Costa/Sanders bill acts more like a governor on an engine.” He warned that market access fees – taken from farmers who increase production beyond their base and paid to farmers who don’t – could create another wedge between producers.

NMPF: Lack of action results in retaliatory tariffs on U.S. cheese exports

The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) expressed great disappointment at the announcement today by the Mexican government that it would impose tariffs of 20% to 25% on several major categories of U.S. exports to Mexico, including many cheeses. This action targets shipments to our largest export market for dairy products and includes products such as cheddar, mozzarella, gouda, provolone, colby, Monterey Jack, cream cheese and many others.

“These tariffs come at a terrible time for U.S. dairy producers, who are still struggling to recover from the horrendous cost-price squeeze endured throughout 2009,” said Jerry Kozak, president and CEO of NMPF. “In order to help restore profitability and stability to America’s hard-working dairy producers, we should be doing all we can to help boost our exports, not pursuing policies that cost us existing sales in critical foreign markets.”

Tom Suber, president of USDEC, noted that “we have worked tremendously hard over the past several years to cultivate the Mexican cheese market and to work with our counterparts in Mexico regarding the importance of U.S.-Mexican NAFTA compliance in order to further the interests of both countries. It is deeply disturbing to now see our exports hindered by lack of U.S. action to resolve such a long-standing issue with our most important trading partner.”

According to the Mexican government, this action is being taken as part of Mexico’s ongoing effort to seek U.S. compliance with its NAFTA obligation to provide Mexico with cross-border trucking access into the United States. Since March 2009, Mexico has imposed retaliatory tariffs on a list of U.S. exports that previously did not include cheese or other notable dairy products.

This retaliation has been authorized by a NAFTA Dispute Settlement Panel due to lack of U.S. compliance with its NAFTA transportation obligations. With respect to the newly published retaliation list, Mexico noted that it had “yet to receive a formal proposal for the resolution of this dispute and an unequivocal signal that the U.S. government is working to eliminate the barriers that Mexican long-haul carriers face to access the U.S. market.  As a result, the Government of Mexico has renewed the list of U.S. goods subject to increased tariffs.”

Together, U.S. exports under these four tariff lines total 44 million pounds this year (January–June data) and are estimated to be worth $59 million. Full year U.S. exports under these tariff lines in 2008 and 2009 averaged 77 million pounds and are estimated to have averaged $104 million over the two years. Exports in 2010 had been on track to recover strongly from a slight dip in value shipped last year.

NMPF and USDEC again called on the Administration to immediately offer a concrete proposal for resolution of this issue that has already negatively impacted many U.S. exports and will now impose harm on even more sectors of our economy, including America’s dairy industry. The organizations further urged Congress to support a resolution to this long-running trade dispute with our close ally and important trading partner.

The future of dairy financing

Dairy Financial Times

By Chris Garnier

Over the past couple months, my firm and I have been presented with numerous questions as to the future of the dairy industry, particularly the future of dairy financing. As we set out to speak with bankers and industry leaders, one specific phrase caught my attention – “Dairy Island.”

Historically dairies have had “special treatment” when it came to the ease and ability to receive financing. The loose requirements of lending to the dairies segregated them as if they inhabited their own island while the rest of the commercial industry was required to provide, budgets, projections and a business plan to be considered for a loan. The banking perception for the dairy industry was that dairies were low risk and safe with minimal, if any, losses. There have been very few business failures that resulted in losses to the bank. Additionally, the competitiveness of banks and the volume of low cost money due to low interest rates added fuel to the fire and freed up cash for dairies who to expanded and improved operations.

As we know, the long, drawn out period of low milk prices and reduced values of cows and real estate maimed and destroyed a life time of equity for dairy businesses. So now what? How does a dairy get financing and continue operations after the loss of equity over the past year and a half?

In order to be approved and receive financing, every business in every industry (except dairy) is expected to provide a lending officer with a business plan, a budget and a cash flow projection of future operations. The bank would review these documents that had been prepared by the CPA or internal staff and make their assessment.

No such requirement existed for dairies. The vast majority of dairies did not prepare a formal business plan. Budgets are for the most part non-existent. And current and future cash flow projections are only prepared at the request of the bank because of their concern about the on-going viability of the dairy business.

Throughout our many meetings and conversations with ag lenders across the country, we noticed they all share some overwhelming similarities. These similarities will be vital for the dairyman to understand and begin to implement in their operations.

Communication

Communication is one key to a good relationship. This also translates into a good relationship with the bank. It has become very difficult for some dairies to make decisions necessary to facilitate good operations because they feel they have to operate within parameters provided by the bank. The bank, however, is not in the business of operating a dairy. Nor do they have the knowhow and skill to manage a successful dairy operation.

For example, we have seen time and again the scenario of “bank cows.” These are cows required to be on the borrowing base/monthly collateral report because the dairyman has to have a specific number of cows to be in compliance with loan covenants. The dairyman knows low producing cows eat just as much as high producing cows but cost the same to feed. Do you sell these cows or keep milking them?

Each party, both bank and dairyman, needs to be educated about the issues and openly communicate and understand the options at hand. I urge the both to utilize the skills and knowledge of the CPA, who has many clients with similar issues and provides analysis to help solve these problems. The CPA and others can be used as a liaison between the bank and the dairyman and potentially bridge any gap. Everyone wins when education and communication is at the forefront of problem solving. When each party is honest about their plans for the dairy, fear of uncertainty begins to subside and progress continues forward.

Budgets, cash flow projections

With a knowledgeable and experienced dairyman, it is fairly easy for a dairy to be profitable when milk price is $20 cwt and higher. The industry was devastated when prices dipped to $10 cwt and the inputs/expenses did not follow suit. The question that inevitably resurfaces is “what is the dairy’s breakeven milk price?” How can anyone know this figure if there is not a budget or a CPA reviewed financial statement.

It makes good business sense to have a goal and aspire to reach it. A budget and cash flow projection will help keep the blinders on so the dairy can follow a predestined path to profit. Not only does this make good business sense, but it will become mandatory by many banks as part of the requirement for financing and loan renewals. Dairies will unavoidably have to follow suit with all other industries that already prepare projections and budgets.

Risk management

Banks have become very uneasy with the fluctuating milk and commodity markets. Furthermore, dairies have been given the colossal task of managing cash flow when they face uncertainty in the amount of their milk check and the current spot prices of corn and other commodities.

With a properly designed risk management plan, dairies can mitigate their losses in a downturn. These plans are widely used in cattle, hog, poultry, farming, and oil industries in order to operate within a budget and to hopefully generate a profit with more certainty. This definitely takes the fun out of hitting the home run when milk prices go to $20 and the breakeven price for the dairy is $14. Some see this as leaving a lot of money on the table. However, the other side of the story is that the dairy may avoid a large loss if prices go the other direction.

Some banks mentioned to us that this may be a suggested tool if the dairy needs a higher advance rate on cows, feed or real estate. By eliminating as much uncertainty as possible, the dairy will be able to focus on meeting goals set in place.

By implementing open communication with your bank, preparing projections and budgets and then abiding by them, by minimizing risk using the knowledge of your dairy CPA and others, the dairy industry will once again be profitable for all parties involved.

FYI

Chris Garnier, CPA in Ontario, Calif., with Genske, Mulder & Co., LLP, a certified public accounting firm representing clients who produce 12% of the nation’s milk in 29 states. Chris can be reached at 909-483-2100 or e-mail him at chris@genskemulder.com

Southwest DairyBusiness: Decrease pen movement

By Texas A&M University AgriLife Extension

COLLEGE STATION, Texas – Every dairy manages cows in groups. At the very least there are dry cows and lactating cows. On many dairies, both far-off and close-up dry cow groups exist. Cows move from a calving pen to a fresh pen and finally to the lactating group; which may be further subdivided either by stage of lactation or breeding status.

Although these groups facilitate management of the cows, the number of pen changes a cow goes through can be stressful. Avoiding unnecessary pen moves and managing necessary moves reduces the social, environmental and metabolic stress associated with changing pens.

Follow these guidelines to decrease the impact of pen changes:

• Only move cows once a week, if possible.

• Move cows in groups of ten or more animals.

• Avoid pen moves in the last two weeks before calving. With the variation in gestation length, this means relocating cows to the close-up pen three weeks prior to expected calving.

• Identify cows that carry twins or experience heat stress, as their gestation length typically is shorter. Plan to move these “short gestation” candidates four weeks prior to expected calving.

• Investigate alternatives to calving pens, such as dry lots with shades and bedded packs. Pay particular attention to keeping clean, dry areas for cows to calve. Consider repercussions on management practices to control diseases such as Johne’s.

• Walk through the close-up cows on an hourly basis. Move cows to maternity pens only once the calve’s feet show to minimize the risk of stillbirth.

• Design facilities so a single worker can move animals.

• Train workers to move cows quietly by using their flight zone as an aid.

Other ways to reduce the stress of pen moves include:

• Segregate heifers and older cows.

• Train heifers to lock-ups prior to entering the close-up pens.

• Install headlocks instead of post-and-rail. Canadian researchers have shown that aggressive behavior decreases and fewer cows are displaced when headlocks are used.

• Do not overstock, particularly in dry cow pens. Overstocking results in decreased feeding time and subordinate animals are again displaced more frequently.

• Conduct a heat stress audit and install additional cooling systems, if needed, to mitigate the impacts of heat stress.

• Minimize the amount of time cows are away from feed and water during pen moves.

• Restrict lock-ups to less than one hour per day even on the day cows are moved.

Advance planning for pen moves includes taking into account the activities in both the pen where the cow was prior to and after the move. A successful pen move minimizes the stress on the cow so productivity is maintained, or at least regained quickly.

For further information on nutrient management and other topics visit our website at: http://texasdairymatters.org/

Mexico eliminates beef anti-dumping duties

Mexico’s Ministry of the Economy has eliminated anti-dumping duties that have been imposed on imports of U.S. beef for the past 10 years. The Ministry’s resolution means U.S. beef arriving at Mexico’s border on Aug. 11 should enter the market duty-free. Companies that have paid duties since April 29, 2010 are entitled to a refund of all duties paid.

The U.S. beef industry has been seeking resolution of this issue for many years. With full support from USDA, the National Cattlemen’s Beef Association (NCBA) and the U.S. Meat Export Federation (USMEF) have led a coalition of U.S. beef industry interests seeking elimination of the duties, which ranged from 3¢ to 29¢ per pound. The duties applied to about half of U.S. beef production, which steared some U.S. companies away from Mexico’s market.

“For nearly 10 years, U.S. beef producers via NCBA and USMEF have spent an enormous amount of time, money and effort to resolve this issue with Mexico,” said Steve Foglesong, NCBA president and Illinois cattle producer. “Today’s news is a big win for all segments of the beef industry because throughout these 10 years many exporters, small and large, were locked out of our top export market due to these prohibitive duties.”

“This is a very important development for those who advocate free trade, as this decision very much upholds the spirit and intent of NAFTA,” said USMEF Chairman Jim Peterson, a rancher from Buffalo, Mont. “It’s been a long time coming, and is a direct result of the cooperative effort of several beef industry interests. I want to particularly thank NCBA for its policy work on this issue and the strong relationship it has developed with all sectors of Mexico’s beef industry, which really paid big dividends in this case.”

Peterson noted that while Mexico is still the leading destination for U.S. beef exports, it is the only major market that is trailing last year’s results. The U.S. Trade Representative’s National Trade Estimate Report on Foreign Trade Barriers has estimated that these duties have caused losses of $100 to $500 million annually because of reduced shipments and altered trade flows. Peterson is confident that elimination of the duties will help the market’s performance.

“This levels the playing field for all U.S. products entering Mexico and should certainly help us regain momentum in our No. 1 export market,” he said. “The foreign markets are very critical to cattle producers’ bottom line right now, so this comes as very welcome news. Both countries will benefit substantially from today’s action.”

The anti-dumping duties are scheduled to sunset every five years, but could have been continued this year upon a request for review by an interested party. Such a request was filed by the association of Mexican cattle producers (Confederación Nacional de Ganaderos, or CNOG), but the organization later withdrew it.

“In recent years, the interested parties in Mexico have concluded that the duties offer them no advantage,” said USMEF regional firector Chad Russell. “Even before the withdrawal motion by CNOG, other Mexican industry associations had remained neutral or actually favored eliminating the duties. This really shows how far the U.S. industry has come in developing a strong trade relationship with Mexico.”

NMC to address milk quality challenges

Registration open for regional meeting, set for Sept. 8-9

VERONA, Wis. (August 9, 2010) — The National Mastitis Council, Inc. (NMC), will hold its 2010 Regional Meeting Sept. 8-9, at the Crowne Plaza Hotel in Grand Rapids, Mich.  This meeting will highlight mastitis control and overall milk quality improvement as they relate to people, cows and the environment.

The two-day conference kicks off with specialized short courses and a farm tour on Wednesday, Sept. 8.  The short courses will cover topics relative to visual inspection techniques, controlling somatic cell counts, and on-farm culture-based treatment of clinical mastitis.  The farm tour features the robotic milking system and pasture-based dairy center at Michigan State University’s W.K. Kellogg Biological Station.  Attendees must pre-register for the short course or farm tour by Aug. 31. An informal reception will culminate the first day of the meeting.

The second day of the program features presentations by David Sumrall, Dairy Production Systems; Janice Swanson, Michigan State University; Aaron Gasper, Lew-Max Holsteins LLC; Jim Dickrell, Dairy Today; Pamela Ruegg, University of Wisconsin-Madison; Dale Moore, Washington State University; Andres Contrares, Michigan State University; and Ron Erskine, Michigan State University.  Featured topics include making quality milk simple, animal welfare in legislation, creating a positive farm image, dairy export issues, making better mastitis treatment decisions, eliminating drug residues, disease susceptibility in the transition cow, and vaccinating for coliform mastitis.

The NMC Regional Meeting again will feature a special program for Spanish-speaking employees involved in the milking process on Sept. 9, from 9:30 a.m. to 12:45 p.m.  Topics will be presented in Spanish and include basic quality milk production tips, management efficiencies, and proper cow management in the parlor.

Individuals interested in attending the sessions on Thursday, Sept. 9 can pre-register by Aug. 31, or register at the door. Additional program content and registration information can be found atwww.nmconline.org or by contacting Anne Saeman, at 608-846-4615 extension 101 (anne@nmconline.org).

NMC is a not-for-profit professional organization devoted to reducing mastitis and enhancing milk quality. NMC promotes research and provides information to the dairy industry on udder health, milking management, milk quality and milk safety. Founded in 1961, NMC now has close to 1,500 members in more than 40 countries throughout the world. NMC is headquartered in Verona, Wis.

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