KENTUCKY
January - February w w w. k y d a i r y. o r g
Milk Matters Kentucky Dairy Partners Annual Meeting Find out more on page 5
Supported by
Five Steps To Improve Your Cell Count In Your Herd Find out more on pages 16-17
Dairy Compliance, Permitting and Programs Find out more on page 12
Management Important for Achieving a 45,000 lbs. Average Herd Production
A
Donna M. Amaral-Phillips
s our understanding on how to feed and manage dairy cows improves, milk production per cow continues to increase. Just look at the last two national record holders for milk production. The most recent national record holder, Selz-Praille Aftershock 3918, produced 78,107 lbs. milk in a 365-day lactation. The previous record holder, Ever-green View My Gold, produced 77,480 lbs. milk, just 627 lbs. less than the current record holder. Both of these cows are housed within herds that can get cows to milk. During the recent fall Kentucky Dairy Development Council tour to Wisconsin, we had the honor to visit the herd which includes My Gold, the previous production record holder. I was excited to see this herd of cows and learn from their owners how they achieve this production. This herd consisted of 94 cows averaging 45,290 lbs. milk at 3.8% butterfat and 3.1%
protein. Cows were housed in a tie stall barn built in 1938. Approximately 50% of the herd were 2-year olds. Just inside the door of the barn were three cows in a row, which averaged over 60,000 lbs. of milk. I realize that this herd sells many embryos and cows to neighboring farms, but they still get cows that remain in the herd to milk well. From my observations and listening to the farmers’ discussions, I gleaned three management philosophies that I believe had a positive impact on My Gold and her herdmates’ outstanding production. Management Philosophy #1: “Calves are the most important group on this farm.” Calves represent the next generation for the dairy herd and management practices during the first two months of life directly and indirectly influence future milk production. Newborn calves were fed 4 quarts of colostrum within a half hour of birth and calves were warmed using heat lamps when necessary. Calves were housed individually and fed pasteurized whole milk using buckets, calf starter and water. The amount of milk was increased after the first 4 weeks of life from 2 quarts to 3 quarts fed twice daily. Calf pens were cleaned out when calves were 3 weeks of age and again when the calf left the calf barn. Attention to detail and ensuring consistency in feeding practices was very evident during our tour of the calf barn. The amount of milk fed each calf was measured using a metering device to ensure a consistent amount was being fed. Calves were definitely fed on schedule. The owner indicated that calves were continued on page 17
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
2017 KDDC Board of Directors & Staff Executive Committee President: Richard Sparrow Vice President: Charles Townsend, DVM Sec./Treasurer: Tom Hastings EC Member: Tony Cowherd EC Member: Freeman Brundige EC Past President: Bob Klingenfus
Board of Directors District 1: Freeman Brundige 731.446.6248 District 2: Josh Duvall 270.535.6533 District 3: Don Kinslow 270.646.0086 District 4: William Crist Sr. 270.590.3185 District 5: Tony Compton 270.378.0525 District 6: Mark Williams 270.427.0796 District 7: Greg Goode 606.303.2150 District 8: Jerry Gentry 606-875-2526 District 9: Dwight Leslie 859.588.3441 District 10: Richard Sparrow 502.370.6730 District 11: Stewart Jones 270.402.4805 District 12: Larry Embry 270.259.6903 Equipment: Tony Cowherd 270.469.0398 Milk Haulers: Alan Wilson 606.875.7281 Genetics: Dan Johnson 502.905.8221 Feed: Tom Hastings 270.748.9652 Nutrition: Dr. Ron Wendlandt 502.839.4222 Dairy Co-op: Justin Olson 765.499.4817 Veterinary: Dr. Charles Townsend 270.726.4041 Finance: Michael Smith 859.619.4995 Former Pres.: Bob Klingenfus 502.817.3165
President’s Corner Richard Sparrow
E
ven though it is my birthday, it was a sad day for me. I hauled three cows down to Smiths Grove. Now, before you roll your eyes and think that you make that trip every week or month, I have to explain. Yes, I have taken many cows to the weigh pen over the years, too.
However, these three cows are different from most that make that trip. Nestle (a 3E, 93 point fourteen year old), Georgia (a 2E 93 point twelve year old), and Rosebud (a 2E 91 point ten year old) are all homebred. Collectively, these three cows produced 661,641 pounds of milk, 30,682 pounds of fat, and 25,118 pounds of protein. Even using my last month final payment milk values, that’s $143,522.86. But, it isn’t just about the money they have earned for us. Not only are they a source of pride, we have invested a lot of love and care in their wellbeing. They will be missed. Every dairy farm is different. Our dairy enterprise depends on the milk check to pay the bills. However, we also market our genetics in the form of breeding bulls, semen, embryos, and show calves. So, when a cow cannot make milk or babies, the decision is difficult, but inevitable. With the dark clouds on our milk price outlook horizon, every dairy farmers will continue to examine every aspect of their operation and maybe make unpleasant choices. Parting with a cow who has been a part of our herd for several years is never easy. Like any business, though, we focus on the future, celebrating the arrival of new babies, and the care and well-being of our herd.
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KDDC 176 Pasadena Drive Lexington, KY 40503 www.kydairy.org KY Milk Matters produced by Carey Brown
January - February 2018 • KDDC • Page 2
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KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
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KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Executive Director Comments Maury Cox
O
ften when times are not what we would like, we need a little inspiration to give us an attitude adjustment. I’m not talking about buying into a “false narrative” for the sake of unreal expectations. But more so a different view, a different perspective that can motivate us into action. The following Blog Post in Hoard’s Dairyman, NoteBook by Mark Rodgers, Georgia Dairy Farmer did just that for me. If you need some encouragement it might help you as well.
innovate, and share our message. It is time for dairy farmers to “Face Everything and Rise”. Mark and Caitlin Rodgers are dairy farmers in Dearing, Georgia. Their “Father and Daughter Dairy Together” column appears every other Thursday on HD Notebook. The Rodgers have a 400-cow dairy that averages 32,000 pounds of milk. Follow their family farm on Facebook at Hillcrest Farms Inc.
How do you define F.E.A.R.?
Jan. 25 2018 By Mark Rodgers, Georgia dairy farmer As farmers, we can “forget everything and run” or “face everything and rise.” This quote – F.E.A.R.: Forget Everything and Run or Face Everything and Rise – was the quote of the week on our office memo board. Each week someone writes a Bible verse, a quote they like, or just a challenging thought they had on our dry-erase board. The F.E.A.R. quote is something I thought about while our family discussed the Class I mover price. What steps would we take as a family farm to survive the projected milk prices? Furthermore, what, if anything, can all the dairy farmers do to stop this devastating cycle of low prices? Ideas including quotas, base/ excess, and co-ops penalizing for additional milk are all being discussed. As an industry we face declining fluid sales, challenges with consumer confidence, and labor shortages. Yes, we have serious challenges ahead. It will take leadership, cooperation, innovation, and perspiration to survive and then thrive. Steps our family is considering include robotics to reduce the amount of labor required and herd reduction to eliminate the need for rented cropland. We are using social media to share our positive message with our neighbors and consumers. We are also considering agritourism to complement our switch to robotics. Consider what your farm can do to help. Bring new ideas and leadership where you can to your co-op and the dairy industry. Share your family farm’s message with your community, local schools, and governmental leaders whenever possible. Join your local Chamber of Commerce, serve on your town’s tourism board, speak at a civic club meeting, or talk about dairy life on a local radio show. I have a daughter and a nephew who have decided to return home to dairy. I want them to succeed. They want to operate our family farm and to prosper at it. We have to step up together,
January - February 2018 • KDDC • Page 4
TAKING YOUR HERD TO NEW HEIGHTS
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KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Kentucky Dairy Partners Annual Meeting February 27 & 28, 2018 Sloan Convention Center, 1021 Wilkinson Trace, Bowling Green, Kentucky Tuesday, February 27
(All Times are Central Time)
8:30
Registration for KDDC Young Dairy Producers Conference
9:30
“Animal Care-What You Need to Know” - Dr. Charles Townsend, Burkmann Feeds
9:00AM -11:30AM 10:10
Trade Show Set up
“Maximize Your Components” – Darren McGee, DVM, Elanco
10:45
Break
11:00
“The Economics of Organic and Conventional Milk Production” - Dr. Larry Tranel, Iowa State University
12:00-1:30 PM
Lunch and Trade Show Opens
1:45
“Are You Ready for a DOW Visit” – Ben Koostra, P. E. Limestone and Cooper
1:00 - 5:00
ADA of Kentucky Board Meeting
2:30
Break
3:00
“Cooling Off When It Gets Hot” - Nathan Upah, TechMix Nutrition
“Recent Discoveries and Tried and True Methods You Can Use to Improve Dairy Herd Reproduction - Part 1” Dr. Jeff Stevenson, Kansas State University.
3:40 4:30- 6:00
Visit Trade Show
6:00 - 8:00
Dairy Awards Dinner – Keynote Speaker – KY Commissioner of Agriculture, Ryan Quarles
Wednesday, February 28 (All Times are Central Time) 8:00 AM
Registration & Trade Show Open
9:10-9:40
“Milk Nourishes Kentucky Students in the Summer Too” - Mike Sullivan KY Department of Education Branch Manager, Support Branch Division of School and Community Nutrition Office of Finance and Operations
9:00
Welcome – Dr. Richard Coffey, University of Kentucky
“Recent Discoveries and Tried and True Methods You Can Use to Improve Dairy Herd Reproduction - Part 2” Dr. Jeff Stevenson, Kansas State University
9:50-10:35 10:45-11:30
11:30 – 1:30 PM 1:30 – 2:00 2:05 – 2:35 2:40 – 3:10 3:15 3:30
“Economics of Robotic Systems and Low-Cost Parlors” – Dr. Larry Tranel, Iowa State University
Lunch - KDDC Annual Business Meeting – Trade Show Exhibits (Bidding Ends on Silent Auction Items)
“Dairy Check-off at Work” - Tamara Sandberg, Executive Director of the Kentucky Association of Food Banks. “Key Points in Calf Management-Early Life Disease and Future Implications” – Dr. Joao Costa, University of Kentucky “The Stensland Family Farm Story” – Doug and Mona Stensland, Stensland Dairy Farm Wrap up and Evaluations Have a Safe Trip Home
Holiday Inn Hotel room rate is $105 and room block ends February 15, 2018 Call 270-745-0088 under KY Dairy Partners
January - February 2018 • KDDC • Page 6
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Kentucky Dairy Partners Meeting (2017) – Exhibitand & Conference Reservation Form Form Kentucky Dairy Partners AnnualAnnual Meeting (2018) - Exhibit Conference Reservation Name of Company: Representative: Address:
Phone: Fax: Cell Phone: Email: Others Attending: (Name & Email)
Allied Industry - Booth & Conference Registration: = $350 Booth space* – includes booth space, (1) YDP/Awards Banquet w/ meals & (1) KDP conference registration w/ meals *Platinum KDDC sponsors – free booth space, (1) YDPI/Awards Banquet & (1) free conference registration * Gold KDDC sponsors - $200 booth space, (1) YDPI/Awards Banquet & (1) free conference registration _________= *no booth charge for government, educational, etc. (does not include attendee registrations)
= $30/person Tues - registration - Young Dairy Producers Meeting
Feb 21
x
_____ (number attending)
= $30/person Wed - KDP conference registration
Feb 22
x
__________ (number attending)
= Total amount enclosed - Please make checks payable to: KDDC (KY Dairy Development Council) *************(Ky dairy producers will be charged $25 per dairy farm for the two day conference*******************
****************************************************************** Yes, we would like to provide a door prize - list item: Yes, we would like to provide an item for the silent auction– list item: Please answer the following questions to help us better accommodate you. What type of display do you have? (i.e. full floor, table top, pull ups, other) Is your booth larger than 10 w x 6 d? Do you need electricity?
Return registration & checks (checks written to: KDDC):
eunice.schlappi@ky.gov
Kentucky Department of Agriculture ‐ Eunice Schlappi 111 Corporate Drive Frankfort, KY 40601
Phone: 502‐573‐0282
Cell: 502‐545‐0809
January - February 2018 • KDDC • Page 7
Anthem of Kentucky has revised their eligibility guidelines for KDDC Association Group Health Plans. Key Changes: • Employer groups of one may be eligible for small group plans. • Husband/wife employer groups may be eligible for small group plans. • Employer groups of 5 or more can choose 2 plan options. • Employer groups of 10 or more can choose 3 plan options. For more information, please contact: Melissa Hinton The Hinton Agency (859) 351-6559 thehintonagency@gmail.com
Cassie Grigsby Association Advantage Insurance Group (502) 875-1593 cgrigsby@aaigky.com
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KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
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We have established a very trusted and talented crew over the years, being a crucial part of our success. We have established a very trusted and talented crew over the years, being a crucial part of our success.
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January - February 2018 • KDDC • Page 9
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
The New Section 199A Deduction Paul Neiffer CPA Top Producer, Farm Journal Publication, February 2018
N
ow that President Donald Trump has signed the Tax Cuts and Jobs Acts, it’s time to dig deeper into the details and see how it affects most farmers. As with any major tax change, there will be winners and losers. But overall, I would label this new law as a winner for the ag industry. Under the old law, farmers were entitled to a deduction of up to 9% of net farm income known as the domestic production activities deduction (DPAD). The overall limit was 50% of wages paid and a final limit of taxable income. It could not create a net operating loss. The new law eliminated this deduction. However, it did create a new Section 199A deduction designed to level the playing field between corporations, which saw their top rate go from 35% to 21%, and pass-through farmers, which would only have seen their top rate decrease from 39.6% to 37%. There are two components to the deduction. First, on the sales to non-cooperatives, a farmer is allowed a 20% deduction based on net farm income and net taxable income minus net capital gains and cooperative distributions. Once that deduction is calculated, the farmer can add 20% of gross cooperative payments received as a patron. The only limit is taxable income minus net capital gains. We will need guidance from the IRS regarding farm land-lords (cash of crop-share) and self-rental arrangements to see if they will qualify for the new 20% deduction. A literal reading of the new codes requires a trade or business and typically neither of these qualify. Because corporations got the benefit of lower rates, they’re not allowed to take this deduction. That is unlike the old law, under which corporations were eligible for DPAD. This deduction will expire at the end of 2025. Analysis will be needed to determine which entity structures are best with this new deduction.
January - February 2018 • KDDC • Page 10
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
SUDIA Rebrands to Reflect Market-Focused Mission and Innovation The Dairy Alliance Represents 2,100 Dairy Farmers Across Nine Southeast States
T
he Southeast United Dairy Industry Association (SUDIA) has new leadership, new branding and a new name — The Dairy Alliance.
organization started with just four states and has grown to nine, including Alabama, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Virginia.
This change represents the new vision and mission of the organization. The Dairy Alliance has an emphasis on marketfocused partnerships that proactively promote and protect the interests of 2,100 dairy farm families in the Southeast. The new branding initiative includes a new logo, a strategic mission and vision and a renewed effort to expand partnerships and provide growth opportunities in the dairy industry.
The reorganization aims to represent its partners, to grow and to meet the challenges facing the dairy industry with knowledge and innovation.
“We are aligning our organization to more accurately reflect the vision of our dairy farmer board of directors and bring focus and clarity to the new mission of The Dairy Alliance,” said Doug Ackerman, who since January of 2017 has served as The Dairy Alliance Chief Executive Officer. “The rebranding is more than a new logo and a new name. It is a fundamental shift in how we position ourselves within the dairy industry, individual business channels and communities where we live and partner for a healthier future for us all.” Since 1971, The Dairy Alliance has been the voice for dairy in the Southeast. The primary goal has been promoting milk and dairy foods for farmers and working with industry partners. The
“The dairy industry is facing several challenges, including the loss of producers, globalization and regulation,” said Glen Easter, Chairman of the Board of Directors of The Dairy Alliance and third-generation dairy farmer. “This effort ensures the alliance is hitting our targets and that our families and partners are part of the conversations and, ultimately, the solutions.” The Dairy Alliance uses scientifically-based research and information to champion the dairy industry to organizations around the country including farm bureaus, departments of education, school nutrition associations, state nutrition directors, health professional organizations and others. On behalf of dairy farm families, the non-profit The Dairy Alliance, works with schools, health professionals, retailers, dairy processors and the public to promote dairy foods. For more information, visit thedairyalliance.com.
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Cowherd Dairy Supply 1483 Old Summersville Rd. Campbellsville, KY 42718
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270-465-2679 or 270-651-2643 Tire Scraper January - February 2018 • KDDC • Page 11
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Dairy Compliance, Permitting and Programs Let us help you get your dairy operation current with Kentucky requirements.
K
entucky Dairy Development Council is hosting meetings in various areas in the state to explain Division of Water requirements and to assist producers in being compliant. The Kentucky No Discharge Operational Permit (KNDOP) most dairy farmers operate under expired February 29, 2016. Producers are required to reapply for a KNDOP even if they previously had one. Simply having an Ag Water Quality Plan will not be enough if you get a visit from Division of Water (DOW). It is very unlikely you will be fined with that visit if the permit has not been renewed, however you will likely be sent a letter notifying you that you are in violation of KRS statues that carry penalties. If you have a violation you likely will be given a reasonable time to correct the violation. In the past DOW farm visits were typically based on a complaint. However, the DOW has started making farm visits to check all producers’ permits and records with the goal of visiting at least 20 percent of Kentucky dairy farms per year. This is expected to continue. The DOW has knowledge of the locations of all KY dairy producers and they are aware many producers have never applied for a permit. These changes are no reason to panic; the DOW does not want to put you out of business. If you do have a serious problem the DOW will try to work with you to correct the violation. If needed your NRCS may help assist you in obtaining resources to correct the violation.
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Reach All Kentucky Dairy Producers
Don’t miss your chance to reach dairy producers all across the state of Kentucky. There is no other publication that reaches all dairy producers. Call Carey today for more information at 859-948-1256.
January - February 2018 • KDDC • Page 12
March 12th, 2018, 10:00 – 2:00 pm Trigg County Recreation Complex 303 Complex Road Cadiz, KY 42211 March 13th, 2018, 10:00 – 2:00 pm Christian County Extension Office 2850 Pembroke Road Hopkinsville, KY 42240 March 27th, 2018, 10:00 – 2:00 pm Fleming County Extension Office 1384 Elizaville Road Flemingsburg, KY 41041 Kentucky Dairy Development Council will have staff on hand to help each producer with completing an Ag Water Quality Plan and/or KNDOP permit if needed and assist in scheduling a date to complete a Nutrient Management Plan.
Topics Ag Water Quality Plan Short-form-B, KNDO Permit application DOW permitting process: who is required to have a permit and what permits are required? Overview of a DOW inspection sheet How are violations handled? What type documentation is required for records ? When is a Comprehensive Nutrient Management Plan required? What is the Kentucky plan and how is it different from a CNMP? What to expect with a DOW visit
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
National Issues Update Joe Cain Commodity Director, Kentucky Farm Bureau
A
fter passing historic tax reform into law in December, Congress has a number of major issues looming in 2018. Funding the government, immigration and farm labor reform, trade and farm bill reauthorization are four priorities going into this election year. Both the House and Senate Agriculture Committees have hopes of reauthorizing the farm bill well before the September 30 deadline, but just exactly when we get a new farm bill depends on a number of factors. First, Congress must pass a spending bill that could include some critical farm bill program improvements for cotton and dairy producers prior to farm bill discussions. Cotton and dairy issues could be improved in an omnibus spending bill. This could relieve some of the baseline budget pressure Congress would face when making changes in a new farm bill. Considerable discussion has focused on how the dairy margin protection program (DMPP) might be made more responsive to meet the needs of all dairymen. It is widely acknowledged DMPP, as written, is unpopular and does not provide an effective safety net for the dairy industry. One recommendation is to simply fix the feed adjuster in the program to make it more reflective of actual feed costs. Another suggestion is to offer a counter-cyclical program similar to the old MILC program that will provide support during times of price declines. As briefly mentioned earlier, cost could be a driving factor. Most “fixes” for DMPP will add significant cost to a new farm bill. One bright spot is a new dairy risk management program that could be available soon, pending approval by USDA. The dairy revenue insurance policy, developed by American Farm Bureau and American Farm Bureau Insurance Services provides an insurance guarantee a certain amount of revenue for their milk, or the components in their milk, as they would choose. The program sells coverage based on the average quarterly price of milk, or the value of the components in the milk, for the next quarter and the four following quarters. The policies can be purchased every day, and the premiums are not due until after the period is over. The government will cover somewhere between 44% and 60% of the premium depending on the deductible level the producer chooses.
®
•I Visit us at the
KDP Conference
Access to adequate labor resources continues to be a concern for many farmers. The current H-2A program is complicated and limited to temporary, seasonal jobs making it very difficult for dairy producers to participate. House Judiciary Committee Chairman Bob Goodlatte recently introduced HR 4092, the Agricultural Guestworker Act that would replace the H-2A program with a new H-2C program that is designed to meet the needs of a diverse agriculture industry. Dairy would be able to secure workers under the H-2C program. The bill has passed out of the Judicial Committee and is awaiting action by the full House. The Senate does not have a similar bill, but Senator Rand Paul introduced S. 1578, the Paperwork Reduction for Farmers Act that would reform the existing H-2A program and widen eligibility by including livestock workers as qualifying H-2A employees. Trade is another issue gaining national attention as NAFTA renegotiation talks continue. Dairy is at the center of the NAFTA negotiations as the US wants to gradually end Canada’s limits on imports of milk and cheese products. Other NAFTA issues include auto manufacturing rules, customs and food sanitation issues. NAFTA governs more than $1 trillion in trade between the US, Canada and Mexico.
January - February 2018 • KDDC • Page 13
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
PROJECTED BLEND PRICES –BASE ZONES – SOUTHEASTERN FEDERAL ORDERS Quarter
Dixie Dairy Report February 2018 Calvin Covington ccovington5@cs.com (336) 766-7191
Appalachian
Florida
Southeast
(dollars/cwt.) - 3.5% butterfat January 2018
$17.62
$19.84
$17.83
February
$16.52
$18.55
$16.70
March
$15.96
$17.93
$16.10
April
$15.90
$17.92
$16.08
May
$16.23
$18.18
$16.38
June
$16.54
$18.66
$16.95
Another record year for milk production, production steady in the southeast. 2017 marks the eighth consecutive year milk production has increased. U.S. milk production in 2017 was 215.43 billion lbs. which is 1.4% higher than 2016, and up almost 30% since 2000. (Adjusting for Leap Year, 2017 production was up 1.7%) Most of the increased production was due to more cows. The nation’s dairy herd grew by 65,000 head in 2017. Milk produced per cow increased 0.72% in 2017 versus 2016, below the historical average of around 1.5%. As shown below, changes in milk production in 2017 varied across the country. Production increased 1.6% in the nation’s largest milk producing region, but was down 1.6% in California. The largest production increase was in the Southwest. Southeast milk production down slightly. Actual 2017 production, in the Southeast, was down 0.2% compared to 2016. (Adjusting for Leap Year, production was a fraction higher than 2016). Since 2000, southeast milk production has gradually trended upward. Since 2000, the ten (10) Southeast states have added almost 400 million lbs. of production. As shown below, 2017 production was only up in two states, Georgia and Virginia, and down in the other eight (8) Southeast states. Southeast production continues to concentrate in Florida and Georgia. At the end of 2017, over 46% of the Southeast’s production was in Florida and Georgia. In 2010 it was less than 40%.
Growth in milk production slowing, but record powder inventory. According to USDA, milk production during the fourth quarter of 2017 was up 1.1% compared to the same quarter a year earlier. This compares to production increases of 1.8% in the second quarter of 2017 and 1.7% in the third quarter. If growth in milk production continues to slow, this will provide some positive news for future milk prices. On the other hand, USDA reports manufacturers’ nonfat dry milk powder inventory at the end of 2017 was 330 million lbs., a record high. (Powder inventories were higher in the past if include government holdings). This record high inventory is not good news for future milk prices. The year-end butter inventory of 169 million lbs. is similar to the year earlier inventory of 166 million lbs. The American cheese inventory is up slightly from 733 to 747 million lbs. The high powder inventory and stable butter inventory indicate two things: 1) Milk production continues to exceed demand. Generally, excess milk production ends up in nonfat dry milk powder. 2) Butterfat demand is greater than skim, nonfat solids, or protein demand. Milk is separated into cream and skim milk, to generate the cream needed for butter and other high fat products. The remaining skim goes to the powder plant. Commodity prices. At the CME, January 2018 prices are lower, compared to January 2017. Butter remains the shining star with the January average price of $2.1587/lb. which is only
MILK PRODUCTION by REGION (2017 vs. 2016) Region
2016
2017 (million lbs.)
Change (%)
Midwest
67,285
68,348
1.6
California
40,469
39,802
-1.6
Northeast
31,168
31,447
0.9
Northwest
31,168
31,217
0.6
Southwest
31,021
26,001
8.1
Southeast
9,420
9,397
-0.2
Plains
8,992
9,177
2.1
Alaska-Hawaii
38
41
7.8
Total
212,436
215,430
1.4
January - February 2018 • KDDC • Page 14
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Statistical Summary of Uniform Milk Prices for Federal Orders 05 and 07 Month
*Federal Order 05
**Federal Order 07
January 2017
$20.05
$20.27
February 2017
$19.09
$19.36
March 2017
$19.06
$19.15
April 2017
$17.77
$17.97
May 2017
$17.65
$17.83
June 2017
$17.65
$18.70
July 2017
$19.35
$19.64
August 2017
$19.53
$20.02
September 2017
$19.06
$19.61
October 2017
$18.59
$19.12
November 2017
$18.63
$19.07
December 2017
$18.37
$19.04
FMMO 5 www.malouisville.com January 2018 Class 1 Advanced Price (@ 3.5% BF) $18.84 January 2018 Class 1 Advanced Price (@ 3.5% BF) $17.65 FMMO 7 www.fmmatlanta.com January 2018 Class 1 Advanced Price (@ 3.5% BF) $19.24
*Price at The Base Zone (Mecklenburg County, North Carolina) ** Price at The Base Zone (Fulton County, Georgia) *** Price based on 3.50 % Butterfat for informational Purposes Only
2017 PRICE PROJECTIONS versus ACTUAL PRICES 2017 Projection
2017 Actual
Milk Prices
Actual - Projection
January 2018 Class 1 Advanced Price (@ 3.5% BF) $18.05
(dollars/cwt.) Class I Mover (3.5)
$16.68
$16.45
-$0.23
Class I Mover (2.0)
$13.26
$12.65
-$0.61
Florida blend (3.5)
$21.22
$20.91
Southeast blend (3.5)
$19.57
$19.15
Appalachian blend (3.5)
$18.98
$18.79
$0.08/lb. below a year ago. Prices are much lower for cheese and powder. January block cheddar is $1.4938/lb. down $0.20 from last January. Barrel cheddar averaged $1.3345/lb. in January which is $0.22 lower than last year. The January nonfat dry milk powder averaged $0.6926/lb., which is over $0.40/lb. lower than last January. Some good news, indicators point to the powder price starting to turn around.
Blend prices. Projected blend prices for the three southeastern federal orders are $0.42 lower for the first half of 2018 compared to $0.19 last month’s projections. For all of 2018, we continue to project blend prices to average about $1.50/cwt. lower than 2017. $0.31
How did I do? For those of you who keep track of my price projections, how did I do in projecting 2017 prices? Below are my 2017 projections, as reported in the January 2017 Dixie Dairy Report, compared to actual prices. For all five prices, my 2017 projections were higher than the actual averages.
SOUTHEAST MILK PRODUCTION RANKED by STATE 2010-2017 State
2010
2016
2017
(million lbs.)
2017 vs. 2016
Percent of Total
(%)
(%)
Florida
2,115
2,503
2,496
-0.3
26.6
Georgia
1,395
1,830
1,846
0.9
19.6
Virginia
1,719
1,723
1,737
0.8
18.5
Kentucky
1,157
1,048
1,041
-0.7
11.1
North Carolina
862
965
951
-1.5
10.1
Tennessee
850
696
693
-0.4
7.4
South Carolina
286
250
247
-1.2
2.6
Loiuisianna
235
169
160
-5.3
1.7
Mississippi
223
144
137
-4.9
1.5 0.9
Alabama
159
92
89
-3.3
Total
9,013
9,420
9,397
-0.2
January - February 2018 • KDDC • Page 15
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Five steps to improve cell count in your herd John Laster, DVM
I
n the face of tightening margins and a tough market, emphasis continues to be placed on milk quality. For farmers, improved milk quality can mean survival. So how do farmers achieve better milk quality? Here are some suggestions to help you improve milk quality in 2018. Detect subclinical mastitis: Subclinical mastitis makes up about ninety percent of all mastitis cases. These cases have no visible signs of infection. We strongly recommend two methods of detecting subclinical mastitis. Fresh cow/heifer paddle testing. This offers the following advantages:
If a heifer or cow freshens with mastitis, you find out before her milk increases the bulk tank cell counts. Colostrum antibodies can show false positive results on a CMT test, but we are looking for a heavy positive as a true identifier of mastitis. Suspect positives are recommended to be cultured and treated based on the results. Speaking of treatments, do you and your vet have established treatment protocols for treatment of cows with mastitis? If not, you need standard operating procedures for treatment, determining cure, and withdrawal times. Monthly DHIA testing; many people are completing DHIA testing, but few people use the data to make mastitis decisions. DHIA data is the monthly report card of the mastitis present in your herd. We recommend looking at new and chronic mastitis lists monthly to show the cows suffering with subclinical
Figure 1: this type of gel on a paddle tester is considered positive for mastitis.
mastitis. Cows that have somatic cell scores greater than 4 and or cell counts over 200,000 have mastitis. Paddle test these cows and culture them to see if the mastitis can be treated or if the results indicate she needs to be culled. Eliminate contagious mastitis from your herd. Staph aureus, mycoplasma, and strep ag often spread cow to cow in the parlor, and go unnoticed until a large problem exists. These are the silent killers of milk quality and endanger
January - February 2018 • KDDC • Page 16
the existence of many dairies. Using the techniques above to detect subclinical mastitis, along with good milking hygiene can limit the exposure a dairy has to contagious mastitis organisms. How do you know if these organisms are present in your herd? Complete a bulk tank analysis at regularly scheduled intervals to check the mastitis bugs in your tank. You may be surprised by what you find growing in the cows’ udders.
Paddle test and Culture all fresh cows, fresh heifers, purchased cows and heifers (culture and run cell counts prior to purchase), and any clinical/ subclinical cases of mastitis to identify cows with contagious mastitis. If a cow is found to have a contagious mastitis, she should be culled. If the market doesn’t dictate culling, we recommend building a contagious mastitis group on the farm and milking them last. Disinfectant backflushing between cows will help reduce spreading after a known mastitis cow has been milked. For dairies with a leg banding system, it is best to have a leg band designated for chronic mastitis cows and also for any cows with contagious mastitis. Don’t forget to culture cows before they leave a hospital pen, mycoplasma loves to infect cows that are in hospital pens for other reasons. Improve your environment. Do what’s best for the cows: sand! I recently attended the Southeast Quality Milk Initiative meeting in Nashville. During the meeting, we had a panel of the best milk quality producers in the south. When we asked each producer the number one thing that aided in improvement of milk quality, every producer said that deep sand bedded freestalls were the key. Bedding Type
Coliforms/gram
Klkesiella/gram
Streps/gram
Once recycled sand
90,000
13,000
62,000
Straw
967,000
124,000
690,000
Sawdust
120,000
17,000
30,000
Andy Johnson, DVM completed research on the value of sand over other types of bedding for production, comfort, and improved milk quality. His data concluded that sand bedding was worth $500.00 per cow per year. This number is contrived from decreased cull rate, decreased somatic cell count culls, lameness reduction, and increased production potential. How much do manure pumps cost again? Fix your parlor routine Our goal should be to milk clean, dry, well stimulated cows. If the teats aren’t clean enough to place in your mouth, milking units shouldn’t be placed on them. The people harvesting our milk are the most important people on the farm. Educate them and measure their understanding of standard operating procedures in the parlor. Check in with them frequently to insure procedural drift hasn’t occurred. Consistency of all technicians on all shifts is a key to success in the parlor.
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Timing is also critical; there should be 90 seconds of prep lag time. (time from first touching the cow to unit application). The more we touch the teats during the prep procedure, the better milk is let down. A goal should be 12 seconds of contact time with the teats during prep. Forestripping is a good way to increase contact time during prep and is also a good way to reduce clinical mastitis in the herd. We heavily recommend using forestripping in the prep procedure. Teach your milk technicians to recognize mastitis during forestripping, and develop procedures for the technician to do when they observe mastitis during prep.
Figure 5: prep procedure step 1: dipping
Figure 6: stimulate the teat after dipping
Figure 8: re- dip the cow after she has been forestripped. Figure 7: forestripping is critical in the reduction of mastitis. 3 full forestrips will improve milk let down and will allow a milker to observe clinical mastitis.
Figure 4: a quick way to check teat end cleanliness is to wipe the teat end with an alcohol swab to check for manure and dip. If these aren’t spotless, work with your milkers on cleaning and drying teat ends better.
Regularly maintain your equipment Milking equipment should be like doctor visits, they should be scheduled at regular intervals for physical exams. Our goal should be to gently harvest milk as quickly and efficiently as possible, while insuring that our equipment causes no damage to the udder during the milking process. If our equipment and parlor routine are working well, we should be able to harvest 25 pounds of milk from each cow during the first two minutes the unit is on.
Your equipment provider should regularly service pulsators, take offs, and rubber goods. Liners should be fitted for your cows’ teat size, and peak flow claw vacuums should be utilized to optimize inflation performance. Strip yields are an easy and important tool to see if your take offs are functioning correctly. You should be able to strip at least 250 cc of milk or more out of the udder immediately after the unit comes off. If the cow kicks or acts uncomfortable during this, follow up with your equipment provider to check your take off settings. If any changes are made to the system, a full NMC analysis should be completed to insure your equipment is performing optimally. Score your teat ends. Teat ends that are heavily keratinized are a classic sign of overmilking. If you are noticing this on your dairy, talk to your dealer as soon as possible. Following these tips should help your dairy reach its milk quality goals in the coming year. I hope to see you all in Bowling Green; thanks for reading!
Figure 9: only milk clean, dry, well stimulated teats. Proper drying with a clean, dry towel, while concentrating on clean teat ends is critical to any prep procedure.
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January - February 2018 • KDDC • Page 17
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Please contact Assistant Plant Manager Earl Sebastian @ (859) 308- 2173 with inquiries.
New Riff Distilling
24 Distillery Way Newport, KY 41073
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Is There Opportunity During These Low Prices? Steve Wade
T
hat will depend on your equity situation and long-term goals. Dairy farmers will go out of business as is always the case during low prices. Even though the price outlook is not very bright, some may be in position to take advantage of this period of time. Working closely with the milk plant may reap benefits. It certainly appears low milk prices will be with us for a period of time according to current futures prices and USDA’s estimates released on the recent World Agricultural Supply and Demand (WASDE) report. Class III futures as of the close on January 12th show an average price for 2018 of $14.54. This compares with an average Class III price for 2017 of $16.17 and an average Class III price for 2016 of $14.87. USDA estimates Class III price to average $14.65 according to the WASDE report. USDA also estimated the All-milk price to average $16.20 for 2018 compared to $17.65 for 2017. Barrel cheese price declined to the lowest level since July 30, 2009 last week increasing the concern over how low milk prices may move in the near-term. There is much concern over the ability of dairy farmers to weather this season of low prices. I am already hearing of herds of cow that are for sale if anyone wants them. The problem is that no one or very few may want them. This creates another dilemma. Does the farmer send them all to slaughter at low cull cow prices or milk them until a buyer might be found? It will be a trying time for dairy producers.
Even with lower milk prices the past two years and potentially lower prices this year, some farms are in a better equity position than others and may continue to expand if the milk plant has capacity. However, expansions will be few and far between. Those who may be in a better equity position or encouraged by the lender to push milk production or add cows, may have some very good opportunities to do so. Farms need to make application to their milk plant in order to expand and increase milk production in most cases. With low milk prices, there will be some farms going out of business which may reduce the milk receipts at the plant level depending on where those cow go. This creates the opportunity for another farm to possible obtain the go ahead to produce more milk. Those who may want to expand and increase milk production need to be aware of what is taking place with the other patrons of the milk plant. A possible win-win situation might be to purchase cows from a patron of the milk plant that is going out of business thereby assuming that farms milk production allowing the purchasing farm to expand without a problem with the plant. The farmer that is getting out of the business is able to sell his cows at a better price than the cull price and may have a willing buyer thereby gaining a better value for his animals. You could think of this similar to purchasing quota. Of course, this would need to be cleared with the milk plant before this could take place, but it could be a win-win situation despite the unfortunate loss of a business for one entity. Dairy farmers will need to be creative to weather these low prices. Those who use the tools of risk management and have been able to hedge better prices are the ones who will fare better than those who do not. Those who are looking at employing some sort
January - February 2018 • KDDC • Page 20
of damage control to protect against the possibility of yet lower milk prices should only use put options or put option strategies. Do not use forward contracts or futures contract unless your plan would be to purchase call options if and when milk prices begin to move higher. You do not want to lock in a price below your cost of production. Put option spreads can be implemented for the second half of the year to protect the downside if supply exceeds demand for much of the year. I recommend buying at-the-money put options and selling put options $1.25 below to provide downside protection to the sold put option level. This strategy provides some protection while leaving the upside completely open if prices increase. There are no margin calls and risk is limited to the cost of the option spread. Initiating these strategies will provide some confidence of milk income as we move through the year. Milk prices will, at some point, increase again and will be very good. We have experienced these cycles many times and this one will follow similar patterns. Dairy farmers are not alone with grain producers holding or selling their product below cost of production as well. Low prices will cure low prices. The duration of these low prices is uncertain.
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Contact:Steve Wade, Agent/Broker Office: (270) 234-6074 Email: swade@wadeassurance.com Web: www.wadeassurance.com
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund going to be fed at 4 PM and 12 minutes before feeding time, the calf employee was taking the pasteurized milk to the calf barn so that the calves would be fed on time. Management Philosophy #2: “Nothing goes into the silo that is not perfect.” Harvesting the highest quality forages was extremely important to these owners. High quality forages are more digestible and allow cows to eat more feed, resulting in more nutrients for cows to turn into milk. Forages were harvested at only the proper stage of maturity with nothing “too old or too young” harvested. Corn silage was high chopped (chopped at waist height) to increase the starch content of the preserved feed with a moisture content of less than 60% at ensiling. Brown midrib varieties of corn for silage were harvested. BMR varieties are more digestible than conventional varieties. Mr. Kestell stated they ran out of BMR corn silage last year but that would not happen again this year. Management Philosophy #3: “It’s not what you do right, but what you do not do wrong. Do not insult the cows.”
m
e
C oolai n a c i r r
How does Ever-Green-View Dairy get cows to set milk records? The key management practices we observed included harvesting and feeding high quality forages to cows with the genetics to milk. Cows were treated “like queens” starting at birth and throughout their stay on this farm. This farm definitely made the best use of their facilities with the tie stall barn showing its vintage. But, they made it work for their operation. For example, fans were used to move air in the summer. Attention to management details, consistency of executing management practices, and investigating when changes occur in production or quality expectations were important philosophies throughout all ages of calves, heifers, and cows. For example, one farmer asked what his somatic cell count averaged. The owner’s answer: “100,000 or lower, however yesterday it was 130,000 and we need to look for the ‘problem cow’”. So, the question becomes, can you have the next record producing herd? The answer is yes but you need to remember and follow these three underlying key management philosophies!
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Throughout our tour, attention to detail and consistency for all aspects of management were very evident. Cows were fed approximately 65 lbs. of dry matter with cows averaging about 2 lbs. of milk for every pound of dry matter consumed. Cows were fed a one group TMR in the tie stall barn containing 4 lbs. of alfalfa baleage, corn silage, high moisture corn, and additional grain mix with the top cows’ ration top-dressed with
roasted soybeans. From year to year, the ration is tweaked to adjust for changing nutrient composition of the forages, but no major changes are made. Consistency of feed delivery and implementation of management programs was very evident not only at the level of management but also employees caring for the cows and heifers. These owners had found management practices which worked for them and they followed them consistently.
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January - February 2018 • KDDC • Page 21
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Industry Leader Sees Bright Future for Dairy Mike Opperman milkbusiness.com
M
ichael Dykes has been on the job as CEO of the International Dairy Foods Association (IDFA) for about a year. At the 2018 Dairy Forum he reflected on that first year and provided insights into what’s ahead. In his first year he made it a priority to visit with as many members as possible at their place of business. He made about 58 visits in all and says he learned valuable insights from the experience.
“If we look and listen there are clues to what the future looks like,” Dykes says. “If we focus on shared interests we can make tremendous progress.” He pointed to some of the successes that have been a part of his first year at the helm.
Collaboration has been a key tenant of his first year. He points to collaboration with the National Milk Producers Federation to bring a united Farm Bill proposal to Congress as a key part of that collaboration. “Lawmakers called that a historic collaboration because they had not seen the two organizations work together to bring a united voice on Farm Bill policy,” Dykes says.
Getting 1% flavored milk back into schools. Orders and processes are in place for kids to enjoy flavored milk in schools starting this fall
Dykes says the way consumers shop and eat is centered on speed and convenience, and processors need to think about innovation in terms of portion size and calorie counts, with an emphasis on protein.
Opening global markets. “Production will continue to outpace domestic consumption,” Dykes says. “That means we need to get to a point where 20% or more of production is exported.” With increased production, population growth and continued economic growth, “proactive U.S. trade policy is essential” Dykes says.
Taking advantage of these opportunities, Dykes says, will require collaboration, innovation and an acceptance of change. “We’re not going back to the way things used to be,” he says. He challenged those in the audience to think farther into the future to make sure the next generation of leadership is in place to continue a successful path. “What are you doing to develop the next leaders of your organization,” Dykes says. “When you quit working, do you have someone who can take the organization to a new level?” He says having this transition mindset will help the industry continue down the path of success and help meet ongoing demand opportunities.
CALF HOUSING
Nutritional facts labeling, extending the time period on labeling requirements to coincide with GMO labeling processes so that changes can be made all at once. Alignment of the Pasteurized Milk Ordinance with the regulatory requirements of the Food Safety Modernization Act so all parties are on the same page.
INDOOR
Legislation around natural cheese that approved the definition for this product. A bill was introduced in the House and Senate last week.
PEN
SYSTEM
Geographical Indicators protection to keep current cheese names in place. Dykes says that the successes they had in encouraging Japan to keep geographical names in place as part of their EU trade agreement is a positive sign moving forward.
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January - February 2018 • KDDC • Page 22
HUTCH
The
The
CALF HUTCH
Building consumer demand. “Consumers have a culture ofS Y S T E M choice,” Dykes says, pointing to the number of choices consumers have in the marketplace, especially in the beverage category. “There are challenges and opportunities in this hyper-competitive market.” Dykes says consumers “want food that has a story,” and processors need to “think outside the jug” for opportunities to meet consumer demand. Think innovation, both in product development and packaging.
SUPER
PE N The
Indoor
Looking forward, Dykes commented on three opportunities for dairy:
COM
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
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January - February 2018 • KDDC • Page 23
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2018 Calendar of Events February 22 Kentucky Alfalfa Conference, Cave City Convention Center, 9:00 A.M. C.T.
March 02 Organic Association of Kentucky Conference, Clarion Motel, Lexington, KY
March 27 KDDC Environmental Compliance Dairy Meeting, Fleming Co. Extension
February 27 Young Dairy Producers Conference, Sloan Convention Center, Bowling Green, KY 9:30 A.M. C.T.
March 06-07 Southern Dairy Conference, Nashville, Tenn.
March 27 4-H State Dairy Jeopardy Contest, Barren County Extension Office
March 12 KDDC Environmental Compliance Dairy Meeting, Trigg Recreation Complex
April 05-07 Kentucky National Dairy Show and Sale, State Fairgrounds, Louisville, KY
March 13 KDDC Environmental Compliance Dairy Meeting, Christian Co. Extension
April 21 4-H Dairy Cow Camp, Shelby County
February 27 Dairy Awards Banquet and Auction, Sloan Convention Center, Bowling Green, KY 6:000 P.M. C.T. February 28 KY Dairy Partners Meeting and Industry Trade Show, Sloan Convention Center, Bowling Green, KY 8:30 A.M. February 28 The Dairy Alliance KY Board Meeting, Sloan Convention Center, Bowling Green, KY
March 23 KDDC Board Meeting, Nelson Co. Ext. Office, Bardstown, KY 10:00 A.M. E.T.
May12 Dairy U: Know Before You Show, Burley Fields Livestock Center, Horse Cave