PDPW Dairy's Bottom Line -- November 2021

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BOTTOM LINE Thursday, November 18, 2021 SECTION E

Sharing ideas, solutions, resources and experiences that help dairy producers succeed.

2022 Forward Class III Milk Prices vs. Historical

Class III Milk & Various Inputs Price Appreciation




2021 price levels vs. 2019 price levels, % change



100% $16

80% 60%


40% $12






USDA Announced Price



DRP 95% Coverage


2021 YTD

Forward Price



Baltic Dry Propane Fertilizer Freight



Sources: USDA AMS, FutureSource, Atten Babler

Soybean Meal



Illinois Farmland


Machinery Class III Cost Milk

Sources: USDA, FutureSource, Federal Reserve, University of Illinois

Manage risk in inflationary times WILL BABLER

COVID-19 unleashed a series of supply-chain and labor-market disruptions, monetary and fiscal stimuli, and policy and behavioral changes that have combined to stoke inflation. Dairy producers are feeling the impact of inflation and broken supply chains across almost all inputs to operations. Unfortunately, as seen in the chart, milk-price inflation has yet to follow. No one Babler knows if the current inflation will be transitory. But given the scale of the supply-chain disruptions and the magnitude of the stimuli, it’s likely it will be a problem for the entire 2022 marketing year. Dairy producers need to take action to mitigate the inflationary risk for next year. That includes managing both inputs and milk prices.

to manage downside risk in milk while maintaining upside opportunities. Dairy Revenue Protection is an ideal tool for that environment because it provides insurance against decreased revenue for a subsidized, reduced-cost premium. Importantly, the producer will be able to realize increased revenue if milk prices increase because Dairy Revenue Protection doesn’t limit the upside beyond the premium paid. In an inflationary and volatile environment it’s critical to maintain as much revenue upside as possible to help offset increasing input costs. Fortunately Dairy Revenue Protection coverage levels are at attractive values for the 2022 marketing year, with all Class III and Class IV forward prices now

trading at more than $18 per hundredweight. Many producers are familiar with Dairy Revenue Protection; we encourage them to take advantage of the opportunities that are currently available. For those who have not yet used Dairy Revenue Protection, now is an ideal time to learn more about it; it’s a tool uniquely suited to the current environment. No one knows for sure what the future may be for inflation in general or dairy markets in particular, but it’s clear that Dairy Revenue Protection can provide a strong level of protection under any future scenario. Will Babler is principal at Atten Babler Insurance Services; email wbabler@attenbabler.com to reach him.

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Growing Farm Safety Traditions

Control input risk

Dairy-commodity inputs such as corn, protein and forages have all increased in price. Other inputs such as labor, equipment, machinery, spare parts, fuel, medicine, supplies and chemicals have also increased in price – and are at risk of becoming unavailable. Producers should carefully consider which inputs, if unavailable, will shut down or significantly impair their ability to produce. Securing those inputs with contracts or taking delivery into on-farm inventory will go a long way toward weathering supply-chain disruptions and further price increases. The challenge with an aggressive procurement strategy is that the aforementioned concerns may not materialize and prices could decrease. That could create significant financial risk for producers. There are two ways to mitigate that risk.  Producers can open downside opportunity with put-option strategies for corn and protein commodities.  Milk prices can be protected with minimum revenue hedges to offset input costs. The second approach helps to protect against price declines in traded commodities and inputs that are more-difficult to hedge.

Manage milkprice risk

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One way to manage the risk of increased input costs is by securing a minimum milk price with Dairy Revenue Protection insurance. The increasing tide of inflation could influence all markets but not necessarily equally. There are no guarantees that feed costs and milk prices will be correlated, especially in the short run. In the worst case the milk market could diverge and prices decrease sharply due to its own fundamentals – while inputs remain elevated. The current increased level of uncertainty in markets makes it critical

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BOTTOM LINE Thursday, November 18, 2021 E2

Sharing ideas, solutions, resources and experiences that help dairy producers succeed.

Make merry with Wisconsin cheese CHAD VINCENT

The holidays are approaching and there’s no better way to celebrate than with Wisconsin’s award-winning cheese. As consumers across the country gather, snack, dine and celebrate the season with family and friends, they purchase more of the state’s incredible cheese during November and December than any other time of year. Vincent To build on that momentum, Dairy Farmers of Wisconsin is again launching a major national holiday campaign highlighting Wisconsin cheese varieties. The campaign will be at grocery stores and restaurant chains, using digital media and events with a singular message centered on Wisconsin’s exceptional specialty cheese. Those efforts offer terrific opportunities to engage with consumers as well as to elevate and strengthen positive perceptions of Wisconsin cheese – while increasing milk sales to benefit Wisconsin dairy-farm families. In Wisconsin 90 percent of our milk goes into the production of cheese, so those programs are important to keep sales growing across the country. In the coming weeks consumers

Dairy Farmers of Wisconsin will be partnering with major national grocery retailers to offer promotions to customers shopping specifically for cheese during the upcoming holiday season. across the United States will see and hear a great deal about Wisconsin cheese in a variety of ways.  Dairy Farmers of Wisconsin is partnering with major national grocery retailers to execute in-store promotions and offers, to drive sales of Wisconsin cheese in those increased-volume months. Wisconsin cheese is sold in 99 percent of retail outlets across the country, making for a significant opportunity to reach consumers where they shop during a time when they are specifically interested in celebrating with cheese. The objective of our strategy is to provide an exceptional cheese experience to drive specialty-cheese sales and shopper satisfaction. Dairy Farmers of Wisconsin works with retail partners to share consumer

insights and knowledge, to bring the power and allure of Wisconsin cheese to their stores and bottom line. Consumers will be reminded to look for the Proudly Wisconsin® Cheese Badge to ensure purchases of authentic varieties.  We’ve developed a social-media contest to highlight consumers using Wisconsin cheese to build cheese boards to share with family and friends during holiday gatherings. Look for weekly winner announcements while gathering inspiration for a family’s charcuterie creations.  Watch for increased online engagement and conversations with consumers about Wisconsin cheese varieties, and how to incorporate them into holiday celebrations.

 Dairy Farmers of Wisconsin is working behind the scenes to share the great story of Wisconsin cheese with national and local media partners. We’ve been visiting with editors and reporters from targeted trade and consumer media outlets to help them bring holiday celebrations to life by including Wisconsin cheese. We’re sharing the incredible stories of Wisconsin’s dedicated dairy farmers, and their commitment to making the excellent-quality milk needed to craft our award-winning cheese. We’ve been making cheese in Wisconsin for 180 years; that’s longer than we’ve been a state. It’s no wonder Wisconsin cheesemakers are incredibly good at it. Dairy Farmers of Wisconsin is proud to deliver this integrated campaign to support the state’s farm families and cheesemakers, to keep Wisconsin cheese in the driver’s seat during the holiday season and beyond. Visit www.wisconsindairy. org to learn more about checkoff efforts. Visit www.wisconsincheese.com to learn more about Wisconsin cheese.

PDPW: Who we are

Professional Dairy Producers of Wisconsin (PDPW ) is Dairy's Professional Development Organization®. W ith a vision to lead the success of the dairy industry through education, our mission is to share ideas, solutions, resources and experiences that help dairy producers succeed.

PDPW Board of Directors President Katy Schultz Fox Lake, Wis. 920-210-9661 katylschultz@ gmail.co m Vice President Janet Clark Rosendale, Wis. 608-341-6709 vafarmsllc@hotmail.com Secretary John Haag Dane, Wis. 608-576-0812 jahaag5@gmail. com Treasu rer Steven Orth Cleveland, Wis. 920-905-2575


Directors Andy Buttles Lancaster, Wis. 608-723-4712 stonefront@ tds.net Ken Feltz Stevens Point, Wis. 715-570-6390 feltzfarms@hotmail.com Corey Hodorff Eden, Wis. 920-602-6449 corey@ secondlookholsteins. com Paul Lippert Pittsville, Wis. 715-459-4735 lippert4735@gmail.com

Chad Vincent is the CEO of Dairy Farmers of Wisconsin, the marketing and promotional arm for Wisconsin’s dairy farmers. Visit wisconsindairy. org or email hello@wisconsindairy. org for more information.

Brady Weiland Columbus, Wis. 920-285-7362 bweiland11@hotmail.com

PDPW Advisers Andrew Skwor 608-963-5211 askwor@msa-ps.com

PDPW summit: Managing food system key Innovative dairy farmers, government officials and policymakers, processors, industry and food-system professionals from around the state are making plans to attend the 2021 PDPW Dairy Insights Summit. It’s scheduled for Dec. 1 at the Sheraton Hotel in Madison, Wisconsin. Key topics will explore issues facing the food system, from the animal to the consumer. With the ongoing pandemic and market volatility in view, one featured topic includes a session led by Charlie Arnot concerning emerging consumer trends. Arnot is CEO of the Center for Food Integrity, a non-profit organization dedicated to building consumer trust and confidence in the current food system. He has almost 30 years experience in communications, issues management and public relations in the food system. He’ll highlight which pandemic-prompted trends are here to stay and offer insights on how


Dairy Insights Summit December 1

Sheraton Hotel, Madison, WI

be present Want to be effective?

new habits may shape future opportunities for dairy. A trio of experts will address implications of recent food-system blockages and a worldwide perspective regarding sustainable milk production.  Dan Peerless is the global sustainable-sourcing lead for dairy, meat, poultry and eggs at Nestlé; he’s responsible for defining sustainably sourced dairy and meat ingredients within the Nestlé supply chain.  Jay Waldvogel is senior vice-president of strategy and global development for Dairy

Farmers of America. He leads the organization’s strategic-planning process, provides support to the organization’s business leaders and guides its expanding global activities.  Mary Ledman is a global dairy strategist with RaboResearch; she’s tasked with developing the bank’s medium-term dairy forecasts and advising on its engagement with the dairy industry. Sessions will also offer insights on how to best protect animal welfare despite unexpected disruptions. Jeremy Marchant is a research animal scientist with the U.S. Department of Agriculture’s Agricultural Research Service; for 31 years he’s researched pig and dairy-cattle welfare and behavior. He’ll outline key learnings from the challenges faced in 2020 by the livestock-production sector. Rounding out the summit will be two experts from the pork industry.  Keri Retallick is executive vice-president for the Wisconsin

Pork Association and has served more than 35 years in the food and agricultural industry.  Howard “AV” Roth is a fifth-generation Wisconsin hog farmer who owns and operates a 3,000-head farrow-to-wean operation. He’s served on the National Pork Producers Council and is currently the council’s president. He also serves as chairman of the Wisconsin Pork Association’s Swine Health Committee. The two will analyze the breakdown of the food-supply chain as it pertains to market-access disruptions. They’ll also address health implications on humans and hogs, and offer perspectives on how to best strengthen weak links in the market chain. Call 800-947-7379 or visit www.pdpw.org for more information regarding the 2021 PDPW Dairy Insights Summit, and to register – as a PDPW member, non-member or government affiliate.

PDPW Dairy Managers Institute – learn to lead, manage, influence For producers and agribusiness professionals looking to successfully hire, develop, lead and influence teams to work effectively at all levels, PDPW has developed Dairy Managers Institute®. A two-tier program, the 2021 edition is scheduled for Dec. 14-15 at Kalahari Resorts, Wisconsin Dells, Wisconsin. Communications expert and business founder Becky Stewart-Gross will lead tier one of the program. Attendees will learn the fundamentals of leadership and the four categories of leaders, as well as how to effectively implement change and strategies to identify their strengths and weak-

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nesses as they lead and manage. Participants will also apply the five practices of effective leadership to their on-farm roles. They’ll learn to recognize the differences between managerial skills and those of a leader, as well as when to use which skills. Stewart-Gross will help participants identify the strengths of their personality and work

styles; she’ll also offer methods to recognize other personality styles. The session will shed light on why individuals react to stress the way they do, and why Hoffman their attitudes and actions change from one setting to another. Facilitating tier two of Dairy Managers Institute will be Michael Hoffman. He’s the founder and owner of Igniting Performance Inc., a Dallas-based company that specializes in the skills of sales, customer loyalty and leadership. Hoffman’s “Positively Outrageous Service” session will showcase how to instill a greater sense of ownership and involvement among team members while generating buy-in and commitment to an action plan. He’ll outline

how to create strategic approaches around such management-coaching conversations as those involving change, milestones and setting Stewartexpectations. He’ll Gross also teach participants how to apply coaching skills regarding self-esteem, listening skills and empathy, and the importance of involvement. Other topics Hoffman will cover include identifying the personal and practical needs of a coaching interaction and delivering effective feedback. In addition he’ll offer strategies to use the tools of influence for attendees, to be a part of an operation’s growth and future. Call 800-947-7379 or visit www.pdpw.org to register and for more information regarding the Dairy Managers Institute.

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www.pdpw.org mail@ pdpw.org 800-947-7379

Upcoming Educational Events NOV 16-18; 23-24; 30

The Dairy Signal™ Online, 12 – 1 pm CT Visit www.pdpw.org to participate in live-streamed event. Audio/video recordings also available free.

DEC 1, 2021

Dairy Insights Summit Sheraton Hotel Madison, Wis.

Visit www.pdpw.org for details; all sessions to be held in compliance with CDC guidelines.

DEC 1-2; 7-9

The Dairy Signal™ Online, 12 – 1 pm CT Visit www.pdpw.org to participate in live-streamed event. Audio/video recordings also available free.

DEC 8-9

Financial Literacy for Dairy® (Level 1 concludes) PDPW headquarters Juneau, Wis. Visit www.pdpw.org for details; all sessions held in compliance with CDC guidelines.

DEC 14-16

The Dairy Signal™ Online, 12 – 1 pm CT Visit www.pdpw.org to participate in live-streamed event. Audio/video recordings also available free.

DEC 14-15, 2021

Dairy Managers Institute® Kalahari Resorts Wisconsin Dells, Wis. Visit www.pdpw.org for details; all sessions held in compliance with CDC guidelines.

DEC 21-23; 28-30

The Dairy Signal™ Online, 12 – 1 pm CT Visit www.pdpw.org to participate in live-streamed event. Audio/video recordings also available free.

JAN 11-13, 2022

Manager’s Academy for Dairy Professionals™ West Palm Beach, Florida Visit www.pdpw.org for details; all sessions held in compliance with CDC guidelines.

MAR 15-16, 2022

Cornerstone Dairy Academy™ Kalahari Resorts Wisconsin Dells, Wis. Visit www.pdpw.org for details; all sessions held in compliance with CDC guidelines.

MAR 16-17, 2022

PDPW Business Conference Kalahari Resorts Wisconsin Dells, Wis. More details to come; all sessions to be held in compliance with CDC guidelines.

PDPW mission: to share ideas, solutions, resources and experiences that help dairy producers succeed.

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BOTTOM LINE Thursday, November 18, 2021 E3

Sharing ideas, solutions, resources and experiences that help dairy producers succeed.

Year 1

Pre-treatment Year 2

Year 3


Year 4

Year 5

Runoff (in.)

5 3

Left: The chart shows results from a UW-Discovery Farms study that measured runoff, sediment and nutrient losses in control and treatment fields where the treatment was an overwintering cover crop. Both fields received the same management during the pre-treatment period.


Soil (lb/acre)

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P (lb/acre)

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Fall-planted cover crops yield benefits ERICA GENTRY

Late fall in Wisconsin’s farmland has historically been a showcase of fields bearing only the remaining stubble of corn stalks, soybeans, alfalfa and clean brown soil. Now in many fields e m e rge sprouts of Gentry green cover crops. As concerns grow about Wisconsin’s water quality, farmers across the state are incorporating strategies to keep soil and nutrients in place. Planting a cover crop in the fall assists in reducing soil and nutrient losses that damage water quality. Based on University of Wisconsin-Discovery Farms studies, cover crops can have the most significant influence on maintaining nutrient and sediment levels at three specific time frames.  In early spring when soil loss is likely to occur, an established cover crop helps hold the soil in place.  In the fall cover crops protect soil and take up nitrogen.  While the soil is frozen during winter, they help decrease dissolved phosphorus losses. Discovery Farms recently conducted a project to better understand how efficiently cover crops can decrease dissolved-phosphorus losses. In that study one monitoring station measured runoff from a control field with no cover crop. A second monitoring station nearby measured runoff from a treatment field where cover crops were established each fall. All other practices on the two fields were the same. Data from the study are still being analyzed, but early results show that an established cover crop may have reduced soil, phosphorus and nitrogen losses via surface-water runoff. For the first three years of the study – the pre-treatment period – both fields were managed in a strip-tillcorn and no-till-soybean rotation. After a full crop rotation of corn to soybeans to corn, the post-treatment period began. At that point a rye cover crop was planted each year after harvest on the treatment field. During the pre-treatment period, consistently greater soil and phosphorus losses occurred at the treatment field compared to the control field. When cover crops were incorporated in the fourth year on the treatment field, soil and phosphorus losses became similar to that of the control field. Year five was a bit of an anomaly; there wasn’t much runoff at either site and almost all runoff on the treatment field occurred during a single event May 23. With so few runoff events to analyze, it’s difficult to make definitive conclusions about the efficacy of the cover crop for that year. The reason cover crops may reduce phosphorus runoff from no-till systems comes down to soil protection and nutrient cycling at the surface. No-till systems efficiently reduce or almost 00 eliminate soil loss, but phos1

phorus can concentrate on the surface because the top 6 to 8 inches of soil aren’t tilled. Discovery Farms data shows that dissolved-phosphorus loss in no-till systems occurs most commonly during episodes of runoff while soil is frozen. For those considering cover crops, a good first step is planting an overwintering crop such as winter rye planted after corn silage. If planted early enough in the fall, it allows time for a cover crop to be established and will act as a defense against late-season soil loss. If the crop overwinters well and has a healthy root system in the spring, it will provide continued soil protection and nutrient-cycling benefits. To learn more about Discovery Farms Research and water-quality tradeoffs from conservation practices, attend the Discovery Farms Conference, to be held Dec. 15 in Wisconsin Dells, Wisconsin. Visit www.uwdiscoveryfarms.org for more information.

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