KENTUCKY
July - August 2018 w w w. k y d a i r y. o r g
Milk Matters Supported by
Paula & Patrick Patterson
I
t cannot be understated that the Dairy Industry is in a tough straight. Alternative milk products, contract loss and a changing milk market make dairy farming a much more challenging endeavor than the industry has faced in times past. A doom and gloom mentality has taken hold in a large portion of our community, however when we attended the KDDC Summer Dairy Tour we saw a refreshing break in the clouds. While on the KDDC Summer Dairy Tour we saw men and women with a passion and enthusiasm for dairy that reminded us why we started our dairy in the first place.. Our operation is a 90 cow pasture based dairy. Throughout the year we rotationally graze around 100 acres of novel endophyte fescue with a grain supplement we feed in our open sided dairy barn during milking. During the winter, while they are still rotating fields, the pasture grass is replaced with alfalfa and grass bailage. During the summer, our cows can be found resting under shade trees as the only shelter we have, besides the milk barn, is two tobacco barns we have repurposed for raising the calves and emergency shelter. I was not raised on a dairy and my only experience with a milking operation being that of our farm, I was amazed at the diversity in dairy farm operation styles. While the organic hybrid dairy we visited was the most similar to our operation, the tie stall barns, free stall barns, and compost
bedded pack barns we saw on the tour were a valuable insight into the different styles of operation used by dairy farmers across the state. Patrick was amazed at the amount of time and effort put into cow comfort at these farms. The cows were all in dry well kept barns. The barns were all clean and put the cows in an optimum milk producing environment. They were great for the cows during the different seasons and protected them from the weather. While our cows are on grass 24/7 the cows in these barns were able to get relief from the heat with the help of fans, air flow systems and sprinklers, all of which help contribute to the overall comfort of the cow. We also visited two farms that had installed cooling panels in their barns as an innovative way to help keep the herd cool. These farms reminded us of the importance of keeping the cows comfortable and showed us some of the new and innovative methods farmers are using to improve cow comfort. The greatest takeaway from this trip however, was the people. Whether it was the farmers who took great pride in their operations, or the people who were on the tour with us who talked about their own farms and discussed what we were learning, it was evident that these men and women had a great love and passion for dairy. In an industry plagued with a doom and gloom mentality it was refreshing to see people who were proud to be dairy farmers. Patrick has come home with a head full of ideas, I have come home with a better understanding of the dairy industry, and we both came home with a renewed enthusiasm for the future of our farm and an appreciation for the great people who make up the dairy industry.
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
2018 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: Keith Long 270.670.1388 District 4: Bill Crist, Jr. 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: Stephen Weaver 271.475.3154 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
Employee & Consultants Executive Director: Maury Cox 859.516.1129 DC-Central: Beth Cox 859.516.1619 • 270-469-4278 DC-Western: Dave Roberts 859.516.1409 DC-Southern: Meredith Scales 859.516.1966 DC -Northern: Jennifer Hickerson 859.516.2458
KDDC 176 Pasadena Drive Lexington, KY 40503 www.kydairy.org KY Milk Matters produced by Carey Brown
President’s Corner Richard Sparrow
T
he tragedy of the nineteen Kentucky dairy farmers that lost their milk market finally has closure. This situation has cast a dark cloud over the entire Kentucky dairy industry. We now realize that every Kentucky dairy farm family is one letter away from extinction. I would like to think as a member of a cooperative that our dairy has some insulation from such disaster. However, I do know full well a decision made at the 30,000-foot level could be the end of our dairy farm. It brings to mind my grandfather’s saying, “In every situation, there are winners, whiners and losers.” I now question the validity of Papaw’s statement. In this situation, there are plenty of losers and whiners, but I can’t recognize a winner here. Thank goodness Scioto County Milk Producers stepped up and offered the remaining eleven dairy farms a market. I am sure most Kentucky dairy farmers are unfamiliar with Scioto. In 1998, Scioto had sixty-two dairy farms with about three million pounds of milk a month. As an employee of a large milk cooperative that marketed Scioto’s milk, I attended their board meetings and met with the Scioto president in his home many times. Scioto had two office employees, a field man, and an accountant. Now thirty years later, Scioto has nearly the same number of member farms producing twice as much milk. What other organization can say the same? Over the years, Scioto resisted being absorbed by the larger cooperatives. I know I tried twice. Isn’t it ironic that little Scioto offers these dairy families a lifeline when all the mega-organizations refused. I think it shows what a truly farmer-driven cooperative can accomplish. I guess my grandfather was right after all. Even in this mess there is one winner: Scioto County Milk Cooperative.
Announcement from Federal Milk Marketing Order 5:
Transportation Credit Fund Assessment Decrease and Administrative Fund Assessment Increase April 19, 2018 TO: Regulated Handlers, Appalachian Marketing Area FROM: Market Administrator, Louisville, KY SUBJECT: Transportation Credit Fund Assessment and Administrative Fund Assessment Effective July 1, 2018, the Transportation Credit Balancing Fund assessment rate for the Appalachian Marketing Area will be decreased $0.05 per hundredweight on all producer milk assigned to Class 1. This decreases the assessment rate from $0.15 per hundredweight to $0.10 per hundredweight and will be reflected on the Announcement of Advanced Class Prices released on June 20, 2018. Effective July 1, 2018, the administrative assessment rate for Appalachian Marketing Area will be increased $0.02 per hundredweight on all producer milk. This raises the assessment rate from $0.05 per hundredweight to $0.07 per hundredweight.
July - August 2018 • KDDC • Page 3
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Executive Director Comments Maury Cox
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he top story in the dairy industry for the past four months has been the Dean Foods cancelation notices to over 100 dairy farmers in eight states. Slowly, most of those producers were able to access different markets while some decided to exit the business. In southern Indiana eight farmers were unable to find a market and sold out, while only recently, just days before the deadline, 11 of the original 19 Kentucky dairies that received letters were offered a market for their milk. Special thanks go to Scioto County Milk Producers in southern Ohio and United Dairy, Inc. in Charleston, West Virginia for providing a home for these producers. Following the Scioto offer, Dairy Farmers of America – Southeast Council then offered four of the 11 a market a few days later. Eight of the original 19 producers discontinued dairy farming before a market was found and one of the 11 after the market was located. All total, nine KY dairy farms that shipped their milk to
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Dean Foods, Louisville plant went out of business. That leaves 542 dairy farms in KY operating, the second most in all the southeastern U.S. While this story has been front and center in news outlets and on social media, and rightly so, there have been other matters ongoing affecting KY’s dairy industry. One matter specific to KY is the decision by the UK administration to make a land trade deal with the city of Lexington which included the UK Coldstream dairy farm. Unfortunately, the last information indicates the university will not rebuild its dairy operation as it was first reported. Dr. Richard Coffey, UK, Chair of the Department of Animal and Food Sciences attended the July 27, KDDC board meeting and explained the UK decision. Afterwards the KDDC Board voted to form a task force of producers and industry representatives to meet with university officials and seek alternatives to discontinuing the dairy operation. The KDDC has concerns that although there are serious challenges facing the industry, now more than ever, KY’s 540 plus dairy farmers and the multitude of allied industries, processors, and cooperatives need leadership from our Land Grant University. On a positive note: If you are reading this, I suggest also reading the article written by Paula and Patrick Patterson on the front page of this edition on the KDDC Summer Tour. The story is uplifting and positive and shares a hope for a future in the dairy industry. The KDDC provides these opportunities to fulfil its mission of education for KY dairy farmers. It appears the USDA has implemented a Margin Protection Plan that is substantive and functional. Because it was retroactive to January producers were able to purchase the plan and calculate their payout. Dairy went how long without any real safety net in its tool box? On October 9 dairy farmers across the U.S. will have a new USDA-sponsored risk management tool in the toolbox. Developed by the American Farm Bureau, the Dairy Revenue Protection provides insurance for the difference between the revenue guarantee and actual milk revenue if prices or revenues decline. It also provides a greater choice of price risk management
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July - August 2018 • KDDC • Page 4
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Dairy Revenue Protection will protect against unexpected declines in milk revenue, declines in the value of milk or declines in the state or pooled production region-indexed milk production volume. Those interested in purchasing Dairy Revenue Protection must do so through an agent selling on behalf of an approved insurance provider. I recently attended The Dairy Alliance two-day Summer Annual Meeting in Biloxi, Mississippi. The event was loaded with industry leading, informative speakers and many pressing issues facing us in the Southeast. The following are key points and takeaways from each of the presentations. •Alexis Glick, CEO, GENYOUth gave an inspirational talk regarding the importance of nurturing child health and wellness through improved nutrition and physical activity. •Jim Mulhern, President and CEO National Milk Producers Federation highlighted the major issues he and the National Milk Producers Federation (NMPF) are working on including the 2018 Farm Bill. • Dr. Jack Britt, Dairy Economist, spoke about dairying in the years ahead and shared insights from a large group of dairy industry experts that he works with:
• Doug Ackerman, CEO The Dairy Alliance spoke openly and candidly about the industry needing to become more unified and having stronger leadership, including working with each other rather than against each other if we're to succeed. He reviewed their strategic plan with a theme of: Together. Forward. The real challenges before us are how do Kentucky dairy farmers compete in this market of too much milk and product inventory and too few premiums? Identifying the challenges KY producers are facing go deeper than cheap milk. Solutions and answers are complex because they involve several entities. Issues at hand involve market access, outside Order milk pulling dollars from the pool, milk hauling and stop charges, quota system in KY and the southeast area while overproduction areas continue to grow diminish ability for KY producers to compete. Premiums are either non-existent or are extremely difficult to obtain and limited money available for loans. I agree with Mr. Ackerman in that we must become more unified including working with each other rather than against each other. KDDC is working with dairy farmers, industry representatives, financial institutions and others to seek solutions. We always appreciate constructive comments from dairy farmers and industry.
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July - August 2018 • KDDC • Page 5
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Milk 2 My Plate Grant Makes More Dairy Products Available to Kentucky Families
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ccording to the annual Map the Meal Gap study by Feeding America, as of 2015, one in every six Kentuckians – including one in five children – are food insecure. The Dairy Alliance has partnered with Kentucky Department of Agriculture and God’s Pantry Food Bank to ensure families are receiving vital nutrients including access to fresh Kentucky milk. The Dairy Alliance presented a $30,000 grant to God’s Pantry Food Bank to help thousands of Kentuckians who struggle to buy nutritious foods for their families. God’s Pantry used the grant to acquire seven milk coolers for its Winchester and Lexington-Fayette County food pantries. The grant was awarded in conjunction with The Dairy Alliance’s Milk 2 My Plate initiative as well as the Kentucky Department of Agriculture’s (KDA) Hunger Initiative. “The coolers funded by this grant enable God’s Pantry to store fresh milk for four affiliate food pantries,” Commissioner Quarles said. “As a bonus, our hard-working dairy farm families will get a new market for their products. This is one small step that hopefully will lead to more such initiatives to help Kentucky’s dairy farmers. We are extremely grateful to The Dairy Alliance for its support.” “On behalf of the dairy farm families of Kentucky and the Southeast, The Dairy Alliance is proud to partner in the vision of Commissioner Quarles,” said Doug Ackerman, CEO of The Dairy Alliance. “His
July - August 2018 • KDDC • Page 6
leadership during these difficult and changing times serves to provide hope for the people of Kentucky and the hard-working dairy farmers out there who work 365 days a year to nourish all American families.” Winchester Farms Dairy delivered milk to God’s Pantry as part of the presentation. The pilot project currently provides 60 gallons of milk a week to the food bank, but God’s Pantry CEO Michael Halligan is hoping to increase volume over time. “Hungry families, particularly those with young children, often lack calcium-rich milk in their diet. This pilot project will help us establish a consistent, sustainable flow of milk to those in need,” Halligan said. “In the first few weeks, we’ve witnessed so much joy and excitement through a cold glass of milk. Hats off to The Dairy Alliance, Winchester Farms Dairy, the Kentucky Department of Agriculture, and our amazing Kentucky dairy farmers for helping us begin to imagine what’s possible through a growing Milk 2 My Plate program.” The Dairy Alliance launched Milk 2 My Plate early this year to build an infrastructure for getting dairy products from Kentucky farms to Kentucky homes while developing relationships between processors and food banks. For more information about The Dairy Alliance and Milk 2 My Plate, go to thedairyalliance.com. Commissioner Quarles unveiled the Kentucky Hunger Initiative two years ago to bring together farmers, charitable organizations, faith groups, community leaders, and government entities to look for ways to reduce hunger in Kentucky. To find out more about the Hunger Initiative, go to kyagr.com/ hunger.
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KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Heat Detection - Influence of Herdmates George Heersche, Jr., Ph.D., University of Kentucky Dairy Extension
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esearchers at the University of Kentucky took a detailed look at heat detection a few years ago and the results have real world application particularly for our smaller herds. For three years we had dairy cows under 24 hours surveillance from the time they calved until they were confirmed pregnant using time-lapse video recordings. One interesting part of this research was looking at how a cow’s reproductive status influences her interest in interacting with a herdmate in heat. It is common knowledge more interaction occurs if two cows are in heat at the same time. We wanted to know how much more interaction. We also wanted the answers to other questions. What is the chance a pregnant cow will interact with a cow in heat? Does the stage of the estrous cycle influence the chance a cow will interact with a cow in heat? This research did yield some answers, and the results are summarized in the table. The herdmate’s reproductive status does influence the chance she will interact with a cow in heat. If a cow is in standing heat or was in heat yesterday or will be in heat tomorrow, she is the most likely herdmate (62% chance) to mount a cow in standing heat. If a cow is cycling but has not had a standing heat since calving and her ovarian cycle is in the same stage as cow in heat ± one day, she is the second most likely herdmate (32% chance) to mount a cow in standing heat. A cow who is in the first half of her estrous cycle (days 2 to 10) is more likely to mount a cow in heat than a cow who is in the second half of her cycle (days 11-19, 25 vs. 5% chance). Pregnant cows and cows which have not been seen in heat since calving and are on ovarian cycle days 2 through 19 are not very interested in mounting a herdmate in heat. These results show the percentage of cows detected in heat can be influenced by the varying percentage of herdmates who are near or in heat, pregnant, in the first half of their cycle, in the last half of their cycle, in postpartum anestrus, etc. The number of herdmates or “groupmates” in these reproductive states is influenced by herd size, number of groups per herd and seasonal breeding. Heat detection should always receive high priority. The practical implication is if groups/herds are small or a small percentage of the group is “sexually active”, heat detection becomes an even more difficult job and deserves increased attention by management. This is not only the case for herds who use artificial insemination, but also for herds using natural service. I sincerely hope our natural service herds are keeping the bull in
July - August 2018 • KDDC • Page 8
INFLUENCE OF STAGE OF ESTROUS CYCLE ON THE PERCENT CHANCE A HERDMATE WILL MOUNT A COW IN HEAT Herdmate’s Stage of Cyce
Number of Observations
Chance Herdmate Will Mount a Cow In Heat (%)
Herdmates with ovarian cycles but not seen in standing heat Estrous Cycle Daya -1 to 1
34
32
2 to 10
58
13
11 to 19
62
16
Herdmates which have been seen in heat Estrous Cycle Daya -1 to 1
91
62
2 to 10
82
25
11 to 19
68
5
Pregnant Herdmates
101
12
Daya of standing heat or lowest milk progesterone is day zero
a sturdy bullpen for human safety reasons and bringing the cows in heat to the bull. Another extremely practical application of this information relates to artificial insemination of heifers. If you are breeding a group of 10 to 15 heifers, it usually is not a problem to get all but two or three “stragglers” pregnant. With a high percent of the group pregnant, the chance you will catch the remaining heifers in heat decreases. One must realize that over time the effort devoted to heat detection with the same group of heifers must increase not decrease. A helpful management practice is to place the two or three open heifers with a younger group of non-pregnant cycling heifers. Synchronizing estrus is a good way to get heifers and cows to come in heat at about the same time and several synchronization methods are available. Another interesting result from this study is not a news flash, but a good reminder that accurate heat detection is important. That result is the conception rate of cows definitely in standing heat and inseminated at the correct time was very high.
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
USDA Authorizes $50 million for Feeding Program Fluid Milk Purchases Tariff aid details yet to be released By Progressive Dairyman Editor Dave Natzke By Progressive Dairyman Editor Dave Natzke he USDA plans to purchase $50 million worth of fluid milk for distribution to domestic food assistance programs, the agency announced on Aug. 14. These purchases will be separate from any USDA dairy product purchases under another program designed to provide financial assistance to dairy farmers negatively impacted by the ongoing tariff war with major U.S. dairy export customers. The USDA purchases will include consumer-packaged whole, 2 percent, 1 percent and skim milk. Estimated milk volumes could total 12 million to 15 million gallons, depending on the prices agreed to by USDA and the milk suppliers. It marks the first time USDA has purchased fluid milk for domestic food assistance programs, according to the National Milk Producers Federation (NMPF). “Milk is one of the most requested nutrition staples at food banks, yet it is rarely available,” said Julia Kadison, chief executive officer at MilkPEP. “And as one out of two kids ages 9 and up are falling short on calcium, vitamin D and potassium – essential nutrients that milk provides – there is an even greater need to make sure milk is getting to children and families who need it most.” Working with states to determine need, the department will work with states through The Emergency Food Assistance Program (TEFAP) to provide the milk to programs and charities that assist struggling families. To be eligible to submit offers, potential fluid milk contractors must meet USDA Ag Marketing Service (AMS) vendor qualification requirements. Details of these requirements, as well as access to submit bids, are available online. The USDA will offer informational webinars to dairy companies wishing to sell milk to the agency through this donation program. A pre-bid conference call will be held on Aug. 22.
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Notice received from: USDA Marketing Service • Dana Coale, Deputy Admin. • USDA, Dairy Programs July 10, 2018
various pooling provisions of the two orders should USDA decide to proceed with a hearing.
RI: Southeast and Appalachian Hearing Request On June 28, 2018, National All-Jersey (NAJ) withdrew their request to have a hearing regarding the Southeast and Appalachian Milk Marketing Orders. NAJ originally submitted a proposal, on behalf of fourteen cooperative associations and four national and state trade organizations, to consider adopting multiple component pricing in the two marketing orders. At the request of USDA, two additional proposals were received seeking to amend
Since the primary proponent on this matter has withdrawn their request, USDA will not move forward with a formal rulemaking hearing. Information on the originally submitted proposal may be obtained from the Dairy Program website at: https//www.ams.usda.gov/ rules-regulations/moa/dairy/southeast-appalachian-orders
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July - August 2018 • KDDC • Page 9
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Dixie Dairy Report August 2018
SOUTHEASTERN FEDERAL ORDERS DAILY AVERAGE POOL PLANT CLASS I UTILIZATION - 1st Half 2018 versus 1st Half 2017 Order
ccovington5@cs.com (336) 766-7191
Lower commodity prices. July DPSR prices for all commodities, except dry whey, are lower than June and, all prices are lower than a year ago. Lower commodity prices have resulted in lower federal class prices. The August Class I Mover (set in July) is $14.15/cwt., $1.21/cwt. lower than July. The Class III price declined from $15.21/cwt. in June to $14.10/cwt. in July. For the first time since last September, the Class IV price is higher than the Class III price. The July Class IV price is $14.14/cwt. a drop of $0.77/cwt. compared to June. So far in August, commodity prices are improving. Small increases are projected for the September Class I Mover, and August Class III and IV prices. DAIRY PRODUCTS SALES REPORT (DPSR) PRICES July 2017
2018
Change %
(lbs)
Calvin Covington
Product
2017
June 2018
July 2018
($/lb.) Butter
$2.6039
$2,3756
$2.2596
Cheese (block & barrel)
$1.5430
$1.6150
$1.4868
Nonfat Dry Milk Powder
$0.8991
$0.8150
$0.7824
Dry Whey
$0.4515
$0.3086
$0.3372
Sales and inventories. Through the first five months of 2018, domestic sales (total solids basis) are about even with the same period a year ago. However, for the past three months domestic sales were below a year ago. Domestic sales were down 1.4% in March, down 0.7% in April, and down 2.1% in May. At the end of June, the butter inventory was almost 8.5% higher than last June. Total cheese inventory of about 1.4 billion lbs. on June 30 is another record high, and is 6% higher than a year ago. NFDM inventory is only 1.4% higher than last year. Through May, exports sales are setting records with sales up over 21% compared to last year. Currently, exports are over 16.5% of total dairy sales. The next few months will tell us the impact of higher tariffs on dairy exports. Dairy Market News reports tariff related effects, at least in the short term, are less impactful than some contacts had expected. Southeastern Class I sales. For the first half of 2018, total Class I utilization in the three southeastern orders is down 0.4%, compared to the first half of 2017. Class I utilization is down 2.9% in the Florida order and down 1.5% in the Southeast order, and 2.1% higher in the Appalachian order. Higher Class I in the Appalachian order is due to an increase in sales previously reported, in other orders or unregulated. National milk production is up, but down in the
July - August 2018 • KDDC • Page 10
Appalachian
11,728,417
11,974,456
2.1%
Florida
6,503,830
6,138,121
-2.9%
Southeast
11,331,254
11,156,089
-1.5%
Total
29,563,500
29,448,666
0.4%
Southeast. For the first half of 2018, U.S. milk production is 1.1% higher than the first half of 2017. Cow numbers are remaining constant at about 9.4 million head. As shown below, most of the production increase is west of the Mississippi River. The Northwest and Southwest lead the increase, with production up 3.8% in both regions. Even though cow numbers are down in California, production is up 1.6% due to more milk per cow. Production is almost flat in the Midwest and down 1.2% in the Northeast, primarily due to fewer cows. In the Southeast, the production decline accelerated during the second quarter. First quarter production was down 2.15%, and second quarter production was down 4.10%. Combined, production is down 3.1% for the first half of the year. Most of the Southeast production decline is due to slightly over one pound of milk per cow per day less this year, compared to a year ago. Cow numbers are down about 5,000 head. The Southeast production decline equates to about 17 less tankers loads of milk per day this year compared to last year. Of the ten Southeast states, production is only higher in one state, Kentucky, up 0.2%. Production is down 3.0% in Florida and down 5.6% in Georgia. Lower blend prices. July blend prices in the three southeastern federal orders are projected about $0.30/cwt. lower than June. As shown below, blend prices are currently projected to decline again in August due to a lower Class I Mover. Little change is projected in the September blend price compared to August. Prices are projected to start moving higher in October. Submit your comment on plant based products using dairy terms. The Food and Drug Administrator (FDA) is considering disallowing plant based beverages labeling their products with dairy terms such as “milk.” Calling these plant based products “milk” is a violation of federal standards of identity which states: “Milk is the lacteal secretion from the complete milking of one or more healthy cows.” Consumers who purchase these plant based beverages labeled as “milk” are misled. Plant based beverages do not provide the same level of nutrition and taste as found in cow’s milk. FDA is asking for public comments on this issue. We strongly encourage everyone to submit a comment to FDA strongly encouraging the enforcement of the standard of identity for milk. The American Dairy Coalition has started “The Protecting Milk Integrity Initiative. Their website, (www. americandairycoalitioninc.com) has information on how to submit comments to FDA including talking points.
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund U.S. MILK PRODUCTION by REGION – 1st Half 2018 versus 1st Half 2017 Region
2017
2018
Change %
(million lbs) Southeast
4,999
4,843
-3.1
Midwest
34,323
34,380
0.2
California
20,281
20,601
1.6
Northwest
15,412
15,991
3.8
Northeast
15,955
15,755
-1.2
Southwest
13,316
13,823
3.8
Plains
4,599
4,742
3.1
Alasks + Hawaii
21.7
22.3
2.8
108,906
110,157
1.1
Total
PROJECTED BLEND PRICES–BASE ZONES – SOUTHEASTERN FEDERAL ORDERS Month
Appalachian
Florida
Southeast
(dollars/cwt) - 3.5% butterfat July 2018
$17.45
$19.66
$17.82
August
$16.92
$18.90
$17.30
September
$17.08
$18.82
$17.34
October
$17.70
$19.22
$17.96
November
$18.07
$20.16
$18.55
Milk Prices FMMO 5 www.malouisville.com July 2018 Class 1 Advanced Price (@ 3.5% BF) $18.76 August 2018 Class 1 Advanced Price (@ 3.5% BF) $17.55 FMMO 7 www.fmmatlanta.com July 2018 Class 1 Advanced Price (@ 3.5% BF) $19.16 August 2018 Class 1 Advanced Price (@ 3.5% BF) $17.95
Meadowbrook Farm FALL FIELD DAY: Thursday, September 27 Featuring New Robotic Milking Facility REGISTER by September 21 • UK Madison County Extension Office • 859-623-4072 Location: EKU’s Meadowbrook Farm 485 Whitt Road Richmond, KY 40475
Time: Check-in 4:30 - 5 p.m. Tours & Presentations 5 - 7 p.m. Dinner 7 p.m.
Special Guests: Michael Benson – President, Eastern Kentucky University Thomas Erekson – Dean, EKU College of Business & Technology Ryan Quarles – Kentucky Agriculture Commissioner Sponsored meal will be provided for all registered guests! July - August 2018 • KDDC • Page 11
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
What Is the New Dairy Revenue Protection?
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Steve Wade, Wade Assurance • swade@wadeassurance.com • 270-234-6074
o say 2018 has been a difficult year for Kentucky Dairy Producers would be an understatement. I have yet to hear how many dairies are closing their parlors because they have run out of cash this year. In my opinion, the FSA and RMA have both failed to provide livestock producers….. especially dairy producers adequate risk management tools like they have the grain farmers who continue to do well overall. While this is going to be too little too late for some, 2018 is finally beginning to show some promising insurance programs that should help dairy farmers have a smoother path going forward.
THE PAST For years, MPP insurance from the FSA was truly awful. It was extremely difficult to collect any sort of indemnity even at the highest levels during the worst of times. LGM insurance from the RMA was better in that it triggered losses much more quickly and was less expensive for higher coverages, but it has some major deficiencies as well. The biggest problem with margin-based insurance is that often times, as milk prices decline so are grain prices. When the price of milk and feed increase and decrease at the same time, a potential claim might be negated as the margins do not narrow. This is a frustration for farmers and risk management agencies alike.
The coverage periods are on quarters, so for each quarter the farmer would choose either a component-based or a milk-based price policy. For a milk price policy, a producer would select an average milk price for the quarter based on a combination of the CME milk futures for Class III and IV milk. For a component-based policy, the producer would choose the amount of milkfat and protein levels to cover. Component values are determined by the implied CME prices for butterfat, protein and other milk solids. This is probably the most difficult step of selecting the right coverage.
2. The Amount of Milk Production to Cover The producers elected volume of milk will be indexed using the average expected state milk yield per cow. Lets say a farmer elects to insure 2,000,000 lbs of milk with a state average milk yield of 4,000 lbs per cow would be covering the equivalent of 500 milking cows. (2,000,000/4,000 = 500)
3. The Level of Coverage (from 70-95% of the revenue guarantee) The producer is allowed a range of deductible ranging from 5% to 30%. The larger deductible has a larger subsidy which should make the premium much less, but my experience shows you seldom collect at the lowest levels of any insurance.
THE PRESENT Perhaps it was complaints from dairy farmers and farmer organizations, or perhaps it was increased competition from the RMA, but the FSA finally improved MPP this year as most of you know. The new MPP is a good product and one which leaped over LGM in its usefulness as a risk management tool. MPP should be the foundation for a dairy producer’s risk management program, but it is still a margin-based program.
THE FUTURE Beginning October 9, dairy farmers will be offered yet again a new insurance, but this policy is not margin based. Dairy Revenue Protection (Dairy-RP) is a new type of insurance which was developed by the American Farm Bureau Federation. Dairy-RP protects producers against declines in quarterly revenue from milk sales, unexpected declines in milk prices, unexpected declines in milk production or both. I guess you could say that it helps producers who are reluctant to do any sort of sophisticated marketing. The chart below clearly shows what much of the problem is. Revenue from milk sales fluctuates wildly month to month. MPP and LGM insurance don’t necessarily smooth out this volatility. Dairy-RP will smooth out this volatility by allowing you to move to more of a quarterly based plan, and if prices are profitable, you can buy your coverage out 5 quarters, or 15 months! No more of those crazy deficits.
1. HOW DOES DAIRY-RP WORK The Value of Milk Protected
July - August 2018 • KDDC • Page 12
4. Which Quarterly Contracts to Purchase Policies correspond to the quarters of the calendar year, and producers may purchase these policies for up to 5 nearby quarters. A producer who begins his first quarter in January of 2019 could have coverage as far out as March of 2020.
5. Protection Factor Protection factors range from 1.00-1.50 in .05 increments. This factor allows producers to buy up their protection if higher revenue levels are required due to local conditions and on farm factors. For example, a farmer who might collect a $10,000 indemnity with a factor of 1 would collect $15,000 with a factor of 1.5. The higher the protection factor the higher the premium. October 9 will be the first day you can buy Dairy-RP for coverage which begins in January of 2019. You can still participate with MPP and LGM if you also want DairyRP. Claim payments will be made within 30 days after the insurance agent receives a properly executed claim form. Premiums are due at the end of the quarter. Farmers interested in Dairy-RP can purchase from licensed crop insurance agencies which have certification in Dairy-RP.
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KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
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Eric Risser: 423-368-7753 - August 2018 • KDDC • Page 13 ZackJuly Burris: 270-576-7001
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
REGISTRATION FORM – 2018 YDP WISCONSIN TOUR Oct. 2 – 5, 2018 FIRST PERSON ATTENDING (PLEASE INCLUDE BIRTHDAY IF UNDER 21)
SECOND PERSON ATTENDING
ADDRESS
HOME PHONE
CELL PHONE
EMAIL ADDRESS
Young Dairy Producers (must meet criteria & KDDC Board Members: $150 per person ($50 non-refundable)-(limit 2 per dairy farm at $150-additional members from farm at $300) All other dairy farmers and industry representatives- $300 per person ($50 non- refundable) Industry representatives will cover cost of their hotel rooms.
Make checks payable to:
KDDC
Send registration/check to:
Eunice Schlappi Kentucky Dept of Agriculture 111 Corporate Drive Frankfort, KY 40601
(After your registration is received, we will send you a full agenda once it is set)
July - August 2018 • KDDC • Page 14
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
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(502) 425-1868 u www.ssmidamerica.com July - August 2018 • KDDC • Page 15
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
KDDC Comments on Real Milk Labeling August 21, 2018 Docket ID: FDA-2018-N-2381 Agency: Food and Drug Administration (FDA) Parent Agency: Department of Health and Human Services (HHS) To Whom It May Concern: These comments are submitted on behalf of the Kentucky Dairy Development Council, a 501 (c) 3, nonprofit dairy farmer advocacy and educational organization established in 2005. There are presently 542 Grade A dairy farmers operating in KY.
When one searches the United States Food and Drug Administration federal regulations, to find the description of “Milk”, one will find the following information in the Code of Federal Regulations, Title 21, Volume 2, Subpart B-Requirements for Specific Standardized Milk and Cream; Section 131.110 Milk: a) Description, “Milk is the lacteal secretion, practically free from colostrum, obtained by the complete milking of one or more healthy cows.” Yet, Dr. Scott Gottlieb, Commissioner of the Food and Drug Administration has requested to seek comments from interested stakeholders, so the FDA can review and modernize the agency’s standards of identification for milk and dairy products. Milk from cows is probably one of the oldest natural substance available to humans, yet other than variation in the concentration of butterfat and protein, across breeds of cows, it also is one of the most consistent naturally nutritious products consumed by humans. It is for most, the first food for mammals, able to sustain life until solid foods can be digested. It has a history long before the 1938 establishment of the FDA as being “milk”. As stated, it is not a new product or something that has changed in its physical makeup since it was first produced.
Mrs. Alyssa Clements, M.S., P.A.S. Southeast Technical Sales Manager Alyssa.clements@feedcomponents.com (931)-881-8817
July - August 2018 • KDDC • Page 16
However, plant-based alternative products have been using the word “milk” on their labels with no regard for the official standards set by the FDA, so well stated by Commissioner Gottlieb, from the Administration’s Press Release, July 26, 2018: “Food labels – including the name of food – inform consumers about what they’re buying, and standards of identity are used to ensure that foods have the characteristics expected by consumers. The information provided through food labeling must be truthful and not misleading. The consumer choices made based on this information can have important impacts on health.” The deceptive and misleading labeling used by marketers of plant-based alternatives purposely associates themselves with the nutritional content and value found in real milk and dairy products. This can be confusing to consumers thinking milk is milk, regardless of its source. The nutritional content of true dairy milk offered to consumers is consistent irrespective of brand with its standardized color-coded milk/fat container tops while it naturally provides essential minerals and vitamins not provided at the same levels in plant-based alternatives. Real dairy milk provides 30 percent of the recommended calcium for most of the U.S. population and is the primary source to provide three of the four under-consumed nutrients of public health concerns as identified by the Dietary Guidelines for Americans. Real dairy milk contains eight grams of naturally occurring protein in each eight-ounce serving. Recent research also indicates consumption of milk and dairy products is associated with a lowering risk for heart disease, type 2 diabetes, and osteoporosis. It is obvious why makers of non-dairy, plant-based alternative beverages would want to pawn themselves off as good, wholesome, nutritious milk. Connecting and promoting their non-dairy alternatives as “milk” brings a special level of confidence to their product that otherwise they would not enjoy. It allows the advertisers of these products to market to consumers with the allusion they are a nutritionally equivalent replacement for real dairy milk. They are not. It is time the makers of plant-based alternative juices compete on the merits of the product they produce. It is time the FDA enforces the labeling standards already established. It is time consumers are no longer mislead and deceived into believing these alternative products are the equivalent of nutrient, rich, wholesome real milk and dairy products. Therefore, the Kentucky Dairy Development Council requests the FDA put a stop to the false and deceptive mislabeling of plant-based alternative beverages and enforce the standards of identity for real dairy milk.
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
SAVE THE DATE 2 0 1 8 K D D C Y DP FAL L TOUR TO WISCONSIN Oc t o b e r 2 n d – 5 t h Join us for this years upcoming Fall tour and see a variety of dairies and chance to visit the World Dairy Expo in Madison, Wisconsin. You will have the opportunity to see different management styles and learn from other dairyman as we tour different operations. Register now to secure a spot on this years Fall tour to Wisconsin. Contact Eunice Schlappi at eunice.schlappi@ky.gov or your Regional KDDC Dairy Consultant
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July - August 2018 • KDDC • Page 17
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
$7,500 Raised for the Junior Dairy Show The KY Cheese Auction – Great Success Raising $ for KY Juniors
Cheese Auction Bidders (l to r) Megan Bailey, Southland Dairy Producers; Joe Cain, KYFB; Greg Goode, KDDC; Glenn Sageser, PDCA; Ray Graves, Becks Seed; John Crawford.
T
his year at the Kentucky State Fair Dairy Show, dairy folks came together to make sure the Juniors were represented in the Sale of Champions. For the first time a Cheese Auction was held featuring Kentucky’s diverse and wonderful cheeses processed right here in KY. Donations and purchases were put on display paraded around the ring in a wagon pulled by Eunice Schlappi, Dairy Specialist with the KY Department of Agriculture. A whopping $7,500 was raised for the Juniors! The idea was developed by Glenn Sageser, recently retired Holstein Area Representative. Dairy has not participated in the “Sale of Champions” to raise money for the Junior show in the past like the swine, beef and other livestock species do. So, Glenn presented the idea to several folks including Eunice and KDDC and others to see if it could get any traction. KDDC stepped up and donated $500 and along with Ms. Schlappi offered to help do the soliciting and collection of cheese from processors across KY. Eunice coordinated the effort and made sure all Artisan Cheese Makers and larger cheese processors had an opportunity to submit their cheeses into the mix. Below are all the contributing cheese makers that participated: DFA Mideast Council Organic Valley Bel Brand Cheese Bluegrass Dairy & Foods Kenny’s Farmhouse Cheese Western KY University Harvest Moon Dairy Ed-Mar Dairy Wildcat Mountain Cheese Cloverdale Cheese We thank them for their donations to the effort. It simply would not have happened if not for the goodness of these folks.
July - August 2018 • KDDC • Page 18
Beth Cox, Jennifer Hickerson, Eunice Schlappi and Dave Roberts. with KDDC and KDA. with the cheese s donated. Now that the cheese was assembled it needed to be sold. Glenn Sageser worked this end of the project, soliciting bid donations for the auction from a variety of businesses and people. Below is the list of people that donated to the cause: Farm Credit Services of Mid-America Scott Travis KY Farm Bureau Dairy Products Association of KY Mid America/Select Sires DFA – Mideast Council Southland Dairy Producers DFA – Southeast Council The Dairy Alliance KDDC Ray Graves David Croshaw Tim Reynolds Glenn Sageser The proceeds from the auction were distributed in the following manner: 60 percent – KY Breed Champions of the Jr. Dairy Show 30 percent – All KY Class winners of the Jr. Show 10 percent – 4-H and FFA State Organizations Special thanks to all that participated. Looking forward to an even better response next year!
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
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July - August 2018 • KDDC • Page 19
Non-Profit US Postage PAID
176 Pasadena Drive Lexington, KY 40503 859.516.1129 ph www.kydairy.org
2018 CALENDAR OF EVENTS August August 28-30 Kentucky Milk Quality Conference, Lake Barkley, Cadiz, KY September September 06 CPC Fall Field Day, Fountain Run, KY 9:00 A.M. September 17 PA All American Invitational 4-H Dairy Judging Contest, Harrisburg, Pa.
Sept. 30 - Oct 04 National 4-H dairy Judging Contest, World Dairy Expo. October October 02-05 KDDC Young Dairy Producer Bus Tour, World Dairy Expo. Madison, Wisconsin October 27 Dare to Dairy, University of Kentucky Coldstream Dairy, Lexington, KY November
September 27 EKU Meadowbrook Farm Fall Field Day, Richmond, KY 5:00 P.M.
Nov. 02 – Nov. 06 North American International Livestock Show, KY Fair and Exhibition Center
September 28 KDDC Board Meeting, Nelson Co. Extension Office 10:00 A.M.
Nov. 29- Dec. 01 Kentucky Farm Bureau Annual Meeting, Louisville, KY
December December 07 KDDC Board Meeting, Nelson Co. Extension Office 10:00 A.M.