KENTUCKY
September - October w w w. k y d a i r y. o r g
Milk Matters Keeping Your Head Above Milk Water Find out more on page 6
Supported by
Sustained Profits Could Be On The Horizon Find out more on page 6
Kentucky Dairy: Wake Up Call
Find out more on page 12
2018 KDDC Young Dairy Producer World Dairy Expo Tour Beth Cox
The 2018 KDDC World Dairy Expo, Wisconsin Tour Group. There were 39 total attendees from all areas of KY.
T
he KDDC Fall tour to Wisconsin was no doubt one for the books. With a total of 6 dairy farm tours, one organic processing plant, and a day spent at The World Dairy Expo. Attendees experienced a vast array of dairy while on the trip. A few highlights from the trip include Stone Ridge Dairy, the largest dairy farm in Illinois, milking 3,500 cows with an average of 100 pounds of milk a day and SCC of 90,000.
Milking 3 times a day in a double 50 parlor. Cows were housed in sand bedded free stalls.
Another impressive dairy was Selz-Pralle Dairy milking 400 cows with 58 excellent registered Holsteins in the herd. They averaged over 100 lbs. of milk per day, but the most impressive cow was the new world record holder. At the ripe age of 10 years, cow number 3918 Aftershock has produced over 78,000 lbs of milk in 365 days and was still milking strong. Selz-Pralle Dairy had recently built a new calf barn where they were group feeding baby calves.
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
President’s Corner Richard Sparrow
D
uring a recent KDDC board meeting, we had a wideranging discussion about the ever-changing needs of Kentucky dairy farmers and how KDDC can help sustain the Kentucky dairy industry. As the discussion wound down, a board member suggested that we form a strategic planning committee, and we did.. Since its inception, KDDC has brought an increased focus on Kentucky’s dairy industry. The KDDC board, with its mix of industry leaders and producers, has been an unbiased voice for dairy in this state. The KDDC consultants have been an invaluable resource for all dairy farmers. KDDC has been the instrument to direct Agriculture Development dollars to producers, and at the same time help farmers improve quality, production and efficiency. However, a lot has changed since KDDC was formed. The loss of competitive milk markets, an ever-shrinking commitment to dairy by our land grant university, and of course, a challenging milk price and profit margin continue to cause a decline in farms.
The KDDC strategic planning committee has had their first meeting and discussed many new and old ideas. Regardless of change, KDDC should continue to be the voice of the Kentucky dairy industry and help Kentucky dairy farmers be sustainable and competitive in today’s world milk market.
Shelby County 4-H Dairy Club
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
September - October 2018 • KDDC • Page 2
Members of the Shelby County 4-H Dairy club attended the National 4-H Dairy Conference held during World Dairy Expo. Special Thanks to Robbie and Lea Ann Wood for chaperoning the group on the trip. (L-R) Bryce Sipes, Isabella Hayse, Alexis Perry, Anna Wood, Kara Phillips, and Markus Stephens.
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KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Kentucky Dairy Development Council Strategic Planning Meeting – Report (KCARD) Maury Cox
O
n September 12, 2018, the Kentucky Dairy Development Council held a strategic planning meeting at the Farm Credit Mid America offices in Elizabethtown, Kentucky to discuss how KDDC can effectively address the challenges facing the dairy industry in Kentucky. Attendees included dairy producers, allied dairy industry representatives, dairy promotion and a representative from the Kentucky Center for Agriculture and Rural Development. Below is a condensed summary of the notes from the meeting. KDDC Role In addition to providing technical assistance and support to the dairy industry in Kentucky, KDDC has served as a voice to help unify dairy producers as they deal with the current market situation.
Concerns Raised During the Meeting The group raised numerous concerns with regards to the issues facing the dairy industry in Kentucky and offered suggestions with regards to KDDC’s roles in those issues. Among the concerns mentioned include the following: • Determine the value of locally produced milk compared to milk from outside the area. • What factors make outside area milk more attractive to coops and processors and how does KY produced milk compete? • How can federal order rules be changed? • How can in-state hauling be changed to keep milk closer to processing plants and reduce excessive charges for small producers? • How do dairies in KY maintain and sustain today and how to keep dairying in the future to gain more control of the product? Action Items:
Throughout the discussion, several suggestions were made for ways that KDDC could provide support for the industry going forward. These include the following: • Appoint a committee to meet with market administrator to discuss federal order rules. • Explore similar model of Beef Solutions for KDDC milk processing for Kentucky producers (and reach out into Tennessee). • Work with Kentucky Farm Bureau separately to develop unified lobbying front on policy and regulatory issues. • Contact other state dairy organizations about issues they are seeing and how they are approaching those issues. • Promote 4H and FFA dairy contests – Much like the KY State Fair – Parade of Champions • Investigate feasibility studies to show demand for milk, cheese, other dairy products if sold as a Kentucky Proud product and determine what the market would sustain with regard to volume and price. Is there a market for KY products in state park, institutions, universities, public schools.
September - October 2018 • KDDC • Page 4
• Work with Farm Credit to evaluate numbers for operational efficiencies. Southeast states’ dairy organizations leaders have been contacted and they have indicated a mutual interest to work together. The next step will involve planning a meeting for these state leaders to come together to map out an action plan for the southeast to consider.
This present dilemma is not isolated to the southeast. Recent conversations with producers in the northeast indicate similar market issues are occurring there as well. Surplus milk is coming in at a discount in both areas. Is it time to consider a production model like what has been implemented in the southeast market? Many believe it is the only way medium and smaller dairies will survive and for that matter some of the larger dairies as well. It is evident there is an economic incentive to haul outside milk into the southeast, otherwise growth would be taking place locally and markets would be available. Just the opposite is occurring with the loss of competition, closing of milk plants, loss of premiums and pay prices under the federal order minimum coupled by increasing hauling charges and marketing fees. This is not what we were taught in Econ. 101. It is our hope we can learn more and pursue realistic opportunities for the future of our dairy industry, both here in KY and other areas as well.
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KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Keeping Your Head Above Water Milk Donna M. Amaral-Phillips University of KY Extension Professor and Dairy Nutritionist
T
he dairy industry, not only in Kentucky but also across the US, continues to undergo many challenges and industry changes. Changing and lost milk markets, reductions in domestic demand, and uncertainties with foreign trade potentially effecting exports have all contributed to lower milk prices and caps placed on total production to be marketed per farm. These lower milk checks have definitely presented challenges in covering farm and family expenses. Obviously, each farm has to develop its own plan, but some common threads exists on the more profitable dairies. Dairy farmers that optimize the use of financial, labor, facility, and cow resources are better able to weather the storm. Let us explore some of these management and business practices implemented on some of Kentucky’s more profitable dairies. Management of Finances + Cows = Dairy Business The statement is often made, “You cannot manage what you cannot measure”. Most farmers can quote the price they received for their milk last month. However, can you also quote your current cost to produce milk per cwt or per cow? When it comes to running a business, like a dairy farm, understanding what it costs to produce your product, in this case milk, is paramount in being as profitable as the financial climate allows. With this information, you can compare costs within various categories, i.e. feed costs, to previous years and other producers to see if your costs are reasonable and if financial opportunities exist to improve the bottom line. During either lean or profitable times, potential profit should not be “left on the table”. Businesses realize that sometimes you need to spend a $1 to make $1.50 or $2 on your investment. This type of return is greater than you can get on any bank CD. For example, using fans or a cooling system set to come on at 65°F can improve cow comfort, reproductive efficiency and milk production leading to potentially more profit. Yes, electricity costs increase, but they are quickly offset by increases or the ability to maintain milk production and reproductive performance. However, I do realize that there is a limit to the number of investments that can be made. I still remember a dairy farmer for whom I had the upmost respect for make the statement: “$20 might not be much by itself, but multiple $20 expenses add up quickly and can affect finances”. This statement is very true and affects finances in business and personal endeavors. Cull the Dead Wood Resources should be invested in the most profitable cows. Generally, early lactation and higher producing cows are the
September - October 2018 • KDDC • Page 6
most profitable. Critical evaluation of each cow in your herd helps determine which cows are “paying their way”. Cows that make the “to be culled list” need to be culled sooner rather than later to free up financial and management resources. Cows can be placed on the cull list for a variety of reasons, including high SCC, reproductive issues or low milk production. To identify these cows in a timely manner, individual cow records are needed and must be used on a routine basis. For example, identifying chronically high SCC cows, culling these cows, and replacing them allows “barn space” to be occupied by a low SCC cow that should reduce your tank SCC and help protect your milk market. To identify high SCC cows, DHI records where milk is tested for SCC or the recording of results overtime from a CMT test can be used to identify chronically high SCC that need to be culled. Keep the Barn Full With Not Too Many Spares Expenses associated with raising replacement heifers account for 15 to 20% of the total cost to produce milk. This cost is much greater than most people realize until one calculates resources these heifers use, i.e. forage needs, and costs associated with these resources. A 2015 survey of WI heifer operations reported an average of $2510 to raise a heifer from birth to calving when accounting for labor, feed, depreciation and other variable costs. Two factors that greatly influences the total dollars used by replacements is age at calving as well as the total number of head being raised. When heifers calve in at an older age, they are very costly to maintain in the heifer herd and drain a farm’s financial resources. For each day over 22 to 24 months of age at calving, feed costs represented about $2 per day with total cost in the 2015 WI survey of $3.36/day. Adequate numbers of heifers are needed to replace culled cows, but raising more heifers than needed increases total rearing costs tremendously. For example, with a 33% cow cull rate and heifers calving at 22 to 24 months of age, only 70 heifers of all ages per 100 cows are needed as replacements for the milking herd (at 36% cull rate, 75 total heifers of all ages per 100 cows). Excess heifers could be sold as springers if a good market exists or sold at a young age so that resources were not invested in them. Instead of raising more heifers than needed, what if another enterprise on the farm used these forage/land resources to help diversify and provide another source of farm income. Sweat the Details Managing a dairy business requires juggling many components at once. To start with, forages need to be harvested either by the cows themselves or harvested and stored at the optimum maturity. Higher quality forages maximize feed intake, intake of nutrients, and milk production per cow especially in early lactation. The statement is often made: “Your nutritionist is only as good as your forages”. Over half of your cows’ diet comes from the forages you produce or purchase, thus their quality directly impacts your bottom line. Another concept to remember is that cows require nutrients, such as energy, protein, mineral and vi-
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
tamins, not specific ingredients. As the prices of grain commodities change, working closely with your nutritionist to substitute cheaper sources of nutrients can save dollars on your feed bill and get cows to produce milk efficiently and economically. Generally, a dairy cow is the most profitable during early lactation and less profitable later in lactation. To keep the number of days in milk reasonable, cows need to be rebred in a timely manner and obviously, become pregnant. Early identification of cows NOT pregnant is critical either through testing the milk or palpation by a veterinarian. Skipping or extending the period from breeding till pregnancy diagnosis can result in more cows being open for a longer time period, costing you dollars in lost milk income in the future.
for the positive side of things. I realize this is not always the easiest perspective during stressful times Sometimes we need to step back, enjoy life and laugh at the little things that can keep us sane. To share a personal perspective: “Yes Teddy, I know you are trying to relocate the chipmunk so he will not dig holes in my flowers”. “Teddy, yes you are lying in my flower bed”, but at least it’s before I plant my flowers. Oh well!! Sometimes the best thing to do is just smile, shrug your shoulders, or laugh, and control the controllable!!!!
Pamper Your Cows Cows are creatures of habit and like consistency in their daily milking and feeding routines. Consistent feeding practices are important to maintain milk production, but also components. Consistency on feeding practices includes: 1. Feed pushed up multiple times daily to ensure cows can reach feed, 2. Feed in front of cows at least 20 hours daily, 3. Consistent composition of TMR (ingredients added in correct amount and not over or under mixed), 4. During warmer months, feed more often and make sure feed is shaded within feedbunk, and 5. Provide adequate, cool, and clean source of water (cows spend less than 20 min daily drinking). Cows respond positively when provided a comfortable place to lay down and when housed in an environment that minimizes heat stress. Cows are most comfortable at lower environmental temperatures than humans, generally between 40 and 70°F. Cows spend approximately 4 to 6 hrs daily eating, 12 to 14 hrs lying down, and less than 2 to 3 hrs daily standing waiting to be milked. Observing these time budgets can help improve performance. The most important period for cows on a dairy are those 3 weeks before and 3 weeks after calving. Special attention to the dietary and management needs of cows close to calving reduces stress and provides nutrients needed while making sure not to overfeed energy or underfeed fiber for rumen fill. Smooth transitions back into the milking herd allow cows to peak and milk to their potential and rebreed in a timely manner. Providing heat abatement during the dry period not only impacts production after calving, but also future production of her heifer calf. Make Lemonade Out of Lemons All businesses experience good and not so good financial times. To weather these storms, we need to work on aspects under our control, take pride in the industry we are part of, and remember the important parts in our lives--family, friends and beliefs. Look
Sometimes you just have to make lemonade out of lemons and make the best of situation
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September - October 2018 • KDDC • Page 7
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Sustained Profits Could Be On The Horizon Sarina Sharp Market Analyst For The Daily Dairy Report
G
lobal demand for dairy products remains strong. As a result, international factors are playing a larger role in determining milk prices. But farm-level profits - or losses - are still a local matter. China’s voracious appetite for milk powders has largely driven global dairy demand. In 2012, Chinese skim and whole milk powder imports were 27 percent greater than the previous year. Through this July, imports are 24 percent higher than the same period in 2012. As the middle class in China and other emerging markets continues to expand, demand for milk powders will likely rise as well. In recent years, higher global dairy product demand has outpaced supply growth. That was exacerbated this year by a crippling drought in New Zealand and unfavorable weather and farm-level economics throughout Europe. Reduced output from the United States’ largest competitors in the export market created a vacuum, and U.S. dairy exports are larger than they have ever been. Exports have consumed more than 15 percent of this year’s milk solids production and more than half of domestic milk powder. U.S. dairy product prices remain at a sizeable discount to prices overseas, which has helped put a floor under domestic prices and suggests U.S. exports will remain strong for months. Competition next year may be stiffer. Processors overseas have promised very high payouts, and this, coupled with lower feed prices, will encourage more milk production. New Zealand’s season is off to a robust start. Fonterra reported a 5 percent expansion in milk collections in New Zealand compared to the first three months of the 2012 to 2013 season. Pasture growth is excellent, and milk production is expected to remain strong, weather permitting. Still, global dairy product stocks are low, and Europe and New Zealand will need to rebuild inventories. Dairy product prices are likely to be lower next year, as global milk production rebounds. Prices may not truly capitulate, though, until U.S. competitors rebuild inventories and are forced to push large volumes of product onto the market. This prospect remains months away, at least, and may not happen if weather sours. Grain prices falling Will projected milk prices be enough to cover producers’ costs? In many regions, the answer is a resounding yes. Feed costs for all domestic producers are finally abating. Corn futures have fallen more than 40 percent from their previous year highs. USDA expects the corn crop to reach 13.84 billion bushels, which would be record-large production despite a national average yield that falls short of the trend line. This suggests that there is room for
September - October 2018 • KDDC • Page 8
lower U.S. corn acreage and still plentiful - and affordable - grain supplies in years to come. With corn prices near the cost of production, the substantial advantage that farming dairy producers held over their feed-buying counterparts will dissipate. Class III futures are currently forecasting a payout of $16 or $17 per cwt., high enough to pay the bills in the Midwest and Northeast, where forage and grain prices are much lower than they were a few months ago. The only cost that remains elevated for these producers is soybean meal. Soybean prices remain strong due to dry conditions in the pod-filling stage. Substitutes including canola are readily available, and by spring, the market could be pressured lower by soybeans from South America. For some producers, the mirage that all feed prices will decline this autumn has shimmered and vanished. Years of drought have reduced forage supplies to minimal levels, and prices for hay and corn silage in the Southwest are stubbornly high. If the drought continues to recede, higher hay production in the spring could pressure prices in much of the region. In California, forage prices will likely remain high. Precious water and acreage continue to shift away from corn and hay to higher-value crops like vegetables, citrus, nuts and grapes. For the foreseeable future, dairy producers in the Golden State must either pay a steeper price for corn silage or continue to lose acreage to almonds and tomatoes. California producers who grow forage will enjoy lower feed costs but they must forgo the opportunity to earn more with cash crops. Better cash flow ahead Mailbox milk prices are also a local issue. Producers in areas with heavy Class IV (dry powder, whey and butter) utilization will continue to enjoy a larger milk check than their counterparts whose pay price is based solely on the much lower Class III (cheese) price. Expansion in the industry has been concentrated in the Midwest, which suggests cheese production will remain strong. This could sustain a Class III discount to Class IV prices. For most producers, the future is bright. Global demand is firm, and it will take time to rebuild dairy product inventories. With several years of sexed semen usage and following more than a year of very high cull rates, domestic expansion could be limited by tight heifer supplies. The lofty milk prices seen earlier this year are probably out of reach, but with lower feed costs, they won’t be needed. The industry will likely realize a period of sustained profitability at a milk price that keeps both producers and consumers happy.
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KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
MPP-DAIRY AVERAGE MARGIN January-August 2015-2018 ($/cwt.)
Dixie Dairy Report October 2018 Calvin Covington
ccovington5@cs.com (336) 766-7191
$12.00 $10.00 $8.00 $6.00
$9.60
$7.80
$7.34
2015
2016
$7.08
$4.00 $2.00 $0.00
Milk production back up in August. After only being up 0.5% in July, milk production in August was 1.4% higher than a year ago. The gain in production was all due to more milk per cow. Cow numbers in August were 4,000 head below last month and a year ago. Of the 23 reporting states, milk production was higher in 14 states. Texas led the way with production up a strong 9.5%. Texas reports 20,000 more cows this August compared to last August. Production was higher in the nation’s number one and two milk producing states. California was up 1.2% and Wisconsin up 1.4%. Of the states with lower production, Florida was the lowest followed by Virginia. August production was down 7.3% .in Florida, and down 5.7% in Virginia. Production is down in both states due to a combination of fewer cows (5,000 less in Florida and 4,000 less in Virginia); and less milk per cow (down 50 lbs. per month in Florida and 25 lbs. in Virginia).federal orders are lower for the first half of 2018 compared to last month’s projections. For all of 2018, we continue to project blend prices to average about $1.50/cwt. lower than 2017. Low margins. August is the seventh consecutive month; margins are below the $8.00 level to be eligible for payments under the Margin Protection Program-Dairy (MPP-Dairy). As shown below, the average year-to-date margin is the lowest in the past four years, and is $2.52/cwt. lower than last year. Low margins are resulting in increased numbers of dispersal sales and more dairy cows going to slaughter. Through September dairy cattle slaughter numbers are over 5% higher than a year ago. Domestic demand flat, exports up almost 20%. Domestic demand for all dairy products, on a total solids basis, was up
2017
2018
1.2% in July, a much needed improvement after being down the previous four months. Butterfat continues to drive domestic sales with year-to-date butterfat demand up 1.5% while skim demand is down 0.5%. Combined, year-over-year domestic demand is flat. Dairy exports continue to set record highs. Through the end of July, dairy exports (total solids basis) are 19.1% higher than the same period a year ago. So far this year exports represent 16.2% of total dairy demand. Combining domestic and exports sales, total solids demand is up 2.8% so far this year. Skim solids account for over 90% of total export sales. Fluid demand. Nationwide, July fluid milk sales (most recent month available) were down 2.6% for conventional, and down 2.1% for organic milk. For the year-to-date, combined, fluid sales are down 2.1%. Whole milk continues to be a bright spot with year-to-date sales up 1.3%. July was a poor month for packaged fluid milk sales in the three southeastern federal orders. July fluid sales were down 2.3% and 4.6% in the Florida and Southeast orders, respectively, while sales were up 0.4% in the Appalachian order. As shown below, year-to-date fluid sales in the three orders, plus Virginia Milk Commission are down 1.3%. Milk prices. For the first time in 2018, both the Class I Mover and Class III prices are over $16.00/cwt. The October Class I price is $16.33/cwt. which is $1.48/cwt. higher than September. The September Class III price is $16.09/cwt., up $1.14/cwt. from August. Both prices are still a few pennies below the same month a year ago. September Class II and Class IV saw small increases, $0.20/cwt. and $0.18/cwt., respectively. September blend prices are projected $0.25-$0.40/cwt. higher than August.
PER CAPITA CONSUMPTION OF SELECTED DAIRY PRODUCTS (2000-2017) Order-Commission
2017 (January-July)
2018 (January-July)
2018 vs. 2017
Appalachian
1,826
1,859
1.8
Florida
1,599
1,565
-2.1
Southeast
2,548
2,477
-2.8
500
486
-2.7
6,473
6,387
-1.3%
Virginia Milk Commission Total
September - October 2018 • KDDC • Page 10
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
PROJECTED BLEND PRICES–BASE ZONES – SOUTHEASTERN FEDERAL ORDERS Month
Appalachian
Florida
Southeast
FMMO 5 www.malouisville.com
($/cwt.) - 3.5% butterfat September
$17.48
$19.22
$17.74
October
$18.65
$20.27
$18.93
November
$18.31
$20.40
$18.79
December
$17.89
$20.52
$18.65
Milk Prices September 2018 Class 1 Advanced Price (@ 3.5% BF) $18.25
Due to the $1.48/cwt. increase in the October Class I Mover, October blend prices are projected to increase about $1.00/cwt. from September. For the last quarter of the year, blend prices are projected to decline in the Appalachian and Southeast orders, and remain relatively steady in the Florida order. Per capita consumption. Recently USDA released its annual per capita consumption of dairy products report. The data tells us what dairy products consumers are eating, and provides further insight into today’s milk prices. As summarized below we see the following: 1) after increasing for several years total dairy product consumption declined last year; 2) consumers continue to eat more cheese, consumption is up 25% since 2000; 3) yogurt consumption has leveled off; 4) ice cream consumption is trending downward; 5) consumers are eating about an additional pound of butter today, compared to ten years ago; and 6) the decline in fluid milk consumption is not slowing down, at the current rate of decline per capita consumption could be below 100 lbs. by 2035.
October 2018 Class 1 Advanced Price (@ 3.5% BF) $19.73 FMMO 7 www.fmmatlanta.com September 2018 Class 1 Advanced Price (@ 3.5% BF) $18.65 October 2018 Class 1 Advanced Price (@ 3.5% BF) $20.13
PER CAPITA CONSUMPTION OF SELECTED DAIRY PRODUCTS (2000-2017) Year
Fluid Milk
Butter
Cheese
Yogurt
Ice Cream
All Dairy Products
2000
197
4.5
29.5
6.5
22.7
591
2005
186
4.5
31.3
10.3
21.1
604
2010
178
4.9
32.7
13.4
20.4
605
2015
156
5.6
35.1
14.4
19.3
630
2016
154
5.7
36.4
13.7
19.3
645
2017
149
5.7
36.9
13.7
19.4
643
The Dairy Industry lost a wonderful advocate and friend in the passing of Bill Jewell. He brought a calming smile and warm manner to everyone he met. He will be sorely missed. William “Bill” Ray Jewell age 72 of Hardyville passed away Tuesday October 9, 2018 at the TJ Samson Community Hospital in Glasgow. He was the son of the late Hermon Jewell and Maureen Lane Jewell. Bill was a dairy consultant for Borden Dairy and of the Baptist Faith. He is survived by his wife Ruthann Owens Jewell of Hardyville. Two sons Greg (Beverly) Jewell of Hardyville and Jeff (Peggy) Jewell of Hardyville. One brother Randall Jewell of Center. Three Grandchildren Sarah (Matt) Harper, Michelle (Troy) Edwards, Christie (Grant) Kindred. Step Grandchild Timothy (Bridget) Strode. One Great Grandchild Cullen Harper. Three step great grandchildren Noah Strode, Ian Strode, and Lydia Strode. Besides his parents he was preceded in death by a sister Betty Akins.
September - October 2018 • KDDC • Page 11
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Kentucky Dairy: Wake Up Call
How Dean producers were handled by industry says something about the future landscape. Sherry Bunting All’s well that ends well, right? Out of sight, out of mind, really? The dairy landscape is shifting sands, and the Dean Foods contract terminations last March were a wake-up call to the pressure of low prices made worse by lost markets. Nowhere is the situation more evident than in Kentucky this summer, where expansion consolidation is displacing small, but efficient, family dairy farms as well as curtailing the ability of multigenerational farms to modernize and modestly expand for their own consumer markets. The going has been tough for half of the 130 farms in 8 states whose longstanding milk contracts with Dean Foods were terminated. This includes all of the 19 affected in Kentucky, a handful in neighboring Tennessee, some of the 23 in southern Indiana, nine in Lancaster County, Pennsylvania and a handful in western Pennsylvania. Many of these producers have sold their cows, are planning sales later this year, or have commingled their milk into loads that were eventually picked up by more distant small independent cooperatives, largely out of kindhearted concern. As one affected dairy producer put it, “When this barn started burning, we found out who our neighbors were, and they weren’t who we thought they were.” But the real lesson in the who-what-when-where of this post-disaster analysis is the way that rapid expansion continues to fuel consolidation of milk production interests in the Central U.S., and the various players are expected as well as surprising. The consolidation-milk that is displacing family farms in the East – and to some degree the Upper Midwest -- is deliberately pushing into the consumer-rich areas of the country where there are a large number of farms shipping less than a tankerload of milk. And the Federal Orders -- those regulated pricing structures implemented in the 1930s to protect farms from market abuse so that consumers would always have milk -- do little more today than move milk from surplus consolidating regions to the populated regions that become more deficit as the remaining dairies end up losing their location advantage, in other words, paying some of the freight to bring in the outof-area expansion milk. All’s fair in business, right? This isn’t business, and it’s not a free market phenomenon. This is calculated market orchestration that uses the regulated pricing system to shape a future dairy landscape from which it expects milk to increasingly come. Not only are the milk markets of Kentucky and the greater Southeast and Appalachian Orders in disarray, their good registered cows are worth less too. Some went for beef, others went North and West to dairies that are -- you guessed it -- expanding rapidly in a consolidating industry. I sat down with three of the Kentucky 19 to do a post-disaster analysis. Their biggest concern -- now that their own uncertainty, emotion, and tough decisions are somewhat behind them? They are concerned about the social cost, the hollowing out of the rural fabric, the loss of optimism of young people wanting to dairy in places like Kentucky, where there’s water and grass and crops… and where they contribute to the economy of
September - October 2018 • KDDC • Page 12
the nearby population consuming milk and dairy products. The optimism of the next generation has been dashed, and the enthusiasm of those who modestly expanded their cowherds while learning this summer that if you did so in Kentucky, that new milk had no home. If you did it elsewhere? It’s all good… just bring it on into Kentucky and the greater Southeast. Get dropped and want to form a co-op to sell to a larger co-op that has a plant in Kentucky? Nope. They are already buying from a co-op to the North and West shipping milk to that plant in Kentucky. For the Dean-dropped producers who were lucky enough to find a local independent bottler to take them -- like the Appalachian co-op that took in some of the Tennessee farms to supply a local fluid milk label or like half the affected farms in Pennsylvania that were picked up by Harrisburg Dairies and Schneider’s Dairy -- they have had a small transition. But for the other Dean-dropped producers that found a last-minute market with a small out-of-area cooperative, the transition has been difficult. Instead of shipping milk to plants within their area, they are paying to ship their milk 200 to 300 miles north, while milk in tankers and bottles from farms that are 300 or more miles away comes to store shelves in their locale. The Kentucky 19 are down to six, and they have gratitude for the lifeline extended to them by Scioto Milk Producers Cooperative of Hillsboro, Ohio. But they wonder not just about milk prices in the future but also about market access – especially for the next generation on farms not shipping a tankerload of milk. In essence, cheaper milk can move in because the real cost of hauling is diluted by regulatory premiums, transportation credits, and loose qualifying standards. The deck is stacked toward moving milk from round-the-clock, round-the-map, multi-tankerload-dispensing dairies of expansion surplus into populated regions where family farms are fighting to hang on. John Kalmey of Shelby County, whose nearly 500 acres was once home to 125 registered Holstein milk cows plus replacements, ceased milk production in August. He kept his heifers and dried off some of his cows that he’ll calve out before selling. When Kalmey got his letter, his young partner found a new partner that was signed up with a cooperative. With the labor concern and months of uncertainty without a market, Kalmey felt forced to begin liquidating his herd. It’s difficult because his herd represents 80 years of breeding, “You hate to give them away,” he says. But there’s no premium for good cattle here because the state’s dairy industry has been dealt a crushing blow. Two generations of Kalmeys have hosted a National Holstein Convention at their Shelbyville farm. The herd was registered since 1928 and has been on test since the early 1920s. Kalmey also served on the National Holstein board from 2004-10. For it to ind-down like this is tough. It’s emotional. For Bob and Angie Klingenfus of Oldham County, Kentucky, the future path is unclear. They are grateful for the market with Scioto, but the new hauling cost is tough on top of these low milk prices.
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund “We’re holding our own in the hope that cattle prices will come up,” says Bob Klingenfus. “But if we wait three more months to downsize, we may lose more than we gain.” The Klingenfuses had already been doing some farmstead cheese processing and agritourism, so one option they’ve considered is downsizing the herd. But the difficulty is their facility improvements don’t float so easily on the smaller scale niche market. They’ve already downsized a bit, and are still milking 104 cows. Guy Grubbs, also of Shelby County, says his March 2 letter was “a kick in the gut. The fourth and fifth generations will go on farming,” he says six months later, “but they aren’t going to be milking.” Three generations have dairied on Grubbs’ fifth-generation farm. Through the summer uncertainty, they sold half the herd, and as of the end of September, were still milking 45. The end of an era is coming for many -- in some cases with a whisper (years of low prices) and in other cases with a bang (lost markets). But more concerning is what is to come of the promise of the future, of the people, of the rural fabric.
Trouble is, the only way to get it there was through Select or DFA Cooperatives. “We tried to get them to pick us up, but they resisted,” Kalmey adds, noting that he had been with Dean Foods for 28 years and before that, the farm’s milk was marketed through a former regional cooperative until 1990. Klingenfus sees the loss-leading at the supermarket level -- especially between Kroger and Walmart -- as they battle for customer loyalty on the backs of commodities like milk. “There are economic games being played,” he observes. Shouldn’t these supermarket wars be funded by the supermarkets instead of the farmers? With Kroger, and now Walmart, in the milk bottling business, they want fixed supplies and stable pricing for their store brand milk, and they price the ‘brands’ higher to drive consumer value to their own store’s private labels while using milk cooperatives to handle their balancing.
When Kalmey, Klingenfus and Grubbs received their letters six months ago -- along with 16 of their peers -- their first response was to call Maury Cox.
The drive is to own the customers and the suppliers. By having a fixed supply of milk and having the milk cooperatives balance that, the processing retailers can control what it costs them to push loss-leading to the extreme. They can be insulated from swings in supply and pricing while the cooperatives bear the fluctuation costs.
Cox has served as executive director of the Kentucky Dairy Development Council (KDDC) since 2007. The KDDC was formed in 2005.
This scenario sets the stage for more rapid consolidation as each tier in the system passes on the cost, all the while losing the ability to truly ‘market’ real milk. Some view this as predatory marketing.
“We started out thinking we’ve got to get in touch with people with some clout to help get through this. We did get the state government involved,” Kalmey reflects.
Producers see a convergence of factors confronting family dairy farms in the Southeast and other fluid milk markets. First, producers have no say over the Federal Orders that govern their pricing because everything is bloc voted by cooperatives. At the same time, the influx of undocumented immigrant workers and low interest rates make it cheap and easy to expand in other areas to push new milk in to displace milk produced by existing multi-generational family farms.
But as spring turned to summer -- and still no buyers for the milk from 19 farms, a number that was dwindling as families sold their cows -- Dean Foods kept extending the deadline, and the conversations started moving toward how to sell cows. What has been the hardest, they say, is the indecision of it all, the emotion of it, that something as swift and decisive as a letter ending decades-long milk contracts can produce such a rollercoaster of hope against dashed hopes… “I feel it’s made an old man out of me,” said Kalmey. The whole learning curve during the nearly five months of uncertainty -- where not one of the cooperatives operating visibly and significantly in Kentucky consumer markets, nor one single Kentucky-operating dairy plant would step forward for this milk -- was described by Kalmey this way: “It really looks like the larger cooperatives are controlling access to our markets, and they have the opportunity to crush the morale of the Kentucky producer. So they did.” As it turned out, additional milk was needed by DFA. Trucks were going by these farms -- not full -- but DFA did not step in until after Scioto offered to buy the milk. Even so, DFA cherry-picked larger producers, further depleting the leverage of those remaining. “In June, what we were looking at was two loads of milk between the remaining farms at that time,” says Cox. “That’s it.” Producers in this situation see it as a strong signal being sent, that paying the Federal Order minimum is a thing of the past and all producers must be subject to re-blended pricing. As the Kentucky farms one-by-one dropped off, those remaining met with Kroger Co. because their farms were within 70 miles of Kroger’s Winchester, Kentucky plant. “Everyone at the plant said, ‘we want your milk,’” Kalmey recalls.
“I wanted to keep my farm a small family farm and hire local labor,” says Kalmey. “I knew I had to produce milk as cheap as possible, but I didn’t know that even if we were competitive, we could just be run over.” He wonders about the effect on the significant dairy and agriculture infrastructure of the two counties in Central Kentucky whose dairies have been virtually gutted by the contract terminations that preceded the impending closure of the Louisville Dean plant. Are the farms whose milk goes in the packages on the shelves in the Shelbyville Walmart and Kroger spending money and paying taxes in this community? “No.” Klingenfus points out that the round-the-clock, round-the-map, multitanker-shipping dairies have a significant advantage. They may ship milk longer distances, but there’s no load-out time and no investment in milk tank refrigeration. It’s fill and move. “When I breakeven, that farm is still making a dollar,” says Klingenfus. “But the cost is going to come to our sense of community. That’s where the price will be paid. Our farmers are the ones sitting on rural boards, buying from our local businesses, contributing to our local economies. It’s the demise of small businesses.” Walmartization. “Once we lose the farms, and then the infrastructure, it will be hard to get it back,” says Grubbs. “We’re talking about the fabric of rural America. People wonder why they should be concerned about small dairies going out of business, but they are the backbone, the foundation.”
September - October 2018 • KDDC • Page 13
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
He sees Congress trying to address this concern by improving the dismal past performance of the Margin Protection Program, which is geared to helping smaller dairy farms, “But it’s not enough and some producers won’t sign up because they view it as welfare,” says Grubbs. Klingenfus puts the focus back on the Federal Orders. He attended the meeting with USDA AMS chief administrator Dana Coale in Tennessee a few months ago. “We presented the facts to her on bloc voting,” he says. “And she told us we all have a representative on our co-ops at the local level. But to change anything there, we’re talking about having to change boards. We don’t really have representation, it’s based on who services the market at a given time…” Not who lives and farms there. The way it is now, multiple out-of-area producers can ship qualifying loads on different days and collect on the blend all month. “In Florida, qualifying producers must ship six days, but here, it’s just one day to qualify. That means more out-of-area producers can be qualified on our Order to dilute the pool and divert even more milk,” Klingenfus explains. He believes that a qualifying producer should have to physically supply the market for 10 days to be pooled here. Meanwhile, mailbox prices in the Southeast and Appalachian Orders continue to slide lower in the ranking. The loss of premiums is one thing, but the deterioration of the pool is another, and it is made worse by the overall decline in Class I utilization as the pie expands with more exports and the value piece shrinks as a piece of the pie. Dairy producers have been convinced to get bigger to survive, and it becomes a self-fulfilling prophecy, they say. According to Cox, who spent every waking hour (and some of his sleepless nights) working through the problem and potential solutions, “It became evident that not one plant would take a mere 90,000 pounds of milk in a deficit region,” he reflects. “By July, we were down to one semi-load of milk from farms that had not sold their cows, that’s it, and no one stepped up. “I’d lie awake at night and get up early in the morning trying to determine how to increase demand and value for fresh milk that is produced locally, because that’s what we’ve got,” says Cox. Grubbs sums it up this way when he speaks with community leaders: “It’s like someone has you by the throat and won’t let go. We have the perfect location for dairying, but our location has become a dumping ground for surplus milk from other areas.” Kalmey agrees: “The prize is the Southeast fluid milk market.” To the victor go the spoils, isn’t that another trite saying we often hear? Questions are: Where’s the referee? Who’s making the rules? As Kentucky and the Southeast prove they can produce milk more efficiently and produce higher quality milk than in the past, the pressure from out-of-area surpluses keeps a lid on that progress. “We are down to 55,000 cows, around 535 herds making 1.04 billion pounds of milk a year. When KDDC started in 2005, we had 110,800 cows producing 1.17 billion pounds,” Cox notes. “We stand in the way of the prize.”
September - October 2018 • KDDC • Page 14
Kalmey believes this is why Kentucky producers were unable to find a market, save the empathy of the Scioto Milk Producers in Ohio. “The idea is to crush the morale of the Kentucky dairy producer,” he says. Cox also points out how morale is affected when the USDA ERS continues to publish a $40 cost of production for Kentucky producers, which he says is ridiculous. This is used to show Kentucky can’t be competitive, while KDDC sees proof every day that Kentucky producers can be and are competitive. Kalmey notes that some of the state’s herds have been interested in expanding, but have trouble finding a market for the milk over the past three years. Tim Elkins of Smiths Grove is an example. His family had a rough summer. They added a robot barn, believing their expansion from 700 cows to 1000 was accepted by Borden. As they prepared to start up the new robot barn, milking 350 cows two miles from the parlor site, they learned that Borden wouldn’t accept the new milk. “We went ahead and moved the cows and that first tankerload had nowhere to go,” Elkins recalls. “We called everywhere. Finally, we found a cheese plant 400 miles away that paid us $3/cwt under class, but we figured it was better than sending it down the drain.” They shipped seven loads that way at $8.73/cwt. By July, their milk from the new location was going to mesh with the 8 or 9 remaining Dean producers to be picked up by Scioto. DFA Southeast turned around a week or so later with an offer to buy that milk from the Elkins’ robot barn as well as two of the former Dean shippers -- essentially removing a chunk of milk from the commingled package that could have been leveraged differently in the game-playing marketplace. Elkins says he is thankful to Scioto for taking them on originally and for DFA now taking the expansion milk from their robot barn. It was a business decision to go with DFA because of the long haul on the milk through Scioto. In retrospect, Kalmey calls it as he sees it: “Someone wants to keep Kentucky out of the dairy business, and it is the social cost that is not talked about. Will we keep our infrastructure or be lost in the dust?” For Cox, it all comes back to the original purpose of KDDC, when 15 years ago Kentucky’s ag industry was concerned about its infrastructure. “We haven’t swung any fists. We’ve just operated deliberately for progress in the hope that we could shore up our losses and help our producers be more efficient. Now we are in a place where we are operating to secure markets for our producer milk, and our allied businesses are seeing what’s happening to their customers,” Cox relates. “They know they need to be involved as well.” “Even though our milk has been picked up by Scioto, the pressure we are under is not over,” says Grubbs. “If we would have been picked up by Kroger through DFA, that would have been $1 difference that could have helped some of us stay in it,” says Kalmey. The saddest thing, says Grubbs, is that, “There are so many young people wanting to make milk here, and they can’t. The economic reality is the market is closed…” Except when it comes to shipping milk here from somewhere else.
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
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KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
KDDC Update October 8, 2018 Joe Cain
Kentucky Farm Bureau
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he dairy industry got good news recently that the trade negotiators recently agreed to a new free trade pact that will be called the United States, Mexico & Canada Act (USMCA) that gives US dairymen a win. While Canada retains their milk production quota program, they did agree to do away with Class 7 pricing and US dairy producers will gain access to an additional 3.6 percent of Canada’s dairy market, a move that is even better than what was being negotiated under the TPP. On October 9, dairy producers were also able to consider purchasing the new Dairy Revenue Protection (DRP) product that was recently approved by USDA’s Risk Management Agency. Similar to crop insurance, DRP is an area-based quarterly revenue insurance product designed to protect against quarterly declines in revenue from milk sales. Recognizing that every dairy farmer in the US is paid a different price for their milk depending on their location, DRP is unique in its ability to more closely match farmlevel milk price risk by providing milk pricing options based on either classified milk prices or the value of the components in the milk. The concept is simple. Dairy-RP would protect dairy farmers against quarterly revenue losses caused by declines in the value of milk or milk components, or unexpected declines in milk production.
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For each quarterly policy, the farmer would choose either a milkor component-based pricing policy. For a milk price policy, the farmer would choose an average milk price for the quarter based on a combination of Chicago Mercantile Exchange milk futures for Class III and IV milk. For a component-based policy, the farmer would choose the amount of milkfat and protein to cover during the quarter. These component levels are multiplied by the implied CME prices for butterfat, protein and other milk solids to determine the component-value of the milk. The farmer then chooses how much milk production to cover during the quarter and what percentage of milk they want to insure for the quarter.
One of the frequently asked questions is: How much will it cost? The answer is, it depends. While premiums will change based on the risk environment, the most important aspect of the policy is that both the coverage and premiums are actuarially appropriate. Prices will change daily based on the market, and premiums will change daily based on the farmer’s insurance declarations and expected risk around milk and dairy commodity prices. However, the product is too complex to adequately cover here, but some excellent resources producers can access can be found at kyfb.com and clicking on Dairy Revenue Protection. Finally, the 2014 Farm Bill expired on September 30. Congress does expect to take up reauthorization following the mid-term elections. So, what happens now that we do not have a farm bill? Really, very little until January 1, 2019. Currently 39 programs are directly affected by the expiration, including three trade promotion programs, including the Foreign Market Development Program. However, to avoid reverting to 1949 permanent law, Congress must pass either reauthorizing language or an extension by December 31, 2018.
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2018 Kentucky 4-H Dairy Judging team took top honors in Brown Swiss and Jersey
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he 2018 Kentucky 4-H Dairy Judging team members are Sydney Warren, Amelia Floyd, Noah Dunning, Evan Stilts and Jackson Shelley. All of this year’s team members are from Spencer County. The team was selected based on the 4-H’ers combined scores from the State 4-H Dairy Judging Contest and several workshops held throughout the summer. The team participated in the Pennsylvania All-American Invitational Dairy Judging Contest on September 17. At this contest, the team won second high team in oral reasons. Sydney Warren was high individual in oral reasons. On October 1 the team competed in the National 4-H Dairy Judging Contest held in conjunction with World Dairy Expo in Madison, Wisconsin. The team placed first in Brown Swiss and first in Jersey. They also placed second in Ayrshire and second
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in Oral Reasons. The team finished seventh in a very close contest. Individually several team members received awards. Sydney Warren placed sixth overall in the National 4-H Contest. She was high individual in Jersey, third in oral reasons and fifth in Brown Swiss. Amelia Floyd was also a member of the All-American Club by placing 23rd. Noah Dunning was ninth in Brown Swiss. There are several people we want to thank for their continued support of the Dairy Judging program. First we want to thank the University of Kentucky Coldstream Dairy Crew and herdsman Joey Clark for hosting the State 4-H Dairy Judging Contest each year. The following breeders served as host for the workouts: Fairdale Farm, Owenton, Kentucky, Keightley-Core Jerseys, Salvisa, Kentucky, and EKU Stateland Dairy, Richmond, Kentucky. We also thank the following sponsors for all their help and financial support: Church and Dwight- Fowler Branstetter, ElancoAndi Branstetter Cook, Select Sires of MidAmerica, Michael Smith, Steve Smith, Melinda Barber, Venture Grant by the Kentucky 4-H Foundation, Louisville Parish Jersey Cattle Club, Oliver and Virginia Payne 4-H Dairy Endowment, Kentucky Purebred Dairy Cattle Association, Kentucky Dairy Development Council, Kentucky Department of Agriculture and the Kentucky State Fair.
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September - October 2018 • KDDC • Page 17
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
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evisions to the Margin Protection Program (MPP), proposed in the yet-to-be approved new farm bill, could offer dairy farmers a 4:1 return.
The estimate is based on what returns would be if feed and milk margins are similar over the next five years to what they were between 2014 and 2018. The better returns are based on lower premium costs and raising the top margin to $9 for the first 4 million pounds of a dairy farm’s production history, says Mark Stephenson, director of Dairy Policy Analysis at the University of Wisconsin. He spoke today at World Dairy Expo.
Under proposals passed by the U.S. House and Senate, MPP premiums would be just 17¢/cwt for $9 coverage for Tier 1 production under the House bill and 18¢/cwt under the Senate bill. If margins are similar to what they had been over the past five years, the MPP payments would average 73¢/cwt under the new farm bill, says Stephenson. “The margin has been below $9 about half the time since the program was begun in March 2014,” says Stephenson. The 73¢/cwt margin represents a 400% return on investment with premiums of 17¢ or 18¢.
“I think producers will need to look at this remodeled MPP,” says Stephenson. “An 18¢ investment for a 73¢ return looks pretty good on the first 4 million pounds of production history. This should be basic risk management.”
Congress would also allow farmers to take both MPP coverage and Livestock Gross Margin-Dairy insurance, though not on the same milk production. There are subtle differences to the House and Senate versions of the dairy title. Both versions would re-name the MPP program, recognizing that many dairy farmers have soured on it because it did not perform as expected. The House would call its new program the Dairy Risk Management Program (DRMP) and the Senate would call its version “Dairy Risk Coverage.”
September - October 2018 • KDDC • Page 18
Both would offer $9 milk-feed margin coverage levels for Tier 1 production (up to 4 million lb. of production history.) But rather than covering 25 to 90% of that history, both bills would allow farmers to cover from 5 to 90% of their production, which would allow large farms to cover more of their production history. Under the House bill, farmers could make only one coverage selection for the life of the farm bill. Under the Senate bill, farmers could choose their coverage levels annually. The House bill offers slightly lower premiums, while the Senate bill would discount premiums 50% for producers with less than 2 million pounds of production history and 25% for production histories between 2 and 10 million pounds.
The Senate bill would also prohibit any refunds of premiums paid when there was no indemnity paid.
In addition, both bills would change how Class I prices are calculated. Under the current farm law, Class I prices are based on the “higher of” Class III or IV prices. Under the new bill, Class I prices would take the average of Class III and IV and add 74¢/cwt. “This is about revenue neutral but would reduce basis risk for futures market hedging,” says Stephenson. The House-Senate Conference committee met last month but failed to come up with a final bill. Given that mid-term elections are in five weeks, Stephenson doesn’t believe a farm will be approved any time soon. Congress could pass a continuing resolution to keep current programs in place and make a final push on the farm bill in January. “This is normal,” says Stephenson. Others believe Congress could act before the first of the year. Chris Galen, a spokesperson for the National Milk Producers Federation, believes Congress could pass the bill in the lame duck session after the elections but before the new Congress is seated. “The four principals on the Conference Committee may not want to refight these battles next year,” he says. All dairy farmers can do is wait and see. But it might behoove them to study the new proposals to see if they will be of benefit for their farms, says Stephenson.
In any event, farmers can enroll in the new dairy Revenue Protection (RP) insurance that is being rolled out this month. The first day to sign up for that product is Oct. 9. “RP insurance is not a bad program, but it won’t bail you out of low prices,” says Stephenson. Because it is based on the dairy futures market, it can only offer protection based on the level of futures prices.
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
ATTENTION: DAIRY ATTENTION: DAIRYFARM FARMFAMILIES! FAMILIES! You’re invited attendYour Your Kentucky Kentucky Area Producer Meetings for 2018 You’re invited totoattend AreaDairy Dairy Producer Meetings for 2018 The ADA of Kentucky and The Dairy Alliance will cover industry issues, promotional efforts and upcoming events. The ADA of Kentucky and The Dairy Alliance will cover industry issues, promotional efforts and upcoming events. The ADA of Kentucky will hold elections in even-numbered districts. There will be plenty of time for discussion, questions, fellowship and good The ADA of Kentucky willWhile hold you elections in even-numbered districts. willelections be plenty discussion, questions, food! are welcome at any Kentucky districtThere meeting, willofbetime held for in even-numbered districts. fellowship and good
food! While you are welcome at any Kentucky district meeting, elections will be held in even-numbered districts.
Please RSVP at least one week prior to your meeting.
Please RSVP at least one week prior to your meeting. For more information contact Ashley at 800.343.4693
District District #
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District AreAs
For more information contact Ashley at 800.343.4693 Meeting DAte, tiMe & LocAtion
Ballard, DCaldwell, istrictCalloway, AreAsCarlisle, Christian,Meeting DAte, tiMe & LocAtion Crittenden, Fulton, Graves, Henderson, Friday, October 26 - 7:00 p.m. CST Caldwell,Hopkins, Calloway, Carlisle,Lyon, Christian, Livingston, Marshall, Christian County Extension Office 1Ballard,Hickman, Crittenden, Fulton, Graves, Henderson, McCracken, Muhlenberg, Todd, Trigg, Union, Friday, October 26 - 7:00 p.m. CST 2850 Pembroke Road, Hopkinsville, KY 42240 WebsterLyon, Marshall, Christian County Extension Office Hickman, Hopkins, Livingston, McCracken, Muhlenberg, Todd, Trigg,Edmonson, Union, 2850 Breckenridge, Bullitt, Daviess, PembrokeNovember Road, Hopkinsville, 42240 Tuesday, 13 -KY 7:00 p.m. CST Grayson, Hancock, WebsterHardin, Hart, Jefferson, Cave City Convention Center 2 Meade, Ohio 502 Mammoth Cave Street, Cave City, KY 42127 Breckenridge,LaRue, Bullitt,McLean, Daviess, Edmonson,
Tuesday, November 13 - 7:00 p.m. CST
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Tuesday, November Grayson, Hancock, Hardin, Hart, Jefferson, Cave City Convention Center 13 - 7:00 p.m. CST Allen, Barren, Butler,Meade, Logan, Ohio Simpson, Warren502Cave City Convention CenterCave City, KY 42127 LaRue, McLean, Mammoth Cave Street, 502 Mammoth Cave Street, Cave City, KY 42127
Tuesday, November 13 - 7:00 p.m. CST
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Thursday, November 8 - 7:00 p.m. EST Allen, Barren, Butler, Logan, Simpson, Warren Cave City Convention Center Gallatin, Grant, Henry, Kenton, Oldham, Owen, Claudie Sanders Dinner House 4 5023202 Mammoth Cave Street, Cave City, KY 42127 Scott, Shelby, Trimble Shelbyville Road, Shelbyville, KY 40065
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Kenton, Casey, Green,Oldham, Taylor Owen, 5Gallatin, Grant, Henry,
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6
6
Metcalfe, Monroe 7Marion, Mercer,Cumberland, Nelson, Spencer, Washington,
7 8 9
10
11
Anderson, Boone, Campbell, Carroll, Franklin,
Anderson, Boone, Campbell, Carroll, Franklin, Scott, Shelby, Trimble
Claudie Dinner House Taylor Sanders County Extension Office 3202 Shelbyville Road,Avenue, Shelbyville, KY 40065KY 42718 1143 South Columbia Campbellsville,
Boyle, Fayette, Garrard, Jessamine, Madison,Tuesday, Friday, November 166- 7:00 p.m. EST November - 7:00 p.m. EST Marion, Mercer,Green, Nelson,Taylor Spencer, Washington,Taylor Marion County ExtensionOffice Office Casey, County Extension Woodford 415South Fairgrounds Rd, Lebanon, 40033 1143 Columbia Avenue, KY Campbellsville, KY 42718
Boyle, Fayette, Garrard, Jessamine, Madison, Woodford
8
Thursday, November6 8- 7:00 - 7:00 p.m. EST Tuesday, November p.m. EST
Adair, Russell
Cumberland, Metcalfe, Monroe
Tuesday, November - 7:00p.m. p.m.EST CST Friday, November 1613- 7:00 Cave City Convention Center Marion County Extension Office 502 Mammoth Cave Street, Cave City, KY 42127 415 Fairgrounds Rd, Lebanon, KY 40033
Friday, November 9 - 7:00 p.m. CST
Tuesday, November - 7:00 Lindsey Wilson College Cranmer13 Dining Center p.m. CST
Cave Convention 430City Hellen Flatt Drive,Center Columbia, KY 42728 Bell, Breathitt, Clay, Clinton, Estill, Floyd, Harlan,502 Mammoth Cave Street, Cave City, KY 42127
Jackson, Knott, Knox, Laurel, Lee, Leslie, Thursday, November - 6:30 p.m. EST Friday, November 9 - 15 7:00 p.m. CST Adair, Russell Letcher, Lincoln, Magoffin, McCreary, Owsley, Marcella’s Farm to Fork 9 Lindsey Wilson College Cranmer Dining Center Perry, Pike, Powell, Pulaski, Rockcastle, Wayne, 216 Cedar Rapids Road, Mount Vernon, KY 40456 430 Hellen Flatt Drive, Columbia, KY 42728 Whitley, Wolfe Bell, Breathitt, Clay, Clinton, Floyd, Harlan, Bath, Bourbon, Boyd,Estill, Bracken, Carter, Clark, Elliott, Fleming, Greenup, Johnson, Thursday, Thursday,November November 115 - 12:00 Jackson, Knott, Knox, Laurel,Harrison, Lee, Leslie, - 6:30p.m. p.m.EST EST Lawrence,Magoffin, Lewis, Martin, Mason,Owsley, Menifee, Marcella’s Blue LicksFarm StatetoPark 10Letcher, Lincoln, McCreary, Fork Montgomery, Morgan,Rockcastle, Nicholas, Pendleton, Maysville 40311 KY 40456 Perry, Pike, Powell, Pulaski, Wayne, 21610299 Cedar RapidsRoad, Road,Carlisle, MountKY Vernon, Robertson, Whitley, Wolfe Rowan Clark, Crawford, Daviess, Dubois, Floyd, Bath, Bourbon, Boyd, Bracken, Carter, Clark, Gibson, Green, Harrison, Jackson, Jefferson, Friday, November 2 - 11:00 a.m. CST Elliott, Fleming, Greenup, Harrison, Knox, Lawrence, Martin, Orange,Johnson, Perry, Pike, Thursday, The Red WagonNovember 1 - 12:00 p.m. EST 11 Lawrence, Lewis, Martin, Mason, Menifee, Blue Licks State Road, Park Poseyville, IN 47633 Posey, Scott, Spencer, Sullivan, Vanderburgh, 6950 Frontage Montgomery, Morgan, Nicholas, Pendleton, Vermillion, Vigo, Warren, Warrick, Washington10299 Maysville Road, Carlisle, KY 40311
Robertson, Rowan Clark, Crawford, Daviess, Dubois, Floyd, Gibson, Green, Harrison, Jackson, Jefferson, Friday, November 2 - 11:00 a.m. Knox, Lawrence, Martin, Orange, Perry, Pike, The Red Wagon Posey, Scott, Spencer, Sullivan, Vanderburgh, 6950 Frontage Road, Poseyville, IN 47633 Vermillion, Vigo, Warren, Warrick, Washington
CST
PLeAse rsVP to your istrict chAirMAn DP LeAse rsVP to your
chAirMAn District Sheila Keeling
270.792.0020 Sheila Keeling 585 Jason Ridge Road, Lewisburg, KY 42256
270.792.0020 585 Jason Ridge Road, Lewisburg, KY 42256 Aubin Mattingly
270.735.5732 2844 Thomas Road, WRineyville, KY 40162
Aubin Mattingly
Richard 270.735.5732 Mattingly
270.646.6948 2844 Thomas Road, WRineyville, KY 40162 3625 Etoila Road, Glasgow, KY 42141
Richard Mattingly
Ginger 270.646.6948 Coombs
502.758.3908 3625 Etoila Road, Glasgow, KY 42141 3401 Lake Jericho Road, Smithfield, KY 40068
Ginger Coombs Jeff Deener
502.758.3908 270.789.9019 Lake Jericho Road, Smithfield, 1393401 Sanders Road, Campbellsville, KY 42718KY 40068
KimJeff Jones Deener
270.402.1383 270.789.9019 3310 Highway 52, Loretto, KY 40037 KY 42718 139 Sanders Road, Campbellsville,
DaleKim Fudge Jones
270.407.1173 270.402.1383 163 Fudge Street, Gamaliel, KY 42140
3310 Highway 52, Loretto, KY 40037
Billy Rowe
Dale Fudge 270.634.0334 270.407.1173 499 Norman Grant Road, Columbia, KY 42728
163 Fudge Street, Gamaliel, KY 42140
Ronnie Patton Billy Rowe
606.309.5138 270.634.0334 5049 Highway 490, East Bernstadt, KY 40729
499 Norman Grant Road, Columbia, KY 42728
Paul ColsonPatton Ronnie
859.298.5609 606.309.5138 225 Lane, Cynthiana, KY 41031 KY 40729 5049Shaw Highway 490, East Bernstadt,
Kelly Obert
Paul Colson 812.779.8531 7826 S 550 E, Fort859.298.5609 Branch, IN 47648
225 Shaw Lane, Cynthiana, KY 41031
Kelly Obert
812.779.8531 7826 S 550 E, Fort Branch, IN 47648
September - October 2018 • KDDC • Page 19
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Prairie Farms breaks ground on $5 million expansion Carla Slavey Commonwealth Journal
A
Thursday groundbreaking ceremony took place at Prairie Farms to announce a $5 million expansion to the bottling and off-loading operations. Pictured are, from left, Prairie Farms District Board Member Dante Carpenter, Representative of Rand Paul’s Office Bryan Mills, Somerset Mayor Eddie Girdler, Pulaski Judge-Executive Steve Kelley, Kentucky Agricultural Commissioner Ryan Quarles, Prairie Farms General Manager Mike Chandler, Senator Rick Girdler, Representative Tommy Turner, Gary Roberts of Roberts Construction, Neal Dockery of Roberts Construction, and Prairie Farms Plant Manager Kevin Randolph. A $5 million expansion to the Prairie Farms plant on Bourne Avenue is moo-ving forward, and the milk bottling plant celebrated Thursday with a ground-breaking ceremony which concluded with guest sipping on the milk of their choice.
The investment will expand the plant’s bottling and receiving areas, intended to increase efficiency, add production capacity and add 10 jobs to the plant. As part of the 6,000 square feet to be added to the building, upgrades will be made to the cooler to allow for an increased volume and quicker off-loading of milk. Plans are for the operation to be finished mid-2019. The plant’s general Manager, Mike Chandler, thanked those from Prairie Farms as well as local and state elected officials for aiding the project, especially during a time when other plants in the state are shutting down or cutting back.
“Dean’s Louisville closed about a week ago,” Chandler said. “Prairie Farms had closed a plant in Fulton, Ky., about a three or four months ago. I understand there’s about six or seven more plants that are fixing to close, so we didn’t want to be part of that group.”
The Somerset plant, however, is growing, Chandler said.
“We’re one of the largest and most successful dairy cooperatives in the Midwest,” he said. “… We are up here, in this plant, somewhere around 40 percent in volume from a year ago. We’re growing fast.”
Kentucky Agricultural Commissioner Ryan Quarles alluded to milk producer problems while praising the Somerset plant. “It’s been a tough time right now, but Prairie Farms has stepped up, and during a difficult time in industry they have expanded. We’re so glad to have them not just in Kentucky, but in Somerset. That’s a direct result of it being farmer owned,” Quarles said.
As Quarles reminded the crowd: “Kentuckians enjoy their bourbon, but milk is Kentucky’s official drink.” In addition to Quarles, local and state leaders attending the groundbreaking included Somerset Mayor Eddie Girdler and Pulaski Judge-Executive Steve Kelley.
Girdler said, “I just want to congratulate Prairie Farms, and Mike [Chandler], on their vision for our community, for their investment of over $5 million, and both the retention of the jobs and the creation of new jobs. That is awesome for our community.” Kelley added, “We’re excited to see this in Pulaski County. These are good jobs. Anytime we can help our local industry to grow, that’s what we want to do. We want to make our locals stronger.”
State Senator Rick Girdler said that Prairie Farms was dear to him and his family, pointing out that his father-in-law used to own several milk routes, his brother-in-law currently owns several routes, and mentioned that Girdler himself had married a “true Southern Belle,” referencing the plant’s former branding. While Chandler had thanked Senator Girdler in his role for securing incentives for the project, Girdler said that Chandler had done most of the work.
“To use farmer analogy, he planted the seed, did all the work on the fields. I got to reap the harvest. Mike has worked his tail off on this.” Adding his praise of the project, Representative Tommy Turner said, “This facility does mean a lot to our community. It’s one of the stable jobs that we’ve had here. It’s one of the better employers.”
Chandler said that on top of the news of the expansion, Prairie Farms could announce that the Somerset plant had won a Grand Champion title for its whole chocolate milk submission to the World Dairy Expo Championship Dairy Product Contest. Photo: Carla Slavey
September - October 2018 • KDDC • Page 20
REAL DAIRY CAMPAIGN For the month of September, The Dairy Alliance launched the “Real Dairy” campaign. This campaign was a fun, tongue-in-cheek take on the current milk debate and reminded people that delicious, wholesome milk comes from cows! These old-school ads were placed on all social media platforms along with a short video that resembles a commercial from the 1970s. The fun ads also appeared on Ibotta, a grocery shopping app, to target consumers who purchase alternative beverages. Many consumers enjoyed the retro feeling and the clear message that cow’s milk is the real dairy choice. The “Real Dairy” campaign ended by reaching a total of 2.2 million people. Additionally, over 88 percent of consumers watched the video advertisement in its entirety, which is 23 percent higher than the industry average.
EAT TOGETHER EAT BETTER October is national Eat Together Eat Better month, and The Dairy Alliance is joining in by including real dairy with every meal. Over the last three decades, family meal times have decreased by 30 percent. Studies show children who eat meals with their families have better grades, less risky behavior and eat healthier. To showcase the importance of eating as a family, The Dairy Alliance filmed four farm familes a eating dinner to feature on social media. One video featured a Kentucky dairy farm family eating dinner at a restaurant to show familes mealtime can be held anywhere. In this video, the family shares tips and tricks to make mealtime easier and how dairy is an essential part of their diets. The Dairy Alliance will be sharing statistics, facts and recipes to encourage families to eat together with real dairy all month long. Be sure to follow The Dairy Alliance on Facebook to learn more about how your family can Eat Together, Eat Better.
For more information on checkoff programs in Kentucky, contact Senior Manager of Farmer Relations Denise Jones at (270) 970-4792 or djones@thedairyalliance.com
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Kentucky Dairy Partners Annual Meeting & Young Dairy Producers Meeting
Selz-Pralle Aftershock 3918 produced 78,170 lbs. of milk, 3,094 lbs. of butterfat and 2,393 lbs. of protein in her last lactation. She is owned by Pam Selz-Pralle and Scott Pralle, Humbird, Wis.
The third outstanding dairy was Bert-Mar Farms a 5th generation dairy farm milking 100 registered Holsteins in a tie-stall barn. They focus on high-type and deep pedigree cow families, to capitalize on genetic progress, they manage an extensive in vitro fertilization program. The following quote by Allan Lundberg, owner of Bert-Mar Farms sums up their operation. “A successful dairy farm doesn’t happen overnight. Be patient, diligent, and open to new, innovative ideas.” Our final stop on the way home was The Hoard’s Dairyman Farm and Shrine Museum. The Hoard’s Dairy were milking around 400 cows consisting of 2/3 Guernseys and 1/3 Jerseys. In 2017, the Hoard’s Dairyman Farm had the leading herd in milk, fat, and protein among other herds with more than 100 Guernsey cows. With a current RHA of 20,022 lbs., 25 excellent cows and 300 very good cows, the Hoard’s Dairy was something to see. The World Dairy Expo was none less than impressive in 2018, with 1,700 cattle exhibitors and over 2,300 head of cattle. There were 70,000 people attending the Expo from 97 different countries, 900 exhibitor booths from 28 countries and hundreds of students eager to learn about the dairy industry. We would like to thank our sponsors, without them this trip would not have been possible. Kentucky Agriculture Development Council, Alltech, Kentucky Farm Bureau, DCC Waterbeds - Scott Hartwell, Prairie Farms and the Kentucky Department of Agriculture.
September - October 2018 • KDDC • Page 22
Register or Reserve Your Booth Space at www.kydairy.org
February 26-27, 2019 Bowling Green, KY The Sloan Convention Center Register or Reserve Your Booth Space at www.kydairy.org
KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund
Allied Sponsors Platinum
S P E C I A L T H A N K S T O O U R
Ag Central Alltech Cowherd Equipment CPC Commodities Bluegrass Dairy & Food Burkmann Feeds Dairy Farmers of America Farm Credit Mid-America Kentucky Department of Agriculture Kentucky Farm Bureau Kentucky Soybean Board Southland Dairy Farmers Trenton Farm Supply Zoetis
Gold
Arm & Hammer Animal Nutrition Dairy Express Services Dairy Products Assoc. of KY Elanco IDEXX Kentucky Nutrition Service Land O’Lakes Mid-South Dairy Records Owen Transport Purina Select Sires MidAmerica (KABA)
Silver
S P O N S O R S
Afi Milk Grain Processing Corp. KVMA Luttrull Feeds Prairie Farms RSI Calf Systems
Bronze
ABS Global Advantage Hoof Care Bagdad Roller Mills Chaney’s Dairy Double “S” Liquid Feed Genetics Plus Hinton Mills Lallemand Smith Creek, Inc Wilson Trucking
September - October 2018 • KDDC • Page 23
Non-Profit US Postage PAID
176 Pasadena Drive Lexington, KY 40503 859.516.1129 ph www.kydairy.org
2018 Calendar of Events October 26
Maryland Virginia District Meeting Pembroke Fire Station October 27
Dare to Dairy, University of Kentucky Coldstream Dairy, Lexington, KY
November 13
KDDC Division of Water Meeting, Bath County, KY November 14
KDDC Division of Water Meeting, Metcalfe County Extension Office, 10:00am-2:00pm
Nov 02- Nov 06
North American International Livestock Show, KY Fair and Exhibition Center
December 07
KDDC Board Meeting, Nelson Co. Extension Office 10: 00 A.M. E.T. December 10-11
North Carolina State Ext. Value Added Dairy Conference, Crown Plaza, Ashville, N,C. February 26
November 20
KDDC Division of Water Meeting,
Christian County Extension Office, 10:00am-
KDDC Young Dairy Producer Conference,
Sloan Convention Center, Bowling Green, KY
November 02-03
2:00pm
Bowl Contest, KFEC Louisville, KY
Nov29 – Dec 01
Center. Bowling Green, KY
Louisville KY
February 27
North American Invitational 4-H Dairy Quiz
November 03-05
North American Invitational Dairy Judging Contest, KFEC, Louisville, KY
Kentucky Farm Bureau Annual Meeting,
February 26
Dairy Awards Banquet, Sloan Convention
KY Dairy Partners Meeting and Industry Trade Show, Sloan Convention, Bowling Green, KY