KY Milk Matters May June 2017

KENTUCKY

May - June 2017 w w w. k y d a i r y. o r g

Milk Matters Are You Getting the Most Out of Your Fans?

Find out more on page 8

Supported by

Legislative Update

Find out more on page 12

The New Proposed Milk Program for 2017 Find out more on page 13

J

June is National Dairy Month

une is National Dairy Month. It has been recognized since 1939 across the country. Here in Kentucky we have a long heritage of celebrating June Dairy Month as well. Kentucky is rich in dairy heritage with dairy cows and their care givers scattered from east to west and north to south. Granted the number of dairy farm isn’t nearly as large as it once was however there are still over 600 operations in the state providing a home for nearly 60,000 cows. What is truly amazing is although the farms and cow numbers have contracted, KY dairy cows are producing over one billion pounds of milk a year. That’s over 116 million gallons of milk. Kentucky dairy farmers continue to do more with less than ever before.

Recently folks representing Kentucky’s dairy industry from farmer to retailer came together on the Capital lawn in Frankfort to celebrate and recognize the dairy’s impact on KY and have Governor Matt Bevin and Agriculture Commissioner Ryan Quarles sign a proclamation that June is Dairy Month in KY. The event, organized by Eunice Schlappi, Dairy Marketing Specialist, KY Department of Ag, had KY ice cream makers, Crank and Boom from Lexington and Chaney’s Dairy Barn from Bowling Green serving scrumptious assortments of delicious, creamy ice cream and Prairie Farms, Somerset furnishing ice cold white and chocolate milk. On hand was a beautiful Holstein cow and calf from the Greg Goode Dairy Farm in Casey County that offered her services for

the milking contest between Governor Bevin and Commissioner Quarles.

The baby calf was the real winner as the Governor fed her the milk in a bottle.

There was a large crowd, but that is expected when ice cream and ice cold milk are served along with a live cow and calf on the lawn.

Others representing or involved in the industry included Keith Rogers, and Tim Hughes and other members of the KDA staff, the Governor’s Office of Ag Policy with Executive Director Warren Beeler and staff members, Dairy Products Association of KY, with President Jeff Tapp, American Dairy Association of KY and the Southeast United Dairy Industry, with President Billy Rowe and Denise Jones, SUDIA KY/TN Senior Manager, along with staff members, Kentucky Farm Bureau, Terry Rowlett, Chair of the Dairy Advisor Comm. and Henry Co. dairyman and Joe Cain, Director of Commodity Division, KY Farm Bureau, and staff members, KY Dairy Development Council staff, Jennifer Hickerson, Beth Cox, Meredith Scales, Dave Roberts and Maury Cox. Garry Gupton, KY Director of Communication for Tourism oversaw the event to make certain everything was in the right place and last but not least, KY Kate, the portable, fiberglass milking cow furnished by KDDC. Many more stopped by to enjoy the festivities and the ice cream.

It was a great event, the weather was wonderful and dairy was definitely celebrated. There are several June Dairy Month events coming up this month across the state. Please see the Calendar of Events on the last page of this edition of KY Milk Matters to see where one is located near you.

Photo by Chris Aldridge, KDA

March-April 2017 • KDDC • Page 2

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

2017 KDDC Board of Directors & Staff

President’s Corner Richard Sparrow

Executive Committee

I

was deeply saddened by the recent passing of one of the Kentucky Dairy industry’s most formidable leaders, Jack Durbin.

Jack and I worked together on several dairy marketing situations and Brown Swiss promotions. I always enjoyed our long phone conversations and lunch visits. We solved most of the problems facing the dairy industry in

those talks.

Jack was a great friend, and I will miss him. My thoughts and prayers go out to Jack’s family: Donna, Chris, and Zach.

Jack Houchin Durbin, age 55 of Leitchf ield passed away, Thursday, April 13th 2017 at his residence. He was born June 5th 1961 in Edmonson County, KY, the son of John & June Houchin Durbin.

He was a graduate of Grayson County High School and the co-owner of Givens & Houchin Milk Hauling.

He is survived by his wife of 30 years, Donna Lynn Haines Durbin, two sons, Chris & Zach Durbin, and several nieces and nephews.

Other than his parents, he was preceded in death by his two brothers, David & Lonnie Durbin.

Your Input Is Needed Most are aware of what The Kentucky Dairy Development Council mission statement is “To educate, promote and represent dairy producers and foster an environment for growth of the Kentucky Dairy Industry.” What better way to do this than listening to the producers! We are dedicated to helping dairy producers in any way that is possible and continually strive to better our services to you. That’s why we are seeking input for your newsletter. What would YOU like to see covered in each issue.

Your input and opinions are a valuable resource to us and we would enjoy hearing from you. Please take a minute to share with us what you would like to see included in the newsletter. Responses can be sent to KDDC at 859-516-2458 or email @ kddc@kydairy.org

President: Richard Sparrow Vice President: Charles Townsend, DVM Sec./Treasurer: Tom Hastings EC Member: Tony Cowherd EC Member: Freeman Brundige EC Past President: Bob Klingenfus

Board of Directors District 1: Freeman Brundige 731.446.6248 District 2: Josh Duvall 270.535.6533 District 3: Don Kinslow 270.646.0086 District 4: William Crist Sr. 270.590.3185 District 5: Tony Compton 270.378.0525 District 6: Mark Williams 270.427.0796 District 7: Greg Goode 606.303.2150 District 8: Jerry Gentry 606-875-2526 District 9: Dwight Leslie 859.588.3441 District 10: Richard Sparrow 502.370.6730 District 11: Stewart Jones 270.402.4805 District 12: Larry Embry 270.259.6903 Equipment: Tony Cowherd 270.469.0398 Milk Haulers: Alan Wilson 606.875.7281 Genetics: Dan Johnson 502.905.8221 Feed: Tom Hastings 270.748.9652 Nutrition: Dr. Ron Wendlandt 502.839.4222 Dairy Co-op: Justin Olson 765.499.4817 Veterinary: Dr. Charles Townsend 270.726.4041 Finance: Michael Smith 859.619.4995 Former Pres.: Bob Klingenfus 502.817.3165

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

May - June 2017 • KDDC • Page 3

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

Executive Director Comments Maury Cox

O

n May 19, 2017, the Kentucky Dairy Development Council came one step closer to making the new Market Incentive Leadership for Kentucky (MILK) Program a reality.

It was on that Friday morning, members of the KY Agricultural Development Fund Committee that oversees the KDDC grant, approved the new program criteria. We still have one more step to go before the program is implemented. A requirement for the program to move forward is all major KY milk marketing organizations must participate in the incentive program by matching the premiums that would be paid to their producers from KADF dollars. It would be considered an unfair competitive advantage if one organization decided to opt out when others were contributing the match.

This process began with a letter being sent to all milk marketing partners dated September 15, 2016 to solicit continued participation in the MILK Program. The letter listed the amount of premium dollars KY dairy farmers had received since the beginning of the program ($6,982,341) and also included some of the goals that had been accomplished from the program. For instance, in the March 25, 2017, issue of the Hoard’s Dairymen, KY dairy farmers were listed as first in the U.S. for increased milk production per cow, per year of 3,727 lbs. over the past five years by the USDA/NASS. Additionally, KY dairy herds on DHIA were ranked number one in somatic cell count at 211,000 ml. in the 11 U.S. Southeastern states according to the Progressive Dairymen’s April 19, 2016 edition. Although other influences helped in improving these numbers, we firmly believe the MILK Program was instrumental in making KY dairy farmers more competitive in today’s milk markets.

As all dairy producers are very well aware, 2016 was an extremely tough year of close margins coupled with marketing fees being charged to many KY farmers for excess milk being dumped, primarily in other areas. This market situation made everyone step back and consider another plan of action regarding the MILK Program which had been based both on quality and increased production. It was this change that sent us back to the drawing board to develop a program that did not include an incentive to produce more milk. We found this to not be a simple task since increased production was very easy to measure and often demonstrated improved management practices.

Members of the KDDC Executive Committee and staff, along with Dr. Jeffrey Bewley, UK Dairy Extension Specialist, met multiple times with the Governor’s Office of Agricultural Policy personnel, and the KADF Committee to work on the program. We also involved Mark Witherspoon, Mid-South Dairy Records Manager to help with different metrics. Several updates were provided to the KDDC Board at meetings and via emails. The main difficulty was the replacement of production with another measurable metric that could demonstrate management improvement in a herd. We looked at several good management tools but decided they would not work well when incentives were applied.

Ultimately, we all know bulk tank SCC and PIC are standard

May - June 2017 • KDDC • Page 4

measurements of milk quality and that portion of the program was not difficult to develop. However there were concerns since increased production lbs. were removed more producers most likely would participate. Would there be enough funds available to complete the year? The premiums levels and total cap were lowered to accommodate this ‘unknown’ aspect of the program. The second sector of the program also focuses on SCC but drills down more to look at individual cows.

The new program criteria can be viewed in the KDDC MILK Program article in this edition of the Milk Matters newsletter.

Since it is widely accepted that cows with SCC greater than 200,000 indicates a presence of infection in the udder, the percent of the herd at or less than 200,000 SCC provides a good measurement of management for mastitis. It also will be extremely helpful in determining which cows are contributing to an increased SCC bulk tank level since samples must be taken on individual cows to provide these results. The “Hot Sheet” lists the high cows and the amount they are contributing to the tank score and what it would be without them. Then those cows can be cultured and a decision can be made for the best plan of action to take in correcting their contribution to the bulk tank SCC. Secondly, a recent study by Zoetis along with AgStar Financial Services states: “For every 100,000 increase in bulk tank somatic cell count, milk yield declines 5.2 lbs.” This study indicates the number one factor in profitability is milk quality and somatic cell counts.

We must thank Dr. Bewley and Mark Witherspoon for helping us flesh out this metric, the GOAP Staff and Executive Director, Warren Beeler for their hard work and the KADF Committee that continued to work diligently with us in developing this program. We understand the huge task and responsibility they face as they are challenged to administer the funds entrusted to them to do good work in KY’s agricultural community.

We believe the KDDC has an exceptional track record as well, making every dollar count with the KADF money granted to KY dairy farmers. The money has been invested wisely. I will end with a little math to better demonstrate that point.

According to USDA/NASS, KY producers increased milk per cow per year by 4,617 lbs. over the period of the program from 2007 to 2016; 13,444 lbs. to 18,061 lbs. The average dairy farm in KY has 90 cows and there are presently 600 dairy farms still in operation as of April 1, 2017. If we consider just one year’s production, that would be an equivalence of 4,155 hundredweight of milk. (4,617 x 90/100 = 4,155) The average mailbox price for the Appalachian Federal Milk Marketing Order for 2016 was $16.46/cwt. That additional milk sold in 2016 compared to 2007 for all 600 KY dairy farms calculates to be $41,037,742. ((4155 x $16.46) x 600 farms = $41,034,780).

Realistically we know not all of that was disposable income and certainly not all was profit because of additional expenses and possibly capital cost, plus we are calculating from averages. However these are the numbers provided by USDA/NASS. Now, if you used KY income tax rate of 5.8 percent, the additional milk alone made money for the state coffers at $2,380,017 in just one year. Not bad for a $500,000 investment.

Next step: We will be talking with each milk marketing organization in the next few weeks to explain the program and hopefully get their support to go forward. Thank you for your patience. We know you could use the dollars.

– MARK YOUR CALENDAR –

KDDC SOUTHCENTRAL

KY DAIRY TOUR EXPERIENCE INNOVATION 2017

See KY Dairy Farms up close and personal

JULY 25-26

Touring Seven Innovative Dairies

Cost: $25 per dairy family (limit 4 members/family) $25 for non-dairy farmers

You don’t want to miss this exciting innovation tour of some of southcentral Kentucky’s top dairy farms. This two-day event will offer an opportunity to take a tour of Bluegrass Dairy and Foods, see a variety of production facilities, including free stall and tunnel ventilation, bedded packs and conventional parlors, as well as two different brands of robotics.

Participants will also experience a cheese tasting at Kenny Mattingly’s Dairy and Cheese House and enjoy a meal at Elkins Grove wedding barn and dairy. *Hotel accommodations and transportation are included with registration for farm families.

For more information or to register, Contact Eunice Schlappi at eunice.schlappi@ky.gov

SPONSORED BY

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

Bring your family to

“Dairy Night” at the Ballgames!

Thursday, June 15 - 7:05 p.m.

Thursday, June 22 - 6:35 p.m.

(deadline to order tickets - June 8)

(deadline to order tickets - June 15)

4 - free tickets per dairy farm family (additional tickets can be purchased @ $5 each)

2 - free dairy t-shirts per dairy farm family (t§shirts sponsored by ADA of KY)

All other tickets are $5 - payable at the ballgames - please call to reserve To order tickets, contact: Eunice Schlappi at 502-782-4122 (leave message) or email at eunice.schlappi@ky.gov May - June 2017 • KDDC • Page 6

Lunch Provided! ────

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6.29.2017 Malvern Hills Dairy Open House View the Mattingly Family’s DeLaval VMS Robot Barn The Mattingly Family and AgCentral Co-Op would like to invite you to their open house on June 29th from 10am-2pm (cst). Come out and enjoy this beautiful state-of-the-art DeLaval VMS barn!

This barn also features tunnel ventilation and ECVC fans from VES, Houle manure scrapers, DCC Waterbeds, Sturdy Built free stall loops, JOZ feed pusher and much more!

MALVERN HILLS DAIRY 2737 Etoile Rd Glasgow, KY 270-576-7001 423-368-7753 www.agcentralcoop.net 6.29.2017 10am-2pm

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

Are you getting the most out of your fans?

By Jeffrey Bewley

W

ith the summer heat and humidity, the signs of heat stress on dairy cows are very evident. Cow temperatures, respiration rates, and heart rates increase with heat stress and is a major issue for dairy cows, particularly in hot, humid climates. It’s easy to forget that cows begin experiencing heat stress when the temperature humidity index is 68. Heat stressed cows produce less milk, are less feed efficient, less likely to conceive, more likely to become sick, and more likely to become lame. Helping alleviate some heat stress can lessen its impact. Building open barns that maximize natural ventilation is the first step to managing heat stress. But, generally, we need to supplement natural ventilation with mechanical ventilation and water. Unfortunately, fans are often used without knowing how to maximize their effectiveness. Here are a few common mistakes seen in dairy cattle facilities that reduce fan effectiveness. Many of these situations can be remedied with little to no capital investment.

angle is between 15-20 degrees. This minimizes opportunities for dead space or lack of air movement. Distance between fans is generally 10 times the diameter of the fan. For example, a 36-inch fan would cover 30 feet and a 48-inch fan would cover 40 feet. In the figure at bottom left the fans are pointed toward the ground, leaving large open areas without any supplemental air.

Dirty fans Fans aren’t clean Dirty fans do not put out as much air and energy efficiency is reduced considerably. Fan blades and housing should be cleaned periodically to avoid situations like identified in the picture above. Fan belts should be replaced periodically.

Fan inlet placed against a wall.

Fans are placed with inlet against a wall or with fan direction against that natural air. For maximum airflow, fan inlets should be set so that natural air flows into the inlet. This improves fan performance and can increase air flow.

Fans placed at the wrong angle

Fans are placed at the wrong angle or too far apart Fans should be placed so that air from one fan is aimed at the bottom of the next fan. The

May - June 2017 • KDDC • Page 8

Fans are placed too far apart across a row of fans. In the picture above, additional fans could be added to eliminate the dead space between fans. These types of fans are generally designed to blow forward, not necessarily to the side. During hotter temperatures, cows may be found lying in rows directly in front of the fans, showing that they prefer the areas with more airflow.

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

only one row of fans is in place. Adding a second row of fans would increase air flow to the cows resting in the freestalls.

Fans are not on. It may sound simple, but this is often a major opportunity.

Many people don’t turn on fans until they feel hot. However, the cow’s thermal neutral zone is much lower than ours.

Thus, they experience heat stress at much lower temperatures than humans do. Fans should be turned on (manually or automatically) somewhere between 65 to 70° F.

Not enough fans over freestalls

m

Coolai n a c rF eri

an

Beat the Heat with Quiet, Quality Fans!

s

A

Not enough fans over freestalls (Picture 5). A row of fans should be present for each row of freestalls. In the picture above,

With six specifically engineered die-formed steel blades that will not flatten and galvanized shrouds, these fans are designed for years of quiet dependable usage.

These fans are so quiet, some call them the “church fan”.

Sizes Available 24˝, 36˝, 52˝, 60˝ For more information call:

Trenton Farm Supply LLC 2470 Cemetary Road • Trenton, KY 42286

270-466-3180

270-881-0605

Options: Shutters, Housing & Cones, Automatic belt tensions

May - June 2017 • KDDC • Page 9

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

Dairy Situation and Outlook

By Calvin Covington, ccovington5@cs.com, 336-766-7191

May 2017 First quarter federal order blend prices highest in three years, but still below 2014. As shown in the table below, blend prices in the three southeastern federal orders are $2.69 to $2.96/cwt. higher than the first quarter of last year.

However, blend prices are still several dollars below 2014.

Blend prices are projected to remain higher than last year, but with seasonal declines in April and May. We project the April blend price, in the three southeastern orders, to be about $1.00/cwt. lower than March. April blend prices are projected as follows: Florida - $20.34, Southeast -$18.23, and Appalachian - $17.86. Expect May blend prices to drop another $0.50-$0.75/cwt. from April. Prices are projected to start inching up in June.

Compared to last month, our projections for the last half of 2017 are lower. Reasons for lower projections include: an abundance of milk especially outside of California and the Northwest; increasing butter and cheese inventories; and domestic and export sales not as strong as anticipated.

Milk production strong during first quarter of the year.

Milk production during first quarter of 2017 versus 2016 is

May - June 2017 • KDDC • Page 10

up 2.15%. (All numbers adjusted for Leap Year). The nation’s dairy herd is at 9.369 million cows, 57,000 head more than last year. Texas and New Mexico lead the way in producing more milk, with first quarter production up 17.28% and 11.85%, respectively. First quarter production changes in other leading milk producing states are: Michigan +4.18%, New York +3.95%, Pennsylvania + 2.60%, and Wisconsin +1.29%. Production is down in states with historically the nation’s lowest milk prices, California down 1.80%, Idaho

down 0.21%, and Idaho down 1.80%.

Milk production in the ten southeastern states is down 0.25% in the first quarter of this year compared to a year ago. As shown below, adjusted production is only up in two states, Georgia and Florida. The share of these two states total southeastern milk production continues to increase.

Georgia and Florida now produce over 47% of all milk in the southeastern states.

Sales of packaged fluid milk sold in Florida market, but packaged outside of Florida skyrockets. Over the past few years, about 12-13% of fluid milk sales in the Florida market were processed in plants located outside of the marketing area. During the past few months this has dramatically changed. As shown in the table at right, almost 19% of

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

Milk Prices FMMO 5

www.malouisville.com May 2017 Class I Advanced Price (@ 3.5% BF) $18.60 June 2017 Class I Advanced Price (@ 3.5% BF) $18.71

FMMO 7 www.fmmatlanta.com May 2017 Class I Advanced Price (@ 3.5% BF) $19.00 June 2017 Class I Advanced Price (@ 3.5% BF) $19.11

Florida fluid milk sales are now processed outside of Florida.

The following puts the above table in better perspective: About 11.5 more tankers per day of raw milk equivalent, packaged outside of Florida, were sold in Florida during the first quarter of 2017 compared to 2014. While during the same time period about 11.5 less tankers of Florida packaged milk were processed each day.

My reasons for the growth in sales of milk packaged outside of Florida include: • Increasing demand for various fluid milk products in Florida, but not packaged in Florida. Products such as; milk sold in non-conventional gallons jugs that require less handling (greatest impact); organic milk, lactose free milk, and newer branded products such as FairlifeR and A2R. • A large, Pennsylvania based convenience store chain, Wawa, continues to expand in Florida. This chain has its own fluid milk processing plant in Pennsylvania.

• Just as many dairy farms see the need to expand due to lower margins, the same is true with fluid milk plants. Due to federal order pricing regulations, it is much easier for plants located in the Midwest

and Northeast to expand south.

Southeast cheese wins prestigious award.

Congratulations to Sweet Grass Dairy, Thomasville, Georgia for being awarded the 2017 sofi (specialty outstanding food innovation) Gold medal for its “Thomasville Tomme” cheese. This award, presented by the Specialty Food Association started back in 1972. The Gold award is the top award given in various food categories including cheese. Entries come from throughout the world, and are judged by 62 nationally recognized culinary experts. The Sweet Grass cheese will be presented later at the Summer Fancy Food Show in New York City, and the Winter Fancy Food Show in San Francisco.

A2R milk now available in the southeast. Fluid milk, processed from cows only containing the A2R beta-casein (protein), is now carried by Publix Super Markets. Originally, all cows’ milk contained the A2R protein, but over time much of the world’s cows’ milk started containing the A1 protein.

Various reports show people with challenges digesting milk can more easily digest milk containing only the A2R protein. With the growing interest in A2R milk, more dairy farms are selecting cows that contain the A2R protein. Granted, some people question the validity of A2R milk. However, it is my opinion the market for A2R milk will continue to grow.

May - June 2017 • KDDC • Page 11

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

Legislative Update

By Joe Cain, Kentucky Farm Bureau

Around Washington

W

ashington has been a buzz of activity since January. Agriculture began the year with disappointing news concerning international trade when the Trans Pacific Partnership (TPP) was pronounced dead and the Administration threatened to pull out of the North American Free Trade Agreement (NAFTA). We also thought we might actually reauthorize a farm bill early, would have real healthcare reform, that Americans could expect tax reforms providing some tax relief and that Congress and the Administration would take action to alleviate burdensome regulations.

Lately regulatory reform seems to have the most momentum, both legislatively and through administrative action. Congress is considering legislation that would reform the regulatory process in bills that have passed the House such as HR 5, the Regulatory Accountability Act of 2017 and S 951, the Senate version that has passed out of committee. We have also had Executive Order 13777, issued by the Trump Administration that instructed a thorough review of regulations to ensure they do not impose an undue economic burden on any segment of society. Agencies such as EPA recently posted a request for stakeholder input on regulations that may be appropriate for repeal, replacement or modification, with over 168,000 comments submitted for review.

The final Clean Water Rule, often referred to as the WOTUS Rule, was a regulatory example identified as overreaching and burdensome by many commenters.

Essentially, the rule could have extended EPA and US Army Corps of Engineers regulatory oversight to virtually any area holding water for any period of time through a significant nexus standard or by biological connection. Finalized early last year a court injunction kept the rule from being implemented. EPA just recently sent its proposal to the White House Office of Management and Budget (OMB) for review as a precursor for formally withdrawing the rule, but EPA is expected to revisit the rule, and try to provide clarity as to the definition of what are waters of the United States.

Immigration reform has been discussed, initially because of the “build the wall” strategy towards securing America’s borders, with part of that discussion involving farm labor reform. The current platform most farmers utilize to secure farm labor is the H-2A temporary, seasonal nonimmigrant

May - June 2017 • KDDC • Page 12

labor program. It is cumbersome, complicated and expensive, but participation continues to grow. However, because it is temporary and seasonal, many ag sectors such as dairy cannot utilize the program to secure workers. Legislation has been offered that could either modify H-2A guidelines or create an entirely new farm labor program that would be more inclusive for all sectors of agriculture. There are also rumors of possible regulatory modification being made to H-2A, but it would take statute change to address the changes needed for livestock producers to benefit.

Healthcare and tax reform are major legislative priorities both the Administration and Congress hope to accomplish before the end of 2017. Healthcare reform efforts have begun, with passage of the American Health Care Act of 2017 (AHCA) in the House on May 4. The AHCA would not entirely repeal the Affordable Care Act, but would make some significant changes. The Senate is expected to begin work soon on their own version of healthcare reform. Since it will likely differ from the House-passed bill a conference to reconcile the differences would be necessary. This makes passage of a final bill ready to be signed into law before the end of the year more challenging.

The desire is for healthcare to move prior to taking up tax reform since the ACHA does contain some tax changes and Congress plans to move both under budget reconciliation.

Tax reform seems to be gaining some momentum.

Simplification of the tax code, reducing the number of tax brackets and reducing individual and corporate tax rates are common ideas being promoted by House leadership and the Administration, but there are differences specifically on how deductions would be handled. Also, being proposed is repeal of the federal estate tax.

Finally, much was made last year about efforts to reauthorize the farm bill prior to the current farm bill’s expiration the end of September, 2018. However, it now seems likely the farm bill debate will be pushed into 2018. Kentucky Farm Bureau has been coordinating discussion groups on the major components of the farm bill since late last year. The goal is to identify areas of the farm bill that might not be performing as needed, develop specific recommendations and provide that input to Kentucky’s Congressional delegation that will hopefully lead to the next farm bill providing a more effective safety net for American agriculture. Specifically, the Dairy Margin Protection Program was identified as not providing the kind of support dairy farmers need.

This has been just a “snapshot” of what is currently transpiring in Washington. For more detail on federal issues impacting agriculture, feel free to contact Kentucky Farm Bureau for more information.

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

The New Proposed MILK Program for 2017

I

n 2007 the Kentucky Dairy Development Council Board was working to develop a plan that would incentivize more milk being produced in KY to diminish the amount of supplemental milk being hauled in to meet KY processor needs. The goals of the plan were to incentivize and increase local production, increase overall milk quality and help KY dairy farmers utilize business and production records to increase competitiveness and profitability. From these goals and objectives came the KDDC Market Incentive Leadership for Kentucky, (MILK) Program. We really had no idea how well this program would work to accomplish those lofty goals. There have been a few tweaks to the program as the KDDC saw what worked and what didn’t to bring more dairy farmers into the program. But looking at the numbers it can be stated without a doubt the MILK Program has been a huge success for all involved.

The MILK Program has distributed over $7.4 million dollars in premiums to KY dairy producers as of December 31, 2016. While putting additional dollars from incentives in dairymen’s hands the impact has been much greater than premium dollars. Producers participating in the program produced more than 500 million pounds over

base production from 2007 to mid-2016. This increased production brought those in the MILK Program more dollars in their milk checks as well.

This locally produced milk also saved milk marketers over $8 million dollars in hauling costs alone. For a $3.6 million investment $8 million is an excellent return. Equally impressive, KY milk production per cow increased over 34 percent from 13,444 lbs. in 2007 to 18,061 lbs. in 2016 per cow. According to USDA/NASS, this ranked KY as the number one state in the U.S. in increased production per cow over the past five years.

The key to the program working well was the partnerships of all the milk marketing organizations and buyers of milk in KY participating in the program. They did this by matching the premiums provided by the KY Agricultural Development Funds up to a combined total of $15,000 per farm and working closely with KDDC in providing production and quality information on a quarterly basis.

The marketing organizations also provided the avenue of delivery of the premiums by adding a line item on the milk checks to demonstrate payment.

In 2016 the U.S. was overflowing with milk and even though KY was still a deficit milk production area, local producers were being accessed a marketing fee to help cover the cost of excess milk being handled by their cooperatives.

The KDDC began talking with the partnering marketing organizations to address the

Cont’d on pg. 14

May - June 2017 • KDDC • Page 13

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Cont’d from pg. 13 changing market status and work to adopt the MILK Program to incentivize quality milk and continue empowering KY producers to be competitive. The KDDC also worked hard with the KADF Committee which oversees the operation and funding for the program, to develop a new program that would not focus on increased milk production, but rather incentivize milk quality and management strategies to help in accomplishing that goal.

The results: Increased milk production over base production has been removed from the program and the milk quality requirements have been developed in three tiers or levels receiving varying amounts of premiums. A second section has been added that will evaluate the percent of cows in the herd that are at 200,000 SCC and under. This also has three tiers and will be demonstrated below. Of course to calculate the second section one must submit individual cow samples when testing. This will provide an improved level of management for the producer and will help identify problem cows in the herd.

The $15,000 per farm, per year cap has been lowered to $12,000 because the production criteria have been removed and more producers are expected to participate. Hopefully

INDOOR

CALF HOUSING

PEN

SCC cell count by percentage of herd < 200,000 SCC. Total Premium % of cows SCC (Maximum of $6,000) $0.25/cwt 85% < 200,000 $0.13/cwt 75% <200,000 $0.08/cwt 65% <200,000

CALF HOUSING The

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CEAML F SYST

HUTCH

HUTCH

SUPER CALF HUTCH HUTCH The

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Qualifying criteria as required by the KADF Committee

Qualifying Requirements All producers must be enrolled in qualified production testing program (DHIA) and/or equivalent program including installed recording equipment approved by KDDC. This will include the collection and testing of individual cow samples.

Validate that producers are participating in their marketing organization’s Dairy Animal Care Program.

To receive quality premiums for herd average, producers must have somatic cell counts (SCC) of 300,000 or less and preliminary incubation counts (PIC) of 20,000 or less To receive quality premiums for individual cow performance producers must have 65% or more of the herd with a somatic cell count of less than 200,000.

Payments are based on a graduated scale. *Producers may qualify for quality incentive payments independent of each other depending on herd performance.

Producers must meet both PIC minimum and the SCC minimum in order to qualify for a quality incentive payment. The maximum of $12,000 per farm per year will be distributed.

Premiums are based on SCC – PIC Average for the month.

Total Premium SCC PIC(Maximum of $6,000) $0.25/cwt <200,000 <20,000 $0.13/cwt 200,001 - 250,000 <20,000 $0.08/cwt 250,001 - 300,000 <20,000

SYSTEM

Indoor

more producers will receive premiums. This may be reevaluated depending on the amount of premiums being paid.

.RSICALFSYSTEMS. .rsicalfsystems .com

www

WWW

8OO.493.4945 800.493.4945

CALF SYSTEMS DIVISION OF RIVERSIDE PLASTICS, INC.

May - June 2017 • KDDC • Page 14

COM

This MILK Program must be approved by all milk marketing organizations in KY in order to be implemented. There can be no exceptions. If one organization decides to opt out the program will not go forward. We will be working with all marketing organizations in the next month to do our best to see the MILK Program continues. If you have questions please contact your regional KDDC Director, Dairy Consultant or contact the KDDC office at 859-516-1129.

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund TODD, CHRISTIAN AND TRIGG COUNTY DAIRY PRODUCERS

KDDC T RI -C OUNTY F AMILY D AIRY M EETING Family Event— Focus is to educate children and adults on the value of good dairy

husbandry. Also fun learning games for the children.   

Timely Dairy Topics presented by U.K. Dairy Extension Fun Dairy Quizzes and Games with U.K. Dairy Students KDDC Updates of Dairy News and Programs

JUNE 21st 8:00-3:00

Location: Trenton Farm Supply - 2470 Cemetery Rd. Trenton, Ky. — Equipment and Supply Discounts will be available also BBQ Chicken and Pork Lunch and Drinks If there is hot weather, there will be WATER BALLOONS !!!!!!!!!

COFFEE, MILK and DONUTS at 8:00 SPEAKERS begin at 9:00 For more information call : Jacob Smoker 270-466-3180 or Dave Roberts 859-516-1409

May - June 2017 • KDDC • Page 15

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

State Milk Regulators Ask FDA for Assistance on Assuring Proper Use of Dairy Product Terminology Published on National Milk Producers Federation (http://www. nmpf.org) GRAND RAPIDS, MICH – State milk regulators today requested that the U.S. Food and Drug Administration (FDA) work with them to enforce the proper use of milk and milk product labeling terms, especially those meant to distinguish between real dairy products and plant-based imitators – a development the National Milk Producers Federation (NMPF) hailed as “the strongest statement yet that the abuse of dairy terms has gone too far.”

“It’s time for FDA to work with state agencies in defending standards of identity for dairy products,” said Beth Briczinski, NMPF’s vice president of dairy foods and nutrition.

The pushback by state officials against FDA’s history of inaction on labeling enforcement came Wednesday at the biennial meeting of the National Conference on Interstate Milk Shipments (NCIMS) in Grand Rapids this week.

The KY Milk Matters Media Kit

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WHY ADVERTISE IN THE KENTUCKY MILK MATTERS NEWSLETTER? • It is the ONLY publication that goes directly to ALL KY DAIRY FARMERS • KY has more permitted dairy farms than any other state in the Southeast • It goes directly to the decision makers on all KY dairy farms • Over 1,400 KDDC Milk Matters Newsletters are distributed • The Newsletter is available through email and KDDC Website

May - June 2017 • KDDC • Page 16

The NCIMS is a national cooperative regulatory program that includes state milk regulatory agencies, dairy companies and FDA. The states collaborate with federal regulators and industry groups to ensure the safety and integrity of dairy products regulated under the Grade “A” program, including fluid milk, yogurt and other dairy products.

During today’s NCIMS session, state milk safety regulators voted unanimously in favor of a resolution intended to clarify the responsibilities of FDA and state programs in ensuring the proper use of standardized dairy product names.

“The state agencies, through their vote today, acknowledged that more effort is needed from FDA to clarify the role of State Milk Regulatory Programs in assuring the proper use of the standardized names of milk and milk products,” said Briczinski. “FDA needs to stop picking and choosing which regulations it wants to enforce.”

For example, FDA’s standards of identity specify that milk is the product of cows and other dairy animals, and that yogurt is the product obtained exclusively from the culturing of dairy ingredients. Absent any regulatory consistency about how these label terms are applied, “consumers are bound to be confused and misled by the growing variance in the nutritional and compositional content of imitation foods made from nuts, seeds and grains, but purporting to be dairy products,” Briczinski said.

By approving this resolution, “the NCIMS delegates are acknowledging that states need federal assistance in the regulation of all products utilizing standardized dairy terms. This will ultimately benefit consumers, who face an increasingly bewildering assortment of imitation dairy products,” Briczinski said.

A renewed emphasis by FDA on the regulation of dairy terms would bring the United States into closer alignment with how the issue is handled in other countries, Briczinski noted. Canada, the United Kingdom and the European Union “do not allow plant-based imitators to call themselves milk on their packages. We have the same regulation on the books in the United States, but there has been no effort to enforce that policy. Today’s decision will hopefully create a new approach to the issue.”

The National Milk Producers Federation (NMPF), based in Arlington, VA, develops and carries out policies that advance the well-being of dairy producers and the cooperatives they own.

The members of NMPF’s cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of dairy producers on Capitol Hill and with government agencies. For more on NMPF’s activities, visit our website at www.nmpf.org.

2017 Kentucky Dairy Facts KENTUCKY is home to approximately

58,000 milk cows

who live on

630

The total amount of milk produced in the state amounted to

1.0 billion pounds That’s equal to

dairy farms

122 million gallons

A typical Kentucky dairy farm has a herd of about

92

milking cows

In 2016, a dairy cow in Kentucky cost about

Each dairy cow in Kentucky provides an average of

of milk per year

of all milk produced in 2016 was used and consumed in the form of fluid milk Kentucky has six commercial milk processing plants located in Louisville,

London, Murray, Somerset, Fulton and Winchester Kentucky is...

$1,760 2,101 gallons

87%

The average value of a day’s milk per cow was about

27th in milk production of milk 27th in number cows output per 37th in milk cow 13th

in the number of licensed dairy operations

$9.75

That’s an average of

6.9 gallons of milk per day That’s enough to make 5.9 pounds of cheese or 2.8 pounds of butter each day

Brought to you by the dairy farm families of Kentucky.

Cash receipts for the sale of milk by dairy farmers amounted to

$172.5 million

Top milk producing counties:

1) Logan (111.7 million pounds) 2) Barren (111.1 million pounds) 3) Adair (89.6 million pounds) 4) Christian (78.5 million pounds) 5) Warren (78.2 million pounds) 6) Metcalfe (65.4 million pounds)

To learn more please visit southeastdairy.org *All facts are based on 2016 USDA and KDA data

TM

g tdairy.or theas sou

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

REGISTRATION FORM Summer Dairy Farm Tour South Central KY July 25-26, 2017

First person attending: ___________________ Others attending: _______________________ _______________________________________ Address: _______________________________ _______________________________ Home phone: ___________________________ Cell phone: _____________________________ Email Address:

_______________________

___YES, we need a hotel room for Tuesday, July 25 (covered by KDDC/KADF)

2017 Summer Dairy Farm Tour South Central KY July 25 – 26, 2017

*all times are Central Time Meet at Holiday Inn Express and Suites – Glasgow Address: 208 Wall St, Glasgow, KY 42141 Phone: (270) 629-2900 July 25th 9:00 - Board vans at Holiday Inn Glasgow 9:30 – 10:45 Keith Long Dairy – 992 Morrison Park Rd. Glasgow, KY 11:00 – 12:15 Bertram Dairy – 1923 Mt. Pleasant Rd. Glasgow, KY Arrive 12:30 at Temple Hill Fairgrounds – 10168 Tompkinsville Rd. Glasgow, KY 1:30 – 2:45 Peden Dairy – 708 Lyons School Rd. Glasgow, KY 3:00 – 4:15 Richard Mattingly Dairy – 3625 Etoile Rd. Glasgow, KY 5:00 – 6:15 Kenny Mattingly Dairy and Cheese House – 2033 Thomerson Park Rd. Austin, KY 7:00 – Dinner at Gondolier Restaurant – Alltech presentation

___NO, we will be driving in each day $25 per dairy farm family (limit 4 members/family) $25 each for all others & industry representatives Make checks payable to: KDDC Send registration/check to: Eunice Schlappi Kentucky Dept of Agriculture 111 Corporate Drive Frankfort, KY 40601 Or email to: eunice.schlappi@ky.gov

May - June 2017 • KDDC • Page 18

July 26th 9:00 – Load vans at Holiday Inn Glasgow 9:15 – 10:15 Bluegrass Dairy and Foods Plant – 1117 Cleveland Ave. Glasgow, KY 10:30 – 11:45 Kinslow Dairy – 10611 Old Bowling Green Rd. Smiths Grove, KY 12:00 – 1:00 lunch at Elkins Grove – 2100 Hays Pondsville Rd. Smiths Grove, KY 1:15 – 2:30 Elkins Dairy – 2699 Hays Pondsville Rd. Smiths Grove, KY 3:00 – Unload vans at Holiday Inn Glasgow

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

2017 Kentucky National Dairy Show & Sale You know spring is here in the Bluegrass state and show season is emerging when the Kentucky Nationals transpire in Louisville, KY. This year was no different than the years before, the barn was full of heifers, cows, buyers and sellers from all over the country on April 6, 7 and 8 representing the six breeds of dairy cattle.

All five sales combined sold 251 lots of dairy cattle grossing $478,500.00 with the overall average per lot of $1,906.37. The Kentucky Dairy Development Council is proud to support the Kentucky Nationals.

Pictured below are breed champions.

May - June 2017 â&#x20AC;˘ KDDC â&#x20AC;˘ Page 19

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

Introducing Steve Wade...

Introducing Steve Wade as a contributor to the KDDC Milk Matters Newsletter The KY Dairy Development Council main focus as a dairy producer advocacy organization is on education and enhancing KY dairy farmers’ ability to be more profitable. We believe there are many resources available to help work achieve this goal. During a recent meeting hosted by AgDairy, with Steve Wade and Robin Schmahl, risk management tools were discussed to help protect your bottom line.

I asked the question, “Why aren’t more KY producers using these strategies?” A dairy farmer in the meeting replied, “It is not easy to understand and there is fear that you could lose more than you would gain.”

As I heard one dairyman say, “I don’t want to play in a game if I don’t completely understand the rules.” I then asked how could the KDDC help increase producers’ understanding of these strategies more? The suggestion was to add a dedicated article section in the Milk Matters Newsletter that would explain how to use these tools and offer possibilities for individuals to make better, informed decisions.

I asked Steve Wade if he would contribute a regular article for the Milk Matters and he agreed.

Steve understands that it is not KDDC’s intention to promote his business or the use of his programs more than any other organization or individual, but rather an education tool meant to empower producers to succeed.

Got Milk Marketing Plan?

by Steve Wade

Introduction – Steve Wade, Wade Assurance

I wish to thank the KDDC for inviting me to write marketing comments in the Milk Matters newsletter. In a recent dairy marketing meeting, I remember Maury Cox saying “ the mission of the KDDC is to educate, promote and represent dairy producers and foster an environment for growth of the Kentucky Dairy Industry.” While I could not have stated this as eloquently as Maury did, I will say that I will honor the mission of the KDDC. My pledge to you is that you will receive sound education, advice and recommendations on ways to reduce price risk at your dairy.

Let me provide you a brief biography about my background: •Born and raised on a grain farm in Glendale Kentucky. I still live here today.

•Studied Agricultural Economics at the University of Kentucky, a 1984 graduate •Career experience with: -University of Kentucky Cooperative Extension Service -Kentucky Farm Bureau Insurance -Owned fertilizer/feed business in Meade County -Consolidated Grain and Barge -Owner of Wade Assurance Risk Management Services •Licensed in Crop Insurance AND Commodity Brokerage 19 years. As far as I am aware, I am the only person in the state who is licensed in crop and livestock insurance who also is a series III commodity broker. I have a full range of tools to help people manage price risk.

•I am an associated person with AgDairy for commodity brokerage. Robin Schmahl is the owner of AgDairy, a broker who specializes in the Dairy industry. Robin Schmahl writes the daily dairy comments for DTN, AgWeb and other industry publications nationally and internationally.

One thing I am not able to do is to prognosticate prices into the future. The milk market is one of the most volatile markets you can trade. It is subject to violent price swings and changes in direction, probably more than any other industry I can think of. I don’t know if prices will move higher or lower. What I can do is make recommendations that will help dairy producers manage the risk that is there.

There are many tools dairy producers can use to manage price risk: Maintaining large financial reserves

May - June 2017 • KDDC • Page 20

• Enterprise Diversification • Vertical Integration • Production Contracts • Marketing Contracts • MPP and LGM Insurance • Hedging with Futures and Options Yes, I think I can hear you laughing from where I sit here in Glendale. Most dairy farmers are very good at producing milk, but frequently struggle with the “tools” of managing risk. This is where I am able to help the most.

I am an expert on LGM insurance, and with using futures and options on the farm. My comments should help you understand how to use these tools to make your farm more profitable. These tools in and of themselves will not make you money, but they will help you preserve the fruits of your labor.

My goal writing marketing comments for the KDDC is to help you, the producer, understand these tools in a practical way so that when opportunities present themselves, you can lock in profitable price levels.

W

hen marketing milk, it is useful to know the tendency of the market due to seasonal price fluctuations before making pricing decisions.

In the 9 years since the great recession prices of milk have never peaked in the winter months and have never bottomed in summer months. The chart at right shows milk prices since 2008. The red arrows denote the yearly low while the green arrow shows the yearly high.

So, what does this mean for the dairy farmer? To me it would suggest that the spring and summer months are the best time to do some homework and to make a marketing plan to improve your chances of capturing higher milk prices. Have you calculated your breakeven costs so you know at what level your dairy is profitable? Do you need a brokerage account? Do you know a crop insurance agent who is certified in LGM insurance? If you are trying to make these decisions in October it is most likely already to late.

It only takes a couple of days to open a brokerage account and set a floor using puts. However, it takes at least 6 weeks

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund to get LGM insurance protection from the time you sign the application. Waiting until your fear begins to motivate you to do something to manage price risk usually leads to decisions you would wish to take back later.

My advice is to take advantage of spare moments this summer to study your break-even costs, evaluate the goals

you wish to reach in addition to your break evens, and to make contacts with brokers and crop insurance experts who can help you implement your plan.

What Tools To Use? The tools I prefer are put options and LGM insurance. The plan to use would depend on several factors including: 1. Are prices high or low at the time the plan is to be implemented 2. Has fear entered the market 3. How quickly do you wish to implement the plan. The cost of the insurance or options is comparable, so the plan to choose really depends on what is happening at the time you wish to implement it.

The grid below points out the key differences between LGM and Options.

So why do I prefer these tools over direct marketing contracts? Because they leave the top side open. Marketing contracts for milk put a lid on higher prices. Yes, they typically are free, but when you can put a floor under price using LGM or puts without limiting your upside, why would you want to miss an opportunity?

Below is a chart of milk last fall. For simplicity sake, I am attempting to show in real time what would have happen had you purchased a put option on November 23. This would have set a floor on May futures at $16.25.

As time went on, the producer could have enjoyed the benefit of higher prices. Because he purchased a put option instead of contracting his milk, his milk check grew as prices increased.

As prices fell back below the strike price of the put option, he collected on the put option he purchased.

With LGM or with options, you can have your milk and drink it too!

May - June 2017 â&#x20AC;˘ KDDC â&#x20AC;˘ Page 21

KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund

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May-June 2017 • KDDC • Page 22

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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 S P O N S O R S

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 Select Sires MidAmerica (KABA)

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May-June 2017 • KDDC • Page 23

Non-Profit US Postage PAID

176 Pasadena Drive Lexington, KY 40503 859.516.1129 ph www.kydairy.org

2017 Dairy Calendar of Events June 2017

June 15 Dairy Night at Lexington Legends June 17 Lincoln Co. Cow Bell Day, Stanford, KY June 19 Metcalfe Co. June Dairy Day Appreciation Dinner June 20 Taylor County Dairy Luncheon – Extension Office June 21 Tri-County Dairy Meeting, Trenton Farm Supply, Todd Co. June 22 Dairy Night at Bowling Hot Rods June 23-24 Western Rivers ,Kentucky Jr. Livestock Expo.

William” Bill” Cherry Ag/Expo.

Center, Murry, KY June 24 Marion Co. June Dairy Day, Lebanon, KY June 28 Shelbyville 4-H District Dairy Show, Shelby Co. Fairgrounds 9:00 A.M. June 29 Malvern Hills Farm Open House, Richard

Mattingly, Barren Co. 10:00 A.M. June 30 Adair Co. June Dairy Appreciation Dinner, Adair

Co. Ext. Office, 6:30 P.M.

July 2017

July 19

Tollesboro 4-H District Dairy Show, Tollesboro Fairgrounds July 21-22 Kentucky Junior Livestock Expo., L.D. Brown

Ag. Center, Bowling Green, KY July 25-26 KDDC Dairy Producer Tour, Holiday Inn, Glasgow, 9:00 A.M. July 28 KDDC Board Meeting TBA

August 2017

August Advanced 4-H Dairy Judging Workshops, Held on Saturdays, TBA August 16 KY State Fair Dairy Skill-a-thon and Pizza Party,

KFEC, 7:00 P.M. August 17 Advanced 4-H Dairy Judging Workshop, KY Fair

and Expo Center August 17-27 Kentucky State Fair, Louisville, KY August 17-18 KY State Fair 4-H/FFA Dairy Shows, KFEC August 19-22 KY State Fair Open Dairy Shows, KFEC August 29-31 Kentucky Milk Quality Conference, Lake Barkley

State Park, Cadiz, KY

September 2017

September 07 CPC Fall Field Day, Fountain Run, KY, 9:00 AM July 01

Liberty 4-H District Dairy Show, Casey Co. September 22 KDDC Board Meeting TBA Fairgrounds, 10:00 A.M. July 10 Kentucky State Fair Livestock Entry Deadline October 2017 July 13 Horse Cave District Dairy Show, Burley Fields October 03- 06 KDDC Young Dairy Producer Bus Tour, World

Livestock Center, 9:30 A.M.

Dairy Expo. Madison, Wis. Milk Matters May- June 2017