Address of the NAJ President

Navigating an Ever-Changing Industry

Address of John Kokoski, NAJ President to the 62 nd Annual Meeting of National All-Jersey Inc., June 26, 2020, Columbus, Ohio

Welcome, my fellow Jersey breeders to our 62 nd annual meeting in these unusual and challenging circumstances. If you are joining us virtually, thank you as well for making the effort to be part of the meeting. Although these meetings are an opportunity for us to work together and set the course, it’s also a chance to catch up with fellow dairymen and friends. We will be missing that aspect a lot this year, but hopefully everyone is staying safe and healthy and this will all be behind us soon.

The COVID-19 pandemic has certainly disrupted our lives in so many ways and our industry wasn’t spared. Although our dayto-day lives on the farm probably hasn’t changed, it has turned milk processing and distribution of dairy products upside down. Most large-scale processors cannot adjust their supply to market changes from one sector to another in a short period of time. I’d like to share with you my own experiences that happened when COVID-19 really hit in mid-March and sales went south ... fast.

Our milk bottling business is very heavy in the food service industry with restaurants, coffee shops, bakeries and institutions—the largest being the University of Massachusetts dining services that feeds 25,000 students every day. When the university decided not to come back from spring break and shut down the rest of the semester, you can imagine the impact that had on our business. Within a week we went from using all our own production plus some from Dutch Hollow Farm to dumping milk. But fortunately, it didn’t last long. Within a week and a half things changed. Our retail accounts increased their orders as families rushed to the grocery stores and we had several calls from new stores and two new start-up home delivery operations that deliver to roughly 1,200 homes. Eventually, sales began to recover.

My point in my sharing my own example is, we were able to change our direction of marketing quickly and respond to the changing consumer demand. Flexibility and optimism is key in situations where you’re dealt a difficult hand. Large processors unfortunately cannot respond as fast and this caused a back up and dumping of milk in some areas.

Some co-ops imposed a reduction to producers by up to 15% to reduce milk that they could not get to market. This situation could offer us an opportunity to non-Jersey dairy producers ... make less volume and yet get high prices from components. This is yet another example of Jerseys and Jersey milk being right for the markets in any situation. In this time of unusual and unprecedented challenges, we must seize opportunities to market Jerseys. We would not be in this industry if we shied away from hard work or didn’t have optimism or resiliency—cornerstones of dairy farmers. Jerseys have proven to be successful for us in the past, and now more than ever, will continue to be the cow of the future.

NAJ has been busy all year and you will get to hear more about our activities and progress from Neal Smith, Erick Metgzer as well as our lobbyist in Washington D.C., Charlie Garrison who monitors issues related to our industry. I would like to thank our staff and the board for all the efforts and continued support marketing Jerseys and All-Jersey made products. Thank you again for everyone’s participation today. Everyone’s input and expertise is greatly appreciated and will continue to lead to success.

Kokoski President District 3

Huffard Vice President District 5

Cast District 1

Graber

Finance Chair District 7

Herrera

District 2

Marcoot

District 4

NAJ General Manager tional level for income-over-feed-costs falls negative Producer Price Differentials (continued from page 22) below a level pre-selected by the producer. (PPDs), widespread de-pooling of milk May production fell 1.1% below last year. Premiums must be purchased for the entire and a substantial price lag between uniform That 4% shift in production over three calendar year and are fixed for the life of the milk price and Class III price in the coming months is huge. What made it even more current Farm Bill. Coverage is available for months. impactful was a 1.5% drop in production a dozen levels of margins, from $4 to $9.50, This is largely due to the runup of prices per cow as producers dried cows off early, in two premium tiers based on a dairy’s in May and June and the six-week lag beswitched from three times to twice daily historical production. Coverage for the first tween FMMO fluid milk prices (announced milking and took energy out of the ration 5 million pounds of production at the $4.00 prior to the month) and manufacturing milk in favor of forages. margin is free. Premiums for other coverage prices (announced the next month). Most

On the demand side, exports started to range from .25 cents per hundredweight to often, significant market changes do not take off. When block and barrel cheese 15 cents per hundredweight for the first tier happen in that time frame. The coronavirus prices were $1 a pound, the U.S. was the of production and from .25 cents to $1.813 pandemic, though, has been anything but world’s low-cost leader. A lot of export per hundredweight (maximum margin $8) normal. contracts began to be written. As well, for the second tier of production. When we look at May and June, price government spending increased demand DMC is available through USDA’s Farm relationships among the milk classes started through programs including the normal but changed draFarmers to Families Food Box Table 1: Producer Price Differential Calculation matically. For May, the program and other USDA nuJune Federal Milk Marketing Orders Class I price was $12.95 trition programs. In all, Uncle per hundredweight (anSam is scheduled to purchase Contribution to nounced April 22) and $1 billion in dairy products this Class Price Differential Utilization Uniform Price the Class III price was year. The food service industry Class I $11.92 $2.00 20% $2.78 $12.14 (announced June has rebounded as restaurants Class II 12.99 10% 1.30 3). For June, the Class I learn how to operate in a takeClass III 21.04 50% 10.52 price announced on May out and delivery world and Class IV 12.90 20% 2.58 20—the trough of the replenish depleted inventories. Through it all, retail sales have continued to be strong as well. Uniform Price Producer Price Differential $17.18 (3.86) price cycle—was $11.42. Six weeks later, on July 1, the Class III price was

What do dairy markets look announced at $21.04, like down the road? The biggest determinServices Agency. Enrollment for 2021 runs nearly $10 more than the Class I price for ing factor may be what happens on the supfrom October 12 through December 11. June. ply side. How long will base excess plans For dairy producers using DMC, NAJ This sets up the situation for the negative stay in place, especially when Class III milk recommends enrollment at the maximum PPD. A hypothetical scenario (Table 1) of is now over $20 a hundredweight? How will $9.50 coverage (if eligible) for as long as a FMMO pool using June prices illustrates production respond when cows that were possible. Projections for 2021 show marthis point. Keep in mind PPD is an adjustdried off early begin to calve, producers gins dropping below $9.50 for just a few ment between the Class III price and the return to three times daily milking and corn months, but the past three months are prime uniform price—a weighted average of Class and other energy sources are added back example of what can happen. DMC is an I, Class II, Class III and Class IV milks in into the ration? Non-milk check revenue insurance program like any other, designed a FMMO—and that producers are paid off plays a role, too. Programs including the to protect against catastrophic loss. And the Class III price. Coronavirus Food Assistance Program, don’t count on the free program providing In our example, Class I milk is utilized Dairy Margin Coverage (DMC) and Dairy any level of protection. Despite the worst 20%, Class II is 10%, Class III is 50% and Revenue Protection (DRP) are injecting industry conditions experienced in the past Class IV is 20%. Thus, Class I milk concash into many farms and keeping them in decade, margins never dropped below $4, tributes $2.78 to the uniform price, Class business. This will also impact production. so no indemnities were paid to producers II contributes $1.40, Class III contributes

On the demand side, just as low prices at this level. $10.50 and Class IV contributes $2.65. giveth, high prices taketh away. If high DRP insures against expected milk The cumulative uniform price is $17.33. prices continue, the U.S. will become an revenue rather than margin over feed cost Because this amount is less than the Class import destination for cheese from other and pays on a quarterly basis rather than III price, there is a negative PPD of $3.67. countries. Demand will also be determined monthly. Dairy producers can insure their Class III processors must pay this $3.67 by duration of government food assistance entire production at the same premium rate. per hundredweight to the Federal Order programs and the health of retail purchases Coverage can be purchased any time in if they pool their milk. However, they are as food service recovers and consumers advance of the next quarter and up to five not obligated to pool their milk. They can begin to eat away from home again. quarters in advance. Coverage for the last de-pool milk and forego paying the Federal quarter of 2020 can be purchased through order. De-pooling Class III milk causes the Dairy Insurance Program September. DRP is purchased through percentage utilization of the other lower

Dairy producers can protect themselves authorized crop insurance agents, with priced milk classes to increase and to lower financially by utilizing the insurance propremiums based on Class III and Class IV the uniform price. In our example, if all the grams DMC and DRP. Both are subsidized futures contracts. Class III milk is de-pooled, Class I milk is by USDA and offer protection against utilized 40%, Class II is 20% and Class IV severe price drops while maintaining opImpact of Producer Price Differential is 40%. The uniform price drops to $13.66. portunity to capitalize on high prices. They We are navigating unprecedented terThe two overriding concepts associated operate very differently, however. ritory with Federal Order pricing as well. with de-pooling are: 1.) due to de-pooling,

DMC pays an indemnity when the naProducers can expect to see significant (continued to page 28)

Workshop was hosted in Brattleboro, Vt., in April. Twenty-one participants from 18 operations in six states attended the threeday event. Experts in cheese production and business planning were on hand to learn from, as well as fellow Jersey breeders who have a value-added business.

“The primary goal of JMS (Jersey Marketing Service) is to influence the value of Jerseys and Jersey genetics,” said Smith. In 2019, JMS was able to do just that with several outstanding sales. Wetumpka Viceroy Java-P sold for an impressive $103,000 at the 2019 National Heifer Sale in Saratoga Springs, N.Y., becoming the new all-time high selling heifer in the breed. The sale also set a new record for all-time high series average of $10,308 on 35 head.

“We will continue to work towards identifying opportunities to fund research that can influence not only Jerseys, but our dairy industry, to help our producers be more profitable in their operations,” explained Smith.

“We will continue to work to influence the Federal Milk Marketing Order payment formulas across the country.”

Jersey Journal and Jersey Youth

“One of the greatest things we have done in the last several decades is establish Jersey Youth Academy,” Smith said. With classes every other year, 2019 brought the sixth class to Ohio.

These are the future leaders of the dairy industry. “There’s already a lot of positive evidence in the dairy industry of people who attended Youth Academy. We have a couple of them on our USJersey team now and even one on the board of directors.”

The goal when establishing Jersey Youth Academy was to develop youth as leaders and also encourage them to come back to the dairy industry. We want this program to continue to grow stronger. There will be another class next July with the application period opening on September 1, 2020.

The Jersey Journal is in the process of changes in how they deliver information. There has been no decision to discontinue the monthly printed publication, however shifts are being made to bring things to the public in a more digital format with the new website released in September 2019.

“We need your help to develop this into a more useful tool for you as breeders. I want to appeal to you as members to provide feedback. Our goal is to help you be more successful.”

Breed Growth

The USJersey organizations measure breed growth based on Jersey market share and semen sales, particularly domestic.

“In 1998, 3.2% of the cows on test were in 100% Jersey herds and 2.1% resided in herds that had multiple breeds,’ said Smith. “Today, Jersey has grown a lot. In Jersey herds alone, that number is now 8.7%. It is now almost 11% for mixed breed groups. That’s a lot of change.”

In the past 10 years, Jersey semen sales have grown from 5.5% to 15.5%. The number of units of Jersey semen has been much higher than the number of Jersey females there are to be bred. This means there is a lot of semen going into other breeds.

“It’s fun to talk about this because we have enjoyed growth as a breed, but we don’t need to assume it’s just going to happen,” he said. “We need to continue to generate, develop and implement new ideas, as well as maintain an attitude that is open for change and growth.”

“Another point I want to make is the importance of the breeder,” explained Smith. “We live in a genomics era, it’s a great tool, absolutely. It doesn’t make an instant master breeders club. There is no doubt there’s still an art to breeding top genetics.”

Paying attention and breeding and developing cow families still matters. There is still room in this business for those who are passionate about cattle breeding.

Thank you for the opportunity to report to you and to work for the USJersey organizations. Let’s keep our momentum going.

President: George Dean 724/287-0904 Secretary: Jessica Peters 814/282-5206 AJCA-NAJ Area Representative: Scott Holcomb 614/563-3227 Visit us online at: http://pennsylvaniajerseys.usjersey.com

Four Springs Jerseys J. Craig and Susan Wicker 2147 Upper Brush Valley Road Centre Hall, PA 16828 814/364-9807 wickfsvetclin@aol.com A REAP Herd • Equity Investor

Jersey Farm

LLC

Bob and Alma Kenny Clayton and Renée Kenny 749 McClain Rd. Enon Valley, PA 16120 724/730-0219 • 570/419-5188 kennyjerseyfarm@gmail.com A REAP Herd • Equity Investor

NOBLEDALE FARM Registered Jerseys since 1888

Gillett, PA • Email: nobledalefarm@gmail.com Stuart, Elaine, Maria & Cory • Steve and Donna Phone/Fax 570/537-2308 Maria’s cell 607/483-1413

Stoney Hollow Jerseys Don, Jill, Garrett, and Jason Stonerook 231 Stonerook Rd., Martinsburg, PA 16662 Phone: 814/793-3059 Email: stoneyhollowjerseys@gmail.com

VANDERFELTZ JERSEYS

Visitors Welcome Joe, Melinda, Kyle and Corey VanderFeltz 898 St. Rt. 706, Lawton, PA 18828 570/934-2406 • Joe’s cell: 570/396-0269 E-mail jvanfel2@gmail.com

AJCA President Comments

(continued from page 21)

times. For several weeks, they worked from home because of ‘shelter in place’ orders. They continued to complete their responsibilities, respond to emails and answer questions as though they were in the office as normal. I continue to hear reports of how no other breed association staff compares to ours. I continue to witness how no other breed association staff compares to ours. We are blessed to have such a dedicated staff and a dedicated membership willing to help where, when and however they can. Thank you again for this opportunity to serve and work with such a wonderful group of people.

NAJ General Manager

(continued from page 24) the value of Class III milk will not be reflected in announced FMMO prices; and 2.) the question of how Class III value will be accounted for in milk producer checks remains to be answered.

Independent producers will be paid according to their contracts with their processors. The vast majority of milk is marketed by co-ops, which have three basic options for handling the value of de-pooled milk. They can add it to producer milk checks as premiums or bonuses above the announced FMMO values. They can include the value in their annual, so-called 13 th check. Or they can hold the value in retained earnings.

Given current future market price, negative PPDs are likely to persist for July and August and may continue for September.

As always, NAJ thanks you for your support of the Equity program.

Jersey producers who are using robotic milking system and not on official DHI test can now get production records on performance pedigrees and progeny reports with the new Automated Milking Record (AMR) program. Recently approved by the American Jersey Cattle Association (AJCA) Board of Directors, AMR will enable producers to more widely use and capitalize on information provided by robotic milking systems.

Though robotic records will be published on pedigrees and progeny reports, AMR records are not used for genetic evaluations. So, unless a cow is genotyped, she will not receive a Predicted Transmitting Ability (PTA). As well, AMR records will not receive Data Collection Ratings (DCRs), so are ineligible for AJCA production award programs.

In this month’s Jersey Jargon, we will further explain details of the AMR program and how you can enroll.

Eligibility Requirements

Dairy producers who use on-farm systems that record both milk weights and components every milking and are not on official DHI test can sign up for AMR.

They must also have robotic software that monitors calibrated milk weights versus bulk tank weights, such as Lely’s Time for Cows (T4C) software, and give monthly access to reports to AgriTech Analytics (ATA), the only Dairy Records Processing Center currently accepting AMR records.

How it Works

AMR is available as a third option, along with Plus and Basic, for the AJCA performance programs REAP (Registration, Equity, Appraisal and Performance), TPE (Total Performance Evaluation) and Performance Records. Fees for AMR will be the same as Plus and Basic.

Dairy producers can sign up for AMR by contacting their area representative or the AJCA herd services department. ATA then works with herd owners to establish a schedule for reports to be retrieved from the robotic system. ATA processes the production records and submits them to the AJCA on a monthly basis. When lactations are completed, they are added to the AJCA database and reported on pedigrees and progeny reports.

Genetic Evaluations and Award Programs

AMR lactations are not submitted to

the Council on Dairy Cattle Breeding, so will not be included in genetic evaluations for males or females. Therefore, sire summaries will not include records from AMR cows and cows will not receive a PTA when enrolled in AMR. It should be noted, though, that cows that are genotyped will continue to receive Genomic PTAs.

As well, AMR records are not assigned DCRs, so the are not eligible for AJCA award programs that requires a minimum DCR, including the National Jersey Youth Production Contest, the Pot O’Gold Production Contest, Hall of Fame records, Honor Roll records and the National Class Leader list. They will also not be included in individual herd averages or the overall breed average.

To enroll in AMR, contact AJCA Herd Services by email at herdservices@usjersey.com or phone at 614/322-3636.