After lunch, President Maddox began the session with announcement and recognition of the 40-year members of the association, as well as the new Star of the Breed, Stuewes BF Giddy-ET, an EX-94 Charles daughter with a record of 3-03 365 42,270 5.6 2369 3.3 1407. She is owned by Flower-Brook Registered Holsteins, the Stuewe family, of Hamburg, MN.

Dr. Robert Cropp, Professor Emeritus of the University of Wisconsin-Madison, was introduced as the afternoon’s guest speaker. Dr. Cropp will be leading a discussion on the milk pricing stabilization program.

Notes from Dr. Cropp’s presentation:
“Financial stress on dairy farmers today is the greatest I’ve ever seen. How did it get this way? Things will change, but we have to have a change in dairy policy. We had a few years of record high prices through the end of last year. The market has not responded to any improvement, hopefully in July we can see some. But, it’s a slow market to respond. The cheese market was higher in April than it is today. Block cheese is $1.12 and Barrel cheese is $1.09 with no support. It’s hard to forecast where prices are, but with our current policy we have a great deal of volatility. That won’t change until we have a change in policy. Product price determines milk price and as of right now, everything is markedly down from last year. Every part of the country is hurting, with low prices and high feed costs.

Since the 1990s, the major factor for lower milk prices was relatively more milk production. Production is not growing and yet the market is not responding. Milk per cow is down in many major dairy states – CA, ID, PA, but growing in TX, MI, MN and WN. Production in most states is either down or not growing. Wholesale & retail prices are slowly coming down with should help sales, so we should see a demand response.

Butter last year +12.6% and Jan-Mar 2009 it was -6.6%
Fluid milk is up -.2% last year, this year +1.8%
All products -2.5% over last year
Organic milk was growing 23% last year, but this year, sales are taking quite a hit.

The big impact is the export market. In 2008, 10.8% of total milk supply was exported and it was only 4.5% in 1997. What is causing this? A little is due to the strengthening of the U.S. dollar; the EU re-instated export subsidies; weakening of a world economy; credit issues; world prices too low for commercial exports; increase supply on world market from Australia, New Zealand, Argentina, Brazil & the EU.

USDA estimates exports for 2009 will be down 57% on a fat basis and 25% on a skim-milk basis.

But the good news is this market will recover. I will guarantee 100% that milk prices will improve as the year progresses. Low milk prices & high feed prices will encourage dairy cow slaughter and dairy exiting. 7th ground of CWT – 102,898 cows late May to end of July. There will be an 8th round. With further reduced use of rBST, production per cow will only go up .6%. For the year, production will be down from 2008 by -.5%.

The economy is still sluggish, but we will see some recovery. July – September the price of cheese will be 1.35 to 1.50. From October to December it will increase to 1.55 to 1.65. Dry whey and butter will also increase. I predict milk prices will be 14.20 to 15.15. for Class III prices by December. Prices by the end of 2010 will be 16-17.00. We’ll have a greater probability of $20 milk by 2011. But, without pricing stability, we will see $11 milk again.

So, what are the objectives of a milk pricing stabilization program?
-reduce volatility of market – for producers, processors & end user of milk & dairy products
-prevent severely depressed producer milk prices

We need to complement, and not replace, existing programs. We need to provide a long-run dairy program for 7 years with a 5 year review. And we need to provide flexibility so that producers can expand and new people can get into the industry.

New program suggestions:
Upon implementation, each producer will be assigned an initial base of raw milk marketings from 4/08 through 3/09. Any producer that can verify they had existing planned expansion before the implementation of the program, they could have their base adjusted.

New producers wanting to get into the business will have to earn a base. Their base will begin with their first full month’s of milk marketings and for the next 12 months. Bases are a moving base, whereby at the beginning of the next 12 month period, a base will be the recent past 12 months.

Bases cannot be sold, but they can be transferred to someone who takes over the facility. Producers can combine bases into one dairy facility, provided that each producer involved is engaged in that operation.

USDA would implement the program, with a board consisting of dairy producers, consumer representation, a fluid milk bottler and a dairy economist and dairy product firm representative. The Secretary of Agriculture would work closely with this board to forecast the next 12 months – both domestic and export markets – to determine a market need for the next 12 months. “Allowable milk marketings”

Producers who make less than their base do not lose that designation. Producers who maintain their marketing and exceed their allowable milk marketings, will be assessed a market access fee – a $2 to $3/CWT on all milk marketed after exceeding their limit.

Costs for the program will not be more than 2 cents/CWT.”

Question & Answer period:
Jonathan Lamb (NY)
Big question is about imports. Although MPCs aren’t the reason for our low milk prices right now, what will it take to change the classification of those MPCs into a milk product?
-Gordie Cook – We do have competition for MPCs, and we do need to make sure they are assessed under the tariff system properly, which they currently are not. We are in full agreement that this needs to be addressed.
- John Meyer – As an industry, we have to figure what level we want to produce and what percentage is going to be sold to the international market. What we’ve been doing is producing as much as we can and then just hoping we can market it in an international place.

How did you derive the $2-$3 value in over-base production because that sounds like a more realistic number than what I had originally heard. But we have to know for sure what it’s going to be because it’s definitely an influential number.
-Gordie Cook – We thought it was a fair price so that it doesn’t inhibit new people from coming into the industry. We also want to find something realistic that has every chance to be passed by legislation. We’re trying to treat all herds the same – regardless of size and location.

Unidentified member
I don’t think $2-$3 assessment isn’t near enough. I don’t see how that’s going to cut production – it’s not enough to discourage production. If base is going to adjust every year to reflect increased production, how is that going to lower the national supply?
-Gordie Cook – This committee is going to come up with a number that’s needed, but it’s possible we’ll come up with a negative number for production, based on domestic usage and projected exports and government usage. If the number is smaller, we’re going to have to take some away from the base per producer. We do not want to be the reason for anyone to be in a “race for base.” We didn’t want to create a lot of controversy and we didn’t want to over-complicate the program. We still hope there will be a natural increase in the demand for milk, and even with the large number of cows going out on the buyout, but with projected females (partly from sexed semen) entering the population above and beyond the normal female growth rate of our herd, that’s not going to be a huge difference.
-Dr. Cropp – The market will re-adjust and prices will go up naturally. We just want to make a long-term policy to smooth out the extreme volatility of pricing.

Dennis Areias (CA)
We’re talking about a supply management plan, but we’re not talking about a way to combat high feed costs, such as using corn as ethanol.
-Gordie Cook – The plan will determine an amount of milk that will reflect a positive pay price for producers that factors all of that in.

How long will this take to implement?
-Gordie Cook – This group present represents all of our membership across the country. This group needs to go home, spread the word, and this can happen fast. It’s important that when we leave here, we can move forward with a unified voice and direction.

Time ran out for the many further questions that hopefully will be covered in this afternoon’s regional caucus meetings to meet the candidates.

There will be a legislative committee report presented in tomorrow morning’s meeting.

For notes from this morning’s session, be sure to page down through the blog and read about that, along with seeing pictures from earlier in the convention!
Coming up – coverage from tonight’s 2009 California Futures Sale, as well as Dairy Bowl finals and the Junior and Senior Banquets.

We have advocated for a two-tier pricing plan for several years. NFU supports two-tier pricing and the idea of controlling production is basic economics. We also need to identify all of the imports that are dairy derivatives as dairy and make them subject to our tariff rate quotas to balance them with our domestic needs. We also need a pricing formula that includes a regional cost of production and reasonable profit so that not only will our price stabilize, but at a high enough level to allow a decent living for ourselves and our children to follow. It is long overdue.

Please be sure that the Pricing plan does two things:
1. Does it fully address producer-processor milk? If not, it will send us straight down the road to vertical integration
2. Be sure that the dairymen on the board representing the different regions also represent different milk marketing co-ops. The board should not be under the control of one or two large co-ops. They put us where we are today and are not likely to fix our problems.
~Sheryl Vanco

The news was loaded this morning with issues going on around the country regarding the milk price. Here are some of the top stories, along with some other reader opinions regarding the milk price situation.

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Letter to the Editor -
I support the price stabilization program proposed by Holstein USA or some form of it. My parents just quit farming six months ago and I am keeping my dozen or so cows at a local dairy. My dream is to dairy farm as is my wife’s, who is not from a farm. I would only like to milk 100 cows and feel that I should have the right to do this and make a decent living. Anybody who knows me knows that I love cows and dairy farming. I do not feel I should have to milk thousands of cows to dairy farm. Doing nothing is not an option, if the big keep getting bigger soon there will only be corporate farms left. The problem is the large dairies expand during the good times to make the most money possible or take advantage of the high prices, thus putting too much milk on the market driving the prices down. The biggest problem is when prices crash, the large dairies still add cows, they think they are making themselves more efficient by getting more cash flow and spreading out the costs over more units or cows. What these guys don’t realize is when there is already TOO MUCH MILK, these guys dump more milk into the market, thereby suppressing the prices further and making the downturns longer. The funny thing is they blame it on their neighbor who added 1000 cows when they themselves have added cows. We are all to blame for this problem of supply and demand. Enough is enough, we need a program to keep cow numbers in check or milk production in check, or at least farmers looking out for each other instead of affecting our neighbors negatively. I may have offended a few people, but I have heard these concerns over and over again from many a small dairyman, under 500 cows these days. Thanks.

Sincerely,

Lance Hansen
Sedro-Woolley, WA
holshaft@hotmail.com
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Hot off the wires -
From Bloomberg.com
June 22 (Bloomberg) — Dino Giacomazzi, whose great-grandfather started the Giacomazzi Dairy in Hanford, California, in 1893, said he had no choice but to sell 100 cows, or 11 percent of his herd, in the past four months. Rising feed prices and a world surplus meant it cost as much as $17 to produce $10 of milk.

“Producers are in an absolute state of panic,” said Giacomazzi, 40. “To spend 100 years building a dairy business and see much of that equity disappear in a year is very troubling.”

Farmers plan to shift the pain to consumers. The National Milk Producers Federation in Arlington, Virginia, will pay dairies to slaughter 103,000 U.S. cows in coming months. Milk futures prices will double next year to a record $23 per 100 pounds (43.5 kilograms) as the herd shrinks by 171,000 head, the most since 1989, said Michael Swanson, a senior economist at Wells Fargo & Co., the largest lender to U.S. farmers.

The cuts will lead to the first two-year drop in output in four decades and higher prices in 2010 for butter, cheese, milk and the non-fat dry powder that’s a benchmark for global exports, according to U.S. Department of Agriculture forecasts. Futures for delivery in September 2010 trade 56 percent above today’s prices on the Chicago Mercantile Exchange.

Retail butter prices may rise above the record of $3.937 a pound and cheddar cheese may top $5.097 a pound, according to Jerry Dryer, 65, the editor of the industry newsletter Dairy & Food Market Analyst in Delray Beach, Florida.

‘Big Spike Up’
“We could easily see $20 milk again next year,” said Richard Bradfield, a vice president of the dairy business at International Ingredient Corp., a manufacturer of specialty feed products in Fenton, Missouri. “The longer these low prices last, the greater the potential for a big spike up in prices as dairies make larger cuts.”

Farmers are culling herds because exports plunged 26 percent in the first four months of the year, supplies rose and the cost of corn, the primary feed ingredient, averaged almost $4 a bushel.

At Tulare County Stockyard Inc. in Dinuba, California, more than three fourths of the cows Giacomazzi sold were purchased by beef processors including Cargill Inc., owner Jon Dolieslager said. Many smaller dairies that bought animals at auctions last year are out of business, he said.

Sold for Beef
“The Giacomazzi dairy is unique because of its reputation for taking care of its animals and the long history of superior genetics,” said Dolieslager, who also auctions hogs, beef cattle, goats, sheep and horses. “Less than 2 percent of dairy cows we sell will go out to other dairies.”

“No one is making money producing milk,” Wells Fargo’s Swanson said by telephone from Minneapolis. “The milk price remains well below the total cost of production.”

U.S. output increased to a record 16.73 billion pounds in May as cows on average produced 1,804 pounds each, the most ever, the USDA said June 18. A gallon weighs 8.6 pounds.

Wholesale milk fell 51 percent in the past year and reached $9.93 per 100 pounds on June 19 on the CME. The USDA forecasts average cash prices this year will drop 34 percent, the most since the agency began keeping the data in 1980. While corn fell to $4.195 last week from a record $7.9925 a bushel in June 2008, it’s still 54 percent above the decade average.

Cheese, Butter
Cheese prices on the CME have fallen 43 percent in the past year to $1.1175 pound, while butter dropped 17 percent to $1.215. The retail cost of cheddar cheese rose 4.7 percent to $4.605 a pound in May from a year earlier, government data show. The average supermarket price of butter fell 15 percent to $2.778 a pound last month from a year earlier.

“Wholesale butter and cheese prices could rebound $2 a pound next year,” as the herd declines, Dairy & Food Market’s Dryer said. “Low prices are not going to last because we will see inflation across the board next year.”

In California, the largest milk-producing state, dairies lost $1.07 per 100 pounds in April, compared with profit of $11.23 in July 2007, based on feed costs and milk prices, USDA data show. In January, the state was the most unprofitable in at least six years of record-keeping.

“We’re all in survival mode,” said John Gailey, 35, the general manager and a part owner of the 4,000-cow the Milky Way Dairy near Visalia, California. Gailey cut his herd by 400 head, or 9.1 percent, since March. “I’m surprised we are not hearing about more people filing for bankruptcy.”

24-Month Wait
It takes about 24 months and $1,600 to feed and care for a dairy heifer before it starts producing milk, Gailey said. The price of a young cow ready for milking has dropped by half in the past year to $1,200, he said.

Farmers spent most of the past decade expanding to meet rising global demand.

Futures peaked at a record $22.45 in June 2007 as a drought in Australia and New Zealand, the biggest exporters, curbed supplies. Demand increased in Asia as economic growth allowed consumers to switch to more protein-based diets.

U.S. exports jumped to a record 2.55 million metric tons last year (653.7 million gallons), up 16 percent from 2005, and the value of the shipments rose 25 percent, according to the U.S. Dairy Export Council in Arlington, Virginia. Overseas sales accounted for 11 percent of U.S. production, more than twice the share of 2002, the council said.

By the end of 2008, with the global economy in the first recession since World War II, U.S. milk production had grown to a record 190 billion pounds and the dairy herd was at a 12-year high of 9.315 million cows, according to the USDA.

European Protests
When global prices sagged, European farmers sought government aid and disrupted food supplies. Eight hundred producers from across Europe protested in Brussels last month, and in parts of France grocers ran out of cheese and yogurt because of farmer protests.

Dairy Farmers of Britain Ltd., the U.K. cooperative, filed for receivership this month after firing workers and closing dairies. Dairy Crest Group Plc, the biggest U.K. producer, lowered its milk price in April to 26.28 euro cents per liter ($1.40 a gallon), reflecting a 32 percent drop since October, according to the Web site of the Dutch farmers’ organization LTO-Nederland.

U.S. dairies are trimming the herd. The kill in the week ended June 6 rose to 60,800 head, 35 percent higher than a year earlier, according to USDA data. This year’s cull is up 13 percent from 2008.

Accelerating Cuts
Reductions may accelerate because government payments to small and medium-sized farmers begin to run out this month, said Sherman Toone, 58, a third-generation producer with 350 cows and 1,800 acres of wheat, barley and alfalfa near Grace, Idaho.

“This is the worst I’ve ever seen the imbalance” between feed costs and milk revenue, said Toone, whose grandfather started with 25 cows in 1923.

U.S. milk production will fall 1.3 percent to 187.5 billion pounds this year from last year’s record, and to 186.4 billion in 2010, the first back-to-back decline since 1969, the USDA said June 20.

Prices probably will rise at least 25 percent by the second half of 2010 as production slows and consumption rebounds with an improving economy next year, said Kelvin Wickham, the managing director of global trade at Auckland, New Zealand-based Fonterra Cooperative Group Ltd., the largest dairy exporter.

“We do expect prices to trend higher toward the back half of the year,” Jack Callahan, the chief financial officer at Dallas-based Dean Foods Inc., the biggest U.S. processor, said June 2 at a New York conference. Shares of Dean Foods rose 2.1 percent this year, beating the 1.1 percent drop in the Standard & Poor’s 500 Index.

Roadblocks to Rally
Fonterra’s Wickham cautioned that even a smaller herd may not be enough to turn the market around as rising subsidies and government stockpiling in the European Union and the U.S. delay the recovery.

“People haven’t been buying the stuff, that’s the problem,” said Lloyd Downing, 61, who farms 560 cows on 187 hectares southwest of Morrinsville, on New Zealand’s North Island. “It’s not until the American economy comes right that we’ll start doing any good.”

The U.S. economy contracted three straight quarters, including 5.7 percent in the first quarter. Economists expect a 2.7 percent contraction in 2009 before growth resumes in 2010, based on the median of 62 estimates in a Bloomberg News survey. In the European Union, where growth was 0.63 percent last year, the economy will shrink 4.2 percent in 2009, a Bloomberg survey of 17 economists shows.

Global milk-production growth will likely slow to 0.5 percent to 0.7 percent in 2009, in line with the increase in consumption, Fonterra’s Wickham said.

Chinese Demand
China, the world’s third-largest fluid-milk consumer after India and the U.S., is recovering after melamine contamination last September slashed domestic output. Consumption growth that averaged 13 percent the past three years will likely return to pre-melamine levels by the end of 2009, Lausanne, Switzerland- based Tetra Pak Group, the biggest maker of milk and juice cartons, said in a June 1 report.

China increased imports of milk powder and other dairy products after the government shut 19 percent of the nation’s 20,393 milk-collection stations between November and April, the official Xinhua New Agency reported June 3.

“It only takes a relatively small amount of difference in production and we’re going to have a significant affect on international prices,” said Lachlan McKenzie, who owns a 600-cow dairy northeast of Rotorua on New Zealand’s North Island and is chairman of Federated Farmers’ Dairy Section.

New Zealand Exports
New Zealand exported 50.8 million kilograms of milk powder to China in the three months ended March 31, more than four times as much as the same period a year earlier, according to Statistics New Zealand. Dairies are the country’s biggest export earner, accounting for about 20 percent of trade receipts, government data show.

Whatever happens with demand, a recovery won’t be possible without a cull in the industry, said the Milky Way Dairy’s Gailey.

“We are in a depression right now,” he said. “I have to be an optimist that the dairy farmers can get together and find a way to reduce the cow herd about 5 percent so that prices can recover quickly.”

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Raising support
Fax the USDA: Save America’s Dairy Farmers

Since December 2008, the price that farmers are paid for the milk they produce has dropped over 50 percent — the largest single drop since the Great Depression — to a point far below the cost of production. This unprecedented collapse in prices has occurred in large part due to market manipulations and increased foreign imports by milk industry giants.

Already banks across the country are cutting off farmers’ access to credit and at least two dairy farmers have committed suicide in California. The latest estimates are that the crash in domestic prices might lead to the loss of up to 30 percent of the remaining dairy farmers by the end of this year — as many as 20,000 family dairy farmers could be off the land by the end of this year.

The loss of this many family farmers across the country will have a devastating economic impact on rural America, erasing over $52.7 billion of economic development in less than one year. Even worse, the loss of domestic supply will also create a serious gap in U.S. food safety as processors dramatically increase foreign milk protein concentrate (MPC) imports from countries such as Mexico, India and China — countries which have much lower food safety standards than we do.

Today we’re asking that Secretary Tom Vilsack, head of the United States Department of Agriculture, halt this injustice and adjust the price of milk paid to farmers to “reflect the price of production” by invoking his authority under Section 608c (18) of the Agricultural Marketing Agreement Act of 1937. This legally mandated “floor price” should be at least $17.50 per cwt (a cwt is the standard measure for milk producers).

Send a free fax to Secretary Vilsack today to let him know that you support America’s family dairy farmers. We must stand by them so they can continue to produce a safe product that not only nourishes our children, but also our rural communities. Without a fair price for their milk, they can do neither. Now is the time to embark on meaningful reforms in dairy pricing to ensure that a disaster like this never happens again.
Visit http://act.credoaction.com/campaign/vilsack_milk/?r_by=-1998633-Oeiwfhx&rc=paste for more information.

First, I would like to say that the Holstein USA Dairy Price Stabilization Program is a Draft that is a work in progress. Dairy producer input is important to the development of such a program. I do believe the Dairy Price Stabilization Program will need to address dairy imports issues.

No program put forth will satisfy all dairy producers. Something had to be started and I’m proud Holstein USA made a move that has started dialog in the dairy industry. This program will not stop the bleeding this time around but this program or similarities to it could stop what is happening in the dairy business from happening again.

Dairy economists are telling us the highs and lows in milk pricing could be higher and lower after this round. I believe the consumers will not let the highs go higher than before. If we do not do something the lows may be even lower next time!

Yes, I do support the Dairy Price Stabilization Program for a stable dairy future.

Jim Burdette, Pennsylvania

In response to the Holstein World online polling question:
Would you vote for or against a price support milk program initiated by Holstein Association?

It’s very interesting to read comments relating to the US dairy industry and I can fully understand many of the sentiments expressed. However, the current milk price situation is a global concern and there are many elements at play that have resulted in the current circumstances. These were, and are undoubtedly, beyond the control of farmers and the meltdown in the global banking system also reaches into the pockets of millions round the globe.

But US farmers should consider and debate whether there is a better way to ensure a sustainable future for their dairy industry. How long can US farmers maintain their businesses at a loss? Almost 50% of UK dairy producers have left the industry during the past 10 years – not because of milk quotas – but because UK farmers have been at the mercy of the supply chain and the supermarkets.

Sadly, dairy farmers have been reduced to being “price-takers” rather than being “price-makers.” And many farmers are only being offered the “freedom” to take what is being offered. Few, especially farmers, wish for any form of government intervention but a radical, properly structured supply and support management system could be beneficial to the US dairy industry.

A well developed system could also allow for young people to enter the dairy industry (and these people are the lifeblood of the future) without the expense of huge financial borrowings. The capital gearing required in countries such as Canada is prohibitive to young entrants wishing to get onto the first rung of the farming ladder. Unless, of course, your family are already involved within the industry.

Farmers do not really wish to have the current “freedom” to go “bust” but want a sustainable future for their businesses and their families. We all have to bow down on occasions to government intervention (such as wearing seatbelts) in order to “protect” ourselves. There is little doubt US (and global) farmers face unprecedented challenges and therefore, unprecedented solutions may now be required.

Every possible avenue should be debated and examined in order to consider the best available business solutions for the future of the dairy industry. Alternatively, how long before the last California or Wisconsin dairy farmer finally “switches off the light” on the US dairy industry?

Bruce Jobson
England

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THE NEED FOR CHANGE IN THE DAIRY INDUSTRY

Jeffrey A. Weisel
Chosen Acres Consulting, Inc.

The Problem

Traveling from coast to coast, working in the Dairy/Agriculture field, I am experiencing and observing negative developments that I have never encountered in my thirty-five year career. Despite the development of new technologies that have revolutionized the industry, the quality of the product that arrives on the table of the American consumer is greatly reduced. America is losing dairymen and farmers at an accelerated rate. Today we have more dairymen and farmers over 70 years of age than we have under 50, with very few going to school to become our next generation of food suppliers. The majority of the work force in the food industry is poorly trained with limited communication skills.

The dairymen I have worked with are ready to take on the challenge that lies ahead. However, with a dwindling population of dairymen each year along with the local, state and federal challenges that dairymen are faced with daily, a negative impact on our nation’s (and worlds) food supply is close at hand. There will be a tremendous challenge to figure out how to supply service, quality products, support and education for the dairymen to continue to meet future demands.

Under the current USDA Agriculture Marketing Service (AMS) dairy orders, we see things that should not be taking place, but they are. The dairy industry is not producing a consistent quality product. There is no direct oversight from our government that can assure safe food for our consumers. We have a set of orders and rules (Agriculture Marketing Agreement Act of 1937) without consistent adherence to these rules. These rules were put in place 72 years ago by the FDR administration when a “revolution in constitutional law” took place. Thereafter, the government could easily and legally regulate the economy by controlling the price paid to our American farmer!

The government needs to be aware that there could, in fact, be a “Dairy Bowl” in the near future. The outcome could be an ecological disaster similar to the Dust Bowl which was created when the government urged farmers to plow up 100,000,000 acres of prairie grass in New Mexico, West Texas, Oklahoma and Kansas. No one took those matters seriously until Hugh Bennett, a conservationist, was giving a speech in Washington on April 18, 1935 trying to get the Government’s attention and urge them to take action. Around the time of Mr. Bennett’s speech, one quarter inch of dust settled on our nation’s capital and drifted to the Atlantic Ocean. The Dust Bowl is noted as being the worst ecological disaster of all times and was created by man as a result of the government pushing our farmers to the max.

How can we get the government to address the current problems in the dairy industry? The ability to sustain our dairies lies in the hands of the cooperatives that dictate to the government and thereby control the processors. The pricing of the product is so complicated that even the Dairy AMS struggles to understand it. No other industry in the world can operate by manufacturing a product with out knowing the price for which it will be sold. The average cost to produce milk ranges from $14.00 to $18.00 per hundred weight and the average price the producer is paid ranges from $9.00 to $12.50 per hundred weight. We have lost 11,000 dairymen in 2008 and we are on course to lose more in 2009. The ability to turn cows on and off to control production is not simple. Until we come up with a machine that we feed green hay, yellow corn and water to make white milk, we need a cow which God created and will never be challenged.

The benefits of addressing the current problems in the dairy industry will have far reaching positive consequences. For example, we can substantially lower health care cost. We are what we breathe, drink and eat. 25% of our American diet is comprised of dairy products and another 5% to 15% consist of meat from dairy cattle. The legal limit in the USA for somatic cell count (measurement of white leukocytes in the milk to fight infection) is 750,000 while in Europe it is 450,000. We all agree that high somatic cell counts have no health side effects but what does the high somatic cell count indicate the animal is trying to fight, do to us as consumers?

A lot of states, co-ops and processors have discarded testing for bacteria. We are seeing inaccurate sampling and testing data relayed back to the dairies. Few dairymen are able to comply with the standards that have been established and since the processors need the milk to fill their orders we have chosen to simply not check for the bacteria.

We are also importing dairy products from other countries that have the same issues with quality. In most cases, the quality of dairy products from other countries appears worse than the USA. We have seen other countries grind up by-products to increase protein values along with the melamine that was recently found in Chinese dairy products which caused illness and death to younger children. If we think that it cannot find its way into our food supply we probably need to think again. It comes back to being responsible and accountable to consumers.

As we near next week’s National Convention, more producers are weighing in on the milk price support topic.

New post – 6/19/09
I support a supply management program for milk production in the United States. The status quo is not working. We cannot blame our economic situation entirely on the current recession, because we have seen severe price depressions before. Each time we see these situation they are more severe each time. In 2006 we received low prices, but the rest of the US economy was booming along nicely. At some point our industry needs to have some self responsibility to our economic despair. We cannot produce a product that does not have a market and expect to be paid a fair price for that product; it is irresponsible as an industry to think we can. This is why managing supply is critical to the survival of all family daries in this country. A Supply management program can happen and still allow for the development of new technologies. Just because if we have supply management does not mean we stop working to improve efficiencies on our farms. We can still use sexed semen, rBST, embryo transfer and other genetic and feed advancements to make our businesses more profitable, we just can’t try to be more profitable by selling more volume when there is not a home for the product we are producing. I believe we need dairies in all regions the country and yes cost of production does vary greatly and we need to take that into consideration when creating a stabilization plan. I am not sure that Holstein USA’s plan is the right plan, but it is a start. Just because Canada and other countries that have supply management programs do not make it easy for new producers to get in the dairy business does not mean that our plan has to be the same. Let’s look at other countries mistakes and make our plan better! Bottom line folks, we need to work together. Whether you dairy in Maine, Florida, California, Wisconsin or anywhere in between, we are all vital pieces our local economies and food supplies and we need to work together to survive!

-Dan LaCoss
Young Holstein Dairy Farmer
Vermont

“I am in support of a dairy supply system. The CWT program is a
farce. Something must be done or very soon there won’t be any of us
left.”

Michele B. Reasner
Jemi Jerseys
Newburg, PA

We’ve had some more responses to the question, Would you vote for or against a price support milk program initiated by Holstein Association?

Be sure to check earlier posts on the blog for more extensive comments.

* I am in favor of the Holstein USA DPSP
Leroy Eggink, IA

* I am strongly opposed to the Dairy Price Stabilization Program. I feel that we should not trade our liberty for security.
Rick Pausma
Melvin, Iowa

With the National Convention coming up, we think breeders ought to be prepared to discuss a potential national milk pricing system. We will post comments as we receive them. Thanks for the opinions so far – discussion is always a good thing.

If you’d like to see the question, please visit www.holsteinworld.com. To register a response, email kknutsen@dairybusiness.com.
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I’m strongly opposed to the milk stabilization plan proposal. There is
no question that dairy farmers from coast to coast are hurting. We are
all trying to limit the bleeding caused by the low milk prices.
However, nearly every industry in the country is currently feeling the
pinch of a country in recession, not to mention a weak global economy.
This proposal would place US dairy farmers in a box. This is quite
simply a plan to limit productivity and as an American farmer that is
NOT how we do business. Dairy farmers don’t need socialism!!!

Sincerely,

Jillian Walther

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While we’re no fans of our current milk prices and milk pricing system (the current Milk Marketing Orders either need complete restructuring or abolishment) we’re even less fans of the system currently promoted by Holstein USA. The HAUSA plan offers nothing that ensures a dynamic and prosperous future for the dairy industry and in fact would enact a quota system (stating it’s not a quota system doesn’t make it so) that would essentially put a stop to dairy development and technological improvements; as well as put in place a nearly insurmountable barrier to anyone who wishes to enter the industry. It is also completely contrary to our American way of doing business and any free enterprise principles.

It is already tremendously difficult to get started in the dairy industry due to the capital requirements and lifestyle commitment. Why purposely make it more challenging for those who wish to follow a dream of dairying? If this plan was in place a few years ago when we began our dairy farms we would still be hoping, dreaming and working towards a way to milk cows. Furthermore, our closest dairying neighbors immigrated recently (within the last 5 years) from Canada, Ireland, Holland (2) and England (2), all countries with supply management systems; and one of the primary reasons they moved to the United States is our economic freedom because… Supply Management System = No Future! (Example: according to the Canadian Dairy Commission, the number of dairy farms in Canada has gone from 31,200 in 1992 to 13,587 in 2008 and that’s with a supply management system) Why would an organization that has put so much time and treasure into Holstein Foundation (YDLI) promote a system that basically tells young people that there is no place for them in the dairy industry?

A few more points: Since when do dairy producers (or any small business owners) want more government interference/regulation in how they operate their dairy? Do people really want to spend more time at the local FSA office or fill out more paperwork?! Also, a national average cost of production is a fundamentally meaningless number since the cost to produce 100 lb of milk can vary widely by region and herd size, and can even differ greatly among dairies of similar size only miles apart.

Some possible unintended consequences of Holstein’s supply management proposal or any similar plan include risks to food safety and animal welfare. If there is no potential for profit/growth (or loss) then there is no incentive for improvements in how we identify, breed, feed and care for our cattle. Universities and dairy industry companies will have little reason to invest time and money into improving or expanding technologies and services that allow producers to better care for their cattle and do a better job of safely producing wholesome milk.

The current price received for our milk is abysmal and a genuine challenge for dairy producers. However Holstein’s proposed government intrusion would likely turn out how most situations turn out that the government attempts to rectify. We appreciate the plan’s objective of avoiding economic conditions like we are currently dealing with, but fail to see how putting a cap on future prosperity or growth is helpful for any producer.

Randy K. & Jennifer Gross Doug & Ginger Post
Prairie Gold Dairy Sipka Holsteins
YDLI Class 3 & Class 5 YDLI Class 6
Elkton, South Dakota Volga, South Dakota