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Dairy industry's future uncertain

Thursday, March 4, 2010

Speakers at the 41st annual Monett Dairy Day are shown above. Participating in the Monett Chamber of Commerce's annual event, from left, were: Dairy producer Darron Schoen; Jerome Erpelding, with Accelerated Genetics; dairy producer Charles Fletcher; Scott Brown, from the Food and Agriculture Policy Research Institute; Dr. Stacey Hamilton, Extension dairy specialist; and Dr. Tony Rickard, with the University of Missouri Extension. [Times Photo by Murray Bishoff]
Dairy producers were told at the Monett Chamber of Commerce's 41st annual Dairy Day that significant uncertainty remains in their industry for the year ahead. Innovations in research and production practices were also shared by speakers at the event, held on Tuesday at the National Guard Armory which is co-sponsored by the University of Missouri Extension Service.

Scott Brown, program director for the Food and Agriculture Policy Research Institute (FAPRI) in Columbia, said the dairy market may be less stable in 2010 than initially predicted. Brown expected further reduction of herd sizes to drop supplies and help boost prizes. January numbers suggest herd reduction is leveling out and dropping the milk supply by 1 million pounds or less.

"Now I think we will be up [in supplies] by the end of the year," Brown said. "We will have higher prices in 2010, but we're curbing expectations on where they will go."

Cow numbers are back to 2002 levels, despite major fluctuations in recent years. Brown said producers can still expand supplies quickly due in part to higher yields.The price per gallon of milk in grocery stories is now back at 2007 levels.

At present, dairy producers are receiving $16.50 per hundredweight of milk, what Brown called "break-even prices." Whether that will improve depends on many outside factors, such as the price of corn, which can be driven up by a drought or oil prices rising with the economic recovery.

Demand still remains soft domestically. A very conservative projection of 2 percent growth in gross domestic product would mean dairy producers will have to wait three more years to see their earnings rise to the level they were before the current economic downturn started.

Brown could not see any national policy changes that would reduce price volatility in prices. Some were advocating policies that would reduce imports. Brown said keeping out foreign milk products was a short-term solution that would likely backfire, keeping U.S. products out of other foreign markets.

Exports remain a very important market with serious potential for growth. Market prices for Australian and New Zealand milk products rose in recent years, pulling prices for American products up at the same time.

Australia and New Zealand had little potential to expand production, unlike the United States, in the face of a demand spike. The European Union has higher stockpiles of skim milk powder, but similar supplies in 2003-04 bled off quickly when demand rose. Brown said American producers should not be afraid to compete with their product.

The political atmosphere has shifted in recent years. Brown said Congress may not even consider crafting a new Farm Bill in 2012. Congress may instead simply pass annual reconciliation bills to keep current policies in place. Finding new policy that would continue providing $75 million in annual support for dairy will be difficult.

"Dairy will take its share of cuts," Brown said.

On the positive side, Brown said higher prices for feed and transportation impacted West Coast dairy producers particularly hard. He anticipated movement of milk production closer to grain sources, benefitting Midwest producers.

Research benefits

Other speakers talked about recent research insights.

Stacey Hamilton, an Extension dairy specialist from Mt. Vernon, said nutrition has a major impact on reproduction.

"No matter what synchronized program you use, you must have a well-fed cow for it to work," Hamilton said.

A body condition score from one to five has been developed for rating a cow's health. A cow generally has a conception rate of 40 percent. A loss of half a point can drop the reproduction potential by 17 percent and a whole point can drop the rate by 50 percent.

Jerome Erpelding, herd analyst for Accelerated Genetics in Minnesota, talked about advantages of working genomics into dairy operations. Using a group of bulls instead of one can improve the health traits and longevity of a herd.

"Genomics with a group is one of the best things to happen to the dairy industry in the last 40 years, if used correctly," Erpelding said.

The program closed with dairy producers Charles Fletcher, of Purdy, and Darron Schoen, of Freistatt, talking about using the Dairy Herd Improvement Association (DHIA), which helps producers maintain detailed records on each animal in the herd. The service used to be done locally on the county level and is now done by a private organization.

The DHIA uses calibrated meters to measure milk production on each cow and tests milk for butterfat, protein and somatic cell counts. Detailed records offer information on when a cow can be bred, when it needs to go dry and if it is time to cull the animal from the herd.

Dr. Tony Rickard, dairy specialist with the Extension who helped organize the conference, called the DHIA "a management tool providing information to make a dairy more profitable."

A total of 38 dairymen registered for the conference. The effort was assisted by the Southwest Missouri Cattlemen's Association. Lunch was provided by the chamber.

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