MILK MARKET MOOS – Bad news in this week’s mailbox, but better views ahead!

By Sherry Bunting, Portions reprinted from the May 10, 2024 column with a few preview notes for the May 17 weekly Milk Market Moos, available exclusively in Farmshine Newspaper

This week’s settlement checks for April milk are hard hit by the record-low protein price of $0.83/lb and the $4 to $5 spread of Class IV over III that continues to depress the Class I price via the ‘average of’ method — resulting in depooling of higher value manufacturing milk. But the good news is the cheese markets have sustained a 5-week rally that has been heating up, pushing Class III milk futures higher, while tight supplies of nonfat dry milk moved briskly at higher prices to keep Class IV forging ahead too.

First the bad news: April FO blend prices are mixed with component-pricing lower, Fat/skim-pricing generally higher

The record-low April protein price of 83 cents/lb and second lowest Class III price of the year pushed the Federal Order (FO) blend prices 25 to 45 cents lower in six of the seven FOs that use Multiple Component Pricing (MCP). The Northeast, was off just 9 cents, given the fact that processors still pooled some milk used for higher value Class II and IV products, although not as much. De-pooling of Class II and IV milk was heavier in other MCP FOs due to the whopping $5 spread between Class II and IV ($20.23 and $20.11) over Class III ($15.50) and the fact that Class II and IV were $1.00 higher than the Class I ‘mover.’

The wide spread pushed the Class I ‘mover’ price $1.00 lower using the ‘average of’ calculation than it would have been under the previous ‘higher of’ method. The May Class I mover price is even more disadvantaged — down $1.73 vs. ‘higher of’ — based on the advance pricing factors at the beginning of April before the CME cheese market rally begins filtering its way into USDA weekly surveys and FO formulas.

Three of the four fat/skim priced FOs — Florida, Southeast and Appalachian — have April blends that are mostly 20 cents higher than March. Fat/skim priced FOs benefitted from the butterfat price at $3.33/lb and a solids nonfat (skim) price at 97 cents/lb that was 14 cents higher than the protein price. This is the first time such an inversion has occurred.

Meanwhile, the fat/skim-priced Arizona FO (131) saw its April uniform price fall by 19 cents due to Class II and IV depooling, which increased the negative effect of a higher Class III utilization percentage.

The uniform price in the three southeastern region FOs (5, 6 and 7) would have netted an additional 70 to 80 cents per cwt — if Class I had been priced via the ‘higher of.’ The Mideast (FO 33) would have netted 40 cents per cwt more; the Northeast, Central, and Southwest (FOs 1, 32 and 126) 29 to 30 cents; California and Pacific Northwest (FOs 51 and 124) 20 cents; Upper Midwest (FO 30) 6 cents. All MCP FOs would have benefitted from better alignment keeping more of the higher-valued Class II and IV milk in the FO revenue sharing pools. It’s hard to say whether or how much of the windfall profits of depooling are consequently shared with dairy farmers shipping the milk.

Once again, the Upper Midwest (FO 30) had the rock-bottom uniform price of $15.95 at 3.5% butterfat, with over 92% of the utilization being Class III. If the ‘higher of’ had been used for pricing Class I, the pounds of Class II and IV utilization would likely be greater, which may have contributed to a more positive uniform blend price while yielding a little more than a nickel of additional Class I contribution. Instead, the blend price included less than 2% Class II and IV, and just over 6% Class I.

The FO 30 market administrator saw fit to send a reminder letter to handlers in March that they must show separately how milk payments were calculated for producers having both pooled and depooled milk to ensure the pooled milk was paid at the FO minimum price. Even 100% pooled producers have been seeing ‘milk check gymnastics’ such as underpayment of the FO minimum for ‘other solids’, and then using the producer’s protein premium to make up the difference in order to achieve the regulated gross minimum.

According to USDA AMS, Federal Milk Marketing Orders with multiple component pricing, use individual component values to determine the minimum gross value due to producers. The FMMOs’ primary function is to ensure that the gross payment to the producer is at least equal to the minimum payment for their pooled milk. Enforcement of individual component values may be pursued by FMMOs to prevent handler deception and maintain transparency. In FMMOs where it is common to pool only a portion of a producer’s milk, proprietary handlers are required to send statements to producers indicating the separate amounts paid for pooled and non-pooled milk.

The April 2024 uniform prices and PPDs were announced May 12 through 14 as follow (+/- change from month ago):

Now the good news! What’s UP with Class III?

For 18 months, Class III has been the underdog in milk pricing, especially rough for dairy producers in the Upper Midwest struggling under the brunt of FMMO 30 blend prices built mainly on Class III.

In fact, the April protein price hit a record low, announced May 1st at 83 cents/lb, which is 14 cents below the 97 cents/lb price for solids nonfat. This inversion has never happened before, according to our search of class and component pricing archives.

The butterfat price for April is quadruple the protein price at $3.33, creating additional divergence issues in multiple component pricing orders.

Meanwhile, the Class III milk futures haven’t offered much of a breakeven price to spend money protecting with hedges or DRP…

Until now…

Class III milk futures continued higher — skyrocketing limit-up for nearby contracts Wed., May 8, putting the exclamation point on five straight week of gains that have added $3 per hundredweight to the remaining 2024 contract months, going from the $16s and low $17s to the $19s and $20s, with 2025 contracts well into the $18s. This is the first time the Class III milk futures board has seen a $20 mark in over 18 months.

Class IV futures also made solid 20- to 30-cent gains charting over $20 and $21 across the board.

If the current Class III rally goes too far, too fast in the near-term, we could see negative PPDs in some Federal Orders in June for May’s milk because the May Class I advance base price mover was already announced in mid-April, and includes the much lower advance pricing factors of the (Class III) cheese and whey markets during the first two weeks of April.

The ‘average of’ method disadvantaged the May Class I mover by $1.73/cwt, which will undoubtedly be a factor for milk pooling / depooling decisions at the end of this month as Class I, at a base price of $18.46, will likely be rock-bottom lowest class for May, except where location differentials are high enough to boost it.

$20 finally appears on Class III futures board (June), Spot cheese hits highest price in over a year.

On Wed., May 8 the Class III milk futures for the next 12 months (May24 through Apr25) averaged $19.04, up 54 cents from the previous Wednesday. Class IV milk futures averaged $20.86, up 22 cents from the prior Wednesday.

The milk futures rally is driven by the upward momentum in CME daily spot cheese markets, reaching levels May 8 that are 50 to 55 cents per pound higher than six weeks ago.

The 40-lb block Cheddar price roared 11 1/2 cents higher to $1.95/lb in a single trading session Wed., May 8, gaining 20 cents/lb on the week, and hitting the highest level since last fall, with a single load trading. For 500-lb barrel cheese, at $1.90/lb, the gain was a dime on the week, and the highest price in over a year, with zero loads trading.

(Spoiler alert, the spot price for 500-lb barrel cheese skyrocketed well north of $2 on Tues., May 14 with a single load trading at $2.06. Conversely, Tuesday’s trading session on 40-lb block Cheddar started out moving a load as high as $2.00/lb, which would have been a 2-cent gain for the day. However, after the dust settled on the brisk trading session that moved a whopping 14 loads of blocks in a few short minutes, the market was pegged at the lowest load price of $1.93/lb — down 5 cents from the day before. A bid came in at $1.92 and was ignored after such an abnormally large clearance of blocks for a single session. More on this in the May 17 Farmshine.)

All other dairy commodity prices were higher Wed., May 8, with no trades changing hands. Dry whey gained a penny at 38 1/2 cents/lb (where it continued trading on Tues., May 14 with 2 loads changing hands). May 8th Butter was up 2 cents at $3.02/lb (but traded 16 loads at $3.00/lb Tues., May 14 and 1 load at $2.99/lb, which was a 3-cent loss since the low price is the peg for the day). Nonfat dry milk (NFDM) was up a penny at $1.13/lb on May 8 (and gained 3 1/2 cents more on May 14 at $1.1650/lb with an incredible 26 loads moving in a single session’s narrow $1.16 to $1.1650/lb range).

Dairy farmers will not see these gains in their milk checks until June, if the trend is sustained.

In the face of lower overall dairy exports, analysts tout the record volume of cheese exports in March, which were no-doubt prompted by the cut-rate January through April pricing that doesn’t pay bills on the dairy farm.

We have to go back to 2019 to find a 4-month Jan-April average Class III milk price that was lower than the first four months of 2024. We have to go back to the Covid shutdown in 2020 to find an April Class III milk price that was lower than April 2024. But even then, protein held up at $2.48/lb, not the 83 cents per pound that USDA announced for April settlement.

The difference this time is that fat is so much higher (quadruple the protein price at $3.33/lb for April). This essentially pulls a credit out of protein as an adjustment in fat values for cheese vs. butter. This is a seldom-discussed and little understood function of FMMO multiple component pricing, and another downfall of the many months of wide Class IV over III divergence.

Better views ahead… Higher Class I sales and record-high made-to-order fresh mozzarella production compete with stored product output for reduced milk supply

While the rear-view mirror shows the rough road traveled, the view ahead is improving for Class III milk and the beleaguered record-low protein price. Milk production is down. Packaged Class I fluid milk sales are UP. Processors are making record amounts of fresh (made to order) mozzarella cheese, causing Cheddar production to slow. Meanwhile, Class IV product supplies are tight. (One reason overall U.S. dairy exports were down is that inventories and production of milk powder is down!)

The most recent USDA Dairy Products Report showed Cheddar cheese production down 3.3% year-over-year (YOY) in March, with all American style cheeses down 2.9%. A positive this year that was missing last spring and summer is the draw for milk to make Italian cheeses.

Mozzarella production set records in March, up 6.8% YOY, but those products are not price-surveyed, nor are they included in the FMMO Class III pricing formula.

In addition to Cheddar cheese, the Class III price is also made up of dry whey sales via the ‘other solids’ component. Whey production for both human and animal use is accelerating as inventories of value-added whey protein concentrate (WPC) and whey protein isolates (WPI) were more than 40% below year ago at the end of March, despite March WPC production being up 1% for human use and up 40% for animal use; WPI up 73% YOY.

Dry whey is the commodity used in the FMMO Class III pricing formula with production up 2.4% for human use and 19.2% for animal use in March.

On the Class IV side, butter production was up 1.5% YOY in March with inventories up 2%.

As for powders: Whole milk powder (WMP) production was down 14.6% with inventory 36.3% lower YOY; Skim milk powder (SMP), typically made for export orders, was down 41.7%; and Nonfat dry milk (NFDM) output was down 7.9% YOY in March with inventories off 20.3%.

On the flip side, milk protein concentrate (MPC) production was the contrarian — up a whopping 38.5% YOY in March. MPCs are often used to bump cheese yields higher per hundredweight of raw milk.

These factors beg questions: Why were Class III milk prices for the first four months of 2024 at 5-year lows and protein at a record-low 83 cents per pound for April? Was it the plan to crush Q-1 2024 spot cheese and Class III milk prices to generate record cheese export volumes in March? Are cheesemakers using some of that big increase in MPC production to make more cheese from each cwt of raw milk? Are bioengineered fermentation yeast proteins that are marketed in trade publications as ‘dairy protein analogs’ diluting the supply and demand equation fractionally?

Global picture improving

The global picture is also improving. New Zealand tallied a lower output for the season, and recent reports show stable to lower milk output in EU countries.

In the Global Dairy Trade (GDT) biweekly internet auction Tues., May 7, the all products index was up 1.8% over the previous auction on April 16. This includes a whopping 8% increase in the GDT price index for bulk Cheddar sales contracted out through November, plus a 2.3% increase in bulk Mozzarella sales for July.

In fact, GDT Cheddar contracts for June were up 6.5% in Tuesday’s auction; July up 3.9%; August and September had no sales. October and November contracts were up 11.2 and 12.5%, respectively, compared with three weeks ago.

NoBull legal battle continues over contempt arrests related to 2021 livestock ultrasound investigation

By Sherry Bunting, Farmshine, May 10, 2023

HARRISBURG, Pa. – The legal battle continues for NoBull Solutions LLC partners Rusty Herr of Lancaster County and Ethan Wentworth of York County. Both Pennsylvania men have been jailed in their respective county prisons since April 10 and 11, respectively.

They were arrested for contempt of court after failing to respond to a May 2023 contempt order and failing to comply with a 2021 investigative subpoena seeking the name and address of NoBull’s custodian of records as well as the names and addresses of all members, managers, and other persons who direct its activities, according to the recently unsealed docket 325-MD-2021.

Herr and Wentworth will have served their 30-day commitments by this weekend (May 10 and 11, 2024).

According to counsel Robert Barnes, Esq. of Barnes Law LLP, a Petition for Writ of Habeas Corpus has been filed with the Pennsylvania Supreme Court after a Commonwealth Court Judge denied their motion for immediate release and unsealed the docket in two separate actions on April 29, 2024.

Barnes maintains that certain procedures must be followed in a civil contempt action. 

“To our knowledge those were not followed here. Wentworth and Herr were not given an opportunity to purge contempt in order to secure their release from prison – an essential requirement of civil contempt, which makes this de facto criminal contempt – a violation of Pennsylvania law,” Barnes states in an email response to Farmshine.

Even though the 30-day sentences will have been completed as they wait for the State Supreme Court to hear their appeal, Barnes says his office will “pursue the appeal to restore proper jurisdictional basis and to force the state agencies to adhere to the Pennsylvania Constitution and the Administrative Procedures Act.”

Former Pennsylvania Department of Agriculture counsel and current staff attorney with the Penn State Center for Agricultural and Shale Law Brooke Duer, Esq. told WPMT-Fox43 that the now unsealed docket shows the “civil processes for contempt are all there and were followed.”

The April arrests stemmed from prior actions by the State Board of Veterinary Medicine, which led to a Feb. 2020 complaint filed by the Pennsylvania Veterinary Medical Association (PVMA) one month before the Covid shutdown.

The PVMA alleged that Herr and Wentworth continued practicing veterinary medicine by ultrasounding other farmers’ cows in connection with NoBull’s breeding management service. PVMA asked for contempt charges through Commonwealth Court as part of that 2020 complaint.

The Department of State initiated its investigation in early 2021, issuing a subpoena order for the names and addresses of custodian of records and all parties involved in or directing activities in the business.

Both men failed to comply with the subpoena or to challenge it, according to the now unsealed docket.

“Some of us thought this had more-or-less gone away,” said Duer in the televised interview on May 2. “So, it’s kind of surprising. All of a sudden it’s back on again?”

Duer said there is no evidence that the men responded in any way or represented themselves since 2021.

(Prior dockets show they did represent themselves in prior State Vet Board actions, Herr in 2010 while he was still milking his own dairy herd, and Wentworth in 2018 while he was employed as an AI technician by Select Sires.)

“They had not only a few opportunities to come forward and prevent this kind of an outcome, but those opportunities were multiple…,” said Duer.

According to the unsealed documents, a Commonwealth Court judge signed “Orders to Commit” on October 6, 2023, which resulted in the April 2024 arrests.

The more immediate question is: Were they given the opportunity to purge the contempt at the time of arrest and incarceration, as would appear to be the process with civil contempt, according to an ACLU – Pennsylvania guide to contempt proceedings.

The deeper questions center around the future: What will happen next in terms of a level playing field for smaller farms looking to gain the benefits of integrating ultrasound into breeding management, but are not large enough to have employees trained to do it or vet practices willing to station their vet techs at small farms to do it. 

Of the NoBull customers who have contacted this reporter, nearly 90% want this integration, while they still intend to maintain their veterinary relationships through regular herd checks.

The Veterinary Practice Act does not mention pregnancy diagnosis. 

The Department of State says veterinary medical practice is further defined by the State Vet Board through adjudications.

The PVMA says a pregnant / not pregnant ‘diagnosis’ is a food safety concern because the not-pregnant diagnosis can involve recommendations for hormone treatments, or recommendations for culling open cows for the beef market.

PVMA also maintains that pregnancy diagnosis “by any mode or method” is veterinary practice. Yet blood and milk sample testing for pregnancy by other companies has been used and celebrated in Pennsylvania since at least 2015.

Several dairy trade magazines have published articles over the past 12 years about the differences in the laws between states and the trend toward laypersons doing ultrasound as the machines are widely available, and the technology has improved. A 2007 USDA survey of (larger) dairies in the West showed that nearly one-third (31.7%) of those performing pregnancy diagnosis used someone other than a veterinarian via ultrasound for breeding purposes. That was 17 years ago.

At least one Pennsylvania dairy producer reports that a veterinary practice places vet techs as employees on larger farms for training, and they do those ultrasounds to provide timely information between herd checks at a discount.

A January 2024 Progressive Dairy article by a Genex consultant examined how integrating ultrasound with breeding management is revolutionizing reproduction on U.S. dairies that are faced with the need for swift information to make economic decisions in a highly competitive, tight-margin dairy business.

Small dairy farmers continue to contact this reporter wondering what they can do about this. “How can we help?” they ask.

Virtually all of them continue their relationships with their veterinarians for regular monthly herd checks, in addition to having NoBull do ultrasound in connection with breeding service to achieve those same efficiencies in between.

Commonwealth Court denies immediate release, unseals docket, Supreme Court appeal next step for Herr, Wentworth

By Sherry Bunting, Farmshine, May 3, 2024

HARRISBURG, Pa.  —   It has been three weeks since Rusty Herr and Ethan Wentworth of NoBull Solutions, LLC were arrested on April 10 and 11 and separately incarcerated in Lancaster and York County Prisons — their respective counties of residence in Pennsylvania.

A motion for immediate release has been heard and denied by the Commonwealth Court of Pennsylvania.

“The Commonwealth Court failed to correct their error, so we are taking the case directly to the Supreme Court,” said Robert Barnes, Esq. in a Farmshine interview after the decision.

Judge Michael Wojcik also unsealed the docket in a separate decision.

He heard oral arguments for the motion filed by Barnes Law LLP on behalf of Herr and Wentworth as well as the answer to this request by the Department of State (DOS) Bureau of Professional and Occupational Affairs (BPOA) on April 29, 2024, at 1:30 p.m. via WebEx video conferencing.

According to the docket 325-MD-2021, the BPOA opposed the motion, stating that on May 16, 2023, the court had adjudicated NoBull Solutions in contempt of a previous order dated Nov. 30, 2021, related to enforcement of an investigative subpoena, with conditions for NoBull to purge its contempt through a monetary civil penalty, and that failure to purge may result in issuance of a warrant for their arrest and incarceration.

NoBull Solutions did not show cause why they should not be held in contempt on Nov. 30, 2021, did not appear or comply, and on May 16, 2023, the enforcement order was made absolute requiring NoBull to “purge its contempt,” including providing the BPOA with the name and address of its custodian of records as well as the names and addresses of all members, managers, and other persons who direct its activities.

“At no point during these proceedings has Mr. Wentworth and Mr. Herr challenged BPOA’s allegations that they are the principal members of NoBull Solutions and are directing its activities or made any attempt to purge the Court’s finding of contempt,” the docket reads.

The bottomline here is that Herr and Wentworth are making a stand for the right to assist farms in reproductive management. Through the 15 phone calls from customers, it’s clear they believe ultrasound makes breeding service more effective and efficient for their small farms that are not in a position to be blessed by the law’s exception for hired employees doing this work on larger farms.

Dairy farmers have continued to call into this reporter, explaining that both men, and NoBull collectively, help them be better managers and learn to do more breeding work on their own, even when it means they are purchasing fewer services from NoBull. 

Fully 12 of the 15 calls to-date affirmed they maintain a relationship and regular herd checks with their licensed veterinarians and gave clear examples of how the use of ultrasound with breeding service through NoBull had minimized their waste of costly semen, improved their knowledge, and provided information they needed for timely breeding and culling decisions made on the farm in between regular herd checks.

At issue for Herr and Wentworth, according to Barnes Law, are the Constitutional rights in the handling of the contempt enforcement. With the docket unsealed, a paper trail – including the state’s request for a default judgment that had been denied in 2021 – have been unsealed. 

The initiation of these previously sealed contempt proceedings began in 2021, 18 months after the 2020 Pennsylvania Veterinary Medical Association complaint that had requested contempt charges be pursued by the DOS, alleging both men as principals in NoBull Solutions LLC were continuing to practice veterinary medicine without a license, continuing to do and direct ultrasounding of livestock in connection with their breeding and reproductive management services. 

At this juncture, it appears that Herr and Wentworth will either have their appeal for immediate release heard by the State Supreme Court or serve out their 30 days, whichever happens first.

Then, the real work may begin. Is there a middle ground for these services in conjunction with breeding? Is the assistance providing a level playing field in a low-margin, highly competitive dairy industry where scale affords some farms the avenues to accomplish these services via employees who are proficient in ultrasound vs. smaller farms paying an independent technician for the same.

Since the Department of State maintained in a prior interview that State Veterinary Board adjudications clarify the law with the authority granted them by the legislature, and that the legislature is the body to consult for the exceptions, there’s much here to wade through from the State Capitol to the Administrative Boards and Offices to the Commonwealth Court.

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‘Pregnancy is not a disease’: Two men jailed without bail for contempt in repro ultrasounding of dairy cows

Pictured are (l-r) Ben Masemore, Ethan Wentworth and Rusty Herr at their NoBull Sires booth during the World Dairy Expo. Today, Masemore is fielding calls from dairy farmers across Pennsylvania and the nation as Herr and Wentworth have been jailed for ultrasounding cows they do not own and making diagnoses without a veterinary license as part of their NoBull Solutions LLC breeding services. They have not seen a judge, had no due process, were denied bail, and were arrested by local law enforcement in the respective counties in which they live for contempt of court after ignoring a 2010 and 2018 cease and desist order from the State Board of Veterinary Medicine having not been able to present a defense. Barnes Law LLP has accepted the case, and Robert Barnes says the arrest warrants did not come from a court — a bureaucratic veterinary board is not a court. Funds have been set up to accept donations for their legal defense to get them home to their families, their animals, and the dairy farmers they serve. Photo provided

By Sherry Bunting, a developing story special for Farmshine in mailboxes and online at Farmshine.net, April 19, 2024 edition

CHRISTIANA, Pa. — In a move that has shocked members of the local and distant dairy farming community this week, word spread of the Pennsylvania State Veterinary Board’s action through the Department of State, Professional Compliance Office, executing a “contempt of court” order through local law enforcement when none of these agencies are actual courts.

Rusty Herr of Christiana and Ethan Wentworth of Airville have been in prison since their arrest last week, without seeing a judge, without due process, and being denied bail… for what? 

For ultrasounding dairy cows and horses – without a veterinary license — as part of their NoBull Solutions breeding service. (Imprisoned ultimately on contempt of court).

They are two of the three men that were named in the State Vet Board’s cease-and-desist orders as recently as 2018 and 2020.

With this enforcement, the state is essentially considering pregnancy a disease even though federal courts have found, in humans, pregnancy is a condition, not a disease, and even though the Veterinary Medicine Practice Act in Pennsylvania does not mention pregnancy, but latitude is given to the State Board. No definition of diagnosis nor mention of pregnancy or ultrasound appears in the Board Regulations.

According to the nationally-known Barnes Law LLP, serving as the NoBull legal defense team hired April 17, one week after their arrests, “Pregnancy is not a disease. Pregnancy is not an illness. Likewise, confirming pregnancy or successful reproduction is not a diagnosis. Medicinal definitions are clear: Identification of disease is termed diagnosis, the solution design is called treatment planning, and treatment where appropriate is then implemented as the solution.”

In addition, there are dozens of known technicians using ultrasound with livestock in conjunction with reproductive services in the state of Pennsylvania. Yet for this, Herr and Wentworth are being kept away from their families, already imprisoned for one week, and have been told they will be in jail for 30 days.

Furthermore, the circumstances of their arrests are troubling.

Wentworth was told to go to the Courthouse (in York) on the morning of April 10 to pay a fine. He was told he would see a judge. Instead, he was arrested, and seven days later has still not seen a judge, according to friend and associate Ben Masemore, a dairy farmer associated with a sister business NoBull Sires LLC.

Herr was arrested the very next morning, April 11, at 6:30 a.m. at his home in Christiana. He was handcuffed and taken away in front of his wife and children, says Masemore in a Farmshine phone interview.

The new lead attorney for the Herr/Wentworth and NoBull Solutions defense, Robert Barnes, Esquire, even makes the case that the arrest warrants were not “facially valid” because they did not come from a court.

“There is no actual court on it. It is not a court document. Some bureaucratic official sent it to a prothonotary (court clerk), and now these people are sitting in prison because high ranking state bureaucrats have conspired with incompetent local sheriffs to illegally and unlawfully imprison them,” says Barnes.

This amounts to “some rogue officer and agency in Pennsylvania deciding ‘we want to arrest and imprison people whenever we want, with no limitations.’ The statute doesn’t authorize it. The Constitution of Pennsylvania doesn’t authorize it. In fact, it violates both the State and Federal Constitutions,” Barnes explains in his April 17 Viva Locals podcast about the case.

He adds that they must think “These are just some ordinary folks helping the Amish and (that they) can get away with it. Maybe they thought they were Amish, and they’d never sue.”

Barnes further notes that, “Somebody at the (state vet board) got the idea to create something that calls itself ‘arrest warrant,’ make it look like it came from a local court, create a docket number at the top, refer to (their) board’s activities as ‘The Court,’ call it ‘contempt,’ and have these people ordered arrested interminably in prison.”

Robert Barnes, Esq. of Barnes Law LLP has taken the NoBull Solutions Defense case, vowing to get justice for Ethan and Rusty and their families. He talked about it on his Viva Locals podcast April 17, saying “a whole bunch of folks are about to get sued” and citing unlawful detainment and civil rights precedents, among others. Screen capture by Sherry Bunting

In fact, visiting the Pennsylvania Veterinary Medical Association (PaVMA) website under “advocacy,” Farmshine has learned that the contempt-of-court charge was the suggestion made in the PaVMA’s recent complaint it filed on Herr and Wentworth for ignoring previous fines and cease-and-desist orders from the State Veterinary Board.

Farmshine has learned that these fines were ignored on advice of their former attorney, so as not to admit guilt. After all, why should Herr and Wentworth admit guilt for actions that have become commonplace and are open to interpretation of the state’s vague and archaic veterinary law in regard to defining ‘diagnosis’ — especially since pregnancy is not a disease to be diagnosed, but rather a condition to be observed?

There is also the issue of targeted enforcement.

The State Vet Board was prompted to act in the first place by PaVMA filing a complaint seeking to specifically target “three individuals” with fines and cease-and-desist orders for “illegal practice of veterinary medicine by unlicensed individuals.”

These original orders specifically named them as individuals employed with NoBull Solutions LLC and its “all encompassing reproductive management for dairy farms.”

The “documentary evidence” in the official PaVMA complaint was in the form of two pages of Facebook posts that “show non-veterinarians using ultrasounds and making diagnoses.”

Again, what are we talking about here? Ultrasounding cows in conjunction with breeding service — something dozens of proficient ultrasound machine users and breeding technicians do with cattle, horses, and other livestock across the state and around the country.

What is the difference between “diagnosis of pregnancy” through ultrasound vs. blood test and milk samples offered by companies in the area?

In today’s times, we have breeding technicians using ultrasound in conjunction with pregnancy and reproductive observation that are the lifeblood of a dairy farm. We have hoof trimmers providing essential services that involve observation and treatment of hoof and foot problems, but the state vet law only specifically exempts equine farriers. We have nutritionists body scoring cows for herd nutritional and health status observation and advice. We have FARM program auditors scoring hocks, scoring lameness, scoring body condition and other potential veterinary diagnoses that are referred to as observation.

But somehow, observing pregnancy and reproductive performance through ultrasound is illegal without a veterinary license? All of these examples – including repro ultrasound — show how it takes a village to run a dairy farm these days. How many times do we go to meetings and hear experts tell farmers to get outside eyes observing the cattle on their farms?

Farmers, themselves, wear many hats. They observe, diagnose, and treat many conditions in their own herds. The law recognizes a farmer’s ability to diagnose and treat their own animals and to allow their hired employees to do it for them.

With this action, the state is basically saying small and mid-sized farms cannot pay for the services of others, not being large enough to hire full-time staff to do it. 

This reporter received phone calls from half a dozen farmers, many of them Amish dairy farmers, while completing this report on April 17. One farmer from eastern Lancaster County said “hundreds of farmers in the county don’t know where they would be without Rusty Herr.”

Another from Oxford explained how much Herr has taught him about his livestock, so much more than a veterinarian would have time to teach. He noted Herr’s  “calm personality and precise work,” and how others, including himself, are “now being impacted by not having him on their farms” while he is in jail.

Another from Quarryville said Herr and Wentworth “are keenly missed. They are great people who did a great job and provided great service. This is affecting my dairy farm. I have appreciated how they walked into my barn and did their utmost to help me out with dairy breeding decisions.” 

Pennsylvania, with a small average herd size of 95 cows, has lost 46% of its dairy farms in the five years between the 2017 and 2022 Census of Agriculture. More dairy exits have occurred in 2023 and so far in 2024. Total herd dispersals have become commonplace as the low margins in dairy are a barrier for many farms to continue into the next generation.

How can farm families survive amid rapid consolidation of this industry, if there is not a level playing field? The very largest mega dairy operations in this country can hire full-time staff veterinarians, nutritionists, and technicians as employees and receive the blessing of the law, while small to mid-sized farms stand to lose the service of good people hired independently?

As for the PaVMA complaint that started all of this by citing state veterinary law, that law makes no mention of ultrasound or pregnancy.

It’s important to note that the PaVMA stepped up its drive to get targeted action from the state. According to a February 21 post at the PaVMA website, the organization listed the ultrasound concern as an advocacy position under the heading “Illegal Practice of Veterinary Medicine.”

In the post (see screenshot below), PaVMA states that it “has received many reports of bovine technicians engaging in the practice of veterinary medicine without a license, specifically performing ultrasounds and issuing diagnoses. In the past, the state of Pennsylvania fined three individuals and ordered them to cease and desist their activities. We have received reports that some of these individuals have not stopped and flagrantly promote their use of ultrasounds on Facebook. We have filed a complaint with the Department of State, Professional Compliance Office.”

The organization called its members to action, providing downloadable blank forms and instructions as follows: “We encourage all PVMA Members who have knowledge of these activities to also file complaints. A complaint form and copies of the cease-and-desist orders are available for download. Please reference the docket and case numbers in your complaint. The docket and case number are located on each cease-and-desist order. After filing a complaint, please email us at Membership@PaVMA.org and let us know so we can keep track of our members who have joined us in making the state aware of this problem.”

Screen capture by Sherry Bunting

Parallels can be drawn to other points in the long and legendary history of dairy cattle reproductive progress, whereby the establishment have used interpretations of archaic and vague laws to target progressive individuals, who were helping dairy farmers improve their herds.

One such case was in Canada in the 1980s, as chronicled by Holstein International. The article entitled “Allowing great sires to go everywhere” in the March 2021 edition makes this point:

“Unfortunately, disruption in any established industry does not come without controversy, and in 1987 a charge was made against Transfer Genetics (and its owner) by the Ontario Government for the illegal delivery of semen. The law from the 1950s required semen to be delivered by a licensed Ontario A.I. centre. A fine for this ‘violation’ was suggested, but a guilty plea would delegitimize Transfer Genetics forever. In July 1987 Transfer Genetics was charged – resulting in the closure of Transfer Genetics’ semen distribution.”

After setting up opportunities for farmers to learn to breed their own cows and enduring more than a year fighting this battle, the case was won for farmers, and the achievements for modern-day genetics are well-documented.

Instead of giving in to the intimidation, this entrepreneur, with the help of others in the dairy community, persevered, and the results of those early matings of well-bred Canadian cow families to top U.S. sires of the 1980s have produced legendary lines looked to today.

If that entrepreneur, who went on to be recognized as 2022 World Dairy Expo International Person of the Year, had simply paid his fine in 1987, stopped ruffling feathers, and gone back to the sidelines, who knows what the impact would have been?

Where the similarities are to this Pennsylvania case is that he also chose not to pay fines levied on him and his company by the government as this would “delegitimize (his business) forever.” The rest, as they say, is history.

In the case of Herr and Wentworth using ultrasound, their friend Masemore notes: “There is no guilt because this is an antiquated, vague law. The reality is that times change. Anyone, anywhere, today can buy an ultrasound machine and become extremely proficient in it. This is very commonplace. There are at least 15 to 20 individuals in this state using ultrasound without a vet license. I have dozens of friends, nationwide, that I know personally, who have ultrasound machines. It is a common thing on farms.

“Rusty has a winsome personality and is a man of humility, who is a servant, a hero to farmers as long as I’ve known him,” Masemore observes, adding that dairy farmers in Pennsylvania and around the country have flooded his phone over the past seven days for information on Herr and Wentworth, while their wives worked to retain another attorney. “The phone calls I have received from distraught farmers are overwhelming.”

These calls, he says, show appreciation for the breeding services of these two now-incarcerated men, who are being kept from their families, their animals, and their livelihoods.

Members of the close-knit dairy community in Southeast and Southcentral Pennsylvania — and across the state and nation, in fact — are expressing concern, and a desire to help.

Farmshine’s calls and emails to the offices of the York and Lancaster County District Attorneys have not yet been returned. Messages left for the State Veterinary Board and PaVMA have also not yet been returned.

NoBull Defense Funds have been set up at two local banks with checks payable to the wives of the two men, as noted below, for donations to assist with their legal defense to get them home to their families, their animals, and the dairy farmers they serve. 

Cash donations are discouraged, and all monies unused for bail and/or legal fees will be returned to donors on a percentage basis. Please note in the memo line of the check ‘NoBull Defense Fund.’

The first is at Univest Bank. Checks should be made payable to Heather Herr and mailed to Univest, 1135 Georgetown Rd., Suite 200, Christiana, PA 17509. 

The second is at People’s Bank. Checks should be made payable to Gabrielle Wentworth and mailed to People’s Bank, Brogue Financial Center, 2510 Delta Rd., Brogue, PA 17309.

An online NoBull Solutions Defense Fund has also been established to free Herr and Wentworth from prison at https://www.givesendgo.com/nobull?utm_source=sharelink&utm_medium=copy_link&utm_campaign=nobull

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‘Bird flu’ expands to 13 dairy herds in 6 states

CDC confirms one worker in Texas recovered with mild symptoms; Cow-to-cow transmission ‘cannot be ruled out’, biosecurity paramount

By Sherry Bunting, for Farmshine’s April 5, 2024 edition

WASHINGTON — Detections of highly pathogenic avian influenza in dairy cows — HPAI A(H5N1) — have expanded to 13 herds in 6 states as of Wednesday, April 3: Texas (7), Kansas (2), Michigan (1), New Mexico (1), Idaho (1), and Ohio (1).

Some states, including but not limited to Nebraska, Idaho and Utah have begun issuing import permit requirements for cattle and/or restrictions on non-terminal and/or breeding cattle coming from specific areas. These instructions are available from state authorities, not USDA APHIS.

USDA’s APHIS has a new landing page for daily updates and other resources at https://www.aphis.usda.gov/livestock-poultry-disease/avian/avian-influenza/hpai-detections/livestock 

In addition, the CDC reported April 1 that a worker on a Texas Panhandle dairy, where HPAI was detected, has tested positive with mild flu symptoms, mainly conjunctivitis (pinkeye), and has recovered. The only other human case in the U.S. was a poultry farm worker in Colorado in 2022.

CDC ‘current situation’ screen capture April 3, 2024 at 4:30 pm ET

According to the CDC, their “human health risk assessment for the general public remains low. There continues to be no concern that this circumstance poses a risk to consumer health, or that it affects the safety of the commercial milk supply because products are pasteurized before entering the market,” and milk from infected animals is to be discarded.

New detections of the virus have not changed the primary belief that HPAI A(H5N1) is ‘seeded’ by migratory wild birds (emphasis on waterfowl and by association, vultures).

Cow-to-cow transmission questioned

Complicating the question of potential cow-to-cow transmission, it was reported that the two confirmed herds in Idaho and Michigan had recently received cattle from other states where HPAI A(H5N1) was detected.

APHIS officials stated on March 29 that, “Spread of symptoms among the Michigan herd also indicates that HPAI transmission between cattle cannot be ruled out; USDA and partners continue to monitor this closely and have advised veterinarians and producers to practice good biosecurity.”

During the April 3 Center for Dairy Excellence (CDE) industry call attended virtually by 189 people – the first such call to occur weekly on Wednesdays at Noon – the Pennsylvania State Veterinarian Dr. Alex Hamberg was asked: How is it being transferred?

Just minutes before the call, Dr. Hamberg had received word that a western Ohio dairy herd had tested positive, which he said “is a little too close for comfort.”

Still, his overall calm and practical demeanor comes from having dealt with Pennsylvania’s poultry industry that is well-acquainted with avian influenza at times through history since the early 1990s, and most recently in 2022-23.

“We’re operating under the bird-to-cow, largely waterfowl, migrating ducks and geese, and focusing on using biosecurity measures to keep them away from cattle,” said Dr. Hamberg. “They excrete virus in large amounts.”

He talked about the poultry farm pattern in Pennsylvania in 2022-23, which also suggests wild bird to farm transmission vs. farm-to-farm spread.

“There is some evidence that could suggest this could be cattle-to-cattle, but this would be novel and relatively new to the world,” said Hamberg, airing his doubts. “As we build a better picture of what it looks like and how it moves through a population, we can do more to protect our cattle. Either way, brush up your biosecurity plans.”

On transfer to people, Hamberg said: “What we know with this virus – as seen in birds – it can infect people, but rarely. Several dozen have been infected worldwide (over time), but what we don’t see is person-to-person transmission or concern for consumers.”

He noted that the Texas dairy employee confirmed positive this week makes two farm workers in history: “one from cattle and one from poultry.”

Wild waterfowl still the focus

The investigation so far has looked at a wide variety of data and didn’t find any common links, other than wild migratory waterfowl, said Dr. Hamberg, and it’s the same strain of the virus in these waterfowl in the Pacific and Central Flyways.

He also noted that the poultry industry’s experience has been that songbirds and starlings “are not effective transmitters. We’re focused on waterfowl.”

Dr. Hamberg advised:

1)  Keep a close eye on your cattle,

2) Ramp up your biosecurity,

3) Keep wild waterfowl away from ponds and standing water,

4) Keep cattle fenced off from water where wild waterfowl congregate,

5) Keep outdoor waterers clean and free of wild waterfowl,

6) Clean up roadkill and manage mortalities.

Penn State extension veterinarian Dr. Hayley Springer also mentioned roping off areas where wild bird feces proliferate to keep tractors from running through it between feed commodities and barn entry.

“There is no definitive evidence that this can move from cow to farm birds or vice versa, but still work on biosecurity to keep those populations separate on the farm,” said Hamberg. “If we get a case in cattle in Pennsylvania, we would quarantine that farm, with a minimum set of standards to ensure movement on and off farm does not cause increased risk to other farms in the community.”

For example, a quarantine may mean milk off farm might be permitted to go to a specific plant following specific biosecurity restrictions such as last stop on a run for the milk truck or feed truck – things of that nature. A quarantine would permit milk off the farm only for pasteurization. Such permits would be case by case IF a dairy herd in Pennsylvania would have detected HPAI A(H5N1).

Bottomline, said Hamberg, this virus deemed to be affecting cows is “remarkably unremarkable, and there is no evidence that it has become mammalian-adaptive,” he said. “Usually when we see spillover events, the transmission between animals tends to be very poor. There is no specific mutation identified in this strain to be mammalian adapted, and it is still unclear what that looks like going forward.”

Hamberg said department guidelines for cattle movement and biosecurity would be forthcoming for Pennsylvania and to find them at www.centerfordairyexcellence.com along with other resources, including advice from Dr. Hayley Springer, who gave practical tips for minimizing waterfowl risk on dairy farms.

Two days earlier, in the April 1 webinar put on by NMPF and attended virtually by around 1000 people, veterinarians noted that while HPAI is believed to be introduced by migratory wild birds, veterinarians do not yet understand the mode by which it entered dairy cattle systems for the first time in history, nor do they know how it may or may not be transferred between cows. (Listen to NMPF’s Jamie Jonkers who moderated the webinar discuss it on a podcast March 28.)

Investigations look for multiple ‘pathways’

It’s important to note that veterinarians are operating off the premise that they want to understand the entirety of the situation to be sure other pathways are not involved in the underlying illness in dairy cows causing decreased lactation, low appetite, and other clinical signs.

Toward that end, federal and state agencies continue to conduct additional testing in swabs from sick animals and in unpasteurized clinical milk samples from sick animals, as well as viral genome sequencing, to assess whether HPAI or another unrelated disease may be underlying any symptoms.

Dr. Mark Lyons, National Incident Health Coordination Director at USDA’s Ruminant Health Center, noted on the NMPF webinar that while HPAI A(H5N1) has been detected through the sampling, he suggested that it might not be the only disease or factor at play.

“I don’t think we have a clear picture to say that HPAI is causing the illness we’re seeing displayed in these cattle. I think there’s still a chance that we might be seeing multiple different pathways playing out,” said Lyons, adding that additional sampling needs to be done with the expertise of producers, industry persons, and veterinarians.

Because lateral transmission has been recognized, but the mode of transmission is unknown, biosecurity measures are the most proactive approach producers and industry personnel should be focusing on to protect herds, said Lyons.

When asked if the disease is being found in non-lactating animals, Lyons said that he was unsure of how much testing, if any, had been done on non-lactating cattle because it has been lactating animals that have exhibited clinical signs. 

On movement and biosecurity

While Dr. Lyons said USDA has no plans to ban or restrict cattle movement at this time, it is recommended to limit movements as much as possible and to test any animals destined for movement to be sure they are clear of HPAI at the time of movement. Animals moved should be quarantined.

USDA and its partners are now advising veterinarians and producers to:

1) Practice good biosecurity,

2) Test animals before necessary movements,

3) Minimize animal movements, and

4) Isolate sick (and new) cattle from the herd.

In the NMPF webinar, veterinarians said the focus of biosecurity should be protecting the dairy, preventing exposure to cattle and calves, and precautions for caretakers and veterinarians, including:

1) Manage birds and wildlife on the dairy,

2) Delay or stop movement of animals,

3) Quarantine animals for 21 days because the incubation period is unknown, 

4) Clean and disinfect trailers and equipment,

5) Delay or stop non-essential visitors,

6) Those who do come into the operation should wash hands, change clothes, clean boots, or use disposable boots,

7) Any equipment coming onto the farm should be disinfected before entering,

8) In “abundance of caution”, on farms where HPAI A(H5N1) has been confirmed or is suspected, milk intended to be fed to calves or other livestock (including pets) should be pasteurized or otherwise heat-treated,

9) The recommendation for caretakers and veterinarians working with confirmed or suspected animals is to wear gloves, N95 masks, eye protection and monitor themselves for respiratory or flu-like symptoms.

When asked about the safety of infected cows destined to be culled, Dr. Lyons said cows exhibiting signs should not be sent to slaughter. He noted that, “in an abundance of caution,” milk samples should be used to screen animals from affected herds before moving a cow to slaughter, whether or not signs are being shown.

With the strength of the federal meat inspection process, “we have no reason to believe the meat would be unsafe, and we have not found any virus presence in meat tissue. But, out of extreme caution, we want to do testing or limits. There are already parameters and buffers in place not to send sick animals into the slaughter system,” said Lyons. 

Experiences on affected dairies

APHIS reports that affected animals have recovered after isolation with little to no associated mortality reported.

Dr. Brandon Treichler, quality control veterinarian for Select Milk Producers has witnessed infected herds and has been in contact with others dealing with the disease firsthand. During the NMPF webinar, he shared the signs and symptoms of what they have experienced.

Initial signs are consistent among all the herds. Farms that have the monitoring capability to test conductivity in overall milk will see a spike because of the immune response occurring, he said.

Initially cows rapidly go off feed, stop ruminating or stop showing signs of chewing their cud, and their milk production is suddenly gone, he explained, noting that what milk they do have is thick and resembles colostrum. Not all four quarters are always affected this way, which is a curious finding in how the disease presents.

Other symptoms vary. Some cows have firm, “tacky” manure, which could be a secondary issue from dehydration or cows not being able to regulate fluid. Other cows exhibit systems of diarrhea. Various respiratory symptoms have been reported with the most common being clear nasal discharge and increased respiratory rate. Fevers have been reported in some herds while others have not. 

Secondary infections are also coming in behind the original HPAI A(H5N1), perhaps accounting for variability in reported symptoms.

Most severe cases are shown in older and mid-lactation cows, with some severe cases happening in first lactation or in fresh cows. There has been very little evidence of it impacting dry cows or young stock.

“That’s not to say they aren’t being affected, but the most obvious signs are decreased rumination and loss of milk production, so the signs might not be observed in non-lactating animals,” said Treichler.

This could also be why it doesn’t seem to be affecting beef animals whether cow/calf or feedlot. “It’s not to say they aren’t being affected at all, but it’s hard to see these severe cases in these (non-lactating) groups,” he said. 

“When people are talking about the 10-20% of the herd involved they’re talking about these severe cases. My personal clinical impression is that much of the lactating herd is impacted by this because when you look at things like rumination and milk production, they’re down overall on a herd level,” said Treichler. “At some point most of the cows in the herd are being impacted by this, so you’ll have mostly subclinical cows.” 

The reported production loss estimates range from 4 to 20 pounds/cow/day to 10 to 30 pounds/cow/day.

The worst of the cases appear to be within the first week of the outbreak. Affected cows begin to go back on feed within a few days, and herds go back to pre-infection milk production and SCC levels within a month of the initial outbreak. Some cows will recover, but there are some that will not recover, especially if secondary infections follow.

While cows might show clinical signs of mastitis or abnormal milk, it is not a mastitis pathogen that can be treated traditionally. It does not respond to antibiotics.

Additionally, abortions are being observed in herds that have been through the process, probably not due to the virus, but most likely from high fever in the immune response or metabolic stress that the cows went through. Future fertility or cyclicity problems could be expected. 

“Please don’t hesitate to report to your veterinarian. I know it’s scary, but it will help the whole industry if we can find out about it and learn from each case,” said Treichler.

Responding to a question about what treatment plans are working for sick cows, Dr. Treichler said supportive care includes keeping them hydrated and treating any obvious symptoms from secondary issues, and treating for fever if there is fever.

There is much yet to learn in this rapidly evolving situation. Biosecurity efforts are the best course to follow as more testing and epidemiological study is underway to understand all that is a part of it.

This story follows Farmshine’s coverage in the March 29 edition

-30-

‘Bird Flu’ deemed culprit in dairy cow ‘mystery illness,’ migratory wild birds blamed

Texas detections point to wild migratory birds as source; Public risk remains low; Cows exhibit low appetite, reduced rumination, sharply reduced milk production

Symptoms of what officials are saying are the first ever detections of bird flu in dairy cows include a sharp drop in milk production, reduced appetite, reduced rumination, and colostrum-like milk appearance. As the investigation continues in the Texas Panhandle region, incl. Kansas and New Mexico, dairy producers are implementing advanced biosecurity measures. Texas Ag Commissioner Sid Miller cited “ongoing economic impacts to facilities as herds that are greatly impacted may lose up to 40% of their milk production for 7 to 10 days until symptoms subside. There is no threat to the public,” he said. S. Bunting file photo

By Sherry Bunting, Farmshine, March 29, 2024 (updated since print edition went to press)

WASHINGTON – Federal and state officials confirmed this week that highly pathogenic avian influenza (HPAI), otherwise known as bird flu, has been detected and deemed the culprit in the mystery illness “among primarily older (mid-lactation) dairy cows in Texas, Kansas, and New Mexico that is causing decreased lactation, low appetite, and other symptoms.” 

USDA’s Animal and Plant Health Inspection Service (APHIS) believes “wild migratory birds to be the source of infection as viral testing and epidemiological efforts continue.”

In an email exchange with the APHIS press office on Wed., March 27, Farmshine asked if cow-to-cow transmission has been ruled out at this juncture.

They could not answer directly, but on background, gave this response that mirrored a portion of the March 25 APHIS press release: 

The testing from Texas shows consistency with the strain seen in wild birds. As the release shared, based on the findings, the detections in Texas appear to have been introduced by wild birds. Federal and state agencies are moving quickly to conduct additional testing for HPAI, as well as viral genome sequencing, so that we can better understand the situation, including characterization of the HPAI strain or strains associated with these detections.”

The answer appears to be that cow-to-cow transmission is not suspected as birds are the vector in what APHIS describes as a “rapidly evolving situation” and one in which they are continuing to investigate, working closely with the Food and Drug Administration (FDA), the Centers for Disease Control and Prevention (CDC), as well as state veterinary and public health officials.

Furthermore, if migratory wild birds are the source, then this could be a seasonal anomaly that may shift or dissipate soon.

Word spread quickly on Monday, March 25 as public announcements from federal and state agencies and industry organizations were released in rapid, near simultaneous succession within minutes of the USDA APHIS press release announcing that, “Unpasteurized, clinical samples of milk from sick cattle collected from two dairy farms in Kansas and one in Texas, as well as an oropharyngeal swab from another dairy in Texas have all tested positive for HPAI. Additional testing was initiated on Friday, March 22, and over the weekend, because farms have also reported finding deceased wild birds on their properties.”

Preliminary testing by the National Veterinary Services Laboratories further confirmed that, “No changes to the virus have been found that would make it more transmissible to humans, which would indicate that the current risk to the public remains low.”

Announcements from all corners of health and industry conveyed this main message: “At this stage, there is no concern about the safety of the commercial milk supply or that this circumstance poses a risk to consumer health. The commercial milk supply remains safe due to both federal animal health requirements and pasteurization.”

Bird flu (avian influenza) is a disease caused by a family of flu viruses primarily transmitted among birds.

According to USDA, there are two classifications, and the ‘high’ or ‘low’ pathogenic acronyms are based on the genetic sequence and the severity of disease caused in poultry: HPAI (high pathogenic, meaning it causes severe disease in poultry), which is found mostly in domestic poultry and LPAI (low pathogenic, meaning it causes no signs or few signs of disease in poultry), which is often seen in wild birds.

“It is too soon to predict if all of the recent reports of unexplained illnesses in dairy cattle in the U.S. are due to HPAI. Veterinarians and the dairy industry are working collaboratively with state and federal officials during the ongoing investigation,” noted the American Association of Bovine Practitioners in a March 25 press release

AABP reports that HPAI (H5N1) is most commonly found in birds and poultry with wild waterfowl as known carriers. According to the USDA, 48 states have had cases of HPAI in poultry and wild birds since the outbreak began in 2022. Over 82 million birds have been affected. There have also been reports of over 200 mammals diagnosed with the virus.

The samples from Texas and Kansas are the first confirmed detections of HPAI (H5N1) in cattle anywhere in the U.S. and only the second mammalian detection in Texas, the first being a skunk. 

This marks the second detection in a ruminant animal in the U.S. The first was just a week prior, when HPAI was detected in a goat on a Minnesota farm where chickens and ducks had been quarantined for previous HPAI detection.

In a March 26 American Veterinary Medical Association newsletter, Dr. Brian Hoefs, Minnesota state veterinarian, noted that, “Thankfully, research to-date has shown mammals appear to be dead-end hosts, which means they’re unlikely to spread HPAI further.”

“Mammals, including cows, do not spread avian influenza — it requires birds as the vector of transmission, and it’s extremely rare for the virus to affect humans because most people will never have direct and prolonged contact with an infected bird, especially on a dairy farm,” a joint dairy industry statement by National Milk Producers Federation (NMPF), International Dairy Foods Association (IDFA), Dairy Management Inc (DMI), and U.S. Dairy Export Council (USDEC) reported on March 25. 

Since early 2022, when HPAI was first confirmed in wild waterfowl in the Atlantic flyways and the first domestic poultry flocks were affected, APHIS has been tracking wild mammal detections in the U.S. The list includes skunks, racoon, red and gray fox, coyote, several types of bears, mountain lions, bobcats, fishers, opossums, martens, and harbor seals – all having in common their known contact with wild waterfowl and/or domestic poultry and/or their eggs. 

The APHIS webpage devoted to avian influenza notes that, “Wild birds can be infected with HPAI and still show no signs of illness. They can carry the disease to new areas when migrating, potentially exposing domestic poultry to the virus.”

This is why APHIS conducts a wild bird surveillance program to provide early warning system for the introduction and distribution of avian influenza viruses of concern in the U.S., allowing APHIS and the poultry industry to take timely and rapid action to reduce the risk of spread to the poultry industry and other populations of concern.

For the U.S. poultry industry, HPAI detection in domestic flocks means implementing response programs for flock depopulation and geographic quarantine to prevent the spread because of the high mortality rate in domestic poultry and bird-to-bird transmission within a production setting. According to USDA, approximately 58 million birds were killed in such depopulations in the U.S. last year.

The current detection in cattle is different because there is no confirmation of cow-to-cow transmission, and according to AABP, “there have been no confirmed deaths in cattle due to this disease. Cattle appear to recover in two to three weeks with supportive care.”

“Unlike affected poultry, I foresee there will be no need to depopulate dairy herds. Cattle are expected to fully recover,” said Texas Agriculture Commissioner Sid Miller in a press statement March 25, noting that the Texas dairy industry contributes roughly $50 billion in state economic activity, ranking 4th in milk production nationwide in 2023, moving up to 3rd since the start of 2024.

Assuring consumers of rigorous safety measures already in place and soothing concerns about potential milk supply shortages, Commissioner Miller highlighted pasteurization and milk diversion protocols and the “limited number of affected herds.”

The required dumping of abnormal-appearing milk or milk from sick cows, as well as pasteurization as a fail-safe inactivation of bacterial and viral agents were stressed in the variety of press releases as normal public health safeguards already in place.

“There is no threat to the public, and there will be no supply shortages,” assured Commissioner Miller. “No contaminated milk is known to have entered the food chain; it has all been dumped. In the rare event that some affected milk enters the food chain, the pasteurization process will kill the virus.”

He also noted that, “Cattle impacted by HPAI exhibit flu-like symptoms including fever and a sharp reduction in milk production averaging between 10-30 pounds per cow throughout the herd.”

“On average about 10% of each affected herd appears to be impacted, with little to no associated mortality reported among the animals,” the USDA APHIS report stated, with declines in milk production described as “too limited to impact the supply and price of milk and dairy products.”

Yet in an AABP webinar March 22, before the HPAI strain was confirmed in the Texas and Kansas samples, the findings of veterinarians involved early-on over the past four to six weeks were described, and presenters were asked about the numbers of affected dairy cattle.

An effort is underway “to count them up, but the number is significant, and I’ll leave it at that,” said Dr. Brandon Treichler, DVM, who was joined by Dr. Alexis Thompson with Texas A&M Veterinary Medical Diagnostic Laboratory (TVMDL) in presenting AABP webinar information.

Treichler hails from a family dairy farm in eastern Pennsylvania and serves as a quality control veterinarian, primarily working with large dairies in West Texas and eastern New Mexico. He is active with AABP and National Mastitis Council.

Previously mentioned are the higher rates of culling in herds where an economic decision is made about affected cattle in mid-lactation, when their production is not regained after recovering to health.

Dr. Treichler talked about practitioner findings as “inclusion criteria,” and mentioned some herd to herd variations as well.

“The most consistent factors seen across herds include a decreased feed intake in the herd and at the same time less rumination… These cows are being sorted for us for changes in the milk, and (the facilities that have) conductivity available will see conductivity spike on a large number of cows, and then decreasing milk production across the herd, with individual cows seemingly more severely affected, going from a high production cow to dry or very nearly dry, very quickly. Some of those cows appear to have colostrum-like milk that is either thickened, or thickened with some discoloration,” he said.

According to Treichler, manure among the more severely affected cows is reported to range from dry or tacky to some diarrhea. Other signs that vary include fever, which is potentially attributable to the impact on the immune system from the metabolic disruption of being off-feed with reduced rumination.

In his March 25 press statement, Texas Ag Commissioner Miller cited “ongoing economic impacts to facilities as herds that are greatly impacted may lose up to 40% of their milk production for 7 to 10 days until symptoms subside. It is vital that dairy facilities nationwide practice heightened biosecurity measures to mitigate further spread.”

He advised dairies in the region “to use all standard biosecurity measures, including restricting access to essential personnel only, disinfecting all vehicles entering and leaving premises, isolating affected cattle, and destroying all contaminated milk. Additionally, it is important to clean and disinfect all livestock watering devices and isolate drinking water where it might be contaminated by waterfowl.”

No affected beef cattle have been reported, only older primarily mid-lactation dairy cows. This is interesting, considering the fact that the number of cattle on feed — mostly in open lots similar to drylot dairies that are prevalent in the Panhandle region of the No. 1 cattle feeding state of Texas and No. 3 Kansas – far outweigh milk cow numbers by 5 to 1.

The region’s milk cows are most concentrated in and around the Panhandle of the No. 3 dairy state of Texas, No. 9 New Mexico and No. 17 Kansas portions of the Central Flyway for ‘migratory wild birds.’

Also within this zone are the country’s 5th and 14th largest poultry states of Texas and Oklahoma, respectively, totaling a combined nearly 1 billion head of poultry.

Farmshine asked APHIS and the Texas Animal Health Commission (TAHC) about the status of beef cattle monitoring, to which a TAHC spokesperson responded by email noting: “TAHC and Texas A&M TVMDL have, and continue to ask for, samples from affected and unaffected dairies to gather the full scope of the situation. The feedlot and beef cattle industry are monitoring and doing similar surveillance among their producers that many dairy operations have been conducting — not specifically screening, necessarily, but many are watching for clinical signs of illness that they can identify in the operation and keeping a close eye for abnormal health events among their herds.”

On other questions about whether there are any differences or commonalities in terms of external contributing factors among affected herds, the TAHC spokesperson stated “No dairy specific information could be provided related to type of facilities or other factors where HPAI was detected.”

Dairy industry organization statements point to the National Dairy Producer FARM Program (NDPFP) as the go-to for specific biosecurity, reporting, and recordkeeping measures that are urged on all U.S. dairy farms, including much emphasis being given to the safeguard of milk pasteurization.

“Dairy farmers have begun implementing enhanced biosecurity protocols on their farms, limiting the amount of traffic into and out of their properties and restricting visits to employees and essential personnel,” the NMPF-IDFA-DMI-USDEC joint statement noted.

They cite biosecurity resources, including reference manuals, prep guides, herd health plan protocol templates, animal movement logs, and people entry logs that dairies can use “to keep their cattle and dairy businesses safe.”

USDA APHIS encourages farmers and veterinarians, nationwide, to report cattle illnesses quickly so they can “monitor potential additional cases and minimize the impact to farmers, consumers and other animals.”

Industry announcements urge dairy farmers to immediately contact their veterinarians if they observe clinical signs in their herds that are consistent with this outbreak, such as a significant loss of animal appetite and rumination or an acute drop in milk production.

In turn, veterinarians who observe these clinical signs and have ruled out other diagnoses on a client’s farm should contact the state veterinarian and plan to submit a complete set of samples to be tested at a diagnostic laboratory.

Animals may also be reported to the APHIS toll-free number at 1-866-536-7593.

In Pennsylvania, where HPAI depopulations and quarantines have occurred over the past two years in the poultry industry, there have been no reported cattle affected. However, the state is monitoring the situation, and the Center for Dairy Excellence is conducting a conference call by zoom and telephone at Noon EDT on Wed., April 3 for dairy producers and dairy industry service providers, featuring state veterinarian Dr. Alex Hamberg and Penn State extension vet Dr. Hayley Springer.

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Investigation underway on emerging dairy cattle illness in Texas Panhandle

Here’s what we knew as of March 22, 2024

By Sherry Bunting, Farmshine, March 22, 2024

AMARILLO, Tex. — The Texas Animal Health Commission (TAHC) and USDA — in coordination with industry and veterinary medical partners — are investigating emerging cases of illness in mid-lactation dairy cows in the Texas Panhandle of as-yet undetermined cause and transmission. 

The TAHC circulated a letter March 16 to veterinarians and dairy producers concerning the emerging animal health situation in dairy cattle that is at this point limited to an undetermined number of dairies in the Texas Panhandle. No reported cases outside of the Texas Panhandle are confirmed at this time. 

A TAHC spokesperson told Farmshine Tuesday in a phone interview (March 19) they are not ready to put out a media statement, but in the interest of full transparency, would brief on what is known and being done at this time. 

“We are aware of an animal health situation affecting dairy cattle and are working with USDA and Texas A&M with Dr. Alexis Thompson at the Diagnostic Lab — and with dairy veterinarians, the industry, and other partners — to coordinate an efficient plan to monitor and evaluate affected cattle, and to develop a case definition and conduct additional diagnostics,” the TAHC spokesperson said.

In response to questions, she noted that the Texas State Veterinarian is in contact with counterparts in other states as part of this coordinated effort.

“Right now, our main message is for dairies to conduct standard biosecurity measures, and if they have enhanced biosecurity plans in place, now is a good time to implement those,” the TAHC spokesperson said. She could not say how many herds or what percentage of those herds are affected.

According to the TAHC letter to veterinarians and dairy producers, the clinical signs include decreased herd level milk production; a sudden drop in production with some severely impacted cows experiencing changes in milk appearance (thicker, concentrated, colostrum-like). Affected cows also experience a decline in feed consumption with a simultaneous drop in rumen motility, abnormal tacky or loose feces, and some fever.

“Impacted herds have reported older cows in mid-lactation may be more likely to be severely impacted than younger cows and fresh cows or heifers. Dry cows and heifers do not appear to be affected,” the letter stated. 

The TAHC spokesperson did confirm that death loss from this condition is low.

In other industry correspondence, Farmshine has learned that while cattle recover, not all affected cattle recover their milk production, which has led to some increased culling in the face of high feed costs and high prices paid for market cows for beef. 

Even though this is an emerging situation, not a regulated disease, the TAHC spokesperson observed: “There are no milk and meat concerns at this time,” due to both the Pasteurized Milk Ordinance (PMO) and the Federal Meat Inspection Act that together ensure safe and wholesome milk and meat products enter the food chain.

The PMO dictates best practice to divert from the saleable milk supply any milk that is abnormal in appearance. 

Additionally, the Federal Meat Inspection Act requires ante- and post-mortem examination of every animal presented for slaughter. 

The TAHC encourages veterinary practitioners to report affected animals, by calling Dr. Alexis Thompson with Texas A&M Veterinary Medical Diagnostic Laboratory (TVMDL) (806.651.7478) concerning questions related to case-specific diagnostic plans. Dr. Thompson can provide specific guidance on sample collection as data-driven diagnostics are key to evaluation and understanding transmission and prevention.

As this work is being done, dairy producers are advised to review biosecurity protocols for their farms, take note of declines in production, appetite and rumination, and contact their veterinarians if such are noted.

(Author’s note: The Texas Animal Health Commission, USDA, TVMDL, industry, and veterinary medical practitioners are working on this as they are committed to animal health and well being as well as food safety — and while this is happening, systems are already in place that make the U.S. food supply the safest in the world.)

To be continued

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Seeds of doubt being sown, Part III: Will it reduce butterfat supply and impact industry’s cheese-focused future?

By Sherry Bunting, Farmshine, March 1, 2024

EAST EARL, Pa. — As seeds of doubt are being sown internally within the dairy industry about whole milk in schools, we have discussed Confusion (will it help milk prices?) and Consternation (unfounded fear about what will processors do with ‘all that skim?’)

This week, we look at the third C: ‘Competition’: If schoolchildren are offered whole milk, will it significantly impact butterfat supplies, raise butter prices, and compete with the industry’s cheap milk cheese-focused future?

Every winter conference for the past few years has had at least one speaker telling dairy farmers that fluid milk sales are declining because Americans are eating more of their milk instead of drinking it. 

Fair enough. Cheese is the future, and the industry wants to make more of it. Lots more of it. So much more cheese, in fact, that inventory is growing. Analysts at conferences put up slides with the words “Export or perish!” in large font. 

Yes, U.S. Dairy wants to export more cheese, including mozzarella. U.S. Dairy wants to export more butter and cream products. U.S. Dairy wants to export more of the higher-value products. (And we want to sell more cream to the upscale coffee houses and downscale McCafe drinks we adults get to choose while junior sips a paltry half-pint of fat-free chocolate milk, sugar water, in the back seat. What’s wrong with us?)

This map shows the over $7 billion in new processing coming online between now and 2026. “There’s a lot of cheese on this map,” said IDFA CEO Michael Dykes, presenting at the Georgia Dairy Conference. This slide has also been popping up in other industry conference speaker powerpoint decks this meeting season. IDFA data

The industry also wants to take milk down to its molecular level – to turn the jug of milk into ingredients at the start — to make new function-targeted products for the beverage space outside of Class I parameters within an increasingly Class III dominated processing infrastructure.

Toward that end, new processing capacity won’t convert milk to traditional products, leaving elements to be marketed as ingredients. Instead, these new state-of-the-art cheese and ingredient plants start by taking milk apart to the ingredients-level to be used in making health beverages, bars, and other products, as well as to make cheese. 

At the Georgia Dairy Conference in January, IDFA CEO Michael Dykes mentioned IDFA’s support for the Whole Milk for Healthy Kids Act, giving attendees a QR code to weigh-in with their Senators. 

Later in his presentation, he noted that a shift to more fat in school milk would make a 3% impact on the butter supply.

“I’m a believer that the markets work, when you take it one place, you make a difference and change it someplace else. Those are the things we can work through,” said Dykes.

So, we reached out to Calvin Covington, a former cooperative CEO who is intimately familiar with component pricing as it became part of the Federal Milk Marketing Order (FMMO) system over 20 years ago. We asked his thoughts on how increasing fat in the school milk supply would impact butter. 

“Increased Cheddar cheese production has used millions and millions of pounds of butterfat. No one complains about this. Doesn’t the dairy industry want to increase demand for all milk components?” he replied and sent forth his own calculations, providing a spreadsheet showing his estimates of milk used in schools and the additional fat that would be needed for all of that milk to go completely to 3.25% (whole) milk.

Covington ran the numbers, moving methodically through assumptions on Table 1 to conclude the impact of shifting from a school milk fat percentage of 0.5% (half fat-free and half 1%) all the way to 3.25% (whole milk) would have a small impact on the butterfat supply — raising the school milk’s usage of butterfat from 0.25% of total butterfat production at the current national average fat test of 4.11% to being 1.47% of total butterfat production at the average 4.11% fat test.

Using the identified assumptions, Table 1 shows estimates on school milk volume and use of butterfat under today’s fat-free and 1% low-fat milk requirement compared with a scenario in which all school milk pounds were at 3.25% fat as standardized whole milk. Provided by Calvin Covington

He estimates public schools use 9.72% of all fluid milk, and for the purpose of the spreadsheet exercise, he assumed that half of those school milk sales are currently fat-free and half are 1%. If that is the case, then going to 3.25% (whole) milk for all pounds of school milk sales, the additional fat that would be needed is almost 114 million pounds, he reports.

“This should be a non-issue,” Covington concludes, using estimates that are based on all of those school milk pounds moving to 3.25% fat. 

The more likely scenario, however, is that schools would implement a more gradual increase in fat percentage. If it mirrored the national average for fluid milk sales at 2% fat, the increase would be smaller initially. Using Covington’s chart and assumptions, the additional fat that would be needed if school milk fat content averaged 2% is closer to 84 million pounds, going from using 0.25% of total fat production to 0.9% of total fat production.

Not all schools will choose to offer all milk at 3.25%. Some may offer 2% milk, which has also been banned since 2010 and would be given regulatory relief under the Whole Milk for Healthy Kids Act. 

Even if 3.25% fat milk is universally offered, some schoolchildren will continue to choose low-fat milk, as they did in the Pennsylvania trial, where the preference was 3 to 1 for whole 3.25% over low-fat 1%.

While a potentially higher fat content in school milk is being scrutinized for its impact on butter and butterfat, the impact of aggressive increases in cheese production is ignored. This speaks a bit to industry priorities.

“As butter and cheese consumption increase, processors do not argue against the increase because utilizing more fat would increase the fat price,” Covington observes, wondering why anyone would be concerned about the impact on butterfat supply if children get to choose whole milk while not being concerned about the impact on butterfat supply in any other sector.

“An increase in fluid milk sales, in schools, or anywhere, benefits all dairy farmers. With all things being equal, it would shift milk from Class III and IV to Class I, which is a (normally) higher milk price,” Covington explains. “If Class III or IV need more milk to replace the loss to Class I, more money would need to be paid by Class III and IV milk buyers, again, helping dairy farmers.”

So, what is the current status of butterfat production and usage? 

The national butterfat average is 4.11%. A decade ago, it was 3.69. From 2011 to 2022, total butterfat pounds produced on farms in the U.S. grew by 2 billion pounds from 7.3 billion to 9.3 billion. That’s a butterfat volume response to a price signaling demand.

Where’s it all going? Around 20% goes to butter production, 8% to ice cream and frozen desserts, 10% in fluid milk sales, and close to 50% is used in cheese production. And then there is this growing market for cream used in coffee drinks.

Meanwhile, dairy producers out West report receiving a letter from a large cheese plant, putting in a new base program at 1.5% over base. 

Another producer in an unregulated state in the West reported receiving a letter from his cheese plant stating they will reduce the butterfat multiple in their cheese milk payment, beginning April 1. The reason, according to the letter, is the farms are making too much butterfat, and the plant is having to buy condensed solids (skim) to pair with the additional fat or sell the extra fat as excess sweet cream at a loss.

During the FMMO hearing, fluid milk bottlers complained that the higher fat and component levels in milk today are more costly for them to deal with, that they must move the excess cream at a loss, and they have to clean the separator more often because of ‘sludge’ buildup. (I kid you not, one witness called it ‘sludge.’)

Processors have petitioned USDA with multiple proposals to get regulated minimum prices down to their definition of a ‘market clearing’ level that then allows them to add market premiums to attract new milk. Read that sentence again.

Who would be paying those premiums to grow milk supply? Not the processors. It would be revenue coming out of the regulated minimum price benchmarks for all farmers, including farmers that are not growing, to then get added back in by the processors wherever they want to direct growth.

Cheap milk is the name of the game, while at the same time, dairy farmers are being challenged to grow to meet the future ‘demand gap’ to fill $7 billion in new processing investments that will become operational over the next few years.

Dairy analysts tell how milk production expansion to meet this investment will not be as easy to do and will take longer than in the past because of the shortage in replacement heifers. 

We’re at a standoff, so to speak. 

Dairy producers have bred beef-on-dairy to bring margin back to their farms after 10 years of dairy margin compression. This strategy has been a good hedge against overproduction of milk in the era of sexed-semen, and it has helped protect farm balance sheets by reinforcing the value of the cattle as collateral.

So, what tool will be used now to drive consolidation and growth in dairy? Dykes told Georgia producers that, “Sustainability will be one of the biggest drivers of consolidation we’ve seen in a generation. Why? Because it’s going to take investment, and it’s going to take scale. We need to figure it out, to measure it, verify it, account for it, not double count it. We’re going to need investments to make sure we have the infrastructure.”

He said sustainability will become the gateway for exports where countries have mandates and carbon taxes for purchased ag products.

So, here we are back at the question about milk supply, butterfat supply, skim supply and school milk. Wouldn’t whole milk sales to schools offer a much-needed tug on the demand side to help shift some milk away from this runaway, market-depressing, buildup of excess cheese production that elicits the powerpoint headline: ‘Export or perish?’ 

Just think, if the fluid milk sales to schools increased as they did in the Pennsylvania trial by 52%, or even half that, by 25% as more kids choose milk instead of refusing it, market principles could work — gaining something in one place to affect it someplace else. 

Meanwhile, the industry can do some soul-searching and adapting amid the double-speak. If more milk, fat and components are needed, then farmers need to be able to make a living milking cows and producing fat and components.

Is the problem not enough milk? Or too much milk? Not enough fat? Or too much fat? Not enough skim? Or too much skim? Or is the problem rooted in making sure milk can be bought cheap and that farmers are forced to find revenue in other ways, such as carbon monitoring?

Let’s get it straight please.

On the horizon, we see: Checkoff-funded fluid milk innovations for new beverages that identify and separate specific milk molecules for specific benefits (sleep drinks, energy drinks, immune function drinks, specific protein type drinks)? More on that in Milk Molecules Initiative Part I and Part II

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Seeds of doubt being sown, Part II: ‘What will processors do with all that skim?’ Oh my!

By Sherry Bunting, Farmshine, Feb. 23, 2024

EAST EARL, Pa. — The status of the Whole Milk for Healthy Kids Act, S. 1957, has 17 Senate sponsors from 13 states, including 12 Republicans, 4 Democrats, and 1 Independent. 

Even though both NMPF and IDFA have shown support for the measure, a bit of resignation can be sensed — riding the overwhelming House vote as enough progress for one legislative session. After taking bows for the performance of the bill in the House, representatives of both NMPF and IDFA – while speaking at winter meetings – have indicated a prevailing view that Senate opposition to S. 1957, is a big barrier. 

They say they are working to get the science in front of the Dietary Guidelines Committee, which has been tried before – over and over.

The DGA committee operates under a USDA that does not want whole milk options in schools or SNAP or WIC. This same USDA is proposing to remove chocolate milk options from schools, except for senior high students, and is proposing to reduce WIC milk by 3 gallons per recipient per month. This same USDA projects 20 billion more pounds of milk will be produced in the U.S. by 2030, according to IDFA CEO Michael Dykes, presenting future trends at the Georgia Dairy Conference in Savannah.

Seeds of doubt about the whole milk bill are being sown among farmers. Some asked me recently if their co-ops will lose money on the deal.

Last week, we discussed ‘Confusion’ — the first of 3 C’s that are facing the whole milk bill within the dairy industry. 

This week we look at the second C: ‘Consternation’ — a fancy word for fear.

“What will they do with all of our skim?” farmers asked me at a recent event. Is this something they are hearing from a milk buyer or inspector?

Here are some facts: Whole milk sales move the skim with the fat — leaving some of the fat through standardization, but not leaving any skim. Therefore, an increase in whole milk sales does not burden the skim milk market.

Surely, the practice of holding schoolchildren hostage to drinking the byproduct skim of butter and cream product manufacturing is a poor business model if we care about childhood nutrition, health, and future milk sales. 

Furthermore, the market for skim milk powder and nonfat dry milk is running strong as inventories are at multi-year lows in the U.S. and globally.

Cheese production, on the other hand, is what is cranking up, and it has been the market dog for 18 months. Like whole milk sales, cheesemaking uses both fat and skim. But cheesemaking leaves byproduct lactose and whey, and it can leave some residual fat depending on the ratios per cheese type.

Things are pretty bad for farmers right now in cheesemilk country. Some tough discussions are being had around kitchen tables. The 2022 Ag Census released last week showed the dire straits for farmers nationwide over the last five years as the number of U.S. dairy farms declined below 25,000, down a whopping 40% since 2017.

Wouldn’t an increase in whole milk sales through the school milk channels help pull some milk away from rampant excess cheese production that is currently depressing the Class III milk price, leading to price divergence and market dysfunction?

While there is no one data source to specifically document the percentage of the milk supply that is sold to schools, the estimates run from 6 to 7% of total fluid milk sales (Jim Mulhern, NMPF, 2019), to 8% of the U.S. milk supply (Michael Dykes, IDFA, 2023), to 9.75% of total fluid milk sales (Calvin Covington, independent analysis, 2024). 

If even half of these sales became whole milk sales, it could modestly positively impact the amount of excess cheese being made even as processors say they plan to make more cheese because people eat more of their milk than are drinking it. (Fig. 1)

Meanwhile, the cheese price is under so much downward price pressure that there is a $2 to $4 divergence of Class IV over Class III causing farmers to lose money under the ‘averaging’ formula for Class I milk. In many parts of the country, farmers lose additional money when the milk that is used in Classes II and IV is depooled out of FMMOs.

Without the ‘higher of’ pricing mechanism that was in place from the year 2000 until May 2019, Class I can fall below the higher manufacturing price, removing incentive to pool, which leaves pooled producers with smaller payments for their milk and leaves the decision about what to pay depooled farmers up to the processors after they’ve succeeded in reducing the benchmark minimum by depooling.

Ultrafiltered (UF) milk represents 2.4% of fluid milk market share, having grown by more than 10% per year for four years with sales up 7.7% in 2023 vs. 2022, according to Circana-tracked market data shared by Dykes.

UF milk is also cheese-vat-ready-milk with capability to remove not just the lactose but also the whey as permeate at the front end for use in distilleries that are now funneling lactose into ethanol production in Michigan and whey into alcoholic beverages in Michigan and Minnesota.

Processors want farmers to do “a tradeoff” to decide how much revenue comes to their milk checks and how much goes to processing investments for the future. The future is being dictated by where we are in fluid milk consumption relative to cheese production.

This is one reason IDFA and Wisconsin Cheesemakers, as well as NMPF, had proposals asking USDA to increase the processor credits (make allowances) that are embedded in the dairy product price formulas. IDFA and Milk Innovation Group also put forward other proposals to further reduce regulated minimum prices.

We wonder with these new processing investments, how is it that the make allowances are too small? Only bulk butter, nonfat dry milk, dry whey, 40-lb block Cheddar and 500-lb barrel cheese (yellow not white) are surveyed for the circular class and component price formulas. Everything else that doesn’t meet CME spec for these specific product exchanges is excluded.

This means the costs to make innovative new products and even many bulk commodity-style products, such as bulk mozzarella, unsalted butter, whey protein concentrate and skim milk powder, can be passed on to consumers without being factored back into the FMMO regulated minimum prices paid to farmers.

If market principles are applied, processors wanting to encourage more milk production, to make more cheese, would pay more for the milk – not less. But when the margin can be assured with a make allowance that yields a return on investment, all bets are off. Cheese gets made for the ‘make’ not the market.

We saw processors petition USDA in the recent Federal Milk Marketing Order hearing to reduce the minimum prices in multiple ways so they can have the ability to pay market premiums to attract new milk. This would be value coming out of the regulated FMMO minimum price benchmark for all farmers to get added back in by the processors wherever they want to direct it.

Cheese is in demand globally, and the U.S. dairy industry is investing to meet this. Dykes told Georgia producers that processors want to grow and producers want to grow. He wasn’t wondering what to do with all of the skim when he asked: “Where will the milk come from for the over $7 billion in new processing investments that will be coming online in the next two to three years?”  

This is happening, said Dykes, “due to market changes from fluid milk to more cheese production (Fig. 1). There’s a lot of cheese in those plans. With over $7 billion in investment… These are going to be efficient plants. You’re going to see consolidation. If you are part of a co-op, you’re going to decide how much (revenue) comes in through your milk check and how much goes into investment in processing for the long-run, for the future. That’s the debate your boards of directors will have.” 

Even the planned new fluid milk processing capacity is largely ultra-filtered, aseptic and extended shelf life, according to Dykes.

“That’s the direction we are moving,” he said. “We are seeing that move because as we think about schools, are we still going to be able to send that truck driver 20 miles in any direction with 3 or 4 cases of milk 5 days a week? Or do we do that with aseptic so they can store it and put it in the refrigerator one night before, and get some economies of scale out of that, and maybe bring some margin back to the business?”

As the Class III milk price continues to be the market dog, we don’t see milk moving from Class III manufacturing to Class IV, perhaps because of the dairy processing shifts that have been led by reduced fluid milk consumption. 

Allowing schoolchildren to have the choice of whole milk at school is about nutrition, healthy choices, future milk consumers, and the relevance of fresh fluid milk produced by local family farms in communities across the country. Having a home for skim does not appear to be the primary factor affecting milk prices where Class III is dragging things down.

Bottomline, dairy farmers should have no consternation (fear) over what processors are going to do with “all of that skim” once they are (hopefully) allowed to offer schoolchildren milk with more fat.

Next time, we’ll address the third ‘C’ – Competition – If kids are offered whole milk in schools, will it reduce the butterfat supply and impact the industry’s cheese-centered future? 

A final note, just in case the question about ‘what to do with all that skim’ still bothers anyone… What’s wrong with animal feed markets for skim milk powder? Protein is valuable in animal health, there are livestock to feed, and people spend major bucks on their pets too. Did you know dog treats made with nonfat dry milk powder, flour and grated cheese are a thing?

That idea got a good laugh from those farmers when I suggested it.

However, Cornell dairy economist Dr. Chris Wolf noted recently how China’s purchases are what drive global skim milk powder and whey protein prices, and that much of that market for both is to feed… you guessed it… Pigs. 

Seeds of doubt being sown, Part One, Confusion: ‘Will this bill really improve milk prices?”

By Sherry Bunting, Farmshine, Feb. 16, 2024

EAST EARL, Pa. — While decades of scientific debate in terms of childhood health and nutrition is the curtain opponents hide behind, the anti-animal agenda is the top hurdle for the Whole Milk for Healthy Kids Act in the Senate.

Senator Roger Marshall (R-Kan.) is the prime sponsor of the Senate bill, and he is a medical doctor in obstetrics and is taking a beating from billboards sponsored by Physicians Committee for Responsible Medicine (PCRM) in his home state of Kansas. PCRM is a known arm of PETA. This tells us quite a bit, doesn’t it?

Meanwhile, the top 3 C’s facing the bill within the dairy industry, itself, need to be addressed. 

1) Confusion… Will it really improve milk prices? Addressed in this article

2) Consternation (fear)… What will processors do with “all of that skim”? Addressed in Part II here

3) Competition… Will it reduce the butterfat supply and affect the ramp up in cheese manufacturing or other dairy products? Addressed in Part III here

Plus…. the Checkoff Commitments… Will it interfere with checkoff-funded Milk Molecules Initiative for new beverages that identify and separate specific milk molecules for specific benefits (sleep drinks, energy drinks, immune function drinks, specific protein type drinks)? 

All of these questions are quietly floating around and sowing seeds of doubt, leading to analysis-paralysis, while the industry focus is on innovation and exports, not on fresh milk, or a healthy next generation of U.S. milk consumers.

All of these questions will be answered one at a time over the next several weeks, starting with the first “C”: Confusion.

“Will this bill really improve our milk prices?” was the question I was asked by a few farmers at a recent farm show. My response was to ask them if they are concerned about kids having healthy milk options they enjoy and if they are concerned about seeing further erosion of fluid milk sales, and losing another generation of milk drinkers?

I reached out to Calvin Covington, former milk cooperative CEO in the fluid milk markets of the Southeast and a primary architect of pricing milk by component yield even before Order Reform during his years with American Jersey Cattle Breeders.

Covington ran the numbers using 2023 average prices, and calculating pounds of milk, fat, and skim, utilization, and values, which yield a gross value of a hundredweight of milk being used for fluid processing at different fat levels. 

“At a $3.00 Class I differential, a hundredweight of milk going for 3.25 fluid milk (whole milk as standardized), returns an additional 25 cents per hundredweight over skim milk,” Covington writes, noting that the difference will change based on different Class I differentials.

Even in the counties with small or zero location differentials on the map, the base differential of $1.60 per hundredweight is still included, which means at least a 13 cents per hundredweight difference.

Previously, Covington has noted in presentations that milk prices improve as the average fat level of total fluid milk sales increases. The current average of all sales, nationwide, stands at 2%. A few years ago, it was below 2%. A fractional change in either direction influences Federal Milk Marketing Order blend prices.

Fluid milk demand also plays a role in manufacturing class prices, affecting farmers in regions where prices are based almost exclusively on cheese. 

That’s especially true right now as cheese production has been exploding, and the Class III milk price has been imploding, creating a wide spread below Class IV and pushing FMMO blend prices lower as milk is not moving out of Class III to the higher value Class IV. But the Federal Milk Marketing Law gives Class I dibs to attract milk. So Class I demand is relevant for cheese milk pricing too.

As whole milk sales have increased year-over-year, whole milk became the largest category of fluid milk sales in 2021. It is a bright spot in the fluid milk category.

In 2023, gains in whole milk sales and in lactose-free milk sales are credited with boosting the entire fluid milk category for year-over-year gains in back-to-back months of October and November. This helped flatten the year-to-date loss-curve on total fluid milk sales that had been running 2 to 4% lower year-over-year to be just 1.5% lower cumulatively at year end compared with 2022, according to USDA’s December estimated packaged fluid milk sales report, released in mid-February.

Still, there is ground to make up, as fluid milk sales volume in 2023 is 7.8% lower than pre-Covid 2019, when volume totaled 46.24 billion pounds, down 1.8% from 2018. Then, during pandemic lockdowns, milk sales stabilized, putting the total at 46.2 billion pounds for 2020, virtually unchanged from 2019. In 2021, fluid milk sales volume declined 4.1% to 44.3 billion pounds, followed by a 2.4% decrease in 2022 to 43.3 billion pounds, and now a 1.5% decline in 2023 at 42.6 billion pounds.

NMPF chart, Circana Inc. full-year 2023 data

Meanwhile, the big news reported recently is that plant-based fake-milk beverages saw sales decline by 6.6% in 2023, the second straight year of declines and the smallest sales since 2019, according to data from Circana Inc reported recently. 

Real dairy milk sales volume of 42.6 billion pounds in 2023 is not only a much larger category than the lookalikes at 337.7 million pounds, real dairy milk outperformed lookalikes on a trend basis in 2023 — down just 1.5% vs. plant-based being down 6.6%.

By comparison, plant-based beverage sales volume in 2023 was a fraction of 1% (0.8%) the size of real milk sales volume.

Whole milk education and awareness have helped drive this result. Consumers are paying attention to food science, even if the Dietary Guidelines Advisory Committee, USDA (and FDA on labeling) continue to ignore it. Still, more education and freedom for children to enjoy milk is needed. The concern is that even though it is a smaller percentage loss, the 1.5% sales volume loss in the real milk category in 2023 represented 644 million pounds; whereas a 6.6% sales volume loss in plant-based beverages in 2023 represented 24 million pounds.

Speaking with a local milk bottler and ice cream maker recently – a producer handler – I learned he focuses on how his cows are fed to maintain their rolling average 5% butterfat during the summertime to make ice cream and satisfy consumer demand for whole milk. Their whole milk sales have skyrocketed, and this in turn, to the delight of the grocery store they are in, has helped boost sales of all fluid milk as a category in that store.

This has him thinking of doing a 5% butterfat, non-standardized, maybe even cream top, full-fat milk in glass bottles for the store. The store displays a 97 Milk banner at the entrance and 97milk.com website stickers at the dairy case.

Speaking with a manager at a different grocery store chain with stores in Pennsylvania and surrounding states, I learned their sales of whole milk have also increased by leaps and bounds in the past several years, boosting the entire fluid milk category by 14% at their stores throughout the region. They include the 97milk.com website and information in their sales circulars to their shoppers.

As for the schools — If even half of the schools offered a mix of milkfat choices as the Whole Milk for Healthy Kids Act would allow them to do, the amount of butterfat sold as Class I would increase. This would improve the fat side of the fat/skim pricing in the three Southeast Orders and Arizona. It would also help the Federal Order pool dollars reach after actual components are paid first in Multiple Component Pricing Orders everywhere else.

Total Class I fluid milk sales have dropped like a rock since Congress passed the Healthy Hunger Free Kids Act in 2010, which removed whole and 2% milk options from school meals, followed by USDA in 2012 further banning whole and 2% milk as a la carte or vending machine ‘competing beverage’ options in the Department’s Smart Snacks regulations.

Look at the graph above. It was shared as part of Dr. Mark Stephenson’s testimony in the recent USDA FMMO milk pricing hearing.

Improved total sales of school milk hold potential to increase total Class I fluid milk sales. A Pennsylvania school trial in 2019 showed a 52% increase in milk sales when whole and 2% milk options were offered. Students showed a 3 to 1 preference for whole milk over the 1% milk option.

When their options were expanded, more students chose milk instead of refusing it. Students were able to choose, and some of them continued to choose low-fat, and that’s okay! The Whole Milk for Healthy Kids Act is about choice.

A conservative estimate of a 25% increase in school milk sales can be anticipated if Whole Milk for Healthy Kids gets over the finish line in the Senate after its overwhelming passage in December in the House. That is half of the increase seen in the Pennsylvania school trial. If realized, a 25% increase in school milk sales equates to a little over one billion pounds of additional annual milk sales, which could raise the entire Class I fluid milk category by a little more than 2%.

This is based on the fact that kids aren’t just throwing away milk at school. Some are refusing to take the milk they are offered with school meals. This means sales are being lost.

Fluid milk sales declines will only get worse if USDA implements one of two draft proposals the Department announced a year ago. One would eliminate flavored milk from elementary and middle schools altogether. The other would require added sugar levels to be reduced dramatically in flavored milk at school. It’s widely known that when milkfat is retained in making chocolate milk, less added sugar is needed! 

Demand for whole milk is beneficial on both the milk fat and skim sides of the equation because whole milk sales move the nearly-complete product – the skim with the fat — leaving some of the fat through standardization, but not leaving any skim.

The result of these options in schools could be even better depending on how many schools choose to exercise these options.

If the industry doesn’t supply what consumers demand, sales are lost. Schoolchildren are already the dairy industry’s consumers, and they will hold the purse strings in the future.

Just as the Dietary Guidelines Committee and USDA continue to ignore science on milkfat, we are all ignoring our nation’s schoolchildren and what they are telling us about why they are turning away from nutrient-dense milk at a time when the nutrients milk delivers – that we may think they are receiving — have never been more important.

When the Pennsylvania school trial ended after one school year, a 95% reduction in the average daily volume of discarded milk was recorded. The school Student Council did an environmental project to measure this by measuring the volume of milk thrown away in unopened and partly consumed half-pint containers.

Shouldn’t we be listening to what the young people are telling us? They are our future, after all.

In the next part of this series, we’ll address the question: “What are the processors going to do with all of that skim?” Oh my!

In the meantime, consider this: Fresh fluid milk is the most notably locally-produced dairy product maintaining dairy farm relevance in regions and communities across America. What will the dairy industry look like five years from now, even one year from now? Maybe we should be asking the schoolchildren to answer that question.

As of Feb. 14, 2024, the Whole Milk for Healthy Kids Act, S. 1957, has 15 sponsors from 12 states as illustrated on this map. Graphic by Sherry Bunting