Concerning surprises in FMMO proposed rule; Comments due Sept. 13th

Posted on September 12, 2024 by Agmoos

By Sherry Bunting, Farmshine, Sept. 6, 2024

EAST EARL, Pa. – “Those who don’t learn from history are doomed to repeat it.” That was the theme of the American Dairy Coalition’s webinar on the USDA’s proposed Federal Milk Marketing Order (FMMO) pricing changes, which I participated in last Thursday, August 29^th.

Over 125 people participated, including state dairy and state farm bureau organization leaders and individual producers. American Farm Bureau economist Danny Munch helped producers understand the proposed changes and walked through the areas of mutual concern. Other panelists offered information, and participants’ questions were addressed.

“This webinar was a grassroots dairy producer undertaking,” said moderator Kim Bremmer of Wisconsin-based Ag Inspirations. “ADC planned it to make sure dairy farmers have a way to ask questions before the public comment period closes on Sept. 13th. We know the last update to milk pricing occurred in that 2018 farm bill, and that was without your input, and it cost dairy producers over a billion dollars across the country. It is really important that your voices are heard.”

Four primary areas of concern were discussed: the processor make allowance increase, the size of the whey make allowance relative to the price, delayed timing of beneficial updates to milk composition, and the surprising 2-mover system for Class I, effectively adding a 5th class of milk to the FMMO pricing scheme.

A 2-mover system was not vetted during the very lengthy USDA hearing. It appears to be “thrown in” as a last-minute compromise to appease processors investing in extended shelf life (ESL) fluid milk capacity.

Nestle and Fairlife had testified to sales volume growth when they offered 9 to 12-month flat-pricing after the average-of was implemented in May 2019. They said they must have average-of pricing to manage their risk so they can offer long-term pricing to grow sales.

Make allowance increases quite large

USDA proposes to raise processor make allowance credits by 29 to 33% above the current level. That equates to a 75-cents to $1.00 per hundredweight new deduction from milk checks, embedded in the pricing formulas, depending on how the milk was utilized.

Munch said make allowances are part of the formulas that start with surveying market prices for the four base commodities – 40-lb cheddar cheese blocks, butter, nonfat dry milk, and dry whey. USDA works backwards from the surveyed price to derive a value for the raw milk.

He used a cartoon imagining of “little Zippy selling cheese at his cheese stand.” (a light-hearted reference to AFBF president Zippy Duvall, a former dairyman).

“USDA is surveying the volume and value that he is selling it at — out in the marketplace — and then is using that price to derive a raw milk price,” Munch said, explaining that, “working backward, there has to be a part of the formula that accounts for the cost for Little Zippy to convert the raw milk into the cheese. He uses non-dairy ingredients like cultures and salts. It’s his own labor as well as overhead and equipment that he uses to convert raw milk into cheese. In the FMMO system, that deduction that accounts for his costs is called the make allowance,” he continued.

But today, the Little Zippys of the dairy industry are not so little, and they report much less on the USDA price survey, and they make so much more of the products that are NOT price-surveyed. These other products — such as mozzarella cheese, pizza cheese, other non-cheddar cheeses or cheddar cheeses in other bulk package sizes, whey protein concentrate, skim milk powder, whole milk powder, unsalted butter, and on and on — are not part of the formula and do not contribute value to the farmer’s milk check. Class I and II products are not price-surveyed either.

“When we look at the surveys, so many things are made out of the wonderful perfect nutrition of milk made on our farms, so what is the percent of products that are actually represented in the surveys?” asked Indiana dairy producer Sam Schwoeppe, who moderated the webinar Q&A

Survey volume quite small

Munch said the volume captured is “quite small and declining” to 14.8% in 2022 after being a high of 26.4% in 2002. “But those are just the products that are actually surveyed. There’s a lot of products that are not even surveyed, and that means the percent is even less.”

American Farm Bureau, American Dairy Coalition, and others pushed for some other bulk products to be added, but those proposals were rejected in this USDA decision.

So, how can current make allowance levels be too low when processors are spending billions to expand? Or, are dairy farmers expected to pay this debt service?

Dr. Michael Dykes, the CEO of the International Dairy Foods Association (IDFA), representing processors, told dairy farmers at the Georgia Dairy Conference in January 2024 that, “7 billion in new processing investments (below) will be coming online in the next two to three years. There’s a lot of cheese in those plans. These are going to be efficient plants. You’re going to see consolidation.”

The proposed make allowance increases of 5 to nearly 7 cents per pound across the four commodities equate to a new embedded milk check deduction of nearly $1.00 per hundredweight for Class III and around 75 cents for Class IV – over and above the current make allowances that already equate to $2.20 to $3.40 per hundredweight. Class I would see this embedded in advance skim and fat pricing factors that are used to set the base price mover.

Collectively, the make allowance increases could remove $1.25 billion annually from FMMO pools, Munch showed in a 5-year static analysis based on prior pool composition, (See chart at top). Other aspects of USDA’s full proposal will defray some or all of the loss, mainly in the FMMOs with more Class I utilization. USDA’s proposal includes increases in location differentials for Class I fluid milk.

What happened in 2008-09?

Learn from the past or be doomed to repeat it? The last time make allowances were increased in 2008, a dairy market crash followed. As a webinar panelist and ag journalist, I pointed out that the dry whey price fell below the dry whey make allowance for the first seven months of that implementation from October 2008 through April 2009, resulting in penalties deducted from milk checks on every pound of other solids in the milk.

This time, the proposed dry whey make allowance is the largest of all – up 33.2% from $0.1991/lb now to $0.2653/lb. If in effect a year ago, dairy farmers would have again seen negative other solids penalties on their milk checks in July and August 2023 when milk prices were at their lowest. Meanwhile, processors made less dry whey, instead making more value-added products that are not price-surveyed.

Munch noted that only 66% of the plants on the price survey actually participated in the voluntary cost survey used by USDA to set the proposed new make allowances. AFBF, ADC and other organizations have been on record opposing make allowance increases until mandatory, audited surveys are conducted by USDA.

Conversion from fresh milk to ESL?

Learn from the past or be doomed to repeat it? On the Class I side, the 2018 farm bill changed the base price calculation. Farmers were told this would be revenue neutral, but the change cost them – at minimum — $1.25 billion over the past five years.

USDA now proposes to restore the higher-of calculation, but only for conventionally pasteurized HTST (or fresh) milk. Extended shelf life (or ESL) fluid milk products — labeled good for 60 days or more — would be priced using a new average-of method with a rolling adjuster.

Shouldn’t ESL have been defined in the hearing, and the economic impacts studied? This idea of two different Class I movers was not vetted in the hearing.

With two movers, fluid milk costs could be different from the same location based on shelf life. Webinar comments questioned USDA’s loose definition of ESL; Could processors change the label to move between the movers and pay whichever mover was lower?

The USDA’s one-year static analysis showed the ESL Class I mover would have ranged from being $1.18 per hundredweight over to 95 cents under the HTST Class I mover in various months of 2023. That’s a big spread.

What’s at the root here? The dairy checkoff has openly identified ESL milk as the new milk beverage platform, using dairy farmer funds to research and promote it and to show consumers can be ‘taught’ to accept it.

Dr. Dykes of IDFA, at the Georgia meeting in January 2024, also told dairy producers that “this is the direction we (processors) are moving… to get to some economies of scale and bring margin back to the business.” He said the planned new fluid milk processing capacity investments are largely ultra-filtered, aseptic, and ESL. (10 of the 11 fluid milk plants on the IDFA map above are ESL and/or aseptic fluid milk plants. Some will also make ultrafiltered milk, and some will make plant-based beverages at the same location.)

Has USDA considered the purpose of the FMMO system is to promote orderly marketing and the adequate supply of FRESH FLUID MILK? Will consumers accept the taste of the not-so-fresh ESL and aseptic milk, or migrate faster to other beverages if fresh fluid milk is less available to them?

Would a 2-mover system ultimately reduce farmers’ access to milk markets in some regions and diminish the food security of those consumers? Prized as the freshest, least processed, most regionally local food at the supermarket, will the USDA decision reduce fresh fluid milk availability down the road?

How will the 2-mover system impact dairy farms located outside of the industry’s very specific identified growth centers? And will this perpetuate the wide divergence between Classes III and IV that has been an issue since 2019, further punishing dairy farmers with disorderly marketing and opportunistic depooling?

Webinar participants asked: “Will commenting even matter? Or is the USDA Secretary’s mind made up? How important is individual farmer input?”

“It’s extremely important for farmers to get involved. Even with talking points, really tell your own story with it,” said Munch. “They like hearing from you, and the stories of the impacts to your balance sheet, to your future revenue or the stability of your local community. They want to know the impact on small businesses. That’s one of the driving points.”

Not much time

With a short time remaining to comment at the Federal Register Docket AMS-DA-23-0031-0002.

American Dairy Coalition has prepared an official comment, so other like-minded organizations and individuals can sign on before the filing deadline, which is 11:59 p.m. Friday evening, Sept. 13, 2024.

Comment directly to the Federal Register docket at https://www.federalregister.gov/documents/2024/07/15/2024-14769/milk-in-the-northeast-and-other-marketing-areas-proposed-amendments-to-marketing-agreements-and

Click here to read the ADC’s comment that will be filed before the deadline Friday evening at Sept. 13 at 11:59 p.m. Dairy farmers and organizations wanting to associate themselves with the comment can click here.

Click here to view ADC’s Aug. 29 webinar.

Click here to read Danny Munch’s at Farm Bureau Market Intel.

Milk Market Moos: Could farmers be PAYING processors to take milk’s ‘other solids’ like in 2009 after the last ‘make allowance’ raise?

Posted on August 2, 2024 by Agmoos

By Sherry Bunting, Farmshine, August 2, 2024

No ‘snubber’ on USDA’s higher whey make allowance proposal

The whey market is the one to watch right now as the daily CME spot market sped higher again this week, and the dry whey spot price is now above the 60-cents-per-poind mark!

No ‘snubber’ on new whey make allowance means farmers would have PAID processors to take the ‘other solids’ in their milk last summer.

One thing for the industry and USDA to keep in mind regarding the proposed rule announced July 1 is that the higher make allowances, if implemented, include a nearly 7-cents-per-pound raise in the dry whey processor credit. That can be a real bully when markets go south — considering there is no ‘snubber’ to keep farmers from having to give away these ‘other solids’ or to PAY processors to take them as though worthless.

USDA is proposing to increase the dry whey make allowance from $0.1991/lb to $0.2653/lb — a nearly 7 cents per pound jump.

Farmers would have PAID processors to take other solids last summer

Guess what? If we were having this conversation a year ago, looking at July 2023 Class and Component price announcements, we would be writing in this column that your ‘other solids’ price would be essentially zero, meaning processors would get the lactose and whey free, and last August, if the proposed new whey make allowance was in effect, farmers would have paid processors $0.003 to take these components as if they are worthless.

If the proposed 7-cents-per-pound increase in the dry whey make allowance were in effect in July and August 2023, the new $0.2653/lb make allowance would have been at or slightly higher than the dry whey price for those two months.

When the make allowances were raised in 2008, we saw months in 2009 when farmers literally paid their milk buyers to take the other solids in their milk because the dry whey price had fallen below the then-new make allowance, and there was no snubber to stop the bleeding at zero.

July Butterfat up at $3.57, Protein slips to $1.95

USDA announced mixed trends on July 31 for the Class and Component prices used in Federal Milk Marketing Orders for July milk. Class II and IV at $21.82 and $21.31, respectively, were around 20 cents per cwt higher than a month ago and 20 to 70 cents higher than the July Class I base price ‘mover.’

Class III milk, at $19.79, slipped 8 cents from June and continues to be the lowest of the four classes as it has been for most of the past two and a half years.

All components were higher, except for protein, which slipped 10 cents per pound back under the $2 mark at $1.95/lb. Butterfat gained 3 cents at $3.57 for July. Solids nonfat also gained, valued at just over $1.00 per pound for July.

Other solids also gained, at 26 cents/lb. This is derived from the dry whey price vs. make allowance.

June All-Milk price up 80 cents at $22.80, fully $5/cwt above year ago

USDA announced the All-Milk price for June at $22.80, up 80 cents from May and fully $5 higher than a year ago. The national average butterfat test moved down 0.07 at 4.10, but was still 0.09 above year ago. The Pennsylvania All-Milk price for June, at $23.30, was also 80 cents higher than the previous month, and fat test fell by 0.06, reported at 4.01, just 0.01 above year ago. The June DMC margin was not published or available by press-time, but with a higher All-Milk price for June announced at 3 p.m. July 31st, and moderating feed costs, the June DMC margin is likely to be well above the $9.50 trigger margin at around $11.50/cwt. (Update, June DMC margin was announced Aug. 2 at $11.66).

Milk futures mostly higher, especially Class IV

Class III milk futures were mostly higher this week, except near-term September and October were down a few cents per hundredweight. Class IV futures were steady to higher across the board. On Wed., July 31, Class III milk futures for the next 12 months (Aug24-Jul25) averaged $19.44, down 2 cents from the Jul24-Jun25 average on the previous Wednesday. The 12-month Class IV average at $20.92 for the 12 months Aug24-Jul25, also 2 cents below the Jul24-Jun25 average a week ago.

Whey and powder skyrocket, but formula price survey lags

Trade was active with high volume movement on Class IV products, butter and nonfat dry milk powder. Trade was light for Class III products cheese and whey.

The whey market is again the big story as the daily CME spot market continues trading at price levels well above the weekly National Dairy Product Sales Report (NDPSR). The NDPSR prices are the ones that USDA collects in mandatory processor pricing surveys to use in the Federal Milk Marketing Order end-product pricing formulas. The NDPSR whey price is the one USDA AMS plugs into the FMMO pricing formula for Class III and ‘other solids.’

While spot bids for dry whey rallied to a whopping 62 cents per pound Wednesday, July 31, with 3 loads trading the first three days this week, and the weekly average price at 60 cents… the NDPSR for week ending July 27 is still back at 46 cents/lb — a 14-cent per pound deficit vs. the spot market, and 9 cents lower than the previous week’s spot market.

The CME spot market for cheese was mixed with the barrel premium over blocks widening to 7 cents per pound this week as barrels traded firm while blocks moved lower. In the weekly NDPSR, barrels are a scant half-penny higher than blocks.

The CME daily spot market for 40-lb block Cheddar was pegged at $1.9150/lb Wed., July 31 ($1.93/lb average for the week). This is 2 1/2 cents lower than the prior Wednesday with 3 loads trading the first three days this week. The 500-lb barrel cheese price, pegged at $1.9750/lb was unchanged compared with a week ago; 3 loads traded Monday through Wednesday.

The NDPSR for week ending July 27 pegs block cheese at $1.9482/lb and barrels at $1.9533/lb.

In the Class IV product complex, butter firmed up to move higher this week, shrugging off the Cold Storage Report indicating inventories were running 7% above year ago at the end of June. A whopping 26 loads of butter were traded on the CME cash market Monday through Wednesday this week. On Wed., July 31, the spot price was $3.1275/lb — up nearly 4 cents from the previous Wednesday with the weighted average for the week just over $3.10/lb — right where the NDPSR butter price landed for the week ending July 27.

Grade A nonfat dry milk trade was active again this week on the CME spot market, advancing to $1.2450/lb by Wed., July 31, up another penny from a week ago with a whopping 20 loads changing hands the first three days.

Contrary to historical patterns, the NDPSR moved the opposite direction. Again, this is the price used in FMMO pricing formulas. Nonfat dry milk for the week ending July 27 hung back at the $1.18 mark, declining a penny from the prior week despite the 7-cent spot market advance last week. CME spot prices are now at a 6-cents-per-pound premium over the NDPSR.

Total packaged fluid milk sales in May continue outpacing year ago

U.S. fluid milk sales continued outpacing year ago in May, according to the USDA’s Estimated Total Packaged Fluid Milk Sales Report released last Friday, July 19.

The report showed May sales were up 0.3% compared with a year ago, following the big 5.9% jump in April. In fact, fluid milk sales have been higher year-over-year (YOY) for six of the past eight months.

Year-to-date (YTD) sales continue to beat year ago, up 1.3% for the Jan-May period, and when adjusted for Leap Year, YTD 2024 sales are up 0.6% vs. 2023.

Leading the charge again is the largest volume category: conventional whole milk sales, up 1.8% YOY in May, plus organic whole milk sales, up 28% YOY in May.

Conventional whole flavored milk sales were down 13% from a year ago in May — a function of what fat percentage is offered, not necessarily what consumers may have selected — as the reduced fat (2%) flavored milk sales rose 3.5% in May. By contrast, organic whole flavored milk sales were up 31% YOY in May.

Total Organic fluid milk sales of all fat levels were up 6.3% in May YOY and up 7.8% (Leap Year Adjusted) for the first five months of 2024 vs. year ago. They represent 7% of the YTD total of all fluid milk sales.

The ‘other fluid milk products’ category continues to make double-digit percentage gains, up 45% YOY in May and up 37% (Leap Year Adjusted) YTD vs. year ago. This category represents 2.2% of total fluid milk sales. The report does not separate out the ESL products in each fat percentage; however, lactose-free milk brands are included in the ‘other products’ category.

Year-to-date milk production down 1%

U.S. milk production fell 0.8% in June compared with a year ago, despite the national herd reportedly having 2000 more milk cows than a year ago, according to USDA’s monthly milk report this week. The report also revised the May total lower by another 0.2% or 30 million pounds.

Year-to-date milk production for the first half of 2024 is down 0.3% compared with the first half of 2023 even with an extra day of production in 2024! When adjusted for Leap Year, first half 2024 milk production trailed year ago by 1%. It would not be surprising to see USDA come back and trim the June tally lower, later.

In the Northeast and Midatlantic Milkshed, Pennsylvania’s production fell 2.2%, Vermont down 2.8%, and New York down 1.2%.

In the Southeast, Florida gained 4.9% with 4000 more cows while Georgia dropped 8.1%, losing 8,000 cows, and Virginia saw a 4.3% drop in production vs. year ago.

The Mideast Milkshed declined with Michigan down 0.9%, Ohio 0.6%, and Indiana 1.6%, with just a 1000-head loss in cow numbers across the three states.

In the Upper Midwest and Central Plains, Iowa grew production by 1.2%, despite being hit with bird flu in June, Minnesota was down 1%, South Dakota up 8.3%, and Wisconsin up 0.9%.

Western States saw production declines, except for Texas up 3.1% with 13,000 more milk cows than a year ago.

DMI / NMPF talk supply and demand

Fluid milk, yogurt, butter and other than American-type cheese all posted positive annual growth in domestic commercial use during the March-May 2024 period, according to the July edition of the joint DMI and NMPF market report released July 23rd. The report cites significant export growth for all types of cheese and whey protein concentrate and isolate. However, when looking at domestic and export sales of all products combined, the usage is described as “relatively flat to lower” in the March through May period.

The DMI / NMPF report observes that U.S. milk production has nearly had a year’s worth of volumes charting below prior year levels, but “continued increases in average component composition of producer milk has enabled U.S. dairy farmers to supply available demand for dairy products while keeping inventories of key products relatively stable,” the report stated.

Overall supply-and-demand balance in the industry has been good enough to move dairy product and dairy farm prices and margins higher in recent months, without significantly reversing the gradual reduction trend in retail dairy product prices that has occurred over the past year, according to the report.

While dry skim milk usage is down 48% in the March-May period, this is a function of the lower production of skim milk powder (down 24.5%) and nonfat dry milk (down 12.5%). Inventories at the end of May trailed year ago by 4%. Domestic and export markets can only ‘use’ what is ‘produced’ and available in a commodity category in the first place.

But the DMI / NMPF market report did not even mention imports… So here’s the deal:

The U.S. imported 41% more Whole Milk Powder in first-half 2024 vs. 2023,
up 150% vs. 2022!

While U.S. milk production has trailed year-ago levels for the past 10 consecutive months, U.S. food manufacturers have been quietly ramping up imports of whole milk powder (WMP), which is essentially whole milk, dried.

WMP imports were running 170% above year ago, cumulatively, for the first four months of 2024. May and June totals have slowed down from the huge front-loaded volumes January through April. Still, the cumulative year-to-date WMP import volume at 5.5 million pounds for the first six months of 2024 is 41% greater on a volume basis compared with a year ago.

This is a stunning increase because the Jan-June 2023 WMP import volume was already 77% greater than the first six months of 2022. This means Jan-June Whole Milk Powder (WMP) imports have grown 150% in two years. That’s a volume increase of 1.49 million kgs or 3.29 million pounds. WMP is basically farm milk from another country, in bulk dried form, not a specialized product. It can be used in processing virtually any dairy product, containing all of the milk components — both fat and skim solids.

Total non cheese imports at 10.4 million kgs (21 million pounds) for the first half of 2024 are up 5.9% vs. 2023 and up 41.4% vs. 2022.

Cheese imports, on the other hand are up slightly from a year ago (1.4%) and down 6.27% from 2022.

On the export side of the ledger, the U.S. sold 2% less total milk solids volume overseas in May, which is mainly because skim milk powder, whole milk powder, and other milk protein powder exports were down 8 to 12% from a year ago. Butterfat exports were down 16%.

Cheese exports, on the other hand, were up 27% in May and dry whey product exporter were up 6%. Fluid milk and cream exports were up 2%.

This makes sense because the U.S. dairy processing paradigm has shifted. The U.S. is making less butter and powder (Class IV) and more cheese and dry whey (Class III).
The U.S. is consequently exporting less milk powder and butterfat (Class IV) and exporting more cheese and dry whey products (Class III); while at the same time importing more whole milk powder and non cheese products, while cheese import volumes remain stable.

30-day H5N1 detections drop to 33 in 6 states, hot spot Colo. requires milk testing

As of July 31, 2024, the current confirmed cases of H5N1 in dairy cows within the past 30 days decreased to 33 herds in 6 states. Of these, 24 are in Colorado, the hot spot by a long shot. The state issued an order July 22nd to require mandatory bulk tank milk testing, except raw milk dairies, which are encouraged to do so voluntarily.

Other states with confirmed cases within the past 30 days are: Minnesota (3), Idaho (2), Texas (1), Iowa (1), and Michigan (1). Cumulatively, since the beginning of the outbreak on March 25, 2024, there have been 173 detections in 13 states.

Enrollments in the national voluntary dairy herd status bulk tank testing include 21 herds: Michigan (7), New Mexico (4), Pennsylvania (3), and 1 herd each in Kansas, Nebraska, North Carolina, Ohio, South Dakota, Tennessee, and Texas.

Will we see PA milk bills moove?

The Pennsylvania State Assembly has a few dairy bills waiting to moove on through both chambers again towards the end of a two-year legislative session. We’ve seen this movie before, where the House votes to allow Pennsylvania whole milk produced on Pennsylvania dairy farms to be served in Pennsylvania schools, and where the House votes to allow the state-mandated Pa. Over Order Premium (OOP) to be collected and distributed to farms by the state instead of leaving it open to loopholes that strand the dollars through creative cross-border deals.

In prior years, such milk bills would move through Committee and even get passed by the House, only to be stuck in a chairman’s desk drawer in the Senate. If we look back far enough in the history of milk bills in the Pennsylvania legislature, we see on other occasions a long awaited milk bill passed the Senate only to be stalled out in the House. Will this year be any different? Who knows? Election years are funny-seasons.

Earlier this month, Senators Elder Vogel and Judy Schwank, the chair and ranking member, respectively, of the Senate Ag Committee introduced legislation to allow the state to collect the state-mandated OOP and distribute it to farmers. A similar bill had been introduced in the past two legislative sessions on the House side by Rep. John Lawrence, but Vogel and Schwank were unconvinced to move it in the Senate.

This time, Vogel and Schwank are introducing the measure after many years of multiple hearings, task forces, and other such discussions of what on earth to do about the state-mandated OOP to make sure all of it — 100% — gets into the pockets of Pennsylvania dairy farmers, as intended.

The Vogel-Schwank rendition would “empower” the Pennsylvania Milk Board (formerly known as the Pennsylvania Milk Marketing Board) to administrate the process of collecting and distributing the premium with involvement of the Pa. Dept. of Revenue. The state would distribute the funds to farmers, milk handlers and dealers using a formula that includes cost of production, price received, and other measures.

The current method of distribution only follows the $1 premium for milk that is produced, processed, and sold in Pennsylvania, but consumers pay this $1.00/cwt premium within the minimum retail price set by the Pa. Milk Board for ALL milk sold at retail in Pennsylvania — no matter where it comes from.

For decades the debate over the Pa. OOP has had its moments where farmers thought a change would come to prevent significant gamesmanship stranding millions of dollars in premiums intended for the dairy farmers.

Yes, I am cynical. We are five months away from the end of a 2-year legislative session and four months away from an election / re-election. Forgive my gut reaction: Ho-hum…. here we go again… time and money spent on spinning this wheel of fortune. Not buying it. Stay tuned.

In June, the Senate Ag Committee passed SB 1229, which would allow the Pa. Dept. of Agriculture to provide financial assistance to dairy farmers who enroll in the federal dairy margin coverage (DMC) program.

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

Posted on May 14, 2024 by Agmoos

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.

Is there a middle ground for the greater good? Ultrasound operators still jailed, State provides some answers; Legal team responds

Posted on April 24, 2024 by Agmoos

By Sherry Bunting, special for Farmshine, April 26, 2024 edition

HARRISBURG, Pa. — It has been two weeks since Rusty Herr, 43, of Christiana and Ethan Wentworth, 33, of Airville were arrested on April 10 and 11 and separately incarcerated in Lancaster and York County Prisons — their respective counties of residence.

As of April 24, both men are still in jail, without bail, and without seeing a judge.

“This is an unprecedented case of lawless persecution against two farmers who help other farmers with standard breeding practices, as is their right,” said Robert Barnes, Esq. of Barnes Law LLP, who accepted the case on April 17.

“The Pennsylvania Veterinary trade organizations conspired to protect their own monopoly in violation of the law and in a manner that has hurt farmers throughout Pennsylvania. The Pennsylvania Department of State (DOS), in a secret star chamber proceeding, ordered the unlawful imprisonment of Rusty Herr and Ethan Wentworth, who have still never seen an arrest warrant, heard the charges against them, had a hearing, or seen a judge,” Barnes continued in a statement provided to Farmshine Wed., April 24.

“In short, their due process rights have been obliterated. I will seek justice for Wentworth, Herr, and their families to the fullest extent of the law,” Barnes asserted.

The only dockets available for prior orders last week were two found on the website of the Pennsylvania Veterinary Medical Association (PVMA) as part of a package on their “advocacy” page asking members to file complaints with DOS by referencing the provided docket numbers, and then report back to PVMA so they can keep track. One was a 2010 docket with Herr as respondent and the other 2018 naming Wentworth. Both orders stated civil penalty, not criminal.

All other court and DOS system searches yielded nothing, and even those docket numbers came up “nonexistent.”

In a PVMA press release dated April 19, the veterinary trade organization stated: “PVMA is unaware of the circumstances surrounding the arrest of two individuals on April 10 and 11 for contempt of court.”

And yet, in their 2020 Complaint that they had posted at their website before it was removed this week, the PVMA specifically stated: “Since these individuals continue to practice veterinary medicine without a license after their initial order to cease and desist, we request that the state file contempt charges with the Commonwealth Court. PVMA is able to supply additional witnesses upon request.”

Farmers, veterinarians and others in the dairy industry are discussing the case. Calls, texts and emails pour in from dairy farmers who appreciate NoBull Solutions and rely on them for breeding service.

Calls, texts and emails have also come in to make further accusations against the imprisoned men — none of which are mentioned in the PVMA complaint or their links to two previous civil orders, nor in any documentation provided now by the DOS.

After initiating a request for an interview on April 15 and submitting questions to the State Board of Veterinary Medicine on April 16, Farmshine received a few answers on April 24 from the Department of State (DOS).

On the current situation, the DOS responds: “We can neither confirm nor deny the existence of an investigation or matter.”

On the question of what hearing process may or may not have been available to Herr and Wentworth regarding past civil penalties and cease and desist orders, dockets were provided, one with Herr as the respondent in 2010, and one with Wentworth and another individual who has not been arrested named together as respondents in 2018.

“Speaking generally, the Department reviews every potential license violation of which it becomes aware, whether that is through a complaint filed directly to the Department, a notification from local law enforcement or through media reports. After review, a determination is made as to whether formal action is warranted,” the DOS press office explained in their email response.

The long and short of the DOS response here is that all respondents have due process at some point, which includes notice and an opportunity to participate in those original proceedings, call witnesses, introduce evidence, and testify on their own behalf.

Herr and Wentworth did so, on their own behalf, without legal counsel, in 2010 and 2018, respectively, according to the documents provided by the DOS.

However, they were not noticed since then by the DOS, and nowhere in the responses from DOS or the adjudications they provided is an automatic 30-day prison term without bail stated as a consequence for “continuing to violate the Act” by ultrasounding cows they do not own. No proof of the process has been shown in the responses from the DOS apart from the 2010 and 2018 actions.

On the question about where pregnancy and diagnosis are linked in the law or regulations, the bottomline is they are not. The State Board of Veterinary Medicine decides this through adjudication and orders as the legislature grants the Board this authority.

“The Board adopted the position that, ‘both the performance of a surgical procedure, such as the Gymer/Stemer Toggle Suture Repair, and the diagnosis of a physical condition, such as detecting through ultrasound whether an animal is pregnant, constitute practice of veterinary medicine,’” the DOS reported, adding that the Act contains an exception for any person or an employee of that person or agent while practicing veterinary medicine on his or her own animals. (What constitutes an ‘agent’?)

The DOS included a copy of an Amended Adjudication and Order, Docket No. 2296-57-09, which came before the State Vet Board with Herr as respondent in May of 2010. Performance of toggle on six animals he didn’t own and performing ultrasound for detection of pregnancy on animals he didn’t own were both listed specifically in the determination of civil penalty.

This was 14 years ago, and the docket from 2010 confirms that Herr responded to say he is “no longer toggling other people’s cows.”

The amended adjudication goes on to explain “should the respondent continue to violate the Act, he may be subject to the imposition of a $10,000 civil penalty per act or practice.”

Nowhere does it mention automatic 30 days in prison for continuing to detect pregnancy through ultrasound.

For Wentworth, the docket history supplied by the DOS began Sept. of 2017 while he and another named individual, who has not been arrested, were previously employed by Select Sires. Docket No. 1928-57-17, simply states “Respondents engaged in the practice of veterinary medicine without being properly licensed to do so under the Act” and describes this as “performed pregnancy examinations on cattle using ultrasound equipment.”

Both responded, and this led to a formal hearing, eventually in April of 2018, when the state’s expert witness, a University of Pennsylvania professor, could be available.

Both respondents appeared without representation. They testified on their own behalf and were cross-examined. In May 2018, the matter was closed and determinations were made that both men used ultrasound equipment to “determine pregnancy of customers’ cows” and to “determine if cows were in heat or had other medical issues.”

Noted in the history is this statement that begs more questions: “The economic savings to the cow’s owner, based on a positive pregnancy or negative heat result, are outweighed by the risk of harm to the cow posed by the unlicensed practice (of ultrasound).”

That brings us to April 2024, which the DOS will not comment on.

What we are left with on that is a downloaded copy of the PVMA complaint requesting contempt charges via the Commonwealth Court. Attached to the complaint were pictures from the arrested men’s facebook pages showing ultrasound pregnancy detection.

Bottomline, according to the DOS response: “The State Board of Veterinary Medicine is responsible for enforcing the Veterinary Medicine Act as enacted by the General Assembly. Questions about the provisions of the Act (including the exception in 63 Stat 485.32) should be directed to the legislature.”

This response makes the timing and manner of the arrests more curious, coming six months after the Pennsylvania House Ag Committee opened discussion to look at ways to address the statewide shortage of large animal veterinary practitioners, including the Veterinary Practice Act to see if modifications are needed for a “middle tier” to help Pennsylvania farmers cope.

For veterinary practices, the economics are increasingly difficult in attracting and keeping practitioners and vet technicians in the large animal domain. Their financial and time investments are significant, often graduating $250,000 in debt, and the trend is for more to go into small animal practice with pets to realize a return.

“No large animal practitioner is doing this — for the money,” said one central Pennsylvania vet.

Farmers identify with that. They have significant investments, see their costs rising, and in much of the state, see fewer large animal vets and prohibitive costs for basic services from consolidating companies on small farms vs. large ones, so they look for options, including doing more themselves.

“We have good vets, and I have done some ultrasounding with Rusty, but my vet comes in for herd health, and I keep a good relationship with my vet,” said a dairy farmer from Kirkwood in a Farmshine call April 24.

“Rusty is not trying to take work from vets. He is just trying to help the farmers and provide service for them. He has supported me 100% to help me make breeding decisions in my herd. He will even suggest a mating to a bull outside of his genetic lineup. Instead of just trying to get more business for himself, he highly encouraged and helped teach me how to inseminate my own cows. He’s a mentor and true hero. If anything, he’ll come out of this stronger,” the Kirkwood dairyman continued.

There must be middle ground here. Clarity, transparency and solutions are needed.

“As farmers, we put our bodies and souls into this. As everything consolidates in this industry, how do we compete? This is what extinction looks like,” said Ben Masemore, an eastern Pennsylvania dairy farmer and friend of Herr and Wentworth, who is involved in NoBull Sires, a separate business from NoBull Solutions.

He shared a partial statement written by Herr from his prison cell.

“To this day, we have never once had a farmer or caretaker complain to the state about any single issue. I know that we have a tremendous amount of support behind us, and I realize this will all get resolved. I will be a better husband, father, and person because of this entire experience, and for that I am grateful,” wrote Herr.

He expressed his hope that fair-minded people “can come together… to create a level playing field, one in which we can all work together for the greater good of the industry… I hope and pray that good can come out of this and that someday we can all look back on this time as a steppingstone for meaningful and lasting change.”

Thanking the NoBull team and supporters, and grieving what the families are enduring, Herr wrote: “Thank you all so very much for your coveted prayers and support. Thank you for your financial generosity. Keep the faith and be strong, God is always good. This will all be over soon.”

NoBull Defense Funds have been set up at two local banks to help with legal defense to get them home. Separately, an online fund has raised over $17,000 so far at https://www.givesendgo.com/nobull?utm_source=sharelink&utm_medium=copy_link&utm_campaign=nobull

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Pa. orders dairy cattle movement restrictions, testing to protect against HPAI spread; detections now in 8 states

Posted on April 11, 2024 by Agmoos

By Sherry Bunting, Farmshine, April 12, 2024

HARRISBURG, Pa. – Add North Carolina to the list of states with confirmed detections of bird flu in dairy cattle.

While the USDA APHIS website had not yet updated its daily listing at 4 p.m. on April 10, the North Carolina Department of Agriculture and Consumer Services issued a press release at noon stating: “The National Veterinary Services Laboratory has detected Highly Pathogenic Avian Influenza (HPAI) in a dairy herd in North Carolina.”

This would bring the total to 19 dairy herds in 8 states: Texas (9), Kansas (3), New Mexico (2), Michigan (1), Idaho (1), Ohio (1), North Carolina (1), and South Dakota (1). (South Dakota was added to the list after Farmshine went to press)

“This is an evolving situation, and we are waiting for more diagnostics from NVSL and will work collaboratively with our federal partners and dairy farmers in North Carolina,” said Agriculture Commissioner Steve Troxler. “It is important to note the FDA has no concern about the safety or availability of pasteurized milk products nationwide.”

Introduction of HPAI A(H5N1) to dairy cattle has been shown to be by migratory birds, and USDA epidemiological studies show it may also be spreading between cows.

“Both are sources of introduction,” said Pennsylvania’s Assistant State Veterinarian Dr. Erin Luley, answering questions during the second Center for Dairy Excellence (CDE) weekly HPAI update conference call April 10.

USDA, in fact, reported on April 5 during a UN Food and Agriculture Organization (FAO) virtual meeting of scientists that they “have not seen any true indication that cows are actively shedding the virus and exposing it to other animals, or that it is replicating within the body of the cow — other than within the udder.”

This is why lactating dairy cattle are the focus of multiple state orders in recent days regarding restrictions, testing, and quarantine of interstate dairy cattle movement.

“The virus might be transmitted from cow to cow in milk droplets on dairy workers’ clothing or gloves, or in the suction cups attached to the udders for milking,” Dr. Mark Lyons, USDA Director of Ruminant Health, shared during the international meeting, according to a University of Nebraska Medical Center (UNMC) report.

The UNMC report also noted that dairy cattle are frequently transported from the southern parts of the country to the Midwest and north in the Spring. They are floating the possibility — without naming specific herds or locations — that all affected cows may trace back to a single farm. In fact, the confirmed positives in Idaho, Michigan, Ohio and now North Carolina are on premises where cattle had previously been brought in from Texas.

“The virus appears to replicate in mammary tissue, so those cattle that are not lactating do not have a high viral load for transmitting the virus,” noted Dr. Luley in the CDE call.

According to the epidemiologic data released by USDA, she said, the early cases, especially in Texas, New Mexico, and Kansas, show that HPAI was predominantly introduced by wild birds.

“For a few other detections, including in Michigan and Ohio, the main source seems to be the movement of animals from other states,” said Luley.

To prevent spread to dairy cattle in the Keystone State, the Pennsylvania Department of Agriculture issued an Interstate and International Quarantine Order on April 6 for the restriction of movement and pre-movement influenza testing of dairy cattle from states where HPAI has been detected in dairy cattle.

When asked how the Pennsylvania Order compares to what other states are doing, Dr. Luley said “ours is the most stringent. The goal is preventing the spread of this condition into our state — to proactively protect the animals in our state to the best of our ability.”

In short, the Pennsylvania Order applies to dairy cattle, not beef cattle. It restricts all movement of dairy cattle into the state for any reason from farms where HPAI has been detected.

Furthermore, dairy cattle coming into Pennsylvania for sale or show, must do pre-movement testing if they come from a non-affected farm in a state where HPAI has been detected. Those states to-date are Texas, Kansas, New Mexico, Idaho, Michigan, Ohio, and now North Carolina and South Dakota (updated by APHIS April 11).

The USDA APHIS website is updated daily and includes a map showing the states of HPAI detection in dairy herds at https://www.aphis.usda.gov/livestock-poultry-disease/avian/avian-influenza/hpai-detections/livestock

This should be consulted before movement of cattle from other states into Pennsylvania, to be sure the appropriate restrictions and pre-movement testing are applied.

Dairy cull cows from any state with a positive case, even if coming from a non-affected farm, that are destined for Pennsylvania slaughter facilities, are not subject to pre-movement testing if the animals are slaughtered within 72 hours of entry. However, they must go directly to a slaughter plant and cannot be commingled with other cattle at an auction center.

Calves under one year of age are considered low risk and are exempt from pre-movement testing at this time.

Pre-movement testing must be done through a laboratory in the national network, and the results must accompany the shipment. Acceptable test samples for non-lactating dairy cattle, such as bred heifers, are nasal swabs; however, the only acceptable test sample for a lactating animal is a milk sample. Again, this is because the mammary system is where HPAI viral replication is being seen.

“At present, the disease has not been shown to affect beef animals,” said Luley about why the Order is written only for dairy cattle.

She gave examples of how the Order is being implemented:

If a producer wants to import a group of bred heifers from Texas, and they come from a farm that had a confirmed positive, those heifers would not be allowed to come to Pennsylvania. If they come from a non-infected herd in Texas, they would need pre-movement testing with the farm’s veterinarian overseeing the sampling and the analysis done by a national network lab.

If a producer in Ohio wanted to move cull dairy cows directly to a slaughter facility in Pennsylvania, if they are coming from a currently unaffected farm in that state, no testing would be required. But, if they are from an affected farm in that state, those cull cows would not be permitted to come to a Pennsylvania slaughter facility.

If a producer from Virginia, where there have been no detections of HPAI, wanted to ship fresh heifers to Pennsylvania, there would be no requirement to test because no infection has been detected to-date in that state, so there is no movement restriction and no pre-movement testing requirement.

There are no quarantine orders on milk movement at this time; however, this would change if HPAI were detected anywhere in Pennsylvania. If that occurs, the state would enact its “Temporary Order Designating Dangerous Transmissible Diseases” provision, now amended to include “Influenza A Viruses in Ruminants.”

In such a scenario, a quarantine would be set up for an affected farm to work with animal health officials and their veterinarian to show appropriate biosecurity measures to qualify for a 30-day milk movement permit. With that permit, their milk could go only to a processing plant.

“The viral sequencing matches the circulating strains in the (migratory bird) flyways,” said Luley. “We can impose a quarantine, but we can’t apply it to migratory waterfowl, so that risk remains, and it is the reason why biosecurity is our best tool.”

USDA Wildlife Service biologists Tom Roland and Kyle Van Why said their winter surveillance of migratory waterfowl and raptors in the Susquehanna watershed, for example, shows the virus is here in these populations, but at lower numbers than last year.

Even though starlings and pigeons are not good transmitters of the disease, they do carry it, and the numbers of these birds are high, so they bear watching.

Roland said that with restrictions on how to handle migratory birds, including resident Canadian geese and vultures, farmers should contact the national hotline at 1.866.487.3297 to work with the Wildlife Service for case-by-case strategies to manage and mitigate bird use of the farm. They have tools that are not generally accessible.

Dr. Hayley Springer, Penn State extension veterinarian, said opportunities are available to help dairy farms build their own biosecurity plans. In-person open houses are being held across the state at county extension offices, check with yours.

“Everyday biosecurity is the first line of defense, and effective for Influenza A,” said Springer. Biosecurity Kits to assist are available from CDE.

According to Dr. Luley, one dairy farm in Pennsylvania reported signs that met the case definition closely enough to undergo the HPAI testing protocol, which thankfully turned out to be negative.

Dairy farmers seeing signs in their herd should contact their veterinarian. Clinical signs of HPAI in cattle, which the American Association of Bovine Practitioners this week announced it will rename as Bovine Influenza A, include:

1) a sudden drop in feed intake with concurrent decreased rumination and rumen motility;

2) a subsequent marked drop in herd level milk production with more severely affected cows having thickened milk that almost appears like colostrum or may have essentially no milk at all; and

3) changes in manure, especially tacky to dry manure.

Visit https://www.centerfordairyexcellence.org/hpai-industry-call/ for recordings and other valuable information.

Read Farmshine at farmshine.net for continuing coverage and previous articles April 5 and March 29

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

Posted on March 22, 2024 by Agmoos

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 One, Confusion: ‘Will this bill really improve milk prices?”

Posted on March 7, 2024 by Agmoos

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

USDA FMMO hearing resumes, Dr. Stephenson testifies for MIG proposal to end $1.60 Class I base differential

Posted on January 19, 2024 by Agmoos

USDA’s cross examination reveals possible flaw in simulator model result

By Sherry Bunting, Farmshine, Jan. 19, 2024

CARMEL, Ind. — Shadow pricing, demand elasticity, commoditized loss of prior incentives, balancing cost, give-up cost, base differential, uniform differential, market-clearing price…

These terms ruled the day when the USDA National Hearing on Federal Milk Marketing Order (FMMO) proposals resumed in Carmel, Indiana this week after a more than four-week recess.

The hearing began in late August. It did not conclude by Fri., Jan. 19, so it will again recess until Jan. 29.

American Farm Bureau estimates that another 270 days of post-hearing processes must follow before a USDA decision could be implemented, and even this is subject to proposals that seek a 15-month delay between decision and implementation due to potential impacts on CME futures-based risk management tools, such as Dairy Revenue Protection (DRP).

This is far from over, and hanging in the balance is the Class I price calculation, now based on an averaging method, under which farmers have lost more than $1.02 billion since May 2019 vs. the previous ‘higher of’.

Testimony Tues., Jan. 16 included Dr. Mark Stephenson, retired UW-Madison dairy economist on behalf of Milk Innovation Group (MIG), made up of ‘innovative’ and branded fluid milk processors, including fairlife, HP Hood, Anderson-Erickson, Danone North America, Shamrock, Organic Valley, Aurora Organic, and Pennsylvania’s own Turner Dairy Farms.

Dr. Stephenson delivered his bombshell for MIG that was based on analysis he did using 2016 data in a simulator model, from which he made “certain discoveries.”

First, Stephenson suggested that fluid milk is shifting to become price-elastic vs. the long-held belief that fluid milk sales are price-inelastic. This was followed up by fluid milk processor representatives showing post-Covid fluid milk sales volumes declined as prices rose.

Stephenson cautioned USDA to refrain from setting regulated prices too high, saying this would reduce returns to producers by reducing total fluid milk sales.

This suggestion was challenged in cross examination. In fact, AFBF chief economist Dr. Roger Cryan noted the FMMO focus on fluid milk was originally partly predicated on its “public good” as a food staple, almost akin to a “public utility.”

In cross examination on Jan. 17, Stephenson also revealed he was paid by MIG to analyze the $1.60 base differential, and his work began before MIG finalized its proposal to remove the $1.60 per cwt. base differential all the way down to zero for all Class I milk, nationwide.

Currently, the $1.60 base differential is built uniformly into the Class I price for every regulated county across all FMMOs. The varied location differentials are added to the base differential and spread across the revenue-sharing pools.

Stephenson used the U.S. Dairy Sector Simulator Model (USDSS) to develop a map as though a “milk-dictator” could efficiently “move milk to its highest global use” through various constraints.

In the marginal value map result, Stephenson said the U.S. average value of the differences was minus-38 cents, indicating on a national average, it is more valuable (cost saving) to the model to have milk in a cheese plant than in a fluid plant in most counties. The range goes from somewhat more than $2 per cwt more favorable to a cheese plant (in red) to somewhat more than $2 per cwt more favorable to a fluid plant (in green) in the Southeast. From this “potent revelation,” Dr. Stephenson concludes that, “The model result bolsters the argument to not dilute the value of the $1.60 into the pool if that value represents a balancing cost for fluid and an opportunity cost (give-up) for manufacturing plants. Rather, require the fluid plants to pay the $1.60, but let the fluid plants pay that directly to the farms, cooperatives or manufacturing plants who supply the milk” to the fluid plant.

The map showed the incremental differences in ‘Class I minus Class III “shadow pricing,” across the country.

These marginal value differences, said Stephenson, reflect the opportunity costs of getting manufacturing plants to give up milk to fluid plants in the Central U.S., where milk production exceeds population vs. the cost to balance fluid milk markets in the East, particularly the Southeast, as well as in California and southern Nevada, where population exceeds milk production.

It was the questioning from USDA AMS administrator Erin Taylor on the ‘shadow pricing’ figures in various anchor cities that prompted Stephenson to concede: “You may have caught a major flaw in what I have done here, so I would want to look at this more carefully.”

Yes, he will be back to address such questions when the ever-lengthening hearing resumes on January 29.

Notwithstanding exposure of a possible flaw in the simulator analysis, Stephenson said the ‘market-clearing’ price is the target to aim at, and the system of setting regulated minimum prices “should err on the side of being too-low instead of too-high.”

He said processors will pay premiums in the breach of a ‘too-low’ minimum price, but there are few options for processors to deal with a ‘too-high’ minimum price — other than to opt out of regulation for manufacturing plants (de-pool), but that fluid milk plants have no ability to opt out. They are required to remain regulated by FMMOs.

“Manufacturing is by far the largest use of milk in our dairy industry,” he said, noting that Class I fluid use at 18% of total U.S. milk production (regulated and unregulated). Therefore, he said, manufacturing use should no longer be treated in the FMMO system as “the trailing spouse in the marriage.”

On MIG’s behalf, he introduced a new way of looking at the marginal value between Class III and Class I, and a mechanical change that could be made in how the $1.60 base differential is paid as needed directly to producers, cooperatives and plants that actually supply milk to Class I plants, instead of being paid to the FMMO pools.

The $1.60 became a uniform part of the Class I price in the 1999 Order Reform. About 40 cents of this $1.60 was included to represent the cost of farmers transitioning from Grade B to Grade A. The rest represents ‘give up’ costs from manufacturing to Class I and balancing costs to serve the fluid market.

Stephenson backed up MIG’s assertion that farmers don’t need any of this $1.60 base differential because virtually all milk produced today is now Grade A. During cross examination, NMPF attorneys brought up the cost farmers have to maintain Grade A status. Don’t their costs count here?

Undeterred, Stephenson suggested that these costs are accounted for in the classified pricing since all milk for all uses is Grade A, today. He said that USDA uses ‘minimum pricing’ as a tool so that the regulated price leaves space for voluntary premiums that processors can pay to “incentivize something else.”

“Being chronically above the market-clearing price creates a surplus product, which the market can’t clear,” said Stephenson. “Our dairy markets have always walked on a knife’s edge. Being plus or minus 1% on milk supplies can cause some pretty big swings in prices as the markets do attempt to clear that.”

As for removing the $1.60 uniform price differential either from the price or the pool, Stephenson said it is like “other premiums” that have become “commoditized.”

He likened it to the rbST premium and milk quality premiums, saying those premiums have also become “commoditized.”

For example, when farmers were first asked to give up rbST and sign pledges, a premium was offered. Now, that premium is not paid, he said, because the practice of abandoning rbST is now “commoditized.”

Likewise, said Stephenson: “Milk quality (low SCC) has improved so much that those premiums are not there anymore. They have also become commoditized.”

So, the better dairy farmers get, the more their incentive premiums — and even big chunks of their regulated minimum price — are at risk to be cannibalized by milk buyers because the farmers have now done what they’ve been incentivized to do, so they don’t need to be paid to do it.

MIG also seeks to stop NMPF’s proposal to tweak and raise location differentials across the Class I surface map, putting on the stand some of their members to show how unfair competition arises between independent bottlers and cooperatively owned fluid milk plants in the same region.

For his part, Stephenson noted the concept of pulling the $1.60 base differential out of the pool may discourage non-productive distant pooling.

This week was certainly eye-opening as MIG is all about the processor costs with zero regard for producer costs. They even put an HP Hood representative on the stand who included the $120 million recently announced for expanding the Extended Shelf Life (ESL) plant in Batavia, NY as a “balancing cost,” that somehow justifies giving back the base differential to processors even though processors can pass their costs on to consumers, whereas farmers cannot.

Under cross examination, Hood’s representative admitted that plant-based beverages are also bottled in those so-called ESL ‘milk balancing’ facilities, along with premium products like Lactaid.

Meanwhile farmers continue to incur costs associated with a whole host of improvements that were at one time incentivized. It appears the processors expect farmers to forgo being paid for those costs simply “because everyone’s doing it” and incentives are no longer needed.

The idea here is to deflate regulated minimum prices as much as possible in search of the elusive and not-well-defined Holy Grail: the market-clearing price.

Processors want cheaper milk, and they’ve got multiple proposals to accomplish that. They want to deflate the regulated minimum milk price to free up their ability to pay premiums for “something else.”

In fact, in his testimony, Stephenson admitted that as these costs and premiums are “commoditized,” space is freed up to “pay premiums for something else.”

What is the “something else” that processors will pay to incentivize after they potentially succeed in reducing the regulated minimum price in multiple ways through multiple proposals?

Are climate premiums the next thing coming once the milk price is deflated far enough? Will USDA buy what MIG and IDFA are selling?

Stay tuned.

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‘Twas the Day Before Recess: How Senator Grinch from Michigan blocked Santa’s Whole Milk delivery… for now.

Posted on December 22, 2023 by Agmoos

Even Dr. Seuss’s Grinch had a change of heart. So let’s get to work calling our Senators in Every-Who-Ville!

The House of Representatives overwhelmingly passed H.R. 1147, The Whole Milk for Healthy Kids Act 330-99 on Dec. 13. Senator Roger Marshall (R-Kan.) put forward a unanimous consent motion for a Senate vote on Dec. 14 in the hopes of delivering the Whole Milk bill to the President’s desk for Christmas, but this motion was blocked by Senator Debbie Stabenow (D-Mich.). Marshall has an identical Senate Bill S. 1957 referred to the Senate Ag Committee of which he is a member and she is the chair. That bill has 12 total sponsors from 10 states. We need more. Make your lists and check them twice, Call and find out if YOUR Senators will be naughty or nice!

By Sherry Bunting, Farmshine, December 22, 2023

‘Twas the day before Recess

And all through THE HOUSE,

The Representatives were stirring,

Some as if they saw a mouse.

The amendments had been laid

By the Speaker’s desk with great care

In hopes that healthy choices

Of Whole Milk for kids would be there.

The bipartisan support was nestled

All snug in cosponsorship,

While opponents spoke of ‘experts’

And hurled their ‘expert’ admonishments.

Opposers, few, with empty platitudes

And supporters, many, full of truth

Had just settled in for

A long hour of dispute.

Then what to my wondering eyes

And ears should appear?

But the words, and the vote

We had — for so long — waited to hear.

Whole Milk for Healthy Kids

Won the House vote

Three Hundred Thirty to Ninety-Nine,

But when a whole-milk-drinking Doctor

From Kansas over in the Senate began to opine

It was Senator Grinch from Michigan

Who crushed his bill sweetly on the vine.

“My esteemed colleague is making me hungry,”

Said Senator Grinch with a sugary smile.

“He’s reminding me of growing up with

Cookies and milk,” she giggled all the while.

“I grew up with a family of dairy farmers,”

Said Senator Grinch, Chairwoman of Ag.

“I certainly support milk and the dairy industry,”

She said, tucking the Kansan’s milk bill into her bag.

“This is an important conversation

To have and continue having,” she grinned,

Putting it to bed.

… But Senator Grinch, we must tell you

This conversation, for 10 long years,

We have had and have had and have had!

Make no mistake,

The smiling Senator Grinch did say

She fully supports healthy options for kids

And lauded milk and dairy that day.

“But one thing is clear,” she said,

As her eyes began to narrow and jaw firmly set.

“Those school standards for children,

They are and should continue on dietary science to be set.”

But wait, what else to my wondering

Eyes and ears did appear?

A recorded memory of Villain Vilsack

In 2015 (at a House hearing to be clear.)

“I wish there were scientific facts,

But this is about well-informed opinions”

That’s how we do Dietary Guidelines, my dear.

He talked of preponderance

Of evidence and such.

He said: ‘Oh no’ we can’t include

Diets that treat obesity so much.

He said: “These Guidelines are not

What you shall, but what you should,

These guidelines,” he said,

“Are something we think is good

For you to consider, but yes,

People will make choices too.”

You can choose. I can choose,

That’s true, you see,

Unless you are a child in school

Eating meals two of three

Each day of each week

Nine months or more each year.

If you are that child,

Then no choices for you, my dear.

But don’t fret and don’t fear!

You may choose low-fat

And fat-free,

And a plethora of drinks

Sweetened artificially.

Your choice can be fruity, fizzy

And caffeinated too!

You can choose what you want

If federal bureaucrats agree with you!

So pop-tarts, chips, cookies,

Doritos, donuts, go ahead!

But whole milk for kids,

Government bureacrats want

That deal to be dead!

As Senator Grinch from Michigan

Reminded us all that day,

She grew up in a family of dairy farmers,

And supports you all to say

Milk is good and is great, to be sure

But Guidelines ARE supreme

And children must obey!

“We should not be supporting

Individual food products

That are in our states,”

The Michigan Grinchwoman of Ag

Did scold with a finger wag.

But isn’t Michigan the #5 MILK State?

I wondered aloud,

Then I remembered their specialties

Are ultrafiltered, shelf-stable, dairy-based

With big cheese and ingredient plants

Making them proud.

Did Senator Grinch read the bill?

Did she look at the evidence?

Talk to schools, parents or kids, if you will?

She could not have done her homework

Of that I am sure,

Because she said, smiling sweetly,

Just have those conversations some more.

And so she went on about USDA,

Dietary Guidelines and Such.

They are the experts,

And heed them we MUST

‘They are THE EXPERTS’

And they are meeting RIGHT NOW

To decide for 2025-30 what is best

In Any-Who-Ville and how!

With the sweetness of honey,

The Ag Grinchwoman did say

All these things as she blocked

The Senate’s Whole Milk vote that day.

So now it’s up to us.

We need more cosponsors to enter the fray.

We need them from Every-Who-Ville

That has a Senator today.

We need cosponsors from North

And from South, East and West.

We need them to care that children,

Parents and schools can choose best.

We need them to talk to Senator Grinch

From Michigan

As only another Senator

In the Senate really can.

We need them to smile sweetly and say,

Shouldn’t children be offered milk

They will drink and not throw away?

We hope as Congress return

To Every-Who-Ville this holiday

That they consider the children

All around them at school and at play,

That they consider their health,

For which whole milk doth provide

Flavor and nutrition, and that they strive

To do better by signing onto this bill right away

The Whole Milk for Healthy Kids Act,

Senate Bill S. 1957 by the way.

And that perhaps, just maybe,

We hope and we pray,

Senator Grinch from Michigan’s heart

Can grow 10 sizes – or more – this holiday.

-30-

PHOTO CAPTION: Senator Debbie Stabenow, the Democrat from Michigan who chairs the Agriculture Committee on the Senate side, was certainly all smiles and pleasant as she shut the door on what Senator Roger Marshall, the Republican from Kansas, called “a slam-dunk for American families.” Marshall is a medical doctor, an obstetrician, and member of the Senate Ag Committee. He chugged a glass of whole milk on the Senate floor last Thursday, Dec. 14, before introducing his unanimous consent motion to put the House Whole Milk for Healthy Kids Act to a Senate vote the day after it had passed the House of Representatives in an overwhelming 330 to 99 count.

Let’s make our (Senate) lists and check them twice. We need to find out who’s naughty and nice. As Senator Marshall put it, this bill could have been on the President’s desk this week and delivered to farmers and schoolchildren by Christmas. But that special Santa delivery was ultimately blocked by Chairwoman Stabenow. Current sponsors of the Senate’s identical bill, S. 1957 include Senator Marshall, along with Senators Peter Welch (D) of Vermont, Susan Collins (R) and Angus King (I) of Maine, Kirsten Gillibrand (D) of New York, John Fetterman (D) of Pennsylvania, Cindy Hyde-Smith (R) of Mississippi, Ron Johnson (R) of Wisconsin, James Risch (R) and Mike Crapo (R) of Idaho, Chuck Grassley (R) of Iowa, and just this week a new cosponsor signed on, Jim Vance (R) of Ohio.

We need many Senate cosponsors to sign on, especially members of the Senate Ag Committee, and we need Senators motivated to speak with Chairwoman Stabenow, to ask her to please stop putting the agenda of Washington bureaucrats above the health and welfare of America’s children. Let’s keep this momentum going. Call the two U.S. Senators who represent your state and find out if they are naughty or nice. If they need more information, visit 97milk.com and download the handout Why Whole Milk.

If your Senators are already signed on to S. 1957, thank them. If they have not signed on, ask them to consider this level of support for the bill so that it goes to the floor to allow children to choose milk they will love and consume instead of throwing it away — so the options of whole and 2% milk can be offered by schools instead of only fat-free and 1% low-fat milk. This is about health, nutrition, learning readiness, and the future. C-Span screen capture graphic by Sherry Bunting

With Ja-Bob herd dispersal Nov. 10, one journey ends and another begins

Posted on November 9, 2023 by Agmoos

The Ja-Bob Holsteins dispersal Nov. 10 represents a unique journey in Holstein genetics and the first step as Mark and Joy Yeazel embark on a mission to build a dairy at Eternal Families Tanzania

“Every child deserves two parents. Every child deserves love, and they add into that they are raising them as Christians to be future leaders for their community and their country,” say Mark and Joy Yeazel as they talk about the next chapter in early 2024 that begins with the Nov. 10 complete dispersal sale of their Ja-Bob Holstein herd at their dairy farm near Eaton, Ohio. Mark and Joy had visited Eternal Family Tanzania, an orphanage of 130 children, organized as 10 homes with two parents and 13 children each, and they are seeking to be sustainable from a food standpoint. They wanted to milk cows, and if anyone is prepared to help them do that, it’s Mark. “I felt God calling me to do this,” he said. But to do it, he knew he’d have to sell the herd he has been devoted to for 50 years, to end one journey and begin another.
Be inspired by the video about the mission here
The sale catalog, including benefit lots and donations can be found here

By Sherry Bunting, Farmshine, October 27, 2023

EATON, Ohio – A new chapter begins for Mark and Joy Yeazel of Ja-Bob Holsteins in early 2024. It has been in the making since they first visited Eternal Family Tanzania orphanage in East Africa in March of 2019. In fact, their Junk for Jesus ministry they started 18 years ago had already been financially supporting this ministry — a village of 10 sets of house parents each raising a dozen orphans and growing the farming enterprise to feed them.

Fast-forward to spring 2023 when they went back to see how God was working there. On April 2, Mark, who turns 63 this week, had planned to milk five more years. Seven days later, on April 9, he was planning to sell the herd. Mark says they are doing this for the children, “for the least of these,” called by God to build a dairy at the Eternal Family Tanzania farm.

Nearly 200 lots will be offered at the November 10 complete dispersal of the unique Ja-Bob Holstein herd. All of the dairy equipment, including robots, will sell in the auction managed by Fraley at the farm in Eaton, Ohio, and on Cowbuyer. There will also be donation lots with proceeds going 100% to the mission.

The sale catalog is creating some buzz among breeders for its foundation and the unique traits Mark has brought in. Selling are 105 of the 125 milking cows, 80 calves and heifers, as well as embryos and semen. There will be many unique combinations of red, polled, homozygous polled, A-2 and ‘slick’, from a foundation built on cow families like matriarch Sky-Hi Mars Helen-ET RC 4E92 GMD DOM, and 35 years of aAa breeding. Mark has prioritized width, strength and function.

Some of the lots, as well as donations of semen (including Ja-Bob Jordan-Red) from Triple Hil and embryos from ABC Genetics will directly support the mission. Donated lots continue to come in. This includes a recently added 20 units of early-release Ja-Bob Heritage PP-RED-ET (homozygous polled) from Triple Hil and an anonymous dairyman donated 10 units of sexed Radix P. NoBull Sires recently donated 10 units sexed and 20 units conventional semen (buyer chooses bull in their program).

Mark notes in a Farmshine phone interview that on their spring 2023 visit to Eternal Families Tanzania, they were “so impressed with the village, the design, the school they built, the way they are farming and really embracing the whole vision of caring for the children and doubling the size of the village. One of their stated goals is to be food independent. They built a fishpond and catch water off the roofs. They wanted to start raising chickens, and they wanted to start milking cows and to graze the fields in the off season.”

His wheels started turning. “I think we are supposed to build that dairy,” he said to Joy on the plane-ride home. They hesitated another day. He knew the only way he could do it was to sell the herd.

“I just felt that was what God wants me to do. This is all I’ve ever done for 50 years on this farm, milking these cows, building this herd, but I always said: ‘Do what God wants us to do.’ The question is: Are we going to say ‘yes’ whether it’s a small thing or a big thing?” he says.

Everything he has done may have prepared him and pointed him in this direction.

The Ja-Bob herd dispersal Nov. 10 ends one chapter as Mark Yeazel (right) prepares for the next chapter designing and building a dairy at Eternal Family Tanzania. On a recent visit he talks by the Mahindra tractor his church purchased for the orphanage with founder Mircea Toca (left) of Romania, and George Nywavi who is the farm manager and a house parent. Photo provided

“We are still relatively young and healthy. Our children aren’t interested in continuing what I do here. We’ve accomplished a lot and have been so blessed. To have a cow family like the Helens has been amazing, and the other goals and foundations we’ve been able to build that can be embraced by other breeders who can add their expertise to do good in the world,” he explains.

Talking humbly of the blessing of the chapter that is closing and enthusiastically about the chapter opening ahead, Mark cites Ephesians 3:20: “Now to Him who is able to do immeasurably more than all we ask or imagine, according to His power that is at work within us.”

“The first thing I need to do is to be there and to understand what an East African dairy looks like, not what a Mark Yeazel robotic dairy looks like,” he says, noting he has timelines in his mind, but “I’m not sure what God has in mind. It’s really one step at a time. This is what God has called me to do for the next year. What the following year holds, I don’t know, and that’s alright.”

Mark’s journey in the chapter that is closing really began when he came home from college thinking he needed to add some income to the farm. His interest in genetics led him to look for cows with red factor out of top families. Out of two major cow purchases he made in 1983, it was Helen that turned out to be the brood cow, with some in the Helen family today now 10^th generation EX, with up to 12 generations potential in the youngstock.

He added polled over 25 years ago and has had success selling polled bulls into AI. While he did not intend to chase the A-2 genetics, he used enough of those bulls that over 40 head are identified A-2 with over 40 homozygous polled, over 120 polled and 120 red, as well as 9 Linebacks in these categories. Seen here are 31 heifers arriving for the sale from the heifer raiser in Wooster, 80% of the Ja-Bob youngstock are red.

The ‘slick’ gene was added six years ago, working with Girolando embryos. Girolando are Holstein-like in appearance, but with heat-tolerance and adaptability. He wanted ‘slick’ calves out of red A-2. He has sold six slick bulls to the minor AI studs already, and about 20 slick animals are in the sale.

“I felt like we were ignoring some of the needs of the international community, that this is a void, and the heat-tolerant genetics would really help those breeders,”Mark relates. “I was not seeing anyone else doing it, so I thought: ‘Why not make some lines for the common breeder in tropical countries?’”

Not long after he got into it, ST Genetics and Select Sires started doing this also. So, while the large studs did a quick acceleration with genomics, Mark followed the red and the cow families. There were three bulls with the slick gene available, and he used all three, plus some semen from a bull in New Zealand. He also bought some embryos out of the University of Florida for outcross.

“I made my own bulls for the second generation breeding because I came into this early, so I needed several of them,” he explains.

While he didn’t set out a goal to breed for Tanzania, slick embryos could benefit the dairy project there in the future.

“Our first goal in Tanzania is to produce milk for children, so the type of cow is not nearly as important as just getting started in production, to start milking and see where God takes that,” Mark explains, adding that there are no organized dairies in that location, so cattle will be brought in from further away.

Mark’s journey really began when he purchased first-lactation 2-year-old ‘Helen’ at Sky-Hi Holsteins in Lacrosse, Wisconsin. She would become the matriarch of the Ja-Bob Holstein herd. Photo provided

The first major mile-marker in the Ja-Bob journey was exactly 40 years ago in October 1983 when Mark purchased Helen as a first lactation 2-year-old from Sky-Hi Holsteins in Lacrosse, Wisconsin. He knew her full brother was a red ET bull at 21^st Century Genetics, but back then there was no DNA testing. So, he looked for an ET sister.

He went to Lacrosse to view the herd, and when he saw Helen standing in the stall beside her 14-year-old dam, it was her deep pedigree for longevity that sealed the deal.

He spent $10,000 on Helen – more than double what his father had ever paid for a cow. He was hoping she would carry the red factor like her brother. “But I knew her pedigree was so good that even if the RC was not there, she was worth it,” he says.

Having just completed an internship at Select Embryos, Mark was excited about the prospects to bring the red gene out faster. Helen was flushed to a couple red bulls, including Needle-Lane Jon-Red-ET.

“Three of the first six calves were born red, and we knew we had the red factor. We also flushed her to black bulls, including Walkway Chief Mark,” he recalls.

It was the natural breeding of Helen to Chief Mark that produced Ja-Bob Mark Heavenly Joy, a cow that would go on to be rather famous in her own right. She was born 20 days after he started dating the woman (Joy) whom he would marry four months later.

While Mark says he has never been hung up on milking averages, the Ja-Bob RHA is 27,641M 4.1 1128F 3.25 898P with a 140,000 SCC. He has a couple cows over 200,000-pounds lifetime and several over 150,000, with some individual lactations over 40,000, and recently the first with 2000 of fat.

His original goals were to sell a bull to AI, make an Excellent cow, and produce a 1000F record. All of that was achieved in the first three years. Did he imagine then that he would sell well over 100 bulls into AI, that he would have 10^th generation EX in his herd, and a cow with 2000 pounds of fat?

No, but he knew good things would come from staying true to what was important. To accomplish what he did, he used aAa analyzing to shore up that foundation while pursuing the unique traits with young sires.

“I am not anti-genomics, by any means, but I feel the philosophy of genomics has narrowed the breeding base of the business, and breeds a like-kind cow. Sometimes, you don’t get a lot of balance with that type of cow,” Mark observes.

Strong front ends. Good feet and legs. That’s important, he says.

He talks about showing contacts in Kenya pictures of national champions in the 1970s, 80s and 90s, these wide, strong animals. He believes the industry needs to be “more intentional to sell internationally what fits the environment.” Toward that end, the red and slick bulls, he describes as built to be more rugged.

“I think we can do better,” he says. Even in the U.S., he encourages breeders to go back and look and know the cow’s environment. “If that is delivering feed to cows on concrete, and an average 2.5 to 3 lactations, then you’re making a terminal cow. But if those cows are grazing or in tie stalls, you want a little different type of cow, and the genomics may not reflect that.”

Facebook photo of the Ja-Bob milking herd three nights before the sale, robots visible at rear of the barn.

At Ja-Bob, cows are milked with robots that were installed in June 2013. In that system, teat placement is important, and it’s something Mark says must be considered when using genomic bulls. But when using Triple Hill or smaller studs, he says “I knew that wouldn’t be a problem. It’s the higher genomic bulls that have put emphasis on tight, high udders and short teats. Those are the ones you have to watch out for with robots.”

He notes that the common combinations of aAa matings can be found in higher genomic bulls, so, if that’s what he needs, it will more than likely be a genomic mating. But if he needs a less common combination, a 5-4-6 or a 5-1-3 or 2-1-6, for example, that won’t be genomic.

“If I am looking at red and the occasional RC, and combinations like 5-1-3 or 2-1-6, then I look at Triple Hill and K.I. Samen, and I am watching for those numbers to pop up,” he says, continuing to talk about the way aAa has worked for him from the beginning, something that keeps the foundation on track because it gets complicated when bringing in unique traits that can eliminate whole populations of choices.

What has been most satisfying about this journey as he looks ahead to the next?

Mark tells the story of visiting a farm in Holland many years ago. The breeder wanted to show him daughters of Ja-Bob Horizon-Red, one of Helen’s first sons. “I felt I did my job that a breeder somewhere in the world had a nice daughter from a bull I had bred, and he is happy with her.”

A little fun with the mission fundraising will be had with lots 179 and 180 (aka ‘Jane’ the cow and her daughter ‘cut from the same mold’)! Proceeds from this lot go 100% to the purchase of a cow for the Eternal Families Tanzania.

Of course, breeding a bull like Jordan multiplied this feeling quite a bit as Jordan went into 47 programs worldwide.

Reflecting on two Helen sons Jordan and Helium, he confesses he never set out to breed a top TPI bull, but Jordan was 66^th in the top-100 and number one red bull for a while. Helium was the number one udder composite bull for a while in Germany.

“To think that a little breeding program in Preble County, Ohio could impact people all over the world is hard to believe sometimes,” he admits.

“I’ve tracked the Helen family all over the world, so I have traced animals in 16 different countries, and identified 350 EX and over 1000 VG female maternal line descendants in 11 countries — not counting daughters of Jordan.”

In fact, he shares that Roxy may be the only cow to have more EX descendants worldwide. “Bob Miller and I have talked about this,” says Mark. “He traced over 450 EX back to Roxy.”

Helen also produced 13 red sons in AI. Perhaps Apple had that many, but Helen did it decades ago, when ET was in its infancy and long before IVF.

-30-

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With Ja-Bob herd dispersal Nov. 10, one journey ends and another begins

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