Will ‘local’ focus stem tide of milk displacement?

PA-preferred (1).jpgHarrisburg Dairies, Schneider’s Dairy step up for milk from at least 9 of 42 dropped Pa. farms

 

(Author’s note: Farmers whose milk has been displaced in 8 states are in various stages of determining their futures. Some are exiting the dairy business, a few have been picked up by cooperatives, or as in the case of this story, by processors. Some are resorting to marketing milk with brokers at much lower prices. In addition to PA Preferred, Tennessee’s legislature is working on a state label for milk.)

By Sherry Bunting, Farmshine, March 30, 2018

BROWNSTOWN, Pa. — In the days following the “Save Pennsylvania Dairy Farms” town hall meeting in Lebanon March 19, some breakthroughs came for 9 of the 42 Pennsylvania farms notified by Dean Foods that their contracts will end May 31.

Harrisburg Dairies, based in Harrisburg, picked up 5 (possibly 9) of the 26 farms let go by Dean’s Swiss Premium plant in Lebanon.

Schneider’s Dairy, based in Pittsburgh, picked up 4 of the 16 farms let go by the Dean plant in Sharpsville.

Both Harrisburg Dairies and Schneider’s Dairy source their milk through direct relationships with local family farms, and they use the PA Preferred logo on their milk labels, signifying it was produced and processed in Pennsylvania, which also means the state-mandated over-order premium paid by consumers is passed back through the supply chain.

“It really made the decision for us, when it came to needing our milk supply to be independent producers that we can have a direct relationship, monitor and inspect ourselves,” Alex Dewey told abc27 News, Harrisburg about the PA Preferred label and their decision to add five of the displaced farms to their Pennsylvania-sourced milk. Dewey is the assistant general manager of Harrisburg Dairies.

Likewise, Schneider Dairy president William Schneider told Clarion news that, “We really didn’t need the milk, but… these people were going to lose their livelihood. I didn’t want people to be out on the street, so we did what we could.”

Both dairies appear to have chosen their 4 and 5 farms based on hauling routes and proximity to their respective plants.

Meanwhile, the situation is in limbo the remaining 12 farms in western Pennsylvania, along with the handful of Ohio and New York producers, affected by volume adjustments at Sharpsville and New Wilmington as well as 21 in eastern Pennsylvania affected by volume adjustments at Dean’s Swiss plant in Lebanon.

In addition, producers affected by these notices in Indiana, Kentucky, Tennessee and the Carolinas are also currently still seeking markets. A few in the Southeast have made plans to sell, but overall, there are still about 100 dairy farms displaced by Dean’s system-wide consolidation and Walmart’s new plant coming on line in May in Fort Wayne Indiana.

Some other marketing factors are emerging.

For example, the Dean Sharpsville plant continues to notoriously bring in loads of milk from Michigan. The company confirms that the 90-day notices sent Feb. 26 to over 100 dairy farms in 8 states, did not include Michigan.

The Sharpsville plant was referenced specifically in the December Pennsylvania Milk Marketing Board (PMMB) hearing where the Pennsylvania Association of Milk Dealers and Dean Foods requested a significant reduction in the producer over-order premium to its lowest level in 17 years. This change to a 75-cent mandated premium went into effect for wholesale and retail milk price minimums January 1.

At the time of the hearing, both John Pierce and Evan Kinser of Dean Foods testified that retailers are getting accustomed to bargain-priced milk elsewhere with documented retail milk prices offered to consumers in other states as low as 87 cents per gallon. Kinser testified that this new reality made Pennsylvania’s high state-minimum retail milk price an increasingly attractive destination for milk bottled elsewhere.

Kinser had further testified that the pressure from the increasing influx of out-of-state milk was making it difficult for milk produced in Pennsylvania to compete for retail (and apparently farm level) contracts.

Kinser also indicated that the mix of milk sourcing at the Sharpsville plant, in December, was already much different than the mix at the Swiss Premium plant in Lebanon. With Sharpsville close to the Ohio and New York borders, the plant has been sourcing milk from Ohio and New York for some time, but also increasingly from Michigan and Indiana.

In fact, at the December PMMB hearing, Kinser’s much-redacted testimony warned of Pennsylvania milk becoming displaced and that the new and lower 75-cent over-order premium level is “already a compromise that represented the highest level the current economic conditions can sustain.”

Kinser warned that if the premium were any higher than 75 cents, Dean Foods would be forced to renegotiate its contracts with suppliers to change the mix of milk used at ALL of its plants within the state in order to compete for contracts with packaged milk coming into the state from plants beyond Pennsylvania’s borders.

Even though the PMMB granted Dean’s request to lower the mandated premium to 75 cents, it appears the mix of milk is being renegotiated anyway as part of the company’s milk supply chain consolidation process as the volume adjustments at Pennsylvania plants have fallen primarily onto Pennsylvania farms.

Also emerging in the marketplace is the increased occurrence of brokered milk. This trend began in 2013 as producers across the Northeast and Mideast have dealt with contract losses in the fluid market at smaller levels than seen today.

Great Lakes Milk Producers is an example of a recently organized group of producers from Ohio, Michigan and Indiana, which is organized “like” a cooperative but markets milk as single-source loads through a broker.

Part of the drill is getting the milk qualified with farm audits and certifications as single-source loads that can be matched up to spot needs from cheese and yogurt plants to even, at times, the Dean plant in Sharpsville, Pennsylvania, the Southeast in the summer, and potentially even the new Class I Walmart plant in Fort Wayne.

Marketing through a broker can mean a long haul in a long market with changing conditions. This option makes milk quality a mandate without a premium.

As 27 farms in Indiana continue to seek a market, it is unclear whether brokering with Great Lakes Milk will become an option. The size of the displaced Indiana family dairy farms fits the single-source criteria, ranging 300 to 1500 cows and collectively represent an estimated 20 million pounds per month of displaced milk volume let go by a Dean plant in Indiana as well as Louisville, Kentucky.

“This is a huge issue for our state right now with an overwhelming impact,” said Indiana Dairy Producers executive director Doug Leman at a recent annual meeting in Indianapolis about the 27 farms with displaced milk scattered around the state. “Conversations are starting to happen, and we are planning a meeting for these farms. But just because Dean is not buying this milk, does not mean that the consumer demand has gone away. We have to let the dust settle and go through the milk shuffle.”

Among the recently affected Indiana farms is the sixth generation Kelsay Dairy Farm, operated by brothers Joe and Russ Kelsay and milking nearly 400 cows near Whiteland.  Joe Kelsay was the milkman for last year’s Indy500.

“We are exhausting all contacts and connections with cooperatives and plants,” said Kelsay in a phone interview. “Several told us they are not in a position to take any additional milk, some are doing some checking, and we do have a couple meetings scheduled. We are cautiously optimistic.”

When asked if the new Walmart plant will pick up any of the Dean dropped farms, Leman said the plant’s supply has been locked up with a percentage coming from undisclosed dairies doing contracts directly with Walmart and the balance being single-source loads via third parties.

“We can’t tell Walmart where to get the milk, but we are letting them know to check with these farms,” said Leman. “Some are within 50 miles of the plant.”

Kelsay doesn’t blame either Dean or Walmart for the market loss his family and others are experiencing. “This is a difficult time, but we can’t fault one company or another for doing their best to run their businesses,” he said.

Meanwhile, in Pennsylvania, town hall meetings were held (and reported in last week’s Farmshine) to raise public awareness. Ag Secretary Russ Redding wrote to Dean Foods asking for contract extensions.

But Dean has indicated its problem with excess volume will begin before these contracts end.

“We explored all our options before we made this decision,” noted Reace Smith, Dean Foods director of corporate communications. “At this time, we can’t extend the contracts further. As a fluid milk processing company, we are unable to store milk long-term.”

The timing is difficult with spring flush and spring decisions around the corner.

“We’re all in limbo right now,” said Agri-King nutritionist Bob Byers in a phone interview. He works with 25 farms, serving in the affected area of western Pennsylvania for 20 years. He notes that affected farm families have only so much time to make decisions like what crops to plant, what fuel and supplies to order. These decisions revolve around whether or not they will be milking cows after May 31.

“There is a timeline involved to unwind a multi-generational dairy farm with inventories of cows and feed and with a team of employees to think about,” says Kelsay. “If there is no one to purchase our milk, how can we continue? What happens here has a significant impact on our team of employees, and their families, as well as our hauler, nutritionist, equipment and feed suppliers – our whole web of contacts. We do a lot of business with a lot of people.”

Byers notes that this is the worst of times in the dairy business that he has seen in his 20 years and that it definitely affects local jobs and businesses.

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“Local people want local milk,” he said. “That is the only thing that will help these local farms at this point. Media attention will help get that message in front of consumers, and in front of companies like Walmart.”

CAPTIONS –

PA-preferred

Alisha Risser of Lebanon posted this photo of Harrisburg Dairies’ milk displaying the PA Preferred label signifying the milk was produced on Pennsylvania farms. The Rissers were part of a town hall meeting in Lebanon reported in last week’s Farmshine, and they are one of five farms whose contracts were dropped by the Dean Swiss Premium plant in Lebanon that will be picked up by Harrisburg Dairies.

 

 

 

 

Dairy at a crossroads Part 2: Blinders off, seek help to navigate

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Fig. 1 from the farm financials in the Pennsylvania Dairy Study shows average annual rate of return on assets 2011-16 for Pennsylvania small, medium and large (over 500 cows) farms compared with a 3-state average (NY, MI, WI) for small, medium and large farms. The Center for Dairy Excellence confirms that producers of all sizes are calling to have Dairy Decision Consultants come out to help them figure out how to move forward and lower their cost of production or the best scenario for exiting the dairy business. 

By Sherry Bunting, Farmshine, March 2, 2018 

BROWNSTOWN, Pa. — Every avenue of approach to a four-way crossroads comes with a temporary stop or yield and the need to know whether to turn one way or the other, double back, or drive forward. Staying put is only an option for the time it takes to know which way to go.

For dairy producers at this turning point, not one of these options can be exercised without knowing the farm’s cost of production and its equity position to decide upon a direction for what’s ahead.

Difficult discussions are being had around farm kitchen tables across the country. Seek out the help that is available to navigate, say dairy lenders and consultants interviewed recently by Farmshine.

“Don’t internalize too much or to try to do it on your own. Don’t be afraid to reach out for help,” says Dale Hershey of Univest Bank and Trust. “Don’t wait to raise your hand until after it’s too late. There are people out there, good people, who can give advice and ways to do this at little or no cost.”

Competitive cost of production is shaping the future of the dairy industry. While we hear about the multi-owner multi-site dairies with nearly 100,000 cows and a very low cost of production, size does not dictate the ability to compete.

“It is being achieved here. We have 100-cow dairies and 1000-cow dairies with very competitive cost of production,” says Mike Peachey of Acuity Advisors and CPAs.

He explains that the Northeast has historically had a higher cost of production for a variety of reasons.

“We have been saved by having higher premiums for our milk, but as those premiums erode, the competitiveness of our operations is exposed,” says Peachey. “It comes down to how well-managed a dairy operation is — regardless of size — and how competitive we can get in cost of production.”

“We used to have a milk price advantage in Pennsylvania. That is gone,” adds Mike Hosterman AgChoice Farm Credit business consultant. “We are less than 25 to 50 cents difference to New York, when it used to be $1.00.”

They both see a wide range in cost of production among dairy farms that can vary by $2 to $3/cwt.

“There is easily a variance (in profitability) from bottom to top of at least $1000 per cow, so it really is segmented by thirds,” says Peachey. “We have a top third with a very competitive cost of production, a middle third hanging in there and a bottom third making tough decisions that carry a lot of emotion.”

“So much of the difference comes back to debt, especially for younger farmers,” says Hershey. “Dairy is tough to get into, and the biggest thing is how you come in. Those beginning farms won’t survive without capital or backing from family. We will have some startups this year, but fewer than other years.”

In this business of large capital investments, Hosterman observes debt per cow creeping higher.

“If you go back 10 years, debt was just under $3000/cow. As milk prices go through these wild swings, the trendline was still slowly increasing so producers could afford that increase. Now the price is leveling out while debt per cow can be over $5000 or $6000,” he reports.

“As lenders, we’re all stepping up to help these producers, but we may not have the capacity to help them all.” He notes that refinancing options, different debt structures, and FSA loan availability are some options.

While the fundamentals of future dairy demand and proximity to consumers in the eastern U.S. would suggest a key place for small farms here, Hershey is realistic about the hand being dealt.

DPAC(farmbill)9261(ExtraPhoto)“To be in this for the long haul, we have to look ahead and know what we’re dealing with,” he says, wistfully reflecting upon growing when his father made a good living with 40 registered dairy cows.

“That model is pretty tough to cash flow right now. I see a return to where we were 40 years ago, where farms here had different things going on, multiple income streams, seeing more farms diversify to strengthen their positions,” says Hershey. “If producers are solely dependent on their small dairies, it will be very tough unless they have a very low cost of production.”

Key advice? “Bring a team in around you.”

“Dairy producers are managing expenses and monitoring cash flows, budgets and cost of production throughout the year. They are bouncing ideas off their advisors and consultants to be more competitive,” says Mike Firestine of Fulton Bank. He was recently recognized by American Bankers Association with the Bruning Award for dedicated leadership.

Extension educators also report they are receiving very high interest from dairy farmers wanting to do financial analysis because of varying degrees of stress already experienced over the past three years.

As for Acuity, Peachey regularly looks at clients’ positions around four key areas: cost of production, percent equity, profitability and cash flow, providing information and context for discussions about where they stand, what is their competitive position and where they think they are going to be not just now, but a year from now.

Because things change from year to year due to many variables, including weather and markets, Peachey says it’s important to be monitoring all the things that go into that “cost of production stew,” including milk quality, good internal herd growth, good milk components and feed conversion.

Armed with a team approach, and the numbers, they can uncover how well the animal husbandry is being managed, the breeding program, pregnancy rates, heifer replacement programs, milk production, especially components, and milk quality.

“Done well, these things add up,” says Peachey. “Small farms can counteract some of the competitive disadvantages on the cost and income sides, by having their good management in all these areas add up.”

This becomes cumulative math. For each year that one dairy is not as competitive as another on cost of production (COP), the impact compounds.

For example, a $50,000 annual difference between two similarly-sized farms adds up to half a million dollars over a 10-year period that’s either not in a bank or being reinvested in the operation to stay competitive or being used to pay down debt to put the farm in a better financial position to weather these storms – to provide the liquidity and working capital to get through it, according to Peachey.

Continual monitoring of the COP and doing annual year-ahead budgets are key, Peachey points out, because “guarding cash flow is very important right now. Producers are really scrutinizing capital expenditures with an understanding of what is a need and a want. They are focusing on investments and management decisions that reduce cost of production beyond the initial payback.”

He notes that cutting costs is tricky: “If reduced feed costs means reduced milk production, for example, it ends up contributing to a tailspin when a cost-cut reduces top line revenue.”

“Some guys may sell off some assets and use proceeds to reduce debt,” says Hosterman, citing sales of mountain ground, extra timber, and selling heifers. “Heifer numbers have increased so much on dairy farms that selling extra heifers is not a bad option to generate some cash,” he says.

cropped-reprotour-73.jpgIn fact, some farms are opting to sell quite a few heifers. Even though prices are not the best, these sales contribute to cash flow, which is critical. Some farms are breeding to beef breeds and producing a dairy beef cross for the feeder market. Again, not a big price, but the cost of the breeding is less, and the calves generate cash flow as well as cost savings. Such strategies require careful thought so as not to jeopardize the position of the herd for the future.

Knowing the farm’s COP provides the information to make these types of decisions.

If the farm’s COP is not competitive, the question is, can it become competitive? Is the farm within striking distance of getting to a competitive COP? If the answer is ‘no’, there may be tough business and family decisions to make, according to Peachey.

He says it is also very important to evaluate the farm’s equity position, to sit down with the lender and look at the way the farm’s debt is structured.

“If the farm still has a strong equity base to restructure things to provide cash flow relief, it should be paired with an assessment of the farm’s COP and what can be done to improve it,” says Peachey. “How much runway do you have to work with? Knowing this is helpful for a restructure, but the airplane still has to get off the ground.”

In other words, equity for restructure provides the runway and working toward a competitive COP elevates the plane before it reaches the end of that runway.

It’s critical to go through the budgeting process, says Peachey, “to understand your cash burn rate for the coming year, to know if you have the working capital and liquidity to absorb this and if you have the broader equity base to recapitalize those losses. If I lose x-amount, can I put that on a 3-year note and pay it off and still be okay?”

Peachey equates the breakeven to a Class III price and looks at it from both the intermediate and long-term perspectives. For the short term, he sees the goal being a Class III breakeven of $15 to $15.50, so if the farm’s basis is $2 over Class III, that equates to a breakeven of $17 to $17.50 in other discussions or venues.

He cautions that, long term, the marketplace is going to demand a lower COP with Class III breakevens down to $13 and $14.

Hosterman concurs: “Some of our best farms are achieving a COP under $16.50 right now, so they can get by at a $14 Class III price, but the bottom third still needs a Class III price of $17, and the average producer needs a $15 or better Class III price to break even.”

“It is being achieved here,” says Peachey. “We can do it, but it gets back to all of the other little things that add up to how well the operation can be managed. When we know our COP, we know the weak spot in our model and can figure out how to compensate for that and find where the opportunities are.”

Hershey has received numerous calls from producers wanting to do these projections and breakevens to navigate the road ahead, and he cites Dr. Kohl’s four cornerstones of success — plan, strategize, implement and monitor. “We are pushing that, more than anything, that farmers who are struggling can ask for help.”

There is high praise for what the Center for Dairy Excellence and Penn State Extension offer to improve producer competitiveness to also improve the state’s competitiveness in dairy.

“The resources, educational opportunities and ways to connect folks are greater than ever,” says Peachey. “We have a strong infrastructure and a lot of good things in place.”

Other states have similar extension and organizational services. Seek them out.

Look for more in future editions of Farmshine as we continue this dairy crossroads conversation with producers, industry participants and leaders in the East… and beyond. The next installment will move into the policy realm with a look at the critically acclaimed film “Forgotten Farms,” produced in New England, and a panel discussion about our nation’s food policy centering on the burning question: why has dairy largely been left out of the local food movement? And what is being done about it.

 

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Dairy at a Crossroads Part I: 2018 Turning point?

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Number of farms, robust infrastructure are interdependent. The ripple spreads wide and the pain in rural communities, deep.

 By Sherry Bunting, reprinted from Farmshine, February 23, 2018

BROWNSTOWN, Pa. — Dr. David Kohl recently said he is still bullish on the small farms that populate the eastern dairy industry, that there will always be a place for them, but they will change their focus.

Still, lenders and industry participants confide they are concerned about a large number of dairy exits in 2018. They are encouraging producers to work with advisors, and urging the industry to work together in the embattled eastern U.S., because the whole infrastructure depends on the number of farms as much as — if not more than — the number of cows and amount of milk produced.

While lenders like Dale Hershey, director of ag lending for Univest Bank and Trust, say they have already seen many diversify and change how they operate, others are in the process of re-thinking their futures.

The biggest concern for Hershey is when farms decide to sell the cows, seldom do the cows come back to the farm.

“Some of those farms will stay empty. That, I do see,” he asserts. “Occasionally they’ll come back in and milk, but mostly they will go into something else, or if the farm is sold, we’ll see most of them stay dark in terms of dairy production.

“I think we’ll look back 10 years from now and see 2018 as a turning point.”

Mike Peachey of Acuity Advisors and CPAs agrees. He sees dairy at a crossroads similar to the hog industry in the 1990s: “My concern is that we will see a dairy industry 10 years from now that looks very different from how it looks today, and we are helping our dairy customers take stock of that.”

Peachey observes that as the number of farms decreases, “This puts a lot of pressure on the dairy infrastructure and the ag businesses that support the dairy farms. One of Pennsylvania’s competitive advantages is that there is a lot of infrastructure and support in the whole supply chain that is very beneficial for competitive pricing for our dairy farmers.”

He cites the region’s multiple feed companies, multiple points of expertise, nutritional perspectives and a bidding process, multiple veterinarians, the strong ag lending infrastructure, equipment dealers, and expertise in different specialties.

“My concern is that if the number of dairy farms decreases, and if the infrastructure goes away, then it changes that competitive advantage,” he says, observing that the number of cows or the amount of milk produced does not necessarily make up for what is lost when the quantity of individual farms is reduced by consolidation.

Yes, the dairy industry is at a crossroads, and no where is this perhaps more evident than in eastern states, like Pennsylvania.

The Northeast was a fluid milk market in the past, close to 50% of utilization. Today it is less than 30%. As more milk is produced — even if per capita fluid milk consumption stayed the same — not enough other products are made here, so mailbox prices are falling under the coinciding weight of increased hauling costs and losses in competitive and quality premiums.

Meanwhile, the Class IV utilization has increased as a percentage in the blend price, leading many to believe the Northeast model of dairy pricing may be broken.

In fact, so concerned are states and dairy organizations that state-wide analyses are being conducted in top tier “notably fluid” states like Pennsylvania and New York in the Northeast as well as in Georgia, in the Southeast. The states of Michigan and Wisconsin are also looking at their state’s production, processing and infrastructure to improve their future competitiveness.

In Wisconsin, milk prices are driven off the cheese market — a growing market that has been cultivated to generate variety, demand and competitive premiums — whereas the Northeast model is built off Class I, which is not competitive, nor is it growing. And, unlike cheese with its diverse growth in specialties and brands, the Class I milk at the store is treated like a base commodity against which all newcomers and imitations are compared and premium-priced.

Dairy producers and industry participants also say they are concerned about the Pennsylvania Milk Marketing Board’s role in terms of the costs associated with milk assembly vs. where the state premiums are going.

Meanwhile, store inventories are kept close to the bone. If they throw a gallon of milk away, the margin on every other gallon is affected, and so stocking depth is being reduced.

These are the kinds of issues that states like Pennsylvania, Georgia, New York and Michigan, among others, are actively looking at as they study capacity and market needs and trends.

Producers don’t control these decisions, but their input is vital.

From farm to table, technology and workforce are two other big pieces with immigration reform being a double-edged sword.

If the Congress and the Trump administration are able to legalize immigrant worker status, what will that really do for the dairy workforce? A National Milk Producers Federation study with Texas A&M reveals that 80% of the nation’s milk was harvested by immigrant workers — up from 60% in 2009.

With general unemployment now falling below 5%, which many economists consider to be full employment, a legalized immigrant workforce may be lost to jobs in industries with better margins.

Workforce issues are also affecting trucking and other infrastructure employment.

Labor is fast replacing environmental as the number one issue facing the dairy industry, and against that background, farms will do things differently over the next 10 years to systemize their production, say various experts.

Builders, lenders and others are seeing the emphasis for this in three areas: wet calves, dry cows and post fresh, as well as through investments in technologies that improve management, specifically by their impacts on cost of production because this is the criteria that will drive farm-level investments into the future.

Technologies may help solve it, but this requires investment. The right answer, policy-wise, is elusive, but for individual farms, the right answer comes, again, from knowing cost of production from which to weigh out the options and run projections and scenarios based on where the farm is now and where it wants to be in the future.

While some see opportunities to drive milk output per cow higher with more cow comfort and better heifer programs, pointing out that Pennsylvania lags behind other states in its milk output per cow, others in the industry point to imposed restraints pushing the focus toward managing risk.

Complicating the marginal milk model for improvement in Pennsylvania is the Land O’Lakes base program. When producers are over base — because they’ve improved their management — they take a penalty when the base is enforced, depending on the eastern region’s total production.

Learning to manage through this intermittent penalty seems to be affecting mainly the producers in the East, despite more substantial growth in the West. In addition, DFA has started a base program for portions of its membership in parts of the Southeast U.S., where milk is already regionally deficit.

How will this push-pull play out at the farm level?

Some producers will carry a lunch. Hershey is seeing a trend toward small farm operators finding seasonal off-farm employment to keep their dairy farms running.

Others have and will become diversified, which can reveal two pathways: Getting successful in another area and exiting the dairy, or seeing the dairy as a lifestyle to keep, and using other income streams to weather the storm.

In addition to diversifying, lenders note niche processing will be a path for some. There are a number of niche producers in this part of the country. Some have been doing this a long time, others are just getting in.

“The good economy has really helped those operations. Tourists are traveling, coming to our county, dining out, and packing the places we deal with,” Hershey observes about Lancaster County, Pennsylvania. Some of our cheesemaking stores are flourishing right now, but that business is not for the faint of heart. It requires deep pockets to get into.”

Connecting dots for consumers is essential for eastern states, like Pennsylvania. For example, in Lancaster County, Pennsylvania, there is this dichotomy. The county — like other parts of the eastern U.S. — has grown in produce and other specialty crops to become a great hub of food. To some degree this includes dairy, but more stimulation is needed.

As will be further discussed in part two of this dairy-at-a-crossroads series, knowing the cost of production for the farm business and knowing where lie the passions, strengths and weaknesses of the farm family are keys to finding each farm’s own path — whether that means keeping the cows and diversifying, investing in niche marketing, getting more competitive on cost of production or giving the cows up and channeling that valuable positive experience and energy to new pursuits.

This industry is about the milk and the cows, but even moreso, it is about the people.

“We can do it here,” says Peachey. “When we know our farm’s cost of production, we know the weak spot in our model and can figure out how to compensate for that and find where our opportunities are.”

As these changing tides and issues sort themselves out, Peachey observes how dairymen are making these “tremendous strides to improve their operations,” and he believes the next wave of improvement is figuring out how to do risk management well, how to capture margins when they are available, and how to protect operations from downside risk.

“We can take an operation so far and continue to improve, but the next wave of significant profitability and improvement is in managing the top line price and the input costs and locking in those good margins when they are there,” says Peachey.

“A generation ago, with price supports, dairy farmers could work hard and do okay or very well. Now it is a business requiring an approach to management for the long run,” he adds.

In part two of this series, we’ll examine the map for navigating the dairy crossroads.

 

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Ag economy runs counter to urban economy

Dr. Kohl connects dots, prepares farmers for economic reset

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By Sherry Bunting, reprinted from Farmshine, February 2, 2018

EAST EARL, Pa. – “The growth of the economy is hotter than a pepper sprout, but for how much longer?” observed Dr. David Kohl, Virginia Tech professor emeritus. He then opened eyes, and ears, saying that, “When the urban and suburban economies are going gangbusters, the ag and rural economies tend to struggle. That is very typical. The ag economy tends to run counter to the general economy.”

And with that, we were off to the races with Dr. Kohl, who spoke about positioning for success in the economic reset as the keynoter for the annual Univest Ag Summit that drew over 350 people — mainly farm families and many of them dairy producers — to Shady Maple Smorgasbord here last Friday, Jan. 26.

When Kohl is on the agenda for a meeting, you know you are in for an invigorating look at socio-economic trends, and a whole lot more. His high energy presentations deliver tidbits of insight that help make sense of market patterns that are so difficult to understand. The fact that he is a partner in a creamery is just ice cream on top of the cake.

Part of the reason for these opposite fortunes for urban vs. rural economies is the strength of the dollar and the price of oil that coincide.

Kohl is watching what happens with the U.S. dollar because this will influence inflation and interest rates in the general economy as well as exports in the ag economy.

“When the dollar is stronger, we are in a weaker position to trade commodities,” said Kohl. “When the dollar is weaker, it picks up inflation, so we have to watch out for higher interest rates. We are well into this period of low flat interest rates, but that is about to change.”

Kohl sees the Fed raising the prime rate possibly four times in the coming year, but that will depend on the rate of inflation. If it stays below 3%, there will be less incentive to raise interest rates. In fact, the report released that day pegged it at 2.6%. We shall see.

As he went through the indicators, Kohl indicated his bullishness on agriculture in the East. “One-third of the consumers with money reside within 10 hours of you,” he said.

While it is true that as the economy improves and consumers have more money in their pockets, the food processing and foodservice sector positions have improved, the problem is that the farm sector tends to ride at the back of that bus. What makes the difference for ag, according to Kohl, is the economic growth of export partners.

Trade has become integral to the marketing, pricing and distribution of farm commodities, including dairy, according to Kohl.

He travels extensively, especially during meeting season, and he said it is his ability to go out and confirm the numbers that allows him to see trends and connect dots.

Right now, he said, the problem for dairy is that we are working through a surplus. “The high prices of 2014-15 brought in some inefficiencies,” said Kohl. “When I see the bottom third of producers making good money, that’s when I know we will see financial issues within the next two years.”

On the trade issues, Kohl said that 1 out of 7 days’ worth of milk production in the U.S. is exported somewhere, and 39% of those exports are going to Mexico. During a conference in Mexico, he learned that those buyers will go elsewhere and pay more for dairy if they need to.

And while Asia, and China, are important export destinations for farm products, Kohl said that  NAFTA re-negotiations are important because the U.S. exports more ag products to Canada and Mexico, combined, than to China.

He observes that 47% of the Mexican population is under 25 years of age, and that “This youthful population of consumers helps fuel continued growth in U.S. agriculture.”

He also noted that 3 of every 7 consumers with money to buy goods reside in Asia, but the U.S. has pulled out of the Trans Pacific Partnership, “leaving China to fill our spot, so now Canada and Mexico are in the TPP and they are making agreements without us there.”

Kohl acknowledged the currency manipulations that go on by other countries, including China and Mexico, to improve their market competitiveness globally, and he said that is something to watch both in the trade negotiation processes and in terms of economic factors affecting agriculture, particularly as the U.S. dollar is likely to weaken.

Within this trade discussion, Kohl said the single most important thing that President Trump has done is appointing former Iowa Governor Terry Branstad as Ambassador to China.

And here’s the stuff you get from a guy like Kohl: Branstad and China’s leader Xi Jinping have a very close trusting relationship that dates back 35 years to their work on an Iowa hog farm. In fact, China’s leader holds a Ph.D. in ag and rural markets. He came from an elite family in China, but during the 1980s farm crisis circumstances had him working on farms in east Iowa.

UnivestMeeting(DaveKohl)2“The leader of China worked on hog farms for two years. He ‘gets’ agriculture,” said Kohl, as he turned to a table populated with blue and gold jackets and said: “The relationships you form today, you will not know their impact down the road.”

Under the Trump administration, the U.S. sealed a “beefed up” pork and protein deal with China that has been good for the livestock sector. Perhaps dairy is next?

 Kohl also watches the weather. South America is in their double crop season and it is dry there. In the U.S. southwest, it is very dry in Texas, Oklahoma and Kansas. “If this continues through April 15 or May 15 and if it goes to the upper Midwest with a dry Southeast, it will impact corn.

He also keeps a careful eye on oil and energy prices, proclaiming that the U.S. made a pact after 9/11 to become energy independent within 25 years, but has done it in 10.

“We are now the energy leader in the world, so other nations can’t control us anymore,” said Kohl. Oil and energy costs influence the general economy, and really have an impact on farms. “8 out of every 10 dollars spent on the farm business are connected to oil.”

On the flip side of the oil coin is the historical relationship between oil prices and farm commodity prices. Kohl sees oil getting cheaper. “The demand side is changing. People are moving to cities and using public transportation,” he said, adding this surprising statistic: 31% of people aged 18 to 25 do not have a driver’s license.

He also noted that in Germany, they want to outlaw the internal combustion engine by 2040! And that in China, they want to have 25% of all vehicles run by electric by 2025.

The big trends impact so many things over time, and that is why Kohl pays attention to them.

In fact, he noted that the advances in farming technology have produced surpluses by taking the lower yield farms and really improving those yields. “That is what technology does. It improves the bottom end and that creates surplus, and this is why we need export markets.”

What does all of this mean for farmers? Kohl put the “correction” or “reset” he sees coming into perspective, observing that the 1980s correction went down fast and lasted five years. “This one is a grinder,” he said. “We are not seeing a collapse in the ag economy like we did in the 1980s. We are seeing it grinding along and surviving with technology and management.”

Kohl sees the stock market rate of gains as something that can’t last forever and believes it is a “bubble.” He quickly added that many people disagree.

He noted that student debt is record high, the rate of consumer savings in the U.S. is at the lowest level since 2007 and credit card debt just exceeded a trillion dollars.

Bubble or no bubble, Kohl encouraged listeners with his belief that what we have now is an “asset bubble” where equity and resilience will be the tools to guard. “Don’t get complacent on equity,” he urged.

The economic drivers of the current cycle are its elongation into a supercycle, the available technology and management, interest rates, stronger financial underwriting, working capital, land equity cushion, and crop insurance programs.

“Currently 90% of the world economy is hot,” said Kohl, adding that, “If it grows too fast, it’s a weed.” In his opinion, it is growing too fast.

The killers to watch out for are a rise in oil prices, a decline in the stock market, a tightening of credit strategies by the Central Bank and ‘bubbles.’ The bubbles to watch are auto debt, student debt, stock market, credit card debt and farm land asset to credit.

“Economic expansions do not die, they are killed off, and those are the things that can kill them,” said Kohl.

He said workforce development will be critical for sustaining the economic engine that is revving up, and he was encouraged to hear President Trump say last week that, “Not everybody needs to go to college. There is nothing wrong with vocational skills.”

What can dairy farmers do as these macro-economic factors around them are out of their control?

“Look at your business, and drive it toward efficiencies,” said Kohl. “Do your cash flows early and often to adjust to changing tides.”

Recognizing the trend toward diversified income streams on farms in southeast Pennsylvania, Kohl said that is more sustainable in today’s environment.

But the biggest piece of advice he gave was for farmers to “be proactive. Whether large or small, the top producers are making the adjustments, the middle is in denial waiting for bad weather somewhere to bring back commodity prices and the bottom third are at the end of the pier not knowing what is wrong.”

Look for Kohl’s cornerstones for success as this continues in a future edition.

‘Farming is under fire’

Duarte case has potential to set dangerous precedent nationwide

By Sherry Bunting, reprinted from Farmshine, June 2, 2017

Duarte9983OMAHA, Neb. — “Farming is under fire,” said John Duarte, a fourth-generation farmer with a family nursery business outside of Modesto, California as he recounted the timeline of his 4-year battle with the federal government over — of all things — plowing and planting wheat on agricultural land.

Duarte was a speaker during the Range Rights and Resource Symposium at Bellevue University near Omaha May 19-20. The two-day event was sponsored in part by Protect the Harvest and moderated by Loos Tales radio host and seventh generation farmer Trent Loos.

Duarte is working with the Pacific Legal Defense Fund and the American Farm Bureau is now involved. But it’s not enough. The problem is that the case needs a huge outcry by rural folk across the nation to get the attention it deserves from Congress and the Trump administration to stop this next penalty phase of the case in August.

This week, Mike Conaway (R-Tex), chairman of the House Ag Committee and Bob Goodlatte (R-Va), chairman of the House Judiciary Committee sent a letter of inquiry to Attorney General Jeff Sessions about the Department of Justice’s role in the prosecution of the Duarte case. They want to know why the DOJ is still pursuing a Clean Water Act case against Duarte. If the penalty phase in August upholds the summary judgment in District Court a year ago, this case will set a chilling precedent that has the potential to make it a crime for a farmer to plow his own agricultural land without a permit.

Duarte started a GoFundMe site (https://www.gofundme.com/Duartestandsup) in part to raise funds for his defense and the defense of agriculture and in part to raise public awareness as the penalty phase of the trial heads to court in August.

At the core

The Obama Administration interpretation of Waters of the United States (WOTUS) is at the root of the Duarte case; however, EPA is not the agency Duarte is battling, but rather the Army Corps of Engineers (ACE) and the Department of Justice (DOJ), perhaps because he dared to exercise his Fifth Amendment rights to due process under the Constitution when ACE ordered a cease-and-desist on agricultural land he had purchased on which he plowed and planted a wheat crop.

Indeed, the federal prosecution of Duarte threatens his multigenerational family business as well as his personal home, with over $2 million in legal expenses, and the government seeking nearly $3 million in fines and $15 to $30 million in required purchases of “private wetlands bank credits” to offset his ‘egregious’ act of creating “small mountain ranges,” which were in reality plow furrows that by the government’s own report measured 5-inches from the top of ‘deep ripping’ mound to the bottom of the furrow. Sounds like normal plowing that in reality did not destroy the vernal pools (spring mud puddle) in Duarte’s fields that the federal government deems Waters of the United States (WOTUS). This case clearly threatens American Agriculture to its core.

Private beneficiaries?

These private entities that would receive said wetlands bank credits that the government wants Duarte to pay ($15 to $30 million) are funds paid to private organizations like the Sierra Club that do wetlands restoration and habitat, which said organizations can then freely use this payment to donate to campaign funds of congressional and presidential candidates. This was explained by additional symposium panelists and is a piece of the issue that, alone, should furrow the brows of not just farmers and ranchers, but all Americans.

There is also the concern that other intentions are at play to devalue agricultural land that organizations have their sights set on for cheaper easement purchases if taken out of production.

And then there is the concern that this case puts an even bigger target on the backs of farmers taking land out of the CRP in the future.

The Duarte land involved in the lawsuit was not CRP land; however, the previous owner had not planted wheat there for six years prior to Duarte’s planting, instead leaving it go fallow and grazing cattle — an agricultural choice that reflected the price of wheat over that time, which Duarte showed clearly on a graph.

Furrowed brows

What is astounding is that after Duarte’s tillage, the vernal pools are still there. He had mapped them when he bought the land and can show that they are the same today.

What should raise hairs on the back of every farmer’s neck is that the San Francisco Bay Area California District Court judge agreed with the federal government last August by ruling, in effect, that “if you plow through any depression in America and if some dirt goes from the ‘upland’ to the wetland, you are liable for these penalties,” Duarte said.

The uplands, you ask? That would be the dryland top of the 5-inch high plow furrows (as measured by the government) that created what court documents refer to as “small mountain ranges,” “uplands,” and “drylands” creating debris that could fall into the WOTUS (vernal pool or spring muddle puddle in a poor drainage depression in a field).

Yes, these were plow furrows that ACE came out and measured to be 5-inches tall. In fact, when ACE came out for the measurements, they dug down 23 feet with an excavator – far more egregious than the plowing by Duarte.

They excavated and brought in a specialist to do “pebble distribution counts” to be sure the depressions still drained poorly to hold water in a wet season. These vernal pools, or mud puddles, evaporate, but until they do, they are a home to grassland fairy shrimp (aka sea monkeys) that live and die with the sudden appearance of water, leaving behind eggs for the next temporary rain fill.

Duarte’s slides and maps demonstrated he did his due-diligence, mapping all the pools and swales on the property he had purchased and asking the plowing contractor to plow around them. Some he did, others he didn’t. But the bottom line is that none of those depressions or future mud puddles were destroyed. When they fill with water in a future wet season, the fairy shrimp will have a temporary home. Nothing has changed.

Duarte4747.jpgEven the ACE report acknowledged that, so they had to come up with a different ‘crime,’ that of compromising a Waters of the United States (WOTUS) by debris (dirt) falling from the ‘dryland uplands’ (plow furrow) into the WOTUS (dry future mud puddle).

How did the case against Duarte get to this point? Duarte recounted for the Land Rights attendees the sordid details that began in 2012, when he planted wheat in agricultural land he purchased in Tehama County, California.

He went to the county FSA office looking to buy agricultural land, and the land he purchased was identified as such. Its history included both wheat planting and grazing.

In 2012, the price of wheat was profitable unlike the years before it, so Duarte planted wheat in the fall. Four months later in February 2013, Duarte received letters from ACE to cease and desist operations in WOTUS.

Duarte answered this letter with an inquiry of the facts and received a second letter from the enforcement division of ACE.

Duarte filed in October 2013 a due-process lawsuit, exercising his Fifth Amendment Right.

In May of 2014 ACE filed a counterclaim, bringing the DOJ into the act. In August 2016, the District Court summary judgment went against Duarte, and upcoming in August 2017 will be the penalty phase of this case.

One of the findings in the case is that Duarte’s Fifth Amendment right to due process is not deemed to be “a practical expectation” in this case. He was told that the federal government would have to give up its sovereignty on this issue of WOTUS for Duarte’s Fifth Amendment rights to apply.

Meanwhile, “they are valuing the assets of my family’s company, and my personal home, because I was the chief executive of the family business at the time that the field was plowed,” said Duarte, adding that the DOJ prosecution team in this case “is part of the swamp” that needs to be drained.

But it’s not just about Duarte. It’s about every farmer out there with land that can be controlled and rights that can be taken by the administrative interpretation of the federal Clean Water Act, which Congress specifically said will not regulate normal farming. There is a land grab underway and plenty of alligators in the D.C. swamp.

If plowing is not an ordinary farming practice, what is?

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PHOTO CAPTION

Photo caption:

John Duarte and his family have an agricultural nursery business and are well respected for a variety of environmentally-friendly, forward-looking practices and generations of care for the land and water. But their family business, jobs in the community, and John’s personal home, and more, are all at risk because he plowed wheat without a permit on agricultural land he purchased. This precedent-setting case has already cost over $2 million in legal expenses. He continues to pay a mortgage on 450 acres of California farmland that a court has ordered him not to farm. The federal government is seeking $2.8 million in fines and another $15 to $30 million in required payments to ‘private entities’ for wetland bank credits when the case goes to the penalty phase in August. There’s just 60 days left to stop this train from defining a WOTUS impact that can be used against farmers, nationwide, in the future. Photos by Sherry Bunting

Photo caption #2

From Duarte’s slides, this picture may be familiar to farmers, a poor-draining area where water pools until it evaporates. The Duarte case sets precedent for this WOTUS to be used to not only control land, but also rake in funds that can in turn be used by private entities like the Sierra Club in the form of private wetland bank credits. These required payments by landowners to the private entities can then be donated by these private entities to election campaigns.

 

 

 

Road to recovery

KansasFire4.jpgBy Sherry Bunting April 7, 2017

If there is one thing to come down the road of recovery from a tragedy in agriculture, it is the sense of community that agriculturalists make business-as-usual. It is the matter-of-fact way in which people are prompted to help each other, and the humility with which help is offered that allows proud and self-reliant fellow farmers and ranchers to accept.

All know that livelihoods and legacies are on the line, pending the external forces that cannot be controlled, and that, in an instant, a storm, fire, or other natural disaster could change everything.

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While driving through Ashland and Englewood, Kansas on Saturday heading back to Pennsylvania from other work in the Midwest, the post-wildfire realities stretched for miles.

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Intermittent wheat pasture is credited with saving hundreds of lives.

It was a rain-soaked day, just what the land needs to recover. New life was springing forth, adding lushness to the intermittent wheat pastures that had provided refuge – credited with saving hundreds of human and animal lives as they interrupted the fires that spread rapidly through the dry grasslands and provided a safe haven for evacuees when roads were blocked during the fire.

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Timely rains are softening the charred lands with emerging hints of green, red and gold, framing the wildfire zones as the Painter slowly re-fills this empty palette. Residents say that the rain has helped a lot, and the grasses will explode within the next two weeks in some areas. The hay being sent has been a godsend. And the move by the Trump administration to authorize emergency grazing on Conservation Reserve Program (CRP) lands located in Kansas, Oklahoma, and Texas – the three states which were most heavily impacted by ongoing wildfires – will help.

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But it is the Sandhills of southwest Kansas that catch your breath. The Starbuck fire — that claimed over 500,000 of the total 711,000 acres burned in Kansas the first week of March — had burned so hot, sinking down through the sandy soil like a sponge, that many wonder if the grasslands will come back more than spotty at best in areas where windswept sand dunes present a desert-like appearance. There are areas with nothing on top, leading to lingering concerns about feeding surviving cattle.

Firefighters noted this was unlike anything they had seen in their 20 to 30 years. They described driving 60 to 70 mph, and being outrun by the fast-moving fire, seeing it move right past them.

Only time will tell how some of the acres will respond to the timely rains.

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One thing is for certain, the help of fellow farmers and ranchers via donations of hay, fencing supplies, work crews, orphaned calf care, and fundraising — all of it represent blessings beyond measure.

As Ashland resident Rick Preisner put it: “Everyone here was shell-shocked at first. Everything changed in an instant. It was difficult to know where to start. Then the help came pouring in and it lifted this community up.”

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Ashland is ‘home’ for Roddy Strang with sister Rhonda at Gardiner Angus, where their father worked 26 years.

“No one here is saying no to the hay that’s been coming,” said Roddy Strang. “They know they will need feed for a while here.” Strang trains horses and lives in Chester County, Pennsylvania with his wife and children, but he grew up in Ashland around the Gardiner Angus Ranch, where his father worked for 26 years.

Not only did he fill his livestock trailer with 250 compact alfalfa bales and some fencing for the trip “home” to the annual Gardiner Angus production sale Saturday (April 1), he helped connect the dots for Lancaster County dairy farmer Aaron Hess of Hess Dairy in Mount Joy and his neighbor Arlyn Martin. Martin drove the 1500 miles last week with a load of 36 large square bales from Hess, along with 1800 fence posts and 91 rolls of barbed wire the men procured with funds they had raised and with many companies offering equipment and supplies free or with discounts.

They worked with Kevin Harrop, of Harrop Hay and Bale, Exton. Harrop grew up on a dairy farm and today runs a hay brokering and custom harvesting business in southeast Pennsylvania. Between Harrop and James Hicks of Meadow Springs Farm, they filled another truck with 42 large square bales. Harrop and Martin set out for Kansas early last week, delivered the hay and fencing to Ashland Cooperative Feed and Seed by Wednesday, and were home by Saturday.

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For Strang, the mission was personal. He stayed for the Gardiner Angus sale Saturday, where a few cows were purchased for the return trip to Virginia.

For those involved with the donations from southeast Pennsylvania — as for the numerous others organizing convoys over the past three weeks from Ohio, Michigan, Missouri, Kentucky, Minnesota, Nebraska, Iowa, South Dakota, northwest Pennsylvania, and more — the mission to bring hay to fire-torn regions in four states was something they didn’t really think twice about. And it is something they don’t want recognition for.

The only fanfare being given to these hay donations is the sentiment of “God Bless America.” As Harrop explains it: “We saw it the Facebook posts, and we knew people out there, so we called to see what was going on and to figure out exactly what they would need,” he said in a phone call from the road last week.

Harrop put it best when he explained that people helping out do not want publicity or pats on the back for their own sakes, but they sure don’t mind if others share and publicize what they are doing for the sake of showing the world how farmers and ranchers network and move forward to get things done.

“In a small way, we just want to help keep this network going,” said Harrop. “The need is great in the wildfire zone. The mainstream media and the government are ignoring this. Farmers all over the country have responded.”

In fact, hundreds of trucks with hay and fencing and other needed supplies have poured into the affected areas of southwest Kansas, eastern Colorado and the Texas-Oklahoma Panhandle region. While some areas are saying they have enough hay, for now, southwest Kansas is particularly hard hit in this regard, and people are thankful for the trucks that continue to come – 200 of them, in fact, last Saturday, alone. The list of states represented is too numerous to be sure to acknowledge them all. Relief organizers say they have received calls from over 20 states. Plans are also underway for moving 1000 large bales that have been donated in Greene and Washington counties, Pennsylvania in the near future.
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“That is their lives out there. That’s what they do, and it’s not like they have a lot to fall back on,” said Aaron Hess after securing a load of large bale hay from his dairy onto Arlyn Martin’s truck. “I was just seeing the posts on Facebook, so I called up the Ashland co-op and they put me in touch with the guy in charge. I just felt like it was the right thing to do.”

Teams of volunteers have helped remove damaged fencing. Crews, tools and materials to re-fence perimeters are the priority now.

Strang notes that the recipients are amazed by the outpouring of people wanting to come out to the middle of nowhere and help. “It is emotional,” he admitted. “There are some good people in a bad way. They aren’t going to ask for the help, but we see the need and we know if it were us, they would help.”

Even in this time when agriculture is taking such a severe economic hit, people step up. That’s how agriculture rolls.

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(Above) “From the Ashes” artwork displayed Saturday by Joel Milford of Fowler, Kansas from a photo captured by Cole Gardiner as he found this cow and her newborn calf a day or two after the fire. Milford’s painting was auctioned Saturday during the Gardiner Angus production sale, raising $35,000 and prints are still being sold for $200 each to benefit the wildfire relief efforts of the Ashland Community Foundation. Nearly 100 prints have been sold thus far. To purchase a print for wildfire relief, contact Jan Endicott, at the Stockgrowers Bank in Ashland, Kansas at jan@stockgrowersbank.com or 620-635-4032. Prints are $200 plus $15 shipping and 6.5% Kansas state sales tax. 

How you can help

Wildfire relief organizers are indicating that the best way for distant donors to help is to provide monetary donations for transporting nearby hay and resources to the areas affected by the wildfires.

Supplies and funding for the volunteer care of orphaned calves is also requested. Follow the progress of 4-Hers and other volunteers caring for these calves at Orphaned Calf Relief of SW Kansas.

In addition, auctions are being organized to benefit wildfire funds. For example, a heifer donated by Oklahoma West Livestock Market was auctioned 105 times on March 8 to garner $115,449 with proceeds going to the Oklahoma Cattlemen’s Foundation Fire Relief Fund. Similar ideas are creating a ripple response throughout the agriculture community and can be replicated anywhere. Visit Livestock Marketing Association  for these auction notes and efforts.

Trent Loos at Rural Route Radio is helping to organize this idea to fund the recovery and rebuilding efforts in the fire-ravaged areas of the High Plains through means of raising cash. For information about how to participate in this and to find a list of upcoming auctions, as well as how to set one up, contact Trent Loos at (515) 418-8185.

To give supplies and trucking or to donate funds to foundations for direct wildfire relief, contact the state-by-state resources below.

Kansas

Monetary donations: Ashland Community Foundation/Wildfire Relief Fund at www.ashlandcf.com or P.O. Box 276, Ashland, KS 67831. The Kansas Livestock Association/Wildfire Relief Fund at 6031 SW 37th St., Topeka, KS 66614.

Hay, trucking and fencing donations: Call Ashland Feed and Seed at (620) 635-2856. (Ashland Feed and Seed is also taking credit card orders over the phone for feed and milk replacer or other supplies for ranchers in the area.)

Texas

Monetary donations: Texas Department of Agriculture STAR Fund.

Hay, trucking and fencing donations: Ample hay has been received for two to three weeks, so call to see if and when more is needed. Fencing supplies are needed, which can go to the Agrilife supply points. Contacts are J.R. Sprague at (806) 202-5288 for Lipscomb, Mike Jeffcoat at (580) 467-0753 for Pampa, and Andy Holloway at (806) 823-9114 for Canadian.

For questions about donations or relief efforts, contact Texas A&M Extension at (806) 677-5628.

Colorado

Monetary donations: Colorado Farm Bureau Foundation Disaster Fund at 9177 E. Mineral Circle, Centennial, CO 80112 and visit http://coloradofarmbureau.com/disasterfund/

Hay, trucking and fencing: Contact Kent Kokes (970) 580-8108, John Michal (970) 522-2330, or Justin Price (970) 580-6315.

Oklahoma

Monetary donations: Oklahoma Cattlemen’s Foundation Fire Relief at P.O. Box 82395, Oklahoma City, OK 73148 or www.okcattlemen.org.

Hay, trucking and fencing donations: Contact Harper County Extension at (580) 735-2252 or Buffalo Feeders at (580) 727-5530.

Other states organizing deliveries

Several states outside of the wildfire area are organizing assistance and deliveries. Find those resources at http://www.beefusa.org/firereliefresources.aspx

 

 

 

 

 

 

 

 

 

 

High plains fires take lives, spark spirit

Convoys of trucks bringing hay to the areas affected by March wildfires have come from central Texas, southwest Oklahoma, central Kansas and from Nebraska, South Dakota, Michigan, Ohio and now funds for fuel are being raised to bring 1000 round bales from western Pennsylvania to southwest Kansas… as farmers and ranchers across the country pull together in amazing ways to help their peers with forage for cattle after wildfires decimated grasslands and stored hay in the High Plains. Derrick Carlisle of Claysville, Pennsylvania reports that nearly 1000 round bales of hay have been donated from farms in Greene and Washington counties, and a trucking company has agreed to transport the hay to Ashland, Kansas “at fuel cost.” Now, funds are being raised quickly to buy fuel to transport the hay. Individuals and businesses wanting to help provide funds for fuel, should contact Washington County Cattlemen’s Association president Brian Hrutkay at 724-323-5815.

To help with the ongoing relief efforts for ranchers affected by the wildfires, visit http://www.beefusa.org/firereliefresources.aspx to see various contacts for ways to help listed by the states affected as well as coordinated efforts in other states like Kentucky and Minnesota that are planning deliveries.

 Trent Loos at Rural Route Radio is helping to organize a rebuilding effort through means of raising cash. Various auctions are already set and the idea can be replicated. For information about how to participate in this, contact Trent Loos at 515.418.8185 or check out his Rural Route radio
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“There is so much appreciation in this community for the outpouring of love and compassion.”

Recap reprinted from Farmshine, March 17, 2017

ASHLAND, Kan. — High Plains ranchers are always on guard for the combination of March winds and wildfires. When the two conspire together, the result can rapidly turn devastating and deadly. That was the situation last week in southwest Kansas, the Texas-Oklahoma Panhandle and eastern Colorado.

All told, the wildfires on March 6 consumed around 1.7 million acres of grassland, 33 homes, over 200 farm structures, an estimated 7,000 to 9,000 adult cows along with untold numbers of calves, horses and wildlife. In Texas and Oklahoma, over 5000 hogs perished in separate facilities.

Tragically, some of the affected ranching families in the Panhandle suffered the ultimate loss of loved ones. Seven people lost their lives, at least five while trying to herd cattle to safety before becoming trapped in the rapidly moving fire when the high winds changed direction.

The livestock losses are particularly heavy in southwest Kansas, where a local veterinarian estimates 3000 to 6000 beef cattle have perished; however, an accurate assessment is still weeks away. In the Panhandle, Texas A&M Agrilife extension reports preliminary loss estimates of 2500 adult cows, plus additional calves.

Two consecutive years of above average moisture provided the good grass growth that ended up fueling multiple fires in early March. The previous 60 days had turned it tinder-dry, together with the high winds of up to 60-70 mph, creating the perfect storm. The rapidly moving ‘Starbuck’ fire in northeast Oklahoma and southwest Kansas will go down as the largest and most devastating single fire in Kansas state history. In the Panhandle, the March 6 fire is being called the third worst in Texas history.

While there are some dairies in these areas, extension agents and veterinarians report that no dairy cattle were impacted. But dairy producers and calf ranch operators are among the ag community throughout the region, and beyond, responding to the immediate needs of the region’s ranchers.

Occurring at a vulnerable time, the fires have orphaned many newborn calves. In fact, one purebred Angus operation in Ashland, Kansas described the confluence of emotion – simultaneously dealing with the grisly task of locating and putting-down hundreds of adult cows while gathering to the corrals over 100 survivors for further monitoring and evaluation – 30 of them having their calves in the days immediately following the fire.

Many of the ranchers have lost much of their stored hay supply, and the region’s unburned grasslands are a good 60 days away from greenup — provided they get rain. Surviving cattle are being pulled onto wheat pasture and into corrals — making the immediate priority that of acquiring the hay necessary to feed a good 15,000 surviving livestock in southwest Kansas and over 10,000 in the Panhandle.

With fences to build and repair, feed to secure, cows still calving and long term plans and decisions to make, there’s no time to bottle and bucket feed calves two and three times a day, particularly those ranchers who have also lost their homes.

OrphanCalves01(K-State)County 4-H clubs put the word out early, that youth members would take-in bucket calves to help the ranchers who have so many other things to do in the recovery. (Follow them on Facebook at Orphaned Calf Relief of SW Kansas)

Veterinarians are reaching out to colleagues in the hard-hit areas. Dr. Randy Spare at Ashland Veterinary Center has been organizing some of the needs. He received a call late last week from Dr. Tera Barnhardt.

The 2014 K-State graduate operates a solo bovine practice for dairies and feedlots two hours north of Ashland. While doing preg checks at Deerfield Calf Feeders — where dairy replacement heifers are raised near Johnson, Kansas – Dr. Barnhardt and the general manager Cary Wimmer came up with the idea of offering temporary homes and care in the calf ranch hutches for orphaned calves from Ashland.

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Many ag companies have donated milk replacer, feed, pharmaceuticals and other animal care products — and along with hay donations from other ranches — have come personal items for the families who have lost their homes and belongings.

“Our hearts go out to the ranchers,” said Dr. Barnhardt. “I’m just glad we could help connect some dots and take something off their plate.”

Some of the orphaned Angus calves now at Deerfield are from the Giles Ranch, Ashland, where three family members lost their homes and where they had significant cow losses. At Deerfield, as with the 4-Hers who have volunteered calf care, these baby calves will get the individual care and supervision they need while their owners deal with the recovery process.

“All aspects of this industry are coming together,” said Barnhardt. “It has been impressive. Even the workers at the calf ranch are inspired and proud to take care of these babies.”

As the immediate hustle to triage cattle and secure feed and care for survivors shifts to a longer term plan for coordinating the ongoing relief efforts, those close to the situation are encouraging people who want to help to consider monetary donations needed to cover trucking costs to get donated hay and materials to the affected ranches.

“We don’t want to turn down hay because some of our ranchers are just coming to grips with what their losses are and what their needs will be,” said Dr. Spare. The biggest issue with hay donations right now is the trucking bottleneck. In the short term, the tangibles have been necessary because it takes time for the various foundations to pool monetary donations and get resources to the ranchers.

“Farmers have called from as far away as Vermont and Wisconsin wanting to donate hay, and right now we have 800 bales available nearby in Waco, Texas if we could find the trucking,” said Spare.

Convoys of trucks — semiloads and pickups hauling flatbed trailers — brought an estimated 3000 round bales to the fire-affected regions over the weekend. With more hay available in central Texas and nearby Nebraska, the biggest need at the moment is more trucks or funds to help pay the fuel costs to transport the donated hay.

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(above) Convoys of trucks with hay headed to the wildfire-affected areas over the weekend. This one was organized by Mike and Conner Franetovich of southwest Oklahoma carrying 260 round bales to the ranchers in northwest Oklahoma. Photo by LaQuita Massee/Images By LQ

“When the hay trucks rolled in, it was like the cavalry arrived,” said Greg Gardiner of Gardiner Angus, Ashland. The well-known Angus breeder lost over 500 adult cows, mainly donor cows and spring calvers. They have over 1500 survivors but lost all of their hay — over 5000 round bales and their horse hay as well.

Greg’s brother Mark and his wife Eva lost their home, three of their horses and their dogs to the fire, despite their efforts to free them as the fire changed direction. He was behind them with the horse trailer when the black smoke descended making it impossible to see. He spent a half hour not knowing if they made it out.

“This thing is of biblical proportions, but it all seems small to me. My brother is alive,” said Gardiner. He described the landscape that burned from one end of the ranch to the other as an “apocalyptic wasteland” that will eventually come back stronger with enough rain.

“We’re praying for rain,” said Spare, describing dirty skies as the wind lifts the gray sand over charred soils.

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While prayers are most coveted, those who want to help are urged to contact organizers in the various affected states (see below) to see what the needs are as community leaders develop an ongoing relief plan.

“We are still contacting ranchers,” said Spare. “Some are saying they don’t need hay and feel embarrassed to take it, but the grass is all gone, and we are 60 days from good grass (in unburned areas) if it rains, so we are trying to help people understand as they make their plans, that they will need to have something to feed.”

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Make no mistake, this will be a long recovery for ranchers who have lost 50 to 90% of their herds and multiple years of income, as well as their stockpiled forage and grasslands.

“I told CNN that we as ranchers are stewards of the grasslands, and that the only way we have something to sell for an income is to sell grass through the cows that are eating it. We are working to take care of that and start all over again,” said Dr. Spare, who had significant losses among his own cow herd and was relieved when his son showed up in the driveway Tuesday morning, taking time away from vet school before spring exams to take care of the home front while he worked with other ranchers and their cattle.

As the reality sinks in…

“There is so much appreciation in this community for the outpouring of love and compassion, from the people who come alongside with prayers and help,” said Spare. “Many don’t know how they’ll get through this, but we know we will get through it.”

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