If you have to divert milk, here’s some advice

feed-milk

By Sherry Bunting

Production reduction and milk disposal were top-of-mind in a Center for Dairy Excellence industry call last week. Dr. Mike Van Amburgh of Cornell had advice for those dairy producers facing this impact of COVID-19 market disruptions.

Dr. Van Amburgh stressed avoidance of knee-jerk reactions based on hearsay. He urged producers to know, calculate, evaluate, prioritize, monitor, manage and review.

First and foremost, know what your cooperative is actually requiring and what the penalties are and the time frame. Producers should not assume a production cut of 10 to 15% in the next two to four months unless they have received a letter from the buyer of their milk.

Do the math for your herd. “What is the actual penalty for milk shipped over the new base? Figure out how much milk you have to divert. Calculate the pounds and the deduction and spread that over all the milk produced. What does this do to the income average?” The math is important because, he said, “you don’t want to do things that damage the herd’s ability to make milk in the future.”

UdderComfort_FreshCowflipPrioritize cow health, and “avoid strategies that truly damage the ability of your cows to produce milk,” he said. “You don’t want to make decisions that cost you more in the end.”

Go through your records, Van Amburgh advised. If a 10 to 15% reduction is specifically required for your market, set priorities.

Be methodical, not abrupt, he stressed.

Mike_VanAmburgh

Dr. Mike Van Amburgh

Once you determine pounds of reduction to target, Van Amburgh gave these recommendations in order of priority:

1) Dry off cows: “Look first at which cows could be dried off earlier, and do the math on those pounds and percentages.”

2) Cull cows that are not paying their way. “Don’t cull too hard, be methodical,” said Van Amburgh. Even if the beef market doesn’t pay well with plant closures and disruptions, cull the cows that are costing you money and will cost you even more money when over-base penalties kick-in for those producers who have received letters.

He advised culling cows not bred and longer in milk and cows that have a history of milk quality and udder health issues.

Cull the cows that will leave your herd in a better position to bounce back in the future, and cull the problem animals that require more time and labor or have issues with health and quality.  Refine the herd for high quality milk and to have fewer health problems that drain labor resources. High quality milk is an insurance policy in a selective market.

3) Pen cows over 200 DIM separately and adjust. These are the cows to make adjustments with to slow down by feeding differently or milking 2x instead of 3x.

Check your forage inventory to be sure you have enough to do this: Van Amburgh suggests raising NDF levels on later lactation cows. Go back to the basics — 34 to 38% NDF diets are the best way to back off production, he said. To keep the rumen and the cow healthy, bring forage up to 45 to 50%, then 65 to 70%, and pull starch accordingly to slow those later lactation cows down.

By making a group of later lactation cows and pulling back toward earlier dry-off over the next 120 days — load more forage, balance protein and amino acids and pull back on starch, “you can titrate some of that milk down,” said Van Amburgh.

The key, he said, is good NDF management because it is important to manage this strategy so these later lactation cows do not get fat to avoid metabolic issues when they calve back in.

LINGEN834) Focus on health when evaluating strategies and additives. Don’t just take a lot of the extras out, but do it in a way that makes feeding a less expensive but keeps them in good health, said Van Amburgh.

5) When lowering production, keep the butterfat. This helps keep the income from deflating.

6) Feed saleable milk. “One easy way to divert milk is to feed all the calves some of the salable milk,” he said. “Feeding milk to cows or heifers is also a strategy, and we have some Cornell Pro Dairy bulletins on that.”

Van Amburgh reminded producers that feeding milk to older animals creates a little more work than feeding whey. Work with your nutritionist to see if it it’s doable.

7) Add more forage and pull back starch. “It is crucial to focus on maintaining rumen health,” he said. “It’s important to compare how much this pullback will cost you vs. what the penalties are if you don’t divert all the milk you are being asked to divert. Weigh those dollars and consider the longer-term impacts. As the market adjusts, will your herd be positioned to be healthy and productive for future cash-flow opportunities?

Van Amburgh said the Cornell Pro Dairy team is providing diet and management considerations in an effort to help dairy producers and their advisors meet the request, while maintaining cow health and working to ensure capacity to resume normal milk production relatively quickly once the situation stabilizes.

A question asked on the call was: If dairy farmers reduce their milk production with nutritional measures now, what steps can they take to come back four months from now as conditions change?

This question shows the importance of thinking through how you are going to reduce production and weigh into that decision what the market conditions might be four months from now.

“The key to the answer is the four months,” said Van Amburgh. “That’s 120 days. If you are looking at a 365 or 305 day lactation, you aren’t going to be ramping back up that part of the herd in late lactation four months from now.”

“It’s algebra and biology,” said Van Amburgh. “Yes it is possible, but first sit down and really look at these cows. The last thing you want to do is damage high production cows up front.”

He noted that Cornell is working with herds in New York that if they can’t afford to send that extra milk at a severe discount, take a step by step process for reducing it instead of the knee-jerk reaction of pulling everything out of the program.

UdderComfort_MilkingParlor_18) Going from 3x to 2x milking is the last thing to consider, according to Van Amburgh. That is, unless there are acute labor considerations in the mix. Either way, Van Amburgh advised doing this strategically.

“Weigh this carefully,” he said. “Don’t do it at peak milk. If you are a 3x herd, a smarter strategy is to go to 2x on tail-enders, especially as you move them toward being candidates for an earlier dry-off.”

He said the other group to potentially target for 2x is fresh cows up to 21 days.

These considerations may fit management for some but not all dairies. Every operation will have to determine what might work best for them under their current management conditions. More on this can be found here.

Producers also wondered what they can do privately with milk needing diverted. The answer to this question varies. Robert Barley from the Pa. Milk Marketing Board was on the call, and he said there are no government entities requiring producers to cut production. This means that a producer’s cooperative is best to answer the question about other uses for diverted milk, and the answers may vary.

Producers can also talk with their cooperatives about appropriate donation channels.

On the regulatory side, selling raw milk to consumers is prohibited by most cooperatives, but where it is allowed, producers would have to obtain a raw milk license from their state department of agriculture, and only some states allow the sale of raw milk with a license.

Excess milk can be fed to other livestock on your own farm without a permit. But if it goes into commerce to another operation, it probably needs a permit as it would be identified as commercial feed. Check with your state’s ag department or bureau of plant industry.

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Dairy data show shifting sands

Pa. production, cow numbers plunge into 2019

By Sherry Bunting, Farmshine, Friday, March 15, 2019

WASHINGTON, D.C. — The U.S. produced 1% more milk in 2018 compared with 2017 and did so with roughly the same “average” number of cows for the year. But there were 2,731 fewer U.S. dairy farms (-6.8%) selling milk during 2018 as the average number for the year fell to 37,468 according to USDA.

USDA is still catching up on its delayed milk production reporting after the government shut down earlier this year, the January 2019 figures were released Tuesday (March 12) along with the 2018 annual totals for production, cow numbers and licensed dairies. The data show shifting sands in the dairy industry even as producers, states and regions fight for their place in a consolidating pipeline.

The January portion of the report did show milk production up 1.3% over year ago after being only 0.8% higher in December. January cow numbers were down by 52,000 head, nationally, from a year ago, but up 2000 head from December.

Like a shot between the eyes, Pennsylvania came into 2019 with a whopping 25,000 fewer milk cows (-4.8%) producing 5.5% less milk in January compared with a year ago.

Licensed dairies, other 2018 data

In the 2018 portion of Tuesday’s report, it’s important to note that USDA describes its licensed dairy numbers as the “average number of dairy farms licensed to sell milk during the year, based on counts collected from State and other regulatory agencies.” This means the number of 2018 dairy farms nationally and by state is more along the lines of a rolling average for the year, not a tally of farms in operation at the end of the year for a tracking comparison.

Changes in cow numbers and production for fourth quarter 2018 vs. fourth quarter 2017 is more telling in terms of what it suggests about the rate of exits, consolidation and geographic shifts in the dairy industry. The figures continue to reflect big milk production and cow number gains with a stable number of farms in growing western states, stable production in the face of dairy farm exits and cow losses in some midwestern states, and falling milk production that directly mirrors farm and cow losses in most eastern states.

PA numbers concerning

For Pennsylvania, the figures are quite concerning as the state falls into this last category – right along with the Southeast. In fact, New York was the exception in the East, as the Empire State had stable production in the face of significant farm and cow losses.

Just 11 years ago, Pennsylvania was the fourth largest dairy production state. It then hung on to fifth place until 2016-17 when Michigan — and then Texas — pushed Pennsylvania to seventh.

USDA reports the average number of licensed dairy herds in Pennsylvania fell from 6,570 in 2017 to 6,200 in 2018. Again, this is an average number of dairy farms selling reported milk during the year, not an end-of-year number of remaining operations.

In July (2018), we asked the Center for Dairy Excellence for a handle on the number of licensed herds operating in Pennsylvania at that point in time. What we learned was that the state does not have a good tracking system for licensed herd numbers and that the state is working with the Pennsylvania Milk Marketing Board to get a better handle on these numbers.

The number we were given by the Center in July 2018 was 5,787 licensed dairy farms, but we were told that we “cannot compare this number to the USDA numbers because it is not the same data set.”

Still, the USDA notes in its report that it relies on state agencies for the numbers it uses to find the “average” number of licensed dairy farms state by state, for the year.

The difference between the number of dairy farms that exited the business in 2018 and the net number of dairies selling milk throughout the year is unknown in Pennsylvania.

Did Pennsylvania lose 370 dairy farms as the year over year “average” reported by USDA suggests? Or is that number closer to 700 if the state could provide end-of-year numbers for comparison?

End-of-year comparisons would be more helpful for policymakers to track the health of the dairy industry, whereas the average numbers reflect the type of information the industry wants to use in “sustainability” or “carbon footprint” claims because a certain level of milk production for the year would be produced by an average number of farms and cows during the year — not by just the number remaining at the end of the year.

Even using the USDA average for the year, Pennsylvania dairy farm numbers were down by 370 (-5.6%) and the average number of cows for the year was down by 6,000 head (-1%). Total annual milk production was 10.6 bil lbs (-2.1%) for 2018.

However, fourth quarter production in Pennsylvania was 4.6% lower than Q4 2017. This shows a deeper rate of decline, which was confirmed by the steep loss in cow numbers and production recorded for January 2019 in which USDA reported 25,000 fewer cows were milked in Pennsylvania, making 5.5% less total milk production for the state.

To put this into perspective, Wisconsin state officials estimate that over 700 dairy farms were lost in 2018, but the USDA report pegs the average number of dairy farms in the Dairyland State at 8500, down 590 (-6.5%) from 2017.

Production in Wisconsin, on the other hand, moved higher, reaching 30.5 billion pounds (+0.8%) for the year. The average number of milk cows in Wisconsin fell by 4,000 head (-0.3%).

With Wisconsin and Pennsylvania being the number one and two states for the number of dairy farms, the data differences are illustrative. While communities sustained high dairy farm exits in Wisconsin affecting community-wide dairy infrastructure, the state is still maintaining national average milk production growth and smaller losses in the number of cows relative to the losses in the number of farms.

This suggests that as farms exit the dairy business in Wisconsin, others have growth making up for it. In fact, January’s production in Wisconsin was up 2.9%, according to USDA, despite 5,000 fewer cows reported. That one is a bit of a head-scratcher.

In Pennsylvania, the situation is much different. As the Keystone State loses farms, the cows and production are leaving also. Those losses are not being replaced with in-state growth.

This means Pennsylvania’s entire dairy infrastructure is at risk, and we are seeing more dairy herd liquidations slated for this spring – just like last spring – both nationally and in Pennsylvania. The question is, will Pennsylvania’s ranking in the top 23 milk-producing states continue to decline or can it be stabilized?

Case in point, 2018 annual milk production for Texas was 12.8 bil lbs (+6.1%). That’s 21% more milk than the 10.6 bil lbs produced by Pennsylvania in 2018. Not quite two years ago, Pennsylvania was producing more milk than Texas.

Another comparison to be made here is with Minnesota. Ranked eighth and nipping at the heels of Pennsylvania. Minnesota saw the average number of licensed dairy farms fall by 230 to 2,980 (-7.16%) in 2018, and cow numbers fell by 5,000 (-1.1%). However, Minnesota’s annual milk production in 2018 was unchanged from 2017 at 9.87 bil lbs. Minnesota came into January with 1.6% more production, still down by 5,000 cows.

Northeast milkshed mixed

Back to the Northeast Milkshed, the USDA figures for New York show a similar pattern to Wisconsin and Minnesota as the average number of farms selling milk in 2018 was down by 280 (-6.3%) at 4,190 while cow numbers were down just 2000-head (-0.3%) and production for the year was stable at 14.88 bil lbs (-0.3%). Milk production in New York came into 2019 at levels 3.4% higher in January with 2000 added milk cows compared with a year ago.

Vermont followed a pattern more like Pennsylvania, with the average number of dairy farms selling milk in 2018 down by 90 farms (-10%) while the average number of cows was down by 2000 head (-1.6%), and annual milk production was 2.68 bil lbs (-1.8%). Vermont’s production stabilized a bit into the new year, with January’s production just 0.8% below year ago.

In Virginia, USDA reported 565 dairy farms (-3.1%) sold milk during 2018 with annual milk production down by 5.4% from 4,000 fewer cows (-4.5%). Virginia came into 2019 with a whopping 9,000 fewer cows producing 11.5% less milk in January compared with a year ago.

These data illustrate a couple of things. First, some cooperatives, including national footprint cooperatives like Land O’Lakes and DFA, are enforcing some type of base/excess or seasonal base penalties. In the case of Land O’Lakes, farmers in the East, namely Pennsylvania, have had three to four months out of each of the last three years where milk was penalized for being over base, and the base the company gives the entire eastern region as its individual base trigger has been reduced over those three years. Meanwhile, the members in Minnesota report they have not been penalized to-date.

The data also illustrate that as fluid milk sales decline in the East where Class I sales have been historically more relevant to milk handling, pooling and pricing, the “balancing” costs are reportedly increasing, and those costs are passed back to the farm level through more milk check deductions.

In some ways, the fluid milk market is diminishing to the point where it could be seen as a balancer for manufactured dairy products — even though that’s not the way the USDA Federal Order pricing works.

Coinciding with these market shifts is the rise in documented incidence of supermarkets being randomly short or depleted of available whole milk and cream products throughout the East and Mideast at intervals during all of the past 12 months.

Meanwhile, tolling agreements with cream separation facilities in the East, especially through Land O’Lakes, bring milk from as far away as west Texas to states like Pennsylvania, where the cream can go into butter and the skim is often what pushes the Federal Order One skim dumping requests. There are a number of methane digesters dotting the Northeast and Midatlantic landscape, and this dumped skim milk can put another drag on the Class I sales pool for the region.

Mideast dynamics interesting

Interesting dynamics are also occurring in the Mideast states of Michigan, Ohio and Indiana, where farm losses as a percentage of total farms were also steep in 2018, but milk production was comparatively stable.

Michigan had grown rapidly in 2014 through 2017. For 2018, however, USDA reported 230 fewer farms (-13%) selling milk while annual production was off by just a fraction of one percent (-0.6%) at 11.17 bil lbs. Michigan milked an average number of cows that was down by 3000-head (-0.7%) in 2018. And yet, Michigan came into 2019 with 6,000 fewer cows but 1.1% more milk in January compared with a year ago. Another head-scratcher.

Ohio lost 180 dairy farms on average in 2018, according to USDA, declining to 2200 dairy farms (-7.5%) while average cow numbers for the year fell by 6,000 head (-1.9%) and production fell to 5.5 bil lbs. (-1.5%). When comparing fourth quarter cow numbers in Ohio, 2018’s total was 10,000 head less than Q-4 2017. January 2019 production in Ohio was 3.8% below year ago.

Indiana’s production was 4.16 bil lbs in 2018 (-2.2%) with 95 (-10%) fewer dairy farms selling milk during the year and 3,000 (-1.6%) fewer cows. Indiana came into 2019 with 6,000 fewer cows and 3% less milk production in Jan. 2019 compared with a year ago.

Southeast slide continues

In the Southeast, Florida had 15 fewer dairy farms in 2018 and Georgia was down by 20. Annual production was down 4.6% and 4%, respectively, in 2018 with an average of 4,000 fewer cows milked in Florida and 2,000 fewer cows in Georgia during the year.

Kentucky had 60 fewer dairy farms selling milk (-10%), an average of 1,000 fewer cows being milked (-1.8%), and annual production fell by 3.2% in 2018, according to USDA.

In Tennessee, the picture was especially tough, but consistent across all categories of figures. Annual milk production in the Volunteer State was down by a whopping 8.5% in 2018, while the average number of cows was off by 3,000 head (-7.5%) and 20 fewer farms sold milk (-7.5%) during the year, according to USDA.

Western gainers gain big

On the growth side of the ledger, Colorado stayed unchanged in the number of dairy farms at 100, milked 14,000 more cows and produced 8.8% more milk during 2018. By January 2019, production was up by 6.7% over year ago. Kansas lost 10 farms but produced 6% more milk with 10,000 more cows in 2018. Kansas also came into 2019 with 6.2% more milk in January.

Texas came into 2019 with 18,000 more cows than a year ago in January, producing 7.3% more milk and South Dakota had 4,000 more cows producing 6.3% more milk.

Look for more milkshed milk math analysis when pricing and other data become available in April and May.

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