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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

Category Archives: milk

While milk production in the USA totaled 16.7 billion pounds or an increase of 2.3 percent above last year when adjusted for the extra day of the leap year, Iowa production stood at 399 million pounds up from 395 million pounds in February 2016.

The report showed February milk cow numbers in Iowa at 216,000, up from 211,000 one year ago. However, milk per cow was down from 1,870 pounds in February 2016 to 1,845 this year. Nationally the average was 1,782 pounds in February, down 33 pounds from the same time in 2016.

The complete report can be found at:

https://www.usda.gov/nass/PUBS/TODAYRPT/mkpr0317.pdf

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The current World Agricultural Supply and Demand Estimates (WASDE) were released today.

The 2017 milk production forecast is raised as milk cow numbers are expected to increase more rapidly. However, growth in milk per cow is reduced on January data. Dairy exports on a fat basis for 2017 are unchanged, while skim-solids basis exports are lowered on expected strong competition in international skim milk powder markets.

Both fat basis and skim-solids basis imports forecasts are unchanged. Skim-solids basis ending stocks are forecast higher for 2017 on higher production of dairy products and weaker exports.

Fat-basis ending stocks are unchanged. Historical milk production and stock estimates reflect recently released revisions. The cheese price forecast for 2017 is reduced as stocks of cheese are high and are expected to pressure prices. The butter price forecast is raised on continued demand strength. The nonfat dry milk price is forecast lower on expectations of slower export growth due to increased competition from global competitors. The whey price forecast is raised reflecting recent market strength.

The Class III price is raised as the higher whey price more than outweighs the reduced cheese price. The Class IV price forecast is lowered, reflecting a weaker nonfat dry milk price which more than offsets a higher forecast butter price.

The all milk price for 2017 is forecast at $17.80 to $18.40 per cwt.

On Thursday, the first Senate Farm Bill Reauthorization hearing webinar was hosted in at the Sioux county Extension office. Those attending heard testimony and questions from a wide range of producers and industry representatives.

A consistent theme heard from the presenters was the continuation of the crop insurance, conservation programs (especially EQIP) and a need for more transparency in price determination for the beef industry.

Lynda Foster from Foster Dairy in Fort Scott Kansas voiced her concerns for the upcoming farm bill discussion focusing on three issues.

She noted, in 2014, Congress passed legislation establishing a new safety net under Title I for dairy farmers. During the legislative process, changes were made to the original dairy program designed by NMPF and other dairy leaders around the country. Unfortunately, the safety net, known as the Margin Protection Program for Dairy Producers (MPP), has failed to provide the level of protection envisioned in the original program.

She pointed out that in the first year, there farm signed up for the program and purchased supplemental coverage at the $6.00 level. And like others, since that first year they have only enrolled at the minimal $4 margin level. “…to be perfectly honest, Senator, is meaningless. MPP remains the right model for the future of our industry, but changes are needed if Congress wants to provide relevant tools to our sector…” she stated.  She continued noting that many dairy farmers participating in the MPP have become disenchanted with the program. In calendar year 2015, dairy farmers paid $70 million into the MPP program and received $730 thousand. In 2016, those figures were $20 million and $13 million, in a year where more program support was needed.

During the lead-up to the 2014 Farm Bill, she explained the process to develop a model for average feed costs for dairy cows. This process took nearly a year and included industry experts who understand the real cost of feeding cows. When it was presented to Congress, the formula, while respected as being accurate, was cut by 10 percent. This cut resulted in a skewed margin program, a flawed calculation for MPP and a much less useful program.

As a result of this change, a number of farmers who purchased higher coverage levels in 2015 did not opt to do so in 2016 because of the likelihood of no payment during times of need.

Since its inception, she pointed out that MPP has actually made the government a profit, equal to $66 million in fiscal year 2015 and $37 million in fiscal year 2016, according to the Congressional Budget Office.

She continued by pointing out that unlike other sectors in agriculture, Congress arbitrarily limited the ability of dairy producers to use Risk Management Agency (RMA) products as well as Title I programs. Although all other commodities can use both RMA and Title I programs without any restrictions, dairy farmers cannot use the Livestock Gross Margin for Dairy Cattle (LGM) program, which remains a popular tool for producers. Due to restrictions in MPP, a producer must decide at the beginning of the Farm Bill cycle whether to cover their milk under LGM or the MPP. This restriction leaves dairy farmers without the tools that other farmers have at their disposal regarding federal support for their operations.

Foster also stressed the importance of a dependable labor force to the dairy industry. She quoted a Texas A&M report stating 51 percent of all dairy farm workers are foreign born, and the farms that employ them account for 79 percent of the milk produced in the United States. She then asked, “How are dairies like mine, or any others, supposed to operate if we do not have access to a reliable workforce? In dairy, we cannot turn the cows off when there are not enough employees to do the job, we have to milk them.” She urged the Senators to act immediately to reform our immigration system in a manner that addresses agriculture’s needs for a legal and stable workforce.

One of her final points was how the dairy industry has come a long way on trade in the past several years. Our nation has gone from exporting dairy products valued at less than $1 billion in 2000 to exporting a record $7.1 billion in 2014, an increase of 625 percent. Fifteen years ago the USA was exporting roughly five percent of its milk production, now we are at three times that level, even as overall U.S. milk production has continued to grow. That means the equivalent of one day’s milk production each week from the entire U.S. dairy industry ultimately ends up overseas, making exports integral to the health of my farm and our dairy industry at large. It is critical that Congress protects the progress we have made as the Administration updates trade agreements like the North American Free Trade Agreement.

The complete testimony of each presented is available at:

http://www.agriculture.senate.gov/hearings/hearing-from-the-heartland-perspectives-on-the-2018-farm-bill-from-kansas

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Hoard’s Dairyman dairy news reports that tight margins that ranged from $5.76 to $9.17 per hundredweight after feed costs were among the reasons that more dairy farmers exited the industry last year. Those business closings were only the fourth time in the past decade that 4 percent or more of dairy farmers called it quits.

As the industry continues to lose dairy farms, cow number remain robust as the national dairy herd reached a 20-year high of 9.328 million cows last year.

Given these two trends in recent USDA statistics, it goes without saying that dairy cows and farms continue to consolidate into clusters. When evaluating the top 10 dairy states as measured by total dairy farms, that group only lost 3.7 percent of its farms last year. Each state in that group also had 1,000 or more dairy farms. For the remaining 40 states, losses totaled a more brisk 4.9 percent.

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An article in Feedstuffs noted that the National Dairy Farmers Assuring Responsible Management (FARM) Program has opened participation in its third component: FARM Environmental Stewardship (ES).

The ES module joins the FARM Program’s two other pillars, FARM Animal Care and FARM Antibiotic Stewardship. The voluntary FARM Environmental Stewardship program helps dairy producers augment their environmental management efforts by identifying ways to improve their on-farm sustainability.

Continue reading this article ›

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Cherokee Ag Show is on Tuesday, Feb. 14.  I will be part of “meet the expert” at the ISU Extension booth.  Joel DeJong will be conducting PPAT from 9:30-11:30, so during that time I will be there to answer questions the general public might have about the dairy industry. The show will be at Western Iowa Tech Community College located at 200 Victory Dr., Cherokee.  If you are coming from the north or west on Hwy 59 or 3 it is on the north end of town.  Turn right at Holzhauer Motors and it is directly west.  You can’t miss it.  Parking to the south or west.

Come ask me a bee question if you are into bees!

The milk production forecast for 2017 is raised from last month. Improved returns in 2017 are expected to result in a slightly higher forecast cow inventory during the late part of 2017. Milk output per cow is also raised as improved returns are expected to support continued improvements in the quality of dairy rations. Beginning stocks on both a fat and skim-solids basis are raised from last month on December 31 storage data; stocks at the end of 2017 are raised, reflecting increased beginning inventories and higher dairy product production in 2017. Fat-basis imports are reduced as domestic butterfat is expected to be more competitive with the EU; skim-solids imports are unchanged. Fat basis exports are unchanged and skim-solids basis exports are raised slightly. Skim-solids imports are virtually unchanged as weaker exports of nonfat dry milk (NDM) are offset with stronger whey sales. For 2016, milk production, output per cow, trade, and stock estimates are updated based on data through December.
Cheese and butter price forecasts are lowered as product production is expected to reflect higher forecast milk production and beginning stocks are relatively high. The nonfat dry milk price forecast is unchanged, but the whey price is raised from last month on the strength of domestic and international demand.
The Class III price is raised as the higher whey price more than offsets the lower cheese price forecast.
The Class IV price is reduced as the butter price forecast is lowered. The all milk price is forecast higher at $17.70 to $18.40 per cwt.