Congress starts farm bill talks; dairy revisions being discussed

Published: Wednesday, Feb. 15, 2017

Story source: Scott Brown, 573-882-3861

COLUMBIA, Mo. – U.S. dairy industry faced difficult economics in 2016 with dropping milk prices. However, many producers felt the government safety net in the 2014 farm bill did little to help.

As work starts on the 2018 farm bill, the House Agriculture Committee heard shortcomings of the present act and challenges of a farmer-friendly version.

Scott Brown, University of Missouri Extension dairy economist, testified Feb. 15 in Washington, D.C., before the committee in the House of Representatives.

Dairy policy is not easy, Brown testified. Estimates when forming the 2014 Dairy Margin Protection Program (MPP) did not work as planned.

MPP made a big shift in dairy policy. It went from the long-used price support to selling risk management on dairy farm margins between feed costs and milk income.

Dairy farmers familiar with milk prices didn’t accept margin protection as expected. In 2016, they needed help and MPP paid very little.

Milk prices fell from $24 per hundredweight in 2014 to $16 in 2016.

Changes in global milk economy affected U.S. producers. Global milk supply grew while a strong U.S. dollar cut U.S. exports.

“Domestic milk supply and strong dollar still face U.S. producers in 2017,” Brown said.

Despite tough times, U.S. dairy herd continues to grow. The recent cow count shows 48,000 cows were added in 2016.

The dairy business changed from a time with mostly smaller herds. Small farms dropped out and re-entered more easily. Large modern dairies with high investments don’t quit easily. If they do, someone buys them and takes the risk.

“It’s increasingly difficult to cut U.S. milk supplies,” Brown testified.

Current dairy farmers look for an alternative safety net. They disregard the current margin protection program.

Offering real help in a time of tight federal budgets will be difficult. Brown used stronger words: “Extremely difficult.”

Meaningful federal protection plans can be expensive, he added.

Dairy farm cash receipts can be volatile. Changes pop up unpredictably. U.S. dairy receipts dropped from $49.3 in 2014 billion to $34.2 billion in 2016.

Working safety nets in the past took large public spending. In more recent years, the government spent only $79 million. “Offsetting billion-dollar losses with $79 million will be a challenge,” Brown said.

He added government programs rarely offset low-market returns.

MPP offered ranked levels of protection. The problem hit when few farmers bought protection above the lowest $4 margin level, known as the catastrophic level.

Few bought higher levels, not knowing the probability of any payment, Brown said. “Enrollment has been much lower than many estimated when the program became law in early 2014.”

With involvement low, government outlays have been low.

Of great help to dairy farmers has been a sharp drop in feed costs since 2014. That eased the cost side of margins as much as the enacted MPP.

In an aside, Brown noted that dairy farmers who bought their feed, as in California, came out ahead of producers who grew their own feed, as in Wisconsin. Costs of growing corn remain high.

An adequate safety net for dairy farmers must remain part of federal dairy policy, Brown said. The government remains the largest source of risk management. In such a volatile business, the cost can go from zero to billions quickly.

“This makes scoring policy options difficult,” Brown said. “Spreading risks across federal policy and market-based risk tools may be the answer.”

Also, dairy farmer focus should change from price support to risk management. “Producers need help thinking through risk management,” Brown said. Farms may be better served by high participation in margin protection.

Economic studies show that premium payments even in times of no payoffs are more than offset by the 20 percent of time when payoffs occur.

“Modification is needed in future farm bills as debate continues toward passage,” Brown said. “Better safety net for dairy farmers that can be embraced by all participants is needed in the dairy market.”




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Missouri Holstein cow produces nearly 24 gallons of milk per day
Owner 'grazes' the bar with quality forage.

Source: Reagan Bluel, 417-847-3161

MOUNT VERNON, Mo. –  Missouri Holstein Dezi is a moo-ver and a milker.

The Lawrence County cow outperforms most of her regional counterparts, producing just short of three times as much milk per day, says University of Missouri Extension dairy specialist Reagan Bluel.

Dezi, owned by farmer Karl Wilke, churns out 201 pounds of milk per day. That’s the equivalent of about 24 gallons—15 gallons more than the average Holstein.

The 200-pound-plus achievement through peak production is not uncommon in dairy states, but it is rare in Missouri’s Ozark region. “She’s a superstar,” says Bluel.

Dezi’s efforts earned her nomination as the Missouri Holstein Association Cow of the Year. The winner will be named at the Heart of America Expo, Jan. 19-21 in Springfield. More than 500 producers from 15 states plan to attend.

Bluel says Wilke uses solid dairy management practices to achieve outstanding herd performance.  

Wilke is “graze-ing the bar” for other dairy producers by growing and feeding quality forage. “They do a phenomenal job of putting up great forage,” Bluel says.

Wilke feeds Dezi and the rest of the herd corn silage and high-moisture cereal rye bales – 60 percent moisture – and pastures the herd on cereal rye. There is no alfalfa in the Wilke herd diet. Wilke says he quit growing alfalfa after the 2012 drought and bought it for a few years when fertilizer prices increased. He saw some production loss but profits increased.

Wilke also uses the services the Dairy Herd Improvement Association testing and record-keeping.  Bluel also points out that Wilke studies and then amends management based on the results of DHIA tests and records.  

Dezi was born and AI-bred on the Wilke farm. As a first-lactation heifer, she showed promise, Bluel says. The 5-year-old is being flushed to maintain multiple offspring.

A bred heifer is scheduled to freshen this fall to carry on the cow family name. Wilke is eager to see if she will shine among her peers in the 165-head herd. He hopes her genetics will carry on to her progeny. Third-party testing confirms her milk for protein and butterfat quality.

Dezi feeds on partial mixed ration and is turned out to graze on rye. Part of her superb performance may be attributed to rains in the fall of 2015 that created optimum lush pastures.

Advantages of feeding a partial mixed ration (PMR) include more uniformity in nutrients reaching the cow and therefore less disruption of rumen function, Bluel says. Supplementation allows for an improved control of dry matter intake and reduced rumen digestive problems. “When supplementing pasture with PMR, the rumen is prepped for dietary changes to continue to support lactation even when the pasture gets short,” she says.

Research at Penn State University shows that grazing cows supplemented with a PMR had higher milk fat and protein, better body condition and produced 8 pounds more milk per day than those not fed a PMR.

Wilke and his parents moved their dairy operation to Missouri from Wisconsin in 1979. Missouri’s milder climate appealed to them. Wilke family members have been dairy farmers since coming to the United States from Germany in the 1860s.

Wilke family members are strong supporters of MU Extension education. Karl serves as president of the Lawrence County Extension Council. His family donated some of the foundation heifers in the University of Missouri grazing herd.  

Wilke believes in passing along his dairy knowledge to MU Extension 4-H members and others. He provides scholarships for 4-H camp and offers to host dairy judging clinics at his farm. Wilke helps 4-H dairy judging teams prepare for competitions. “He is someone who always asks how he can help others and our activities,” says 4-H youth development specialist Karla Deaver.

Wilke, Bluel and others interested in the southwestern Missouri bovine phenomenon plan to follow Dezi and her offspring.

“You pour your heart and soul into your passion for milk production,” Bluel says. “Day in and day out, there is never a dull moment. Every once in a while, there is the unexpected in the herd. The outlier cow that makes you proud. Those are the moments—those are the cows—that keep you passionate about your love of making milk.



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