INSIDE THIS ISSUE

MarketView ... U.S. Dairy Outlook Brief 2010, Dr. Cameron Thraen, Milk Marketing Specialist, The Ohio State University
Dairy Critical Issue Briefs (DIBS): 24 now available online address issues facing dairy producers dealing with today’s continuing pitiful milk prices, Ms. Dianne Shoemaker, Extension Dairy Specialist, Ohio State University Extension
Corn Silage Harvest, Dr. Bill Weiss, Dairy Nutrition Specialist, The Ohio State University
Feed Ingredient Prices and the Cost of Nutrients, Dr. Joanne Knapp, Principal Technical Consultant, Fox Hollow Consulting, LLC, Columbus, Ohio

Announcements

Dairy Youth Program Update, Bonnie Ayars, Dairy Youth Specialist, The Ohio State Unviersity
Symposium Will Examine Animal Welfare Issues, Dr. Naomi Botheras, Animal Welfare Specialist, The Ohio State University
New Dairy Building at 2009 Farm Science Review, Dr. Maurice Eastridge, Extension Dairy Specialist, The Ohio State University

Calendar of Events

MarketView...U.S. Dairy Outlook Brief 2010
Dr. Cameron Thraen, Milk Marketing Specialist, The Ohio State University (top of page) pdf file

Chart 1 depicts the long term relationship between the Class 3 milk price (line, left axis) and the rate of change in U.S. milk production (bars, right axis). The inverse relationship between price and rate of increase in milk production is evident. The dashed horizontal line at 2% shows the annual rate of growth in demand for milk and milk products in the United States. Production expansion higher than this pushes down the milk price, while production expansion at a rate lower than 2% drives up the price of milk. The rapid rise in the milk price beginning in 2007 was caused by slow growth in U.S. milk production and, what is not shown on Chart 1, slow growth in milk production outside the United States. This in turn resulted in additional export demand for milk proteins from the U.S. and the historically high U.S. milk price. The 2008 collapse in U.S. and world demand, coupled with continued U.S. milk production expansion above the 2% line, resulted in the collapse of the farm milk price.

Chart 1

The rate of growth in U.S. milk production has been slowing for the past 12 months, finally nearing zero in June 2009. Over the first six months of 2009, this reduction in the rate of growth has not been severe enough to halt the decline in the U.S. milk price. While milk cows have been culled aggressively, milk yield per cow has not moderated. Overall production has slowed, but not enough.

Chart 2 shows the long term history of milk yield per cow (right axis) and the number of milk cows for the United States (left axis). The upward trend in milk productivity is evident. Average annual milk per cow grows at a rate of 1.7% per year. Milk cow on farms shows a much more varied history. Beginning in January 2004, the U.S. dairy herd started on an aggressive expansion path. This expansion ran out of steam mid-year 2008 and began a significant downward adjustment January 2009.

Chart 2.

For milk prices and dairy farm profits to return to a more sustainable level, a painful process needs to take place. The number of dairy cows in the United States must be reduced by a significant amount. The current level, 9,190,000 head is much too high. With the unabated increase in milk output per cow, the adjustment must come from increased dairy cow slaughter. The recent round of the Cooperatives Working Together dairy cow removal program will remove an additional 86,700 head when completed; however, this is not nearly enough. The U.S. dairy cow numbers must decline by at least another 200,000 head. U.S. milk cow numbers must get back to the level of January 2004. This means that a significant number of dairy farms operations will have to exit the industry over the coming months. Today, dairy producers expect the U.S. milk price to return to the $17 to $19 dollar range and this is only possible with a U.S. dairy herd below 9 million head.

As the financial pain is spread across the thousands of medium to small dairy operations in the U.S., the political pressure to rescue these operations is mounting. The U.S. Secretary of Agriculture has increased the support prices offered on Cheese and Nonfat dry milk. The U.S. Senate has passed legislation supporting even higher effective support prices. There is pressure to increase payments under the Milk Income Loss Payment program. All of these measures will only serve to extend the pain. The only way to sustained higher prices for U.S. dairy farms is to reduce the number of milk cows and production. The process has started and now it needs to run its course over the coming months.

Dairy Critical Issue Briefs (DIBS): 24 now available online address issues facing dairy producers dealing with today’s continuing pitiful milk prices
Ms. Dianne Shoemaker, Extension Dairy Specialist, Ohio State University Extension (top of page) pdf file

Dairy Issue Briefs (DIBS) target critical management issues facing Ohio’s economically bruised dairy farms. Cost-cutting decisions must be made with full awareness of both short and long-term production and economic consequences. OSU Extension’s Dairy Working Group, a collaboration of OSU Extension and OARDC faculty is identifying and addressing critical issues in five areas:

• Nutrition and feed costs,
• Reproduction and health,
• Calf and heifer management,
• Business issues, and
• People and stress management.

The emphasis is on "brief" with a short explanation of the issue, the conclusion and contact information for the author(s) if you have further questions.  DIBS can be found at the OSU Resources for Ohio's Dairy Industry website: http://dairy.osu.edu. 

Corn Silage Harvest
Dr. Bill Weiss, Dairy Nutrition Specialist, The Ohio State University (top of page) pdf file

Because of high feed costs and low milk prices, maximizing the nutritional quality of your corn silage and minimizing shrink are more important than ever.  At this time in the growing cycle, the most important manageable factor that will influence the nutritional value of this year’s corn silage is maturity at chopping.  Harvesting corn silage too early (i.e., silage with less than about 30% dry matter) usually results in a lower starch concentration in the silage, which means more corn grain may need to be supplemented.  Corn silage is usually among the least expensive ingredients in a diet and high inclusion rates will reduce feed costs.  However, because wet silage can reduce feed intake by dairy cows, dietary inclusions rates for wet silage are usually less than for normal silage which can increase overall feed costs.

            Over mature corn silage (silage with more than about 38% dry matter) also has less nutritional value than normal corn silage because of lower fiber and starch digestibility.  Kernel processing partially reduces some of the negative effects of maturity on starch digestibility and is strongly recommended for mature corn silage, but it will not make mature corn silage equal to corn silage harvested at the optimal dry matter concentration (30 to 38% dry matter). 

            A portion of the crop that is harvested will be lost during fermentation and storage.  That loss is considered shrink.  Factors that affect shrink include:

1. Type of silo structure: (bags and sealed silos usually lowest, conventional upright silos intermediate and bunkers usually have greatest shrink).
2. Moisture concentration at filling.  Wet silage can have high shrink because of excessive fermentation and seepage.  Dry silage can have high shrink because of spoilage (for example, mold) during storage and feed out.
3. Chop length.  Chopping too coarsely increases the amount of air trapped in the silage mass and reduces compaction.  Chop just coarse enough to provide enough ‘chewable matter’ for the cows.  Approximately 5% of the material on the top screen of the Penn State shaker box is usually adequate.
4. Rate of filling.  Slow filling reduces the rate of fermentation so that pH stays high for a longer period of time which increases shrink.  The faster you fill and pack (filling faster than you can pack will increase shrink), the less shrink.
5. Air trapped in the silage mass and air infiltration into the mass promotes yeast and mold growth causing shrink.  Pack, pack, pack, and when you think you have packed enough, pack some more.
6. Not covering the silage in a bunker silo greatly increases shrink.  Several studies have shown that covering a bunker with plastic returns around $8 in savings for every $1 invested in plastic and labor needed to cover the silo.  For maximum benefit, cover quickly after the silo is filled.
7. Silage inoculants can increase, decrease, or not affect shrink (how is that for a useful statement).  The standard silage inoculant (lactic acid bacteria) usually reduces fermentation losses slightly (i.e., reduces shrink) but often slightly increase spoilage losses during feeding.  If spoiling during feed-out has been a problem on a specific farm, then use of lactic acid bacteria may increase overall shrink and would not be recommended.  If spoilage has not been a problem on a specific farm, then use of lactic acid bacteria should be considered because of the reduction in fermentation losses.  If spoilage has been a problem, propionic acid bacteria (Lactobacillus buchneri) is recommended.  This inoculant often increases fermentation losses but usually reduces spoilage losses more. 

Summary

• Maximize nutritional value of corn silage by chopping when corn is between 30 and 38% dry matter.
• Minimize shrink by chopping fine enough (but not too fine), filling rapidly, packing well and sealing the silo with plastic.  Lactic acid bacterial inoculants will reduce shrink a bit if spoilage during feedout is not a problem.  Lactobacillus buchneri inoculant will reduce spoilage during storage and feedout but will increase fermentation losses slightly.

Feed Ingredient Prices and the Cost of Nutrients (top of page) pdf file
Dr. Joanne Knapp, Principal Technical Consultant, Fox Hollow Consulting, LLC, Columbus, Ohio

Continuing in the tradition established by Dr. St-Pierre, who's currently enjoying a sabbatical leave from OSU, the SesameIII™ software was used to estimate the cost of the key nutrients and predict break-even prices of commodities and forages used in dairy rations (Table 1). Net Energy of Lactation (NEl) is estimated at 9.6¢/Mcal, which is lower than the ~15¢/Mcal we saw during Fall 2008, but still higher than the 20-year historic average of 5¢/Mcal. Metabolizable Protein (MP) at 47¢/lb is on the higher end of the spectrum, which has ranged from 35 to 50¢/lb during the past couple of years. The price of animal proteins is heavily impacting this value, as they contribute significantly to the digestible rumen-undegradable protein portion of MP. Non-effective neutral detergent fiber (neNDF) and effective NDF (eNDF) are -12 and 2.5¢/lb, respectively, well within their normal ranges. It is common for neNDF to be negative, as feeds that have high levels of this nutrient, such as by-products like distillers' grains, corn gluten feed, etc., are discounted in the market relative to other feeds. Good- to high-quality, home-grown forages continue to be an excellent and inexpensive source of effective NDF.

Feed prices have continued to decrease since last winter, with vegetable proteins in particular decreasing over the past two months. The prices of most feedstuffs have gone down over the past four months, with the exception of animal proteins (blood meal, hydrolyzed feather meal, and meat-and-bone meal). Think about it - corn prices have decreased significantly from their all time historical highs during the ethanol boom in 2007. We're actually starting to approach the $120-$130/ton prices we saw before the boom in 2005.

Based on mid August wholesale prices for central Ohio, feed commodities fall into three groups:

The usual caveats with SesameIII™ results apply. You cannot formulate a balanced diet using only the feeds in the Bargains column. These feeds represent savings opportunities and can be utilized in rations to reduce feed costs within the limitations of provided a balanced nutrient supply to the dairy cow. Prices for commodities can vary because of quality differences as well as non-nutritional value added by some suppliers in the form of nutritional services, blending, terms of credit, etc. Feeds may also bring value to a ration in addition to their nutrient value, e.g. tallow as a "carrier" and dust suppressant in vitamin/mineral pre-mixes and molasses as a source of sugars.

The detailed results of the SesameIII™ analysis are given in Table 1. The lower and upper limits give the 75% confidence range for the predicted Break-Even prices. Feeds in the "Appraisal Set" are either those that were completely out of price (outliers) or had unknown prices such as the alfalfa hays of different nutritional quality.

Table 1. Prices of dairy nutrients, and actual wholesale, breakeven (predicted) and 75% confidence limits for feed commodities used on Ohio dairy farms.

While feed costs are down and this will help improve income-over-feed costs, producers will still want to work closely with their nutritionists and feed sales representatives to control feed costs. Keep in mind that feeding for milk components is very worthwhile economically. This will be especially true through September and October with the temporary, additional dairy product price supports provided by the USDA. Improving milk fat by 0.20% and milk protein by 0.10% on a 100-cow herd averaging 65 lbs of milk will be worth $500 to $600 more income per month to the dairy producer. This estimate includes the cost of the increased nutrients required to produce the milk fat and protein.

Announcements (top of page)

Dairy Youth Program Update
Bonnie Ayars, Dairy Youth Specialist, The Ohio State University (top of page) pdf file

It has been a busy and productive summer for Dairy youth programming.

Ohio's 4-H Dairy Quiz Bowl was first on the agenda in June. Perhaps, you have already seen the articles on our results in the popular media. There are loyal counties who bring their finest every year, yet we did have new participation in 2009. Congratulations to Wayne County juniors for winning the Junior Division and Rachel Townsley from Champaign County was the high scoring contestant in the senior version of Dairy Jeopardy.

Ohio's 4-H Dairy Camp was held in mid-July. Geared for 10 to 14 year olds, we were pleased to have nearly 30 participants who spent the day learning about showmanship and fitting skills, feed rations, dairy products, and a scientific activity with liquid nitrogen and the making of ice cream. Each attendee received a dairy camp T-shirt, an entire packet of information, and a wealth of hands-on training. It is the goal to plan one of these annually and to focus on different themes. It is interesting to note that those who attended were youth who had not attended any of our other programs that are offered at a state level.

Dairy Judging continued to receive high priority during the summer. Instead of our Sunday trips to farms during the summer, our state team hopefuls were given additional guidance at the Holstein District show in Wooster. Exhibitors put together fine classes for us to evaluate on the Friday night prior to their event. State FFA teams who placed high in their contest were also invited to participate in this workout.

2009 Ohio State Fair:

The Dairy Skillathon was held on July 30th with a steady stream of participants working their way through the stations. About one third of these individuals were doing this activity for the first time. It was our pleasure to also host the First Lady of Ohio, Frances Strickland. She spent quality time interacting with the kids and the volunteers.

Dairy Judging Clinics were conducted during each rotation of the dairy breeds. Even with a late start on July 31st, we had a ringside of judging hopefuls engaged in the 3 classes that were offered for evaluation. The second clinic on August 7th also included a large group. About 90 individual participants took advantage of these two sessions held in Cooper Arena. Dr Eastridge also initiated a new dairy judging program to score the clinic. Look for more details on this in the future.

The milking parlor was managed by the OSU dairy judging students, and despite a few minor challenges, all went very well. Milk shipped from the fair was at its highest in 5 years. Possibly, this was due to the 50th anniversary of the Ohio Jersey Futurity that included 68 entries. As a service to the exhibitors, the parlor was open over 120 hours with 4 students on hand in the dumping station and parlor area at all times. This continues to be an outreach activity that benefits our judging account, the exhibitors, and the fair goers who watch the process and ask key questions. Speakers outside the parlor allow the fair goers to listen to a CD that explains the milking and key facts about Ohio's dairy producers.

Television Interview: Through the fair public relations department, we were asked to be on a morning television program on Channel 4. Laura Gordon (4-Her, OSU Student, and OSF Scholarship winner) and I carefully placed the newborn baby calf from the calving display and traveled to the studio in my van. "Scarlet" was quite the diva as Laura and I discussed the positive youth development that is a vital portion of the Ohio State Fair. Everyone there was very friendly and charmed by our bovine celebrity.

Yet in August, the college and 4-H teams will travel to their annual "Boot camp" at the Maryland State Fair and then we are off to four major contests in September.

Symposium Will Examine Animal Welfare Issues (top of page)
Dr. Naomi Botheras, Animal Welfare Specialist, The Ohio State University

Plan now to attend the Ohio State Animal Welfare Symposium, on Friday, October 16, 2009 at the Nationwide and Ohio Farm Bureau 4-H Center, on The Ohio State University Columbus campus. This program is a fantastic opportunity to hear the best scientific minds discuss animal welfare and to build relationships with members of the general public, legislators, veterinarians, scientists and others whose perceptions impact animal agricultural practices. CLICK HERE for more details about the symposium.

New Dairy Building at 2009 Farm Science Review (top of page) pdf file
Dr. Maurice Eastridge, Department of Animal Sciences, The Ohio State University

The Buckeye Dairy Club, American Dairy Association Mideast, and the Ohio Dairy Producers Association have teamed up to be located at the same location at F13 Friday Avenue during the annual Farm Science Review - the same location used for many years by the Buckeye Dairy Club to provide you with deliciously refreshing milk shakes. With the leadership provided by Scott Higgins, the dairy industry groups funded the construction of a scarlet and gray building now located on the site. You will be able to get the famous milk shakes, learn about Ohio's dairy farm families in the People Behind the Product program, and how marketing is benefitting the dairy industry. AND, it will be the debut of offering grilled cheese sandwiches and a Buckeye Blizzard. The ribbon cutting will be Tuesday, September 22, 9:00 am - stop in and join in the excitement of these new offerings!

Calendar of Events (top of page)

Web links to Milk Marketing Information: Ohio Dairy Web - http://aede.osu.edu/programs/OhioDairy/; eDairy, Inc. - http://www.dairy.nu/