INSIDE THIS ISSUE

Dairy Policy and Milk Marketing, Dr. Cam Thraen, Milk Marketing Specialist, Ohio State University
Dealing With an Uncommon Feed Market, Dr. Normand St-Pierre, Dairy Management Specialist, Ohio State University
Preventing the Occurrence and Handling of Downer Cows, Dr. Bill Shulaw, Beef and Sheep Extension Veterinarian, Ohio State University
Heat Detection in Dairy Cattle - Part I, Mr. David Marrison, Ashtabula County Agriculture & Natural Resources Extension Agent, Ohio State University
Summer Coliform Mastitis, Dr. Joe Hogan, Mammary Health Specialist, Ohio State University
Heat Stress - Where Should You Start?, Dr. Normand St-Pierre, Dairy Management Specialist, Ohio State University
Kohl Speaks at Northeast Ohio Dairy Conference, Mrs. Dianne Shoemaker, Dairy Extension Specialist, OSU Extension
Announcement on 2004 Ohio Dairy Management Conference, Dr. Normand St-Pierre, Dairy Management Specialist, Ohio State University
OSU Dairy Challenge Team Competes in 2004 National Contest , Dr. Maurice Eastridge, Dairy Nutrition Specialist, Ohio State University
Calendar of Events

Dairy Policy and Milk Marketing, Dr. Cameron Thraen, Milk Marketing Specialist, Ohio State University,
Additional milk marketing information by Dr. Thraen

He who hesitates is lost and this applies to the milk markets as well!

In the March 2004 issue of the Buckeye Dairy News, I titled the article "Are You Playing Blackjack With Your Milk Price?" In that article, I discussed the need to watch the markets and make a decision about pricing your milk or waiting to see what the market would provide by way of a price.

In this article, I will assess what has happened over the last two months. First take a look at the chart below. This is the chart that was published back in the March issue of the Buckeye Dairy News.

By the time the article appeared in the March issue, it was too late to do much about the March 2004 price, but the April 2004 through January 2005 prices were a different matter. The announced April 2004 price was $19.66/cwt. If you had used the futures contract to lock in your milk price at the time of my article, you would have left something in the neighborhood of $5.06/cwt in Class III value on the table. The May 2004 price is yet to be announced, but the current futures price is trading around $20.35/cwt. Had you locked in May, you would have left another $5.00/cwt on the table. Now, back on March 5, the average Class III price for the months of June through September looked about $15.45/cwt. Today these prices average $14.98/cwt. You would be ahead of the game by $0.47/cwt on four months of production. For the remaining period, October through January 2005, the earlier period averaged $13.30/cwt. The current Class III futures prices for these months average $12.87/cwt. You would have been ahead by $0.43/cwt shipped.

So, how would you have done over the entire period? On the two months of production, April and May, you would be feeling pretty bad. You would have left $5.00/cwt on the table. For the remaining eight months, you would be ahead by $0.45/cwt shipped. What should you have done in this situation? Perfect foresight would have told you to do nothing for April and May, and lock in June through January. Unfortunately, none of us possess perfect, or anywhere near, really good foresight into the future. By not doing anything for the April and May prices, we will feel really good about our decision. By not doing anything about the June through January 2005 price, we will feel like an opportunity has gotten away. The moral of this story is that you must have a proactive plan to price your milk out into the future. Working by the seat of the pants will not suffice. It is too difficult. As the second chart shows, the current Class III futures contract settle prices through April 2005 are sliding substantially back toward more normal price levels. The Chicago cheese market and butter market are beginning to slide backward and this showing up in the Class III settles prices giving back most of the premiums that they held just a week back. I project that this cash price slide will continue to erode the milk price over the remaining months of 2004 and into 2005. So, now is the time to answer the following question: What am I going to do about my milk price? Will I continue to be a reactive pricer or will I adopt a more proactive price management plan?

For an up-to-date look at anticipated dairy product and milk component prices connect to the Ohio Dairy Web 2004 and click on Cam's Price Outlook.

Dealing With an Uncommon Feed Market, Dr. Normand St-Pierre, Dairy Management Specialist, Ohio State University (top of page)

I recall just a few months ago when the soybean meal market jumped above $250/ton. I received numerous phone calls and emails requesting help on how to deal "with these obscene soybean prices". I imagine that most dairy producers wouldn't mind still paying $250/ton for soybean meal. But the rapid changes in soybean and corn prices have opened many opportunities for judicious ingredient substitutions in dairy diets. There are bargains out there!

As usual in this column, I used the software SESAME™ that we developed at Ohio State to price the important nutrients in dairy rations to estimate break-even prices of all major commodities traded in Ohio, and to identify feedstuffs that currently are significantly underpriced. Price estimates for net energy lactation (NE_L, $/Mcal), rumen degradable protein (RDP, $/lb), digestible rumen undegradable protein (D-RUP, $/lb), non-effective NDF (ne-NDF, $/lb), and effective NDF (e-NDF, $/lb) are reported in Table 1. Compared to January 2004, the cost per unit of net energy is up by 44%, RDP is up by 29%, D-RUP is up by 27%, ne-NDF is down by 6.5¢/lb, and e-NDF is also down by more than 4.0¢/lb. Thus, although the sticker shock associated with soybean meal has focused our attention on the protein prices, it is the energy that has seen the most dramatic increase. In fact, we have tracked down the NEL cost in the Midwest market all the way back to 1981, and we have never seen a cost exceeding $0.09/Mcal before. We shall expand more on this later.

Based on early May wholesale prices, central Ohio commodities can be partitioned into the three following groups:

As usual, I must remind the readers that these results do not mean that you can formulate a balanced diet using only feeds in the bargains column. Feeds in the "bargains" column offer savings opportunity, and their usage should be maximized within the limits of a properly balanced diet.

One must remember that SESAME compares all commodities at one point in time, early May in our case. Thus, the results do not imply that the bargain feeds are cheap on a historical basis. As a matter of fact, all commodities would be considered expensive on a historical basis. There are some feeds that are relatively more expensive than others.

In Tables 2 and 3, we report the results for all 26 feed commodities. The lower and upper limits mark the 75% confidence range for the predicted (break-even) prices.

We can use estimated nutrient costs to benchmark feeding costs. Refer to the article "Using Nutrient Cost to Benchmark Your Nutrition Costs" in the January 2004 issue of Buckeye Dairy News. Table 4 reports the nutrient costs for a 1500 lb cow producing 77 lb of milk at 3.5% fat and 3.0% protein for September 2003, January 2004, and May 2004.

From this table, one can see that the costs of nutrients have gone up by approximately $0.53/cow/day since January (or equivalently of $0.69/cwt of milk). The $0.53 increase is the result of $1.00/day increase in NE_L, $0.10/day in RDP, and $0.16/day in D-RUP, but a drop of $0.46/day in the cost of e-NDF and a drop of $0.26/day in ne-NDF. Thus, the proper usage of energy sources combined with a wise selection of byproduct feeds can result in substantial savings in feed costs. Savvy buyers will keep a close watch to the commodity market during the summer month as we can expect rapid changes in prices due to seasonal changes in supply and demand of some commodities (e.g., wheat midds and wet brewers grains).

Table 1. Estimates of nutrient unit costs - OH, May 2004.

- A blank means that the nutrient unit cost is likely equal to zero.
- ~ means that the nutrient cost may be close to zero.
- * means that the nutrient cost is unlikely to be equal to zero.
- **means that the nutrient cost is most likely not equal to zero.

Table 2. Estimated break-even prices of commodities - OH, May 2004.

Table 3. Estimated break-even prices of outliers - OH, May 2004.

Table 4. Benchmarks of nutrient costs - Ohio.¹

¹Costs are for a 1500 cow producing 77 lb of milk at 3.5% fat and 3.0% true protein.

Preventing the Occurrence and Handling of Downer Cows, Dr. Bill Shulaw, Beef and Sheep Extension Veterinarian, Ohio State University (top of page)

To say that much has changed for the US dairy and beef cattle industries since the finding in December of a cow with bovine spongiform encephalopathy (BSE) might be the biggest understatement of this year. Thankfully, commodity prices have not changed much as a result of finding this single cow in Washington, but certainly the way we manage, market, and harvest animals has changed and will continue to be scrutinized by our consumers. Although not yet fully implemented, the new rules announced by the USDA and the FDA on January 26, 2004 have further strengthened consumer protection from exposure to BSE contaminated food. However, these rules have also created some challenges for those in the production and processing sectors. Among these new rules is the prohibition of non-ambulatory, or "downer", animals from the human food chain.

Strictly defined, a non-ambulatory animal is one that "…is unable to rise from a recumbent position or unable to walk for any reason…", and, as explained in a USDA press conference, the category also includes baby calves. Cows may become non-ambulatory for many reasons, but these eventually all fall into the categories of illness or injury. Illnesses include such things as milk fever, toxic mastitis or metritis, listeriosis, and severe indigestion (lactic acidosis). Injuries often occur as a result of difficult calvings, falls on slippery surfaces, or injuries to bones, muscles, tendons, and ligaments as a result of weakness or incoordination caused by other conditions such as milk fever, severe lameness, severe weight loss, or obturator nerve paralysis (he obturator nerves cross the lower pelvic bones and are sometimes damaged during prolonged labor or delivery of a large calf). Although it is generally agreed that the occurrence of some downer animals is inevitable, many are preventable. Producers should examine their management practices to reduce the risk of downers. Some considerations might include:

1) Calve cows in areas with good footing. An area with a dry dirt floor covered with clean straw is usually ideal. If that is not available, deep bedding or some sand may improve traction on cement surfaces. For disease prevention purposes (including metritis), this area should be regularly cleaned and re-bedded.

2) Teach employees how to recognize the stages of calving and when and how to assist the cow. Insist on personal cleanliness and sanitation of equipment. Know how to properly use a calf puller to avoid injuring the cow, and know when to get professional assistance.

3) Be sure your nutrition program is optimized to minimize problems during the transition period from dry to lactating. Milk fever, ketosis, fatty liver disease, and some lamenesses are often preventable with an appropriate nutritional program.

4) Consider mechanically "roughing" slippery floors or install non-slip footing in problem areas. In new facilities, consider making this part of the design, and design the facility to improve "traffic flow". Handle cows quietly and gently to prevent falls and injuries.

5) Consider segregating lame cows to areas where better footing is available. These animals are more prone to falls on slippery footing. Work with your veterinarian to reduce the number of lame cows and foot problems.

Should a cow become unable to get up, move her to an area with good footing as soon as possible. Pieces of conveyor belt, a sheet of thick plywood, or even a wooden gate can be inexpensively fashioned to humanely move her to a better place with a tractor. Treat the primary condition promptly. Cows that do not respond to initial treatment, and which remain down for an extended period, are likely to develop muscle and ligament damage to legs on the down side. Of course, animals that become down because of primary skeletal or ligament injury must be evaluated and an appropriate course of action planned.

Getting a down cow up on her feet is a challenge. Very sick cows with conditions such as toxic mastitis or listeriosis are not likely to remain standing, even if they are assisted. Other animals may be able to recover fully with assistance. Hip lifting devices can be used to assist a cow to her feet, but they should be used with extreme care. They can cause severe bruising and other complications, and cows should never be allowed to remain hanging in them. Slings have been used to raise and support cows, but they too can be difficult to manage and can cause injury. Possibly the most useful technique for cows that are not too sick or too badly injured (fractures) is to assist them using water flotation in a sealed tank. More information on this and other techniques can be found at the websites listed at the end of this article.

When a cow becomes a downer, it is critical to reach a diagnosis of the cause and to then decide whether treatment is indicated. If an animal does not respond well to initial treatment, or survival and return to productivity is unlikely, the producer and veterinarian must consider euthanasia. Humane methods of euthanasia are described in the brochure prepared by the American Association of Bovine Practitioners (AABP) referenced below.

Of course, many animals leave the farm walking on their own and arrive at the processing plant in a non-ambulatory condition. Many of these animals have been injured as a result of falling during transportation. On the surface, it would seem that this is a problem for the transporter. However, for at least some of these animals, the problem likely began on the farm, and their frequency could be reduced by on-farm management strategies. Emaciation, which may result in weakness, and lameness are common in culled animals and contribute to the problem of non-ambulatory animals received at the market. Results from the National Market Cow and Bull Beef Quality Audits conducted by the National Cattlemen's Beef Association in 1994 and 1999 suggest that this problem is not getting better. In the 1999 Audit, only "…60.8% of dairy cows… and 70.9% of dairy bulls did not exhibit evidence of lameness, [and] losses due to lameness were greater (P < 0.05) than in the 1994 National Non-Fed Beef Quality Audit." In addition, 72.1% of dairy cows were considered "light muscled" or in poor body condition. Of the top 10 "Quality Challenges" cited for dairy cattle by packers, auction market owners and operators, and affiliated organizations, too frequent downers, too frequent arthritis/structural defects, and too frequent severe emaciation were ranked 3, 4, and 5 by the participants in the Audit. From an overall cattle industry perspective (beef and dairy combined), data generated by the Audit suggested that the market cow and bull sector of the industry could have recaptured $55 for every cow and bull harvested by monitoring health and condition of cows and marketing animals in a timely manner.

Early this summer, the USDA plans to embark on an intensive national BSE surveillance plan. The USDA hopes to sample about 300,000 animals over an 18 month period and test them for BSE. This will allow them to better define whether BSE is present in the US, and if so, at what level. The targeted cattle population consists of those cattle over 30 months of age in certain risk groups. Non-ambulatory cattle are considered to be a major part of that targeted sample, and the USDA is soliciting samples from non-ambulatory cows seen on the farm by veterinarians and producers, as well as those that may appear at the markets following transport. Producers can find out more about this effort, and payment available to support the sample collection, by contacting the Ohio Department of Agriculture or their local veterinarian. Our credibility with consumers and our export markets may hinge on the success of this program.

Lastly, on March 31, 2004, a bill was introduced in the House of Representatives by Rep. Rehberg of Montana that would amend the Federal Meat Inspection Act by banning non-ambulatory cows from slaughter "…unless the reason for such inability is fatigue, stress, obdurator nerve paralysis, obesity, or one or more broken or fractured appendages, severed tendons or ligaments, or dislocated joints." In an opinion article written in the Missoulian online, the author wonders what the Japanese opinion on obturator nerve paralysis might be. Perhaps you might wonder what American consumers' opinions might be as well.

Some resources available on non-ambulatory cattle can be found at the following sites:

http://www.vet.ohio-state.edu/docs/ClinSci/bovine/downer/downer.htm - an informational site by Drs. David Anderson and Jennifer Ivany at OSU on causes and management of downer cows,

http://www.nal.usda.gov/awic/newsletters/v9n1/9n1toc.htm - an article by Temple Grandin titled "Handling of Crippled and Non-ambulatory Livestock" from the National Agriculture Library's Animal Welfare Information Center Bulletin 1998, Volume 9, No. 1-2,

http://www.aabp.org/euth.pdf - a bulletin on humane euthanasia of cattle from the AABP,

http://www.asas.org/jas/abs/2001/a0130658.htm - an abstract of the published findings of the 1999 Non-Fed Beef Quality Audit from the Journal of Animal Science,

http://www.house.gov/apps/list/press/mt00_rehberg/Rehberg_Downer_Bill_040104.pdf - the Rehberg bill, and

http://www.missoulian.com/articles/2004/04/05/opinion/opinion2.txt - the Missoulian article mentioned above.

Heat Detection in Dairy Cattle - Part I, Mr. David Marrison, Ashtabula County Agriculture & Natural Resources Extension Agent, Ohio State University (top of page)

Reproduction on dairy farms is usually one area in which dairy farm operations in Ohio can increase their management skills. The failure to detect estrus (heat) in dairy cows can lead to economic loss due to extended calving intervals, loss of milk production, and the additional cost of heat detection aids and semen. It is vital that managers develop procedures to adequately address heat detection. Using a six-step approach to heat detection, farm managers can help improve their herd's reproductive performance. In this month's issue, we will focus on the first three steps.

#1: Establish a heat detection protocol for your farm

Develop a management program that all employees follow with regards to heat detection, record keeping, the use of heat detection aids, the use of synchronization programs, and insemination. One suggestion to improve the dairy's success rate is to make one person responsible for the observation of standing heats and record keeping. Many others can help, but have them report directly to the appointed reproduction specialist. An excellent way to meet reproduction goals is to offer incentives to those involved with the reproduction program. Such an incentive could be to give employees a bonus (example $5) per pregnancy that results from a breeding performed after reporting a cow or heifer in heat.

#2: Two eyes are better than none

The most common cause of poor heat detection is failure to watch for signs of estrous often enough or long enough. Cows should be observed at times and at a location where they are likely to express estrus. Don't rely on drive-by observations. The average duration of estrus is seven hours, so twice-a-day observations will miss many cows. This suggests that heat detection observations should occur three to five times daily, approximately three to eight hours apart. Most research indicates that once-a-day observations are more common than multiple. At the very least, cows should be observed early in the morning and again at twilight. Table 1 shows research from Cornell University that describes the percentages of cows showing heat at different times of the day.

Table 1. When cows show heat.¹

¹Source: Cornell University, Ithaca, NY.

Cows will show more signs of heat when other activities, such as milking and feeding, are not taking place. Since cows will show heat at times of the day that managers may not be present, it is important that accurate cycling records be kept so that secondary heat signs can be recognized for standing heats that may have occurred while visual observation was not being conducted.

Location is a key component in detecting standing heats. Cows should be observed in areas where a good footing surface and few obstacles are present. Managers with cows housed in free stalls may allow cows time off of the concrete to increase mounting activities. Watch for sexually active groups of cows. Remember that cows will usually alter their normal behavior when approaching heat. Cows in heat or ones that will be in heat in the next 48 hours will commonly congregate together.

Cows should be marked clearly so that identification can be made easily and accurately. Ear-tags, neck chains, and paint sticks can be utilized. Some managers utilize tail chalk to mark cows that are cycling or use different colors of neck chains for cows eligible for breeding.

#3: Develop and maintain cow records

Develop a reproduction record keeping system that works for your farm. Good reproduction records should include freshening dates, post-calving reproduction check-up information, heats detected but not serviced, breeding dates, pregnancy check dates, due dates, and dry-off dates. Heats can be anticipated with good records. By recording accurate information, it is possible to predict when cows are most likely to come into heat.

Managers should utilize a computer record system or Dairy Herd Improvement Association's (DHIA) testing to generate these reports. Managers should ask their breeding representative for a heat expectancy chart and calendar (not the newest hat!). Remember that a 50% conception rate means half the cows bred will become pregnant and half will return to heat in 18 to 24 days.

Final Thoughts

Improving reproduction efficiency on dairy farms takes time and the willingness to examine the current reproduction program. In most cases, efficiency can be increased simply by improving the farm's record keeping and by increasing the amount and duration of visual observations. Each dairy farm must design a reproduction program that is suited for their facilities, record keeping management, personnel, and daily schedule. Watch for the next issue of the Buckeye Dairy News, as we will discuss how herd health, synchronization programs, and goal setting can help strengthen your breeding programs. Now ---- out to the lot for visual observations!

Summer Coliform Mastitis, Dr. Joe Hogan, Mammary Health Specialist, Ohio State University (top of page)

Clinical mastitis, somatic cell counts (SCC), and bacteria counts in milk each increase each summer on Ohio dairy farms. In fact, the animals most at risk to severe clinical mastitis are cows calving in Summer months. Special care should be paid to providing these animals with the coolest, driest, and most comfortable environment possible to assure the cow's health and quality of milk marketed. Managing udder health during the summer requires an understanding that coliform mastitis increases drastically during this time due to the increases in bacteria populations in beddings and the weakened immune system of the cow heat stressed at calving.

Rates of clinical mastitis are not constant among seasons of the year in most herds. The biggest difference in rates of clinical mastitis is between the hot summer months and cold months of late winter and early spring. The rates of clinical mastitis in Ohio are 1.8-fold greater during summer than during spring. The difference in total clinical cases is due to changes in rate of clinical coliform mastitis. Clinical coliform mastitis is 2.5-fold greater in summer compared with spring. Rates of clinical mastitis caused by other pathogens usually do not differ among the seasons.

Rates of clinical mastitis are directly related to the number of bacteria in bedding. A primary reason that rate of clinical coliform cases is highest during summer is that coliform populations in bedding are greatest during this season. The number of coliform bacteria in bedding increases as ambient temperature and relative humidity increases in a barn. Ideally, bedding should be inorganic materials that are low in moisture content and contain few nutrients for bacteria to utilize. The bedding material that is recommended most for controlling environmental mastitis is washed sand. Compared with organic materials, such as sawdust, recycled manure, and straw, inorganic materials consistently contain fewer mastitis pathogens. A potentially serious problem with using either sawdust or recycled manure is a strong relationship between increased coliform mastitis and increased coliform counts in these materials during hot humid weather. Adding lime to sawdust bedding has minimal effect on reducing coliforms in bedding during summer months. A general recommendation is to use alternative bedding materials other than recycled manure and sawdust during late spring, summer, and early fall.

Another factor that results in a higher incidence of clinical mastitis during summer is that "heat stress" may compromise the cow's ability to fight disease. High temperatures and relative humidity reduce host defenses against mastitis. These factors are possibly the reason the greatest incidence of acute mastitis (sick cows) also happens during summer. The effects of heat stress become apparent when temperature exceeds 78^o F. Adequately ventilating barns and free stall sheds will lessen the effects of extreme heat on host defenses. Providing misters and cooling fans have reduced the effects of heat stress on cows in many herds.

Rate of clinical mastitis is greatest the week following calving compared with all other stages of the lactation cycle for most of the common mastitis pathogens. The high rate after calving is due to both new infections that occur around the time of calving and infections that originated in the dry period but remained subclinical until the cow started lactating. Therefore, special emphasis should be given to providing dry and freshening cows with a clean and dry environment. Dry cow areas should be well drained and free of excess manure. Dry cows often manage best on pasture. If cows are pastured during the dry period, limit their access to areas void of grass. Dirt covered areas under trees and in paths can expose cows to pathogen levels comparable to those in free stalls. Box stalls and loose housing areas should be regularly cleaned to the foundation base. Manure packs should be avoided. Manure packs generally contain extremely high counts of pathogens dangerous to both the dam and calf. The effects of summer are not confined to lactating cows but also can increase coliform mastitis in dry and springing cows.

Heat Stress - Where Should You Start?, Dr. Normand St-Pierre, Dairy Management Specialist, Ohio State University (top of page)

As I write this column, outside temperatures are well above 80^oF in Ohio and we are just in early May. Is this unusual? Well, considering that the average of our daily maximum temperature is approximately 70^oF in central Ohio during the first half of May, these daily highs are certainly above average. But, it is not unusual to experience a "heat wave" where temperatures exceed 80^oF in early May. Actually, it would be very unusual not to have at least three days where temperatures exceeded 80oF in the first two weeks of May. If we look at weather data for Central Ohio, in 67 out of the last 70 years, we have experienced three or more days of daily maxima exceeding 80^oF in the first two weeks of May. Factoring the relative humidity, which averages 55% in mid-afternoon, we quickly realize that our cows do experience episodes of heat stress in Ohio during the month of May. On an average year, there are eight days during the month of May where the temperature-humidity index (THI) exceeds 70, putting our cows under heat stress. And heat stress is expensive, costing $19.0 to 33.5 million per year to Ohio's dairy producers. You can greatly reduce these losses by:

1) Starting now. If you have fans, clean them up. The crud that accumulates on the blades and screens can easily reduce their efficiency by 50%. If you have sprinklers, verify each nozzle, clean the water line, and don't wait until it gets really hot to see if the sprinkler system works. If you have movable sidewalls, windows, etc., it is time to open them up. From now on, your cows are considerably more likely of getting too hot than of getting too cold.

2) Starting at the right place. Have a close look at your operation and identify where your cows are most challenged by thermal stress. On some farms, this is in the yard where cows have to stand by an uncovered feed bunk to slowly get cooked by solar radiation. A simple and inexpensive shade cloth can really make a difference in these instances. In general, however, our holding pens are the biggest culprit when it comes to heat stress. In older parlors with lower ceilings and low sidewalls, it is very difficult to move out of the facilities the heat produced by a bunch of milking cows stacked tightly with less than 15 ft2 per cow. It takes fans (and a lot of them) to control heat stress in a holding pen: somewhere around one 36" fan per 120 to 150 ft2 (or roughly one fan per 10 cow capacity in the holding area). Adequate use of sprinklers (one minute on per five-minute cycles) can be very effective at reducing heat stress as long as adequate outside air can be drawn into the holding area. Otherwise, the water evaporating from the cows' backs saturates the air, resulting in one big sauna and a gigantic heat-stress mess.

Alleviating heat stress does not have to be overly expensive. Returns on investments generally exceed 3:1 (a $30/cow per year in equipment depreciation, interest, and maintenance plus the operating costs results in an additional $100 in gross returns).

Just don't wait!

Kohl Speaks at Northeast Ohio Dairy Conference, Mrs. Dianne Shoemaker, Dairy Extension Specialist, OSU Extension (top of page)

"The highs will be higher and shorter (in duration); the lows will be lower and last longer than the highs." A major cause is consolidation coming at us hard and fast, driven primarily by food companies. This prediction of what dairy farmers can expect in the future was made by David Kohl, Professor Emeritus, Virginia Polytechnic Institute at the recent NE Ohio Dairy Management Conference. Any dairy person familiar with the numbers on their farm should not find this hard to believe. Kohl also made another important observation: "...when prices are high, prepare for the lows...don't do anything stupid."

"Be Clean on Credit"

Absolutely, the first priority with improved income is to make sure all accounts are current. Interest charges on open accounts at 1.8 to 2% per month may sound minor but are equivalent to annual rates of 20 to 24%. For example, if a farm owed $10,000 to a feed mill, did not make any payments and simply accumulated 2% per month interest charges (not a situation the feed mill would support), in 12 months, the amount owed would be the original $10,000 plus $2,795 in interest. None of which is deductible on Schedule F until it is actually paid.

Equally important is to pay off outstanding credit card balances. Credit card use is growing in the agricultural sector. Nationally, Kohl stated that more than 70% of people regularly carry an unpaid balance on credit cards. With increased use come horror stories of credit card misuse and abuse. Besides the amazing story of an older farmer running up credit card debts of $80,000 twice in three years (gambling, a trophy wife, and obviously a slow learner), Kohl particularly got the attention of younger members of the audience with examples such as the following:

If a credit card holder has a $2000 balance on a credit card with an 18% interest rate and only makes minimum payments, it will take 16 years to pay off the balance (without making additional charges!). Conversely, if that same minimum monthly payment was invested in a mutual fund generating an 8% return for the same 16 years, the investor would save and earn more than $12,000.

Make a habit of checking your credit rating regularly. Items can mistakenly land on your credit report, which if left uncorrected, can damage your credit rating and ability to get loans approved.

Make budgeting and strategic planning part of how you do business. Most important, let information and facts, not emotion, guide these activities. It is particularly important to be careful of investing in land. Remember that cash flow and earnings pay the bills and pay back debt, not necessarily ownership of land.

This is a particularly challenging issue where land values are rapidly increasing out of agricultural use value because of its' desirability as a location to build the "Ken and Barbie" houses (those huge fancy multi-zillion dollar houses) that are crowding out agriculture on the fringes of urban and suburban development. Kohl did note that eventually the homeowners will discover that these huge houses on multiple acres "own" them with their demanding and costly upkeep…but not soon enough to keep new construction from gobbling up farm ground and driving up land prices.

Budget additional expenses and income for the year. Currently, high feed prices will pick off some of the additional income on many farms. High fuel prices will also take their toll as we enter spring planting and forage harvest.

Pay down lines of credit. Not only will you save interest on the balance, but you are rebuilding credit reserves to help you through the next downturn.

Put some money back - checking accounts that pay interest, certificates of deposit, or whatever investment vehicle pushes your buttons. It needs to be safe, should generate some return, and be readily available for your use during the next down cycle.

"Don't do something stupid"

One of the biggest challenges during market peaks is to not do something stupid with the money. New paint disease is particularly contagious when milk prices are high. I guarantee that someone in your community will start buying stuff. Who cares? Their decisions (which may or may not be good) should not guide yours. Ask several questions before purchasing:

1) Is this a purchase that we were planning before milk prices increased?
2) How will this ________ machine, tractor, cow, building, or 4-wheel-drive king-cab super truck (fill in the blank) increase my farm's profitability?
3) How will we pay for this when milk prices are back to average or below average?
4) Will this purchase compromise our cash reserves?

If this purchase was not in the long term plans and won't increase the farm's bottom line, reconsider. If how the purchase will be paid for in less than optimal milk price times is unclear, just don't do it.

Be aware of what is happening in your industry. Start to think in terms of higher and shorter highs, lower and longer lows. Integrate information-based short term and strategic planning into your business priorities. Carefully monitor cash flow and credit. Fill in any chinks in the mortar of your dairy business's foundation. With careful planning and restraint, the current milk prices give us a chance to do just that.

Announcement on 2004 Ohio Dairy Management Conference, Dr. Normand St-Pierre, Dairy Management Specialist, Ohio State University (top of page)

Mark your calendars for December 2 and 3, 2004. On those two days, you will want to be in Columbus for the fourth biannual Ohio Dairy Management Conference. The organizers are lining up an outstanding set of speakers to cover a wide array of applied topics such as (more details will follow shortly):

• Components of successful heat detection
• Modern milk marketing
• Biological testing for metabolic problems
• Human resource management
• Fresh cow protocols
• Planning on expansion
• Short dry periods
• Milking frequency in early lactation
• Hoof health
• Transition cow management
• Working with your family

OSU Dairy Challenge Team Competes in 2004 National Contest , Dr. Maurice Eastridge, Dairy Nutrition Specialist, Ohio State University (top of page)

OSU team members took part in the North American Intercollegiate Dairy Challenge (NAIDC), April 2-3, in Altoona, Pennsylvania. Created to inspire students and enhance university programs nationwide, the NAIDC is a dairy management contest that incorporates all phases of a specific dairy business in a fun, interactive, and educational forum. Students, Lauren Ward and Chad Knueve (Front Row); and Calvin Keller and Cynthia Smith (Back Row) participated in the two-day program of farm evaluation and oral presentation, along with 24 other teams from 22 universities. The dairy farm enterprise that the OSU team evaluated constituted of 540 cows, cows were milked three times-a-day in a double-8 parallel parlor, and the cows averaged 24,550 lb of milk per year. The team received a Silver Award and was coached by Dr. Maurice Eastridge.

Calendar of Events (top of page)

June 1 - Ohio Dairy Industry Forum, Reynoldsburg. Contact Tim Demland, 419-523-6294.
June 7 - Buckeye Dairy News Conference Call. Contact Maurice Eastridge, 614-688-3059.
July 25-29 - Annual Meeting of American Dairy Science Association and American Society of Animal Science, St. Louis, Missouri
August 4-15 - Ohio State Fair, Columbus
September 21-23 - Farm Science Review, London
December 2-3 -Ohio Dairy Management Conference, University of Plaza Hotel, Columbus. Contact Normand St-Pierre, (614) 292-6507.

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