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Buckeye Dairy News : Volume 13 Issue 6
Dr. Cameron Thraen, State Extension Specialist, Dairy Market and Policy, The Ohio State University
By the time you are reading this, it will be well known that the United States Super Committee of 12 was not able to come to agreement on tax increases and federal program cuts by the imposed deadline of November 23. (Should pigs fly, then you can move to the next section). By not coming to agreement, this also means that the rapid start 2012 Farm Bill, including new legislation for dairy, will have evaporated and along with it any program for dairy margin insurance and dairy stabilization programs. With the 2012 election year now at full throttle, the expectation by those who watch this political sausage making process very closely is that there will not be a 2012 farm bill, or new dairy legislation until after the 2012 elections. That means 2013. We shall see.
Livestock Gross Margin-Dairy Insurance Update
On the Livestock Gross Margin (LGM) dairy front, the last sales period was November 18, 2011. This date was selected to salve those who, after waiting since March 2011 to purchase additional LGM dairy contracts, found that they could not do so at the October sale date. This was due to USDA Risk Management Agency (RMA) computer servers being overrun with agent purchase requests.
For the November 18 sale, USDA RMA announced an additional $7 million in funds. My sources tell me that these were completely exhausted at the November 18 sale, and as such, there are not funds available to support the sale of LGM-Dairy contracts for December. The USDA RMA could move funds from the other livestock commodities and make these available to dairy to support more contract sales in December. This is currently $6 million available in these other accounts.
A few facts from the LGM-Dairy report (11/21/2011):
1) Wisconsin dairy producers lead the nation with 236 policies purchased covering 7.962 million cwt at a premium cost to producers of $2.017 million and U.S. taxpayers $1.739 million. Average contract size is 33,741 cwt.
2) The top five states for LGM-Dairy sales are Wisconsin, Minnesota, Pennsylvania, Michigan, and Vermont (the same top five in 2011). These five states combine for 626 policies out of 903 (69.3%).
3) Total premium paid by producers equals $10.3 million, with an additional $8.9 million in subsidy (46%) paid by taxpayers.
4) Ohio LGM-Dairy contract sales equal 5 contracts on 148,000 cwt of milk at a producer cost of $38,344. The subsidy is $34,820.
5) For the United States, there are 903 contracts from 32 states covering 40.7 million cwt at a producer cost of $10.33 million and a taxpayer subsidy of $8.9 million. The total insured contract liability for the U.S. is $707.9 million dollars. The margin insured per cwt is $17.39.
This is very similar to what took place in the 2011 insurance year. After the LGM-dairy contract was modified to include a premium subsidy of up to 50%, and made effective with the December 2011 contract sale, the available funds to support this subsidy was exhausted in just four sales months. Data comparing 2011 with 2012 show the following: Total contracts sold in 2011 was 1,226; total milk insured 46.2 million cwt; total producer cost $14.2 million; and total subsidy $10.7 million. In 2011, the liability per cwt of insured milk was $16.67.
Dairy Commodity and Milk Price Forecast for November 12, 2011 Through April 14, 2012
My forecast for dairy commodity prices, (http://aede.ag.ohio-state.edu/programs/OhioDairy/BayesForecasts/probability_distribution_forecast.htm) milk component values and the Class 3 price shows an increasing probability of a butter price decline and a slight softening for cheese, whey, and nonfat dry milk in the coming 24 weeks, November 12, 2011 through April 14, 2012 (NASS reported prices, not Chicago Mercantile Exchange prices). As a result, butterfat will fall from the current $2/lb to $1.80, protein (cheese) will increase from the current $2.90 to 3.10/lb; nonfat solids(NDM) will remain fairly stable at the current $1.30 and possibly rising to $1.40/lb; and other solids (whey) will decline slightly from the current $0.44 to 0.38/lb. These prices will give a Class 3 milk price decline only slightly from the current price of $18.42 (November 26 estimate) to $17.95 in April 2012.
Of course, what happens in Europe with the Eurozone financial markets and here at home with the budget impasse may have a major impact on the demand for dairy products and the outlook for market prices.
Ohio Dairy Web 2011
If you have been looking for the Ohio Dairy 2011 website and unable to connect, this is because it was moved. Recent changes to the College of Food, Agriculture and Environmental Sciences (CFAES) and Agricultural, Environmental, and Development Economics (AEDE) website addresses have necessitated a new address for my Ohio dairy website. The most reliable link to reach the dairy website is to bookmark the AEDE department's new web address and then link to the dairy website by selecting "Programs and Research / Ohio Dairy Web". The new AEDE website address is: http://aede.osu.edu. The direct link to Ohio Dairy Web 2011 is currently http://aede.ag.ohio-state.edu/programs/OhioDairy/ .
The Costs of Nutrients, Comparison of Feedstuffs Prices, and the Current Dairy Situation
Dr. Normand St-Pierre, Dairy Extension Specialist, The Ohio State University
The milk and feed markets have gone down recently. Nobody really knows where milk prices are heading 3 to 6 months from now. With all these changes, however, it is too easy to loose track of what should be the overall feed strategy and where the average dairy producer stands in term of profitability. First, let's examine the feed markets in mid November and how feed prices translated into nutrient prices.
As usual in this column, I used the software SESAMETM 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 of net energy lactation (NEL, $/Mcal), metabolizable protein (MP, $/lb - MP is the sum of the digestible microbial protein and digestible rumen-undegradable protein of a feed), non-effective NDF (ne-NDF, $/lb), and effective NDF (e-NDF, $/lb) are reported in Table 1. Compared to its historical average of about 10¢/Mcal, NEL is now severely overpriced at 16.2¢/Mcal, although this figure is down from its peak of 17.4¢/Mcal in June. For MP, its current price (12.1¢/lb) is considerably less than its 6-year average (28¢/lb). Thus, we are currently in a period of very high dietary energy prices but low protein prices. This is even more evident when one is reminded that less than 10 years ago dietary energy (NEL) was priced at about 5¢/Mcal. The cost of ne-NDF is currently discounted by the markets (i.e., feeds with a significant content of non-effective NDF are price discounted), but the discount of -3.5 ¢/lb is below its 6-year average (-9¢/lb). Meanwhile, unit costs of e-NDF are historically high, being priced at about 4¢/lb over the 6-year average (3.3¢/lb). Homegrown forages can be inexpensive sources of this important nutrient.
Table 1. Prices of dairy nutrients for Ohio dairy farms, mid-November 2011.
Economic Value of Feeds
Results of the Sesame analysis for central Ohio in mid November are presented in Table 2. Detailed results for all 27 feed commodities are reported. The lower and upper limits mark the 75% confidence range for the predicted (break-even) prices. Feeds in the "Appraisal Set" were deemed outliers (completely out of price). One must remember that Sesame compares all commodities at one point in time, mid November in our case. Thus, the results do not imply that the bargain feeds are cheap on a historical basis.
For convenience, Table 3 summarizes the economic classification of feeds according to their outcome in the Sesame analysis.
Table 3. Partitioning of feedstuffs, Ohio, mid-November 2011.
Brewers grains, wet
Distillers dried grains
Alfalfa hay - 44% NDF
Corn, ground, shelled
41% Cottonseed meal
48% soybean meal
Soybean meal - expeller
44% soybean meal
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. In addition, prices within a commodity type can vary considerably 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. In addition, there are reasons that a feed might be a very good fit in your feeding program while not appearing in the "bargains" column.
Table 2. Actual, breakeven (predicted) and 75% confidence
limits of 27 feed commodities used on Ohio dairy farms, mid-November 2011.
Current Dairy Situation
We use the estimates of the nutrient costs to calculate the Cow-Jones Index (CJI), an index constructed here at Ohio State to measure the difference between milk revenues and the costs of providing the required nutrients at a production level of 65 lb/cow/day. The Cow-Jones is conceptually very similar to income-over-feed costs, but it is calculated without making reference to any specific diet. The reference cow used to calculate the Cow-Jones weighs 1500 lb and produces 65 lb of milk at 3.6% fat and 3.0% protein - which is about the average cow productivity in Ohio. This cow has daily requirements of 31.3 Mcal of NEL, 4.64 lb of MP, 10.15 lb of e-NDF, and 3.38 lb of ne-NDF. The cost of supplying these nutritional requirements has fluctuated in the last 6 years. Dietary energy is currently quite expensive, and it currently costs over $5.00/day to provide the NEL required for the production of 65 lb/day (Figure 1). This means that on an average, one has to pay $7.82 just to supply the NEL required to produce a cwt of milk.
Figure 1. Costs associated with the supply of 31.3 Mcal of NEL and 4.64 lb of MP per day from January 2005 through November 2011.
The change in the Cow-Jones index over time is shown in Figure 2. We cannot calculate the CJI for November yet because milk component prices will not be announced until December 2 by the Order administrator. As of October 2011, the cost of supplying all the nutrients amounted to $9.70/cwt, down from a peak of $10.84 in September. The milk income was $18.26/cwt. The difference is the Cow-Jones Index and was equal to $8.56/cwt. The break-even level for the Cow-Jones Index is approximately $8.00/cwt. A Cow-Jones in excess of $9.00/cwt is indicative of good profitability in the dairy industry. Thus in the month of October, Ohio dairy producers were operating slightly above break-even levels. Of course some people are more efficient in feeding their cows; others achieve greater production levels than the state average of 65 lb/day. For these producers, their income over feed costs would be better than the Cow-Jones. The index, however, is a very good barometer for the average producer. The fact that the nutrient costs in October amounted to over 53% of the milk revenues is very troublesome and foreshadows a very difficult financial environment if either the current feed prices were to increase throughout the year or if milk prices were to fall even further from their current levels.
Should Major Diet Adjustments be Made Because of High Corn Prices?
Dr. Bill Weiss, Extension Dairy Specialist, Department of Animal Sciences, The Ohio State University
With the end of the cheap corn era (probably forever), diet formulation strategies are being re-evaluated. When dry corn was $120/ton ($3.35/bu), diets that contained more than 30% starch (dry basis) were not uncommon. The price of dry corn is currently in the $250/ton range, and dietary starch concentrations are now typically 24 to 27% of dry matter (DM).
The case for maintaining the status quo (i.e., rely heavily on corn grain to obtain diets with about 25% starch)
1. Corn grain (approximately 70% starch) is a relatively inexpensive source of net energy. Corn may be expensive, but compared with the alternatives, it often is a bargain. Because starch is the predominant source of net energy in corn, lower starch diets can be more expensive than diets with 25% starch.
2. Compared with other energy sources, starch often results in the greatest amount of rumen microbial protein synthesis. Adequate dietary starch concentrations could reduce the need for expensive rumen undegradable protein.
3. On average, starch is about twice as digestible as NDF; therefore, increasing dietary starch concentrations (within limits) reduce manure output and increases feed efficiency (fat-corrected milk/DM intake).
In many situations, not changing the inclusion rate for corn grain or dietary starch concentrations is the correct decision; however, the high price of corn increases the importance of starch digestibility. When corn was inexpensive, it was often more cost-effective to simply feed more starch than to increase the digestibility of the starch (e.g., by fine grinding or steam-flaking). Based on a large number of experiments conducted at OARDC in which corn (grain and silage) was the predominant starch source, digestibility of starch by dairy cows fed typical diets ranges from about 88 to 96%. Increasing starch digestibility from 88 to 96% is equivalent to reducing the dietary starch concentration by 2 percentage units. That is, a diet with 24% starch that is 96% digestible provides the same concentration of digestible starch as a diet with 26% starch that is 88% digestible. Fine-grinding (mean particle size less than about 750 microns), steam-flaking, or replacing dry corn with high moisture corn usually increases starch digestibility. Starch from corn hybrids with less vitreous kernels (softer or more floury) is more digestible than starch from flinty or very hard hybrids. If you are purchasing corn grain, you will probably not know the hybrid, so this is not an option, but if you grow your corn grain, this should be one factor to consider (the effect of vitreousness is generally less for high moisture corn compared with dry ground corn).
Option 1. Feed diets with about 25% starch but reduce the corn grain
Historically corn grain has been the cheapest source of starch in the Midwest; however, in the era of high corn prices, other starch sources should be evaluated. Wheat and barley contain 65 to 75% starch, and their starch is usually more digestible than starch from corn grain. Usually, but not always, they are more expensive sources of starch and energy than corn. Because starch from wheat and barley is more digestible than corn starch, wheat and barley-based diets should be lower in starch than corn grain-based diets, which could also result in some feed costs savings. Hominy contains about 50 to 55% starch and can be a major starch source if the price is competitive. Hominy is higher in fat than corn grain which should limit its inclusion rate to a maximum of about 20% of dietary DM (this would provide 12 percentage units of starch). Corn silage, depending on hybrid and maturity, contains 20 to 40% starch. To obtain a diet with 25% starch and using average corn silage, an average Holstein cow would need to be fed about 5 lb more corn per day when fed a diet with 55% forage comprised of 70:30 alfalfa:corn silage than if she was fed a diet with 30:70 alfalfa:corn silage.
Option 2. Feed diets with less starch (and less corn grain)
Diets with about 20% starch can support high milk yields when starch (i.e., corn grain) is replaced with non-forage NDF (e.g., soyhulls, corn gluten feed, beet pulp, etc.). A recent study from the Miner Institute (NY) found that cows fed diets with 21% starch during the first 13 weeks of lactation had similar milk yields (average 101 lb/day) and milk composition as cows fed a diet with 25.5% starch (soyhulls and wheat midds replaced corn grain). Cows on the lower starch diet consumed more feed, resulting in lower feed efficiency. On average, if diets are formulated correctly, cows fed lower starch diets (~20%) vs. normal starch diets (~25%) have similar milk yields and milk composition but because NDF is less digestible than starch, feed intake usually is higher, resulting in lower feed efficiency. An increase DM intake of 3 to 4 lb/day can be expected with lower starch diets. When evaluating the use of lower starch diets, the cost of increased feed intake (without increased milk yields) must be considered in addition to changes in cost per pound of diet.
Composition of Corn Silage Harvested in 2011
Dr. Maurice L. Eastridge, Extension Dairy Specialist, The Ohio State University
The weather conditions this crop year presented several challenges. It was a very wet spring and crops were planted quite late, resulting in a late harvest. Overall, the yields of forage appear to be quite good for this year's cropping season, but a considerable amount of variation occurred in time of planting and the precipitation during the growing season varied by month and area of the State (or even county). The first frosts in some areas and the intermittent rains during harvest presented several challenges in getting corn silage harvested that was planted late. Based on the data from the Dairy One Forage Laboratory in Ithaca, NY, the corn silage harvested this year have similar concentrations of NDF and starch as compared to the 2010 crop, but both 2010 and 2011 crops have higher starch and lower NDF concentrations compared to the 2009 crop (Table 1). This likely reflects a higher ear to stalk ratio in the corn. At first glance, one would think that this means a higher energy value for the 2010 and 2011 corn silage. However because of the rapid dry down in some cases and the delayed harvest caused by rain, some farmers may have harvested the silage at higher DM than desired (harder kernels), and if a silage processor was not used, digestibility of the carbohydrates may be low. Digestibility should improve with advancing storage time. On the other hand, with proper stage of harvest and the higher starch (lower NDF) concentrations, rations need to be formulated with careful attention to physically effective fiber, particle size of the dry corn grain, and source of grain (dry versus high moisture versus steam flaked) that can affect ruminal pH and rate and extent of starch fermentation. Also due to the weather conditions, some bunkers were not filled and covered very quickly. In these situations, presence of molds and potential mycotoxins need to be assessed. The new crop corn silage should be analyzed, be allowed to stay in storage for at least several weeks if possible based on forage inventory, rations reformulated, and then observe cow performance (yield and composition of milk).
Table 1. Composition of corn silage harvested in 2009, 2010, and 2011.1
(n = 1110 )
May 2010 - April 2011
(n = 17,492)
May 2009 - April 2010
(n = 17,838)
1CV = Coefficient of variation [(standard deviation/average)*100], DM = dry matter, CP = crude protein, ADF = acid detergent fiber, and NDF = neutral detergent fiber.
Students Excel in 2011 Ohio Dairy Challenge Contest
Dr. Maurice L. Eastridge, Extension Dairy Specialist, The Ohio State University
The 2011 Ohio Dairy Challenge was held November 10-11and was again sponsored by Cargill Animal Nutrition. The Dairy Challenge provides the opportunity for undergraduates at Ohio State University to experience the process of evaluating management practices on a dairy farm and to interact with representatives in the dairy industry. The program is held in a contest format whereby students are grouped into teams of three to four individuals, and the first and second place team members received gift certificates to the Barnes and Noble Bookstore. The farm selected for the contest this year was the Rising Sun Dairy in London, OH (Madison County), and the local co-owners are Pieter and Johannes Assen, with the other partner living in TX. The farm was begun in 2003 and today it has about 1175 cows, with plans for expansion underway. The parlor is a double-24 herringbone and cows are milked 3x per day. The contest started by the students and the judges spending about two hours at the farm on Thursday afternoon, interviewing the owner and examining the specific areas of the dairy facility. During Thursday evening, the teams spent about four hours reviewing their notes and farm records to provide a summary of the strengths and opportunities of the operation in the format of a MS PowerPoint presentation that had to be turned in on Thursday evening. On Friday, the students then had 20 minutes to present their results and 10 minutes for questions from the judges. The judges were Mr. Bob Hostetler (Cargill Animal Nutrition), Mr. Ryan Aberle (Cargill Animal Nutrition), Dr. Maurice Eastridge (Professor, Department of Animal Sciences, OSU), and Dr. K. Larry Smith (Professor Emeritus, Department of Animal Sciences, OSU).
There were 10 teams and 37 students that participated in the program. The awards banquet was held on Friday, November 11 at the University Plaza Hotel on Olentangy River Road. Individuals listed below and designated with an asterisk were recognized as providing outstanding contributions to their teams. The first place team consisted of Katie Stevens*, Emily Stayduhar*, Melinda Miller*, and Jessie Maier, with the second place team consisting of Matthew Borchers*, Rachel Foureman, Kevin Jacque*, and Laura Gordon*. The students among the other teams (no particular order) competing were: Team #3 - Maggie Alden, Kevin See, Sam Seider, and Rebekah Meller; Team #4 - Katie Cole, Ashlee Dietz, and Abby Griffith; Team #5 - Kristen Wirght, Marina Cable, Sarah Finney, and Rixt Miedema*; Team #6 - Patrick Twining, Andy Mazur, Heidi Moff, and Derek Booth; Team #7 - Jason Milyard, Kayla Chapman, Felicia Nonnenmacher, and Zekel Dicke; Team #8 - Danielle Roark, Sabrina Eick, Cory Smith, and Sarah Sklenka; Team #9 - Jaimie Watts, Marc Bolen, and Jeneva Auble; and Team #10 - Anne Dobrowski, Lindsay Pickett, and Larissa Deikun. The top 4 individuals for the contest that were selected to represent Ohio at the 2012 National Contest, to be hosted by Virginia Tech University during March 29-31 in Roanoke, VA, were Kevin Jacque, Melinda Miller, Emily Stayduhar, and Katie Stevens. Students from OSU will also be participating in the Midwest Regional Dairy Challenge hosted by Kansas State University to be held January 31 - February 2, 2012 in St. Joseph, MO. The coach for the Dairy Challenge is Dr. Maurice Eastridge in the Department of Animal Sciences at Ohio State.
First Place Team (left to right): Katie Stevens,
Emily Stayduhar, Melinda Miller, and Jessie Maier
Second Place Team (left to right): Matthew Borchers,
Rachel Foureman, Kevin Jacque, and Laura Gordon.
New Chair for the Department of Animal Sciences at The Ohio State University
Dr. Bobby D. Moser, Vice President for Agricultural Administration and Dean, College of Food, Agricultural, and Environmental Sciences
After an extensive national search, I am pleased to announce the appointment of Dr. Ronald S. Kensinger to Chair of the Department of Animal Sciences. Subject to the approval by the University's Board of Trustees, his appointment will begin January 1, 2012.
Dr. Kensinger has an extensive record of achievement in higher education. Most recently, he has served as Department Head and Professor of the Department of Animal Sciences at Oklahoma State University. Previously, he served as Professor of Animal Nutrition/Physiology and Associate Director of the Intercollege Graduate Program in Nutrition at Penn State University.
Dr. Kensinger graduated with his Bachelor of Science degree in Animal Science and a Master of Science degree in Dairy Science from the University of Illinois - Urbana, and a Ph.D. in Animal Science from the University of Florida.
Nationally renowned for his significant leadership contributions to academia and the animal sciences industry, Dr. Kensinger brings to OSU exceptional experience and vision to lead the Department of Animal Sciences to the next levels of success.
Many thanks to Dr. Joe Hogan for his tremendous leadership and service as the Department's Interim Chair throughout the last year, along with thanks to Dr. Jerry Bigham, who willingly postponed his retirement plans to provide additional leadership as the Interim Associate Chair.
Please join me in welcoming Dr. Kensinger to The Ohio State University. I am confident that he will be an outstanding addition to our College's leadership team.
2011 Ohio Forage Performance Trials
Calendar of Events
Date Program Location January 7 Ohio Milking Shorthorn Animal Meeting Der Dutchman, Plain City January 10-12 Taking research to the field: Implementing Advanced Biology in Ration Formulation Software; Agricultural Modeling and Training Systems (AMTS). Cost for attendance is $350 and pre-registration is required. For more information, please visit www.agmodelsystems.com or contact Lynn Gilbert at: email@example.com. Sheraton Hotel, 706 John Nolen Drive,
January 16 Ohio Purebred Dairy Cattle Association Annual Meeting Der Dutchman, Plain City January 28 Ohio Jersey Breeders Association Annual Meeting Der Dutchman, Plain City February 18 Ohio Brown Swiss Breeders Annual Meeting Der Dutchman, Plain City February 25 Ohio Ayrshire Breeders Annual Meeting Der Dutchman, Plain City March 3 Ohio Guernsey Breeders Association Annual Meeting All Occasions, Waldo March 16-17 Ohio Holstein Association Annual Meeting Bellville, OH