Buckeye Dairy News: VOLUME 20, ISSUE 4

  1. Milk Prices, Costs of Nutrients, Margins and Comparison of Feedstuffs Prices

    Mr. Alex Tebbe, Graduate Research Associate, Department of Animal Sciences, The Ohio State University

    In the last issue, the May Class III futures price was set at $14.44/cwt and forecasted to jump to $15.25/cwt in June. The May and June Class III prices actually closed slightly higher at $15.18 and $15.21/cwt, respectively. The Class III price future for July is slightly higher at $15.36/cwt. but is expected to take a large drop in August to $14.08/cwt.

    As in previous issues, these feed ingredients were appraised using the software program SESAME™ developed by Dr. St-Pierre at The Ohio State University to price the important nutrients in dairy rations, to estimate break-even prices of many commodities traded in Ohio, and to identify feedstuffs that currently are underpriced as of July 25, 2018. 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.  

    The current value of NEL and MP are nearly identical to May’s issue (9.0¢/Mcal and $0.40/lb, respectively). The price of e-NDF is about 4¢/lb higher than May, whereas ne-NDF is relatively unchanged from March (i.e., feeds with a significant content of non-effective NDF are priced at a discount).

    To estimate the cost of production at these nutrient prices, I used the Cow-Jones Index for cows milking 70 lb/day or 85 lb/day at 3.7% fat and 3.1% protein. In the May issue, the average income over nutrient costs (IONC) was estimated to be $8.21/cwt for cows milking 70 lb/day and $8.61/cwt for cows milking 85 lb/day. For July, the IONC for our 70 lb/day and 85 lb/day cows are slightly higher than May at $8.41/cwt and $8.85/cwt, respectively. These IONC may be overestimated because they do not account for the cost of replacements or dry cows. Overall, IONC prices for July are slightly better than May but are still not great.

    Table 1. Prices of dairy nutrients for Ohio dairy farms, July 25, 2018.

    Economic Value of Feeds

    Results of the Sesame analysis for central Ohio on July 25, 2018 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 those for which we didn’t have a price or were adjusted to reflect their true (“Corrected”) value in a lactating diet. One must remember that SESAME™ compares all commodities at one specific point in time. Thus, the results do not imply that the bargain feeds are cheap on a historical basis.

    Table 2. Actual, breakeven (predicted) and 75% confidence limits of 27 feed commodities used on Ohio dairy farms, July 25, 2018.

    For convenience, Table 3 summarizes the economic classification of feeds according to their outcome in the SESAME™ analysis. Feedstuffs that have gone up in price or in other words moved a column to the right since the last issue are red. Conversely, feedstuffs that have moved to the left (i.e., decreased in price) are green. These shifts (i.e., feeds moving columns to the left or right) in price are only temporary changes relative to other feedstuffs within the last two months and do not reflect historical prices.

    Table 3. Partitioning of feedstuffs, Ohio, July 25, 2018.

    Bargains At Breakeven Overpriced

    Corn, ground, dry

    Bakery byproducts

    Alfalfa hay – 40% NDF

    Corn silage

    Beet pulp

    Blood meal

    Distillers dried grains

    Feather meal

    Mechanically extracted canola meal

    Gluten feed

    Soybean hulls

    Citrus pulp

    Gluten meal

    48% Soybean meal

    41% Cottonseed meal

    Hominy

    Wheat middlings

    Fish meal

    Meat meal

    Whole, roasted soybeans

    Molasses

    Soybean meal - expeller

    		  

    Solvent extracted canola meal

    Whole cottonseed

    		  

    44% Soybean meal
       

    Tallow
       

    Wheat bran

    As coined by Dr. St-Pierre, 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 a 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. Also, there are reasons that a feed might be a very good fit in your feeding program while not appearing in the “bargains” column. For example, your nutritionist might be using some molasses in your rations for reasons other than its NEL and MP contents.

    Appendix

    For those of you who use the 5-nutrient group values (i.e., replace metabolizable protein by rumen degradable protein and digestible rumen undegradable protein), see the Table 4 below.

    Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, July 25, 2018.

  2. Margin Protection Program Update

    Mrs. Dianne Shoemaker, Extension Field Specialist, Dairy Production Economics, Ohio State University Extension

    The Dairy Margin Protection Program (DMPP) underwent a substantial change earlier this year, resulting from language included in the 2018 Bipartisan Budget Act.  Program enrollment was re-opened from April 9 through June 8, 2018. Significant changes benefiting dairy farmers included a one million pound increase in a farm’s production history eligible for new Tier 1 premium rates. This change meant that the first 5 million pounds of a farm’s annual production history was eligible for substantially reduced premiums. Tier 2 premiums applicable to any production history above 5 million pounds remained unchanged.  Other changes included monthly margin calculations and payments of any indemnities, and the 2018 sign-up being retroactive to 1/1/18.

    As a result of these changes and 2018’s challenging milk prices, 888 Ohio dairy farms enrolled in the updated MPP program according to the Ohio Farm Service Agency. By July 26, 876 of those farms had been approved. USDA Farm Service Agency announced that through July 11, $7,071,360 in program payments were processed for Ohio dairy farmers, averaging $8,072 before premium costs for the 876 approved farms. Individual farm payments vary depending on each farm’s production history and margin coverage selections.

    On June 25, 2018, the Ohio Department of Agriculture’s Dairy Division reported 2,206 dairy farms in Ohio. This is a substantial decline from the 2,312 dairies recorded in October 2017. Since the Margin Protection Program was initiated in September 2014, 1,091 Ohio dairy farms have established their production history with the USDA Farm Service Agency. The current sign-up is 81.39% of farms that have established base with the FSA, or 40% of all Ohio dairy farms. It is unlikely that Ohio would experience a near-100% enrollment as the large population of Ohio’s Anabaptist farmers are not likely to participate in this type of program. 

    Find more details about the new MPP program and resources at:  https://dairy.osu.edu/sites/dairy/files/imce/2018%20Margin%20Protection%20Program%20Update.pdf    

  3. Raising Dairy Calves: Reading Personality of the Calves can be Important

    Dr. Maurice L. Eastridge, Professor and Extension Dairy Specialist, Department of Animal Sciences, The Ohio State University

    We know that personality of children in the same family can vary immensely, caused by genetics, birth order, changing parenting styles, and other factors. Have you ever related these differences to dairy calves? Previous research has revealed that food animals that are generally calmer or less reactive, versus more excitable, have improved growth rates, meat quality, and milk production; improved immune function, and decreased physiological responses to stressful events. Dairy cows that are more excitable in the milking parlor produce less milk, milk out slower, and have reduced lifetime production efficiency. Given this prior knowledge, researchers at the Animal Welfare Program at the University of British Columbia conducted a study with 56 dairy calves to identify personality traits that may be associated with feeding behavior and performance. Calves were housed in seven groups with eight calves in each group with access to automatic milk feeders and free choice water, hay, and calf starter. Calves were assigned to 1 of 4 milk-feeding allowances (1.6, 2.1, 2.6, or 3.2 gal/day of milk) within each group of eight calves, with each group containing two calves on each allowance. Milk was reduced to 50% of the allowance at 42 days of age and reduced by 20%/day from day 50 until calves were completely weaned at day 55. At 27 and 36 days of age, each calf was subjected to three novelty tests (novel environment, human approach, and novel object). Seven different behaviors were scored, but interactive, exploratory-active, and vocal-inactive were the most important in explaining calf behavior. Calves with more exploratory-active began to consume starter at an earlier age and had greater starter intake and overall average daily gain. Calves that were more interactive and vocal-inactive (less vocal) had more unrewarded visits to the milk feeder during the weaning phase. Calf starter also was fed through the automated feeder system, and overall, it took 19 days for the calves to eat 0.10 lb/day, 36 days to first eat 0.50 lb/day, and 42.5 days to eat 1.5 lb/day of calf starter.

    Some general conclusions from this research are:

    • Personality traits explain individual variability in the development of feeding behavior, solid feed intake and weight gains, and behavioral responses of dairy calves.
    • It is important to identify calves that are struggling to make the transition from milk onto solid feed so that performance and welfare are not compromised. Calves that are struggling with the transition can have an extended transition or other exceptions to assist them with the changes during this critical period.
    • Characterization of calf personalities at around three weeks of age can identify animals that are most likely to make this transition smoothly and to identify calves that would benefit from additional assistance.
    • Calf behavior and performance have been used to access when individual calves are ready to move to an automated milk feeder. Additional evidence is still needed, but information collected during the time calves are using the automated milk feeder may help to identify potential personality differences among calves that warrant variation in the transition of calves to a weaned state.

    Even though the dairy industry in moving toward more group housing of pre-weaned calves, using the data collected in the automatic milk feeding system and careful daily monitoring of the calves by employees can help to identify health, performance, and personality differences for individual management of the calves to best meet their needs.

  4. Effective Employee Management

    Mr. Rory Lewandowski, Extension Educator, Wayne County, Ohio State University Extension (originally published in the Dairy Excel column of Farm and Dairy)

    The average number of dairy cows per farm continues to increase. Ironically, as dairy profit margins become tighter, many farms add cows and production to generate minimum levels of income needed to stay in business. As cow numbers increase, so do labor needs and as a result, most dairy farm owners find themselves in the position of managing employees. Employee management requires another skill set that is quite different from the skill set required to milk cows. I recently read several articles on employee management, some dairy related and others not, and all of them had some good ideas regarding how to work with and manage employees more effectively. My summary of those articles includes four practices: 1) develop good job descriptions, 2) provide effective training programs, 3) improve morale and 4) address productivity issues.

                A good place to start with employee management is the job description. A good job description helps to clarify what is involved in the job and provides an idea of the expectations for that job. For example, you want someone to milk the cows. It might seem simple to you; milk the cows what more do I need to say? However, stop and think about the job. Do you have a parlor routine that needs to be followed when milking the cows? Do you want the employee to report any milk abnormalities they might spot or any sick or injured cows? How should they communicate that? Is parlor cleanup included with milking? What is obvious to you may not be to the employee. Spend some time analyzing all the steps involved in the task. The job description begins with a job title that is specific and provides an idea of the expectations required of the employee. Next, define the knowledge (level of experience, degree, certificates, training, etc.), skill set (measurable and/or demonstrative), and abilities (team player, self-starter, etc.) needed for the job.

                An article in the Harvard Business Review entitled “How to Teach Employees Skills They Don’t Know They Lack” referenced data that said employees are “unconsciously incompetent” in typically 20 to 40% of areas critical to their performance. Managers need to provide and design training programs that engage employees and empower them to admit what they don’t know. Employees may be doing the job adequately but feel unsure of what they are doing, or why they are doing certain actions. It could be a case of accidental success. Managers need to recognize differences in skill levels and competencies between employees and provide training that allows the employee to understand the skills required and feel confident about performing the required task. Managers need to build a culture of continuous improvement. Part of this is to track errors and mistakes and then openly discuss those errors and mistakes. Why did this happen? Often a mistake or error is not intentional but the result of knowledge or skill gaps. Identifying and providing training to address mistakes and errors is a better solution than blaming the employee and seeking some form of discipline.

                Good managers have a high employee retention rate. If your farm is experiencing a high employee turnover rate, it might be time to look in the mirror. People often leave a job due to bad management. Good managers build employee morale and keep workers happy. In an article entitled “Six Things That Kill Morale,” author Travis Bradberry lists the following as practices that create job dissatisfaction, and lead to high employee turnover:

    • Overworking people
    • Holding people back: Good managers provide employees with opportunities for advancement and ways to improve or expand their skill set.
    • Playing the blame game: Good managers do not publicly shame or place blame on an employee. The better strategy is to create a team atmosphere, discuss mistakes, and focus on solutions.
    • Frequent threats of firing: This makes people feel like they are disposable and depends upon fear as a motivation to work better. This is not an environment that makes an employee feel valued or a part of a team.
    • Not letting people pursue their passions: Good managers are open to allowing employees to grow and expand their focus and interests. Productivity increases in these circumstances.
    • Withholding praise: Good managers look for opportunities to recognize employees for a job well done and for ways of rewarding employees.

    There are times when employee performance is not what it should be. There are too many mistakes and/or productivity is low. Bob Milligan, consultant with Dairy Strategies, in his June 2018 newsletter, says that in this situation, you have three options as a manager, do nothing, investigate, or blame the employee. Bob makes as case for investigating the performance issue sooner rather than later. A normal reaction is to blame the employee, but even if the blame is well founded, that will not solve the problem. Investigating the reason for poor employee performance requires non-threatening communication with the employee. Some communication keys are to ask questions and to practice active listening. The goal is to create an environment where the employee can see that the manager wants to solve the problem and help them become more proficient and effective.

    Effective employee management does not happen by accident. It requires recognizing our shortfalls as managers and the need to develop new skill sets. It may push us out of our comfort zone, but the results in terms of increased employee competency, happiness, and retention are worth it.