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Buckeye Dairy News : Volume 9 Issue 1
Dairy Policy and Market Watch
Dr. Cameron Thraen, Milk Marketing Specialist, The Ohio State University, Additional milk marketing information by Dr. Thraen
I have just returned from sunny Orlando, Florida, where I attended the 2007 Dairy Forum. Dairy Forum 2007, sponsored by the International Dairy Foods Association (IDFA), is an annual event where representatives from across the dairy industry, including milk producers, dairy cooperative leadership, members of the Federal Milk Marketing Order Branch, and university dairy economists, get together to look into the industry and policy crystal ball. Here is a condensed list of what these folks see as front-burner items and for which every dairy farm family should be aware of and following in the coming year.
Federal Milk Marketing Orders: The current pooling and pricing arrangements for Class I and Class II revenues is just not working, and this is creating distortions and unhappiness in the dairy industry. This, along with the entire price-by-rule approach, appears to be under intense pressure. What is being discussed? One item is a renewed look at the concept of national pooling for all Class I and Class II revenues. Also, some are pressing for an end to Federal orders in their entirety. Nothing is certain other than a general state of frustration with the current situation.
New Class III and Class IV pricing rules: No one, and this includes the USDA/Agricultural Marketing Service (AMS), Federal Order branch, is really okay with the current Class III and Class IV pricing rules. Look for continued pressure on the USDA/AMS to scrap the current pricing formulas for Class III and Class IV. Talk of returning only to minimum pricing for Class I is in the air. A ruling favoring the plaintiffs in the court challenge filed here in Toledo, Ohio (Bridgewater Dairy, LLC, et al. -vs- USDA) will push the USDA/AMS to consider a new national hearing on all aspects of these pricing rules.
Federal Price Support Program: All agreed on the fact that the current floor price program offers no real support to milk producers. Many in the industry believe that the current Milk Income Loss Contract (MILC) program should replace the federal price support program. Some, such as IDFA, are calling for elimination of the MILC program in favor of the federal support price program but not both. A restart of World Trade Organization negotiations will likely push us toward less price support, not more. Look for a real discussion of replacing price floors with some type of MILC program, one which will pass the trade test in the up-coming farm bill.
Trade Liberalization: The general consensus is that we are becoming a major player in the export side of the world trade market for dairy proteins. This is a good thing, and we do not want to put in place obstacles to the future expansion of this market opportunity. It has been estimated that 80% of the improvement in the Class III price on the Chicago Mercantile Exchange (CME) futures market can be traced to the rising price of whey proteins. The challenge in the trade arena is how to provide support to producers in a manner that is decoupled from current production decisions.
I have recently updated my 24 week forecast for the dairy commodity prices and the Class III price. This can be found at the Ohio Dairy Web 2007 website. The link is: http://aede.osu.edu/programs/ohiodairy/quickchart/nass52.htm
What I see at this time is a very bullish Class III price forecast for the next 24 weeks. This forecast is driven by price improvement in the cheese protein market and the strength in the nonfat skim and whey markets. Cheese based protein will average $0.46/lb higher than last year, nonfat dry milk price will average $0.20/lb higher than the same period in 2006, and the whey price also will average $0.20/lb higher. This translates into a Class III price that will average $2.58/cwt higher than the same period last year. The Class III price will average $13.99/cwt over the coming 6 months. Butter and cheese prices will be firm but not outstanding. Any disruption in the international protein markets or rapidly weakening domestic demand will knock the wind out of these prices and send them into a free-fall. Currently, the CME futures prices are posting substantial premiums over historical Class III averages. For more information on the dairy industry, prices, and policy, link to my Ohio Dairy Web 2007 at: http://aede.osu.edu/programs/ohiodairy/
Cost of Nutrients and Benchmarks of Profitability for Ohio Dairy Farms
Dr. Normand St-Pierre, Dairy Management Specialist, The Ohio State University.
Feed markets have turned wild, the results of speculation, substantial increase in corn demand from ethanol plants, and a USDA report that reduced the size of the 2006-2007 corn crop. Results that are presented in this column were obtained using feed prices in effect in early January when corn was trading on our local market at $3.70/bu.
Using Sesame (available at www.sesamesoft.com), implicit market prices of nutrients were calculated using market prices of commodities in central Ohio (Table 1). Net energy lactation is currently very highly priced, exceeding 11¢/Mcal compared to a 10-year average of about 7¢/Mcal. Importantly, both degradable and undegradable protein are currently priced at much discounted prices. Fiber fractions are priced near their historical averages. Thus, we are in a time where dietary energy is very expensive, whereas, protein is relatively inexpensive. This should effect the nutritional strategy used by nutritionists when balancing dairy rations.
In Tables 2 and 3, we report the results for 27 feed commodities traded or available in central Ohio. In spite of its relative high price ($3.70/bu), corn grain was actually underpriced compared to other commodities. There are still feeds available at a relative bargain price compared to other feeds, although most commodities are being traded at prices well above their historical averages. But relatively speaking, there are still some bargains that can significantly reduce feed costs if used properly.
Nutrient prices and milk component prices can be used to calculate a benchmark for feed costs and income over nutrient costs. Results are presented in Table 4. The cost of feeding for a milk yield of 75 lb/day has gone up by $0.62/cow/day since May and is $0.50/cow/day greater than this last November. Improvements in milk prices, however, more than compensate for the increases in feed costs. The income over nutrient cost is currently $1.35 and $0.39/cow/day greater than it was last May and November, respectively. At $6.17/cow/day, income over nutrient cost is approaching its historical average of $6.25 to 6.50. Thus, although current milk prices are greater than their historical averages, the difference is completely cancelled by higher feed costs.
Table 1. Prices of nutrients, central Ohio.
Nutrient nameMay 2006November 2006
Net energy for lactation - 3X (NRC, 2001; $/Mcal)0.0720.0840.115 Rumen degradable protein ($/lb)-0.013-0.083-0.096 Digestible-rumen undegradable protein ($/lb)0.2000.2500.171 Non-effective neutral detergent fiber (NDF; $/lb)-0.027-0.041-0.040 Effective-NDF ($/lb)0.0650.0650.037
Table 2. Grouping of feed commodities, central Ohio, January 2007.BargainsAt BreakevenOverpriced
Bakery byproduct Alfalfa hay - 44% NDF Brewers grains Corn grain Beet pulp Canola meal Corn silage Cottonseed meal Citrus pulp Distillers dried grains Whole Cottonseed Gluten meal Feather meal 48% Soybean meal Meat meal Gluten feed Roasted soybeans Molasses Hominy Tallow Soybean hulls
Expeller soybean meal
Wheat bran 44% Soybean meal Wheat middlings
Table 3. Commodity assessment, central Ohio, January 2007.
NameActual ($/ton)Predicted ($/ton)Lower limit ($/ton)Upper limit ($/ton) Alfalfa Hay, 44% NDF, 20% CP130116.6499.45133.83 Bakery Byproduct Meal141177.75169.15186.34 Beet Sugar Pulp, dried140137.32123.88150.77 Brewers Grains, wet4032.0729.2334.91 Canola Meal, mech. extracted170141.90
Citrus Pulp, dried177147.57140.42154.72 Corn Grain, ground dry142181.41173.41189.41 Corn Silage, 32 to 38% DM4056.1450.1662.12 Cottonseed Meal, 41% CP185174.55165.22183.88 Cottonseed, whole w lint190196.93174.85219.02 Distillers Dried Grains, w solubles147170.84159.86181.81 Feathers Hydrolyzed Meal255276.38259.11293.65 Gluten Feed, dry123143.08134.78151.37 Gluten Meal, dry355316.10293.70338.50 Hominy125156.78149.48164.08 Meat Meal, rendered250231.48216.85246.11 Molasses, sugarcane154127.96121.12134.80 Soybean Hulls12494.8376.06113.61 Soybean Meal, expeller240279.09265.12294.06 Soybean Meal, solvent 44% CP202184.90170.30199.51 Soybean Meal, solvent 48% CP210213.80201.09226.50 Soybean Seeds, whole roasted261271.84259.05284.62 Tallow495471.09444.17498.00 Wheat Bran112104.3491.37117.31 Wheat Middlings105117.95106.64129.26Appraisal Set NameActual ($/ton)Predicted ($/ton)Corrected ($/ton) Alfalfa Hay - 38% NDF, 22% CP170118.61140.33 Alfalfa Hay - 48% NDF, 17% CP130121.68101.98 Blood meal, ring dried505364.01 Fish Menhaden Meal, mech.970306.28
Table 4. Nutrient costs and income over nutrient costs, central Ohio.1
NutrientMay 2006November 2006January 2007------------------------------ $/cow/day -------------------------------- Nutrient costs2
Vitamins and minerals0.200.200.20
Milk gross income
Income over nutrient costs4.825.786.17
1Costs and income for a 1400 lb cow producing 75 lb/day of milk, with 3.6% fat, 3.1% protein, and 5.9% other solids. Component prices are for Federal Order 33, August 2005.
2NEL = Net energy for lactation, RDP = rumen degradable protein, RUP = rumen undegradable protein, ne-NDF = noneffective neutral detergent fiber, and e-NDF = effective neutral effective fiber.
Free Stall Bedding Options: Important considerations from the cow's perspective
Most dairy cows are now housed indoors for most, if not all, of their lives. Very few cows are moved to pasture or dirt lots during the dry period or when weather permits. Concrete is the prevalent flooring surface in dairy barns and so cows may stand and walk on concrete their whole life. The consequences of standing on concrete are considered to be very important in the development of hoof lesions and lameness, as concrete can cause excessive stress on cows' feet and legs. Lameness is one of the major reasons cows are culled, and it results in economic losses, delayed estrus, poor breeding performance, shortened lactation, reduced milk yield, loss of body condition, and poor cow welfare. Several studies have reported increased incidence of claw lesions and lameness in cows exposed to concrete flooring compared with cows housed on flooring surfaces such as dirt (Vermunt and Greenough, 1996) and straw yards (Laven and Livesey, 2004). Somers et al. (2003) found that cows housed in straw yards had significantly fewer claw disorders than cows housed with concrete flooring, and Vanegas et al. (2006) found more cows were treated for lameness when housed in a free stall barn with concrete floors compared to cows housed in a free stall barn with rubber alley mats. Furthermore, cows on concrete flooring were 5 times more likely to be diagnosed as lame than cows on rubber flooring. These findings suggest that softer flooring surfaces reduce foot trauma experienced by cows housed indoors and are beneficial for hoof health.
While the provision of softer flooring surfaces may be beneficial for cow health and welfare, this may not be a practical or cost-effective option under modern systems of dairy cow management. However, this limitation may be overcome to some extent by providing a comfortable and inviting free stall for cows, to maximize resting time and thus the time spent off concrete. It is also essential that dairy cows have enough time to lie down and rest to maintain good health and welfare and high levels of productivity. Free stall design, bedding choice, and management all affect the behavior, health, longevity, and performance of cows, and ultimately profit of the farm. While use of free stalls may be greatly influenced by the physical design of the stall, the bedding surface is also important in determining whether cows will utilize free stalls. Lack of comfort and difficulty rising both discourage free stall use.
Producers have a very wide range of choices of bedding surfaces for free stalls (e.g., mattresses, mats, sand, etc.); however, the optimal stall surface should provide softness (cushion), comfort, traction, low risk of abrasion, thermal insulation, be clean and dry, and also be easy to maintain and clean. One of the most important benefits of providing a comfortable stall for the cow is to maximize lying time. Restricted blood flow to the hoof has been found during prolonged standing, and increased lying behavior is associated with a reduction in the occurrence of lameness, increased rumination, and increased blood flow to the udder, which may ultimately increase longevity, lower health costs, increase productivity, and improve cow welfare. Another benefit of providing a comfortable stall for cows to stand and lie in is the opportunity for hooves to dry out, which can reduce entry of infectious agents that predisposes the hoof to lameness and reduces softness of hooves, which can reduce traumatic lesions. Signs that stalls are uncomfortable or unsatisfactory can include swollen hocks and knees, hair loss and abrasions on joints, perching behavior (cow standing with front feet in the stall and rear feet in the alley), cows standing idle in the alleys (or stalls) and prolonged time taken for cows to lie down, and unsuccessful lying attempts.
Cows tend to spend more time lying on softer surfaces, and preference testing (allowing the cow to choose which stall bedding they prefer) has shown that cows prefer mattresses and solid rubber mats over concrete stalls, and mats are less preferred than mattresses (Tucker et al., 2003). In a comparison of 13 commercially available free stall bases (9 mattresses, 4 mats, and 1 waterbed), Fulwider and Palmer (2004) found a very strong relationship between the softness of the stall surface and both the amount of time the stall was occupied and lying time, illustrating cows' preference for softer free stall bases. Tucker et al. (2003) also found that cows rarely chose a mattress stall when given a choice of a deep-bedded sawdust or deep-bedded sand stall, and when cows were restricted to the non-preferred mattress surface, the lying time was reduced and standing time increased. Providing a large quantity of sawdust bedding material on top of a mattress, similar to the amount found in deep-bedded stalls, also improved the attractiveness of the stall, with cows preferring to use this stall and increasing their lying time compared to stalls with none or only a small amount of sawdust (Tucker and Weary, 2004). These findings suggest cows find deep-bedded stalls most comfortable.
Mattresses and mats have been found to be associated with a higher incidence and more severe hock lesions compared to deep bedding with either sand or sawdust, or housing in straw yards (Weary and Taszkun, 2000; Livesey et al., 2002). On average, 92% of cows on farms using mattresses had skin lesions on the hock, while only 24% of cows on farms using sand bedding had lesions (Weary and Taszkun, 2000). Cows kept on solid rubber mats also had significantly worse or more hock lesions than cows housed on chopped-rubber mattresses (Rodenburg et al., 1994; Livesey et al., 2002). Together, the cow preference and hock lesion results suggest that additional bedding improves the comfort of mattresses and reduces the risk of injury. Mats and mattresses with none or only a thin layer of bedding material cause more skin friction as cows move around when lying down, leading to more hair loss and skin abrasions on the hocks. Mattresses also provide a significantly less traumatic bed than mats, as mattresses better mould to the shape of the cow. Therefore, the provision of a sufficient quantity of bedding material on mattresses and mats is important to reduce friction and also provide a more conforming surface. The bedding material also helps to absorb moisture.
Although mattresses and mats are associated with a higher incidence of hock lesions, lesions can still be a problem when using deep-bedded sand stalls. Lesions are thought to occur when the rear curb becomes exposed if sand is maintained below the level of the curb. As the depth of sand in deep-bedded stalls declines, dairy cows respond by spending less time lying down, indicating compromised comfort in poorly bedded stalls (Drissler et al., 2005). Therefore, to reduce injuries and improve cow comfort in deep-bedded sand stalls, it is important to consider the length of the stall and also to regularly groom the sand surface and frequently add new bedding to prevent the curb from becoming exposed. Deep sand as free stall bedding is generally considered the gold standard. Sand contributes to cow comfort (cushioning surface that reduces pressure on projecting bones and body parts), good udder health (poor medium for bacterial growth), and clean cows. Sand kicked into the alleys can also improve cow footing; however, excessive hoof wear is also possible. One of the only reasons for not using sand has little to do with cow comfort and udder health but with the difficulty the use of sand poses for manure handling systems.
Research has indicated that lameness prevalence in herds housed on sand stalls is lower than herds housed on mattresses (11% and 24% mean lameness prevalence, respectively). Furthermore, the behavior of lame cows in herds that have mattresses on free stall surfaces may contribute to the higher prevalence of lameness observed in these herds (Cook et al., 2004). In herds with sand in free stalls, lame and non-lame cows behave similarly, spending a similar amount of time lying down, feeding, and standing in the alley or stall. Non-lame cows in herds with mattresses also behave similarly to cows in herds with sand bedding, aside from a greater time spent standing in the stall. However, lame cows in herds with mattresses stand for significantly longer in the stall, and this reduces daily feeding and lying times. The difference in stall standing behavior may be explained by the presence of a painful foot condition which makes it more difficult for the cow to lie down and stand up. Sand, because of its ability to supply cushion and traction, allows cows, especially lame cows, to perform the process of laying down more easily, without fear of slipping and also probably less pain. The fear of slipping and pain associated with rising and lying on a mattress surface are possible reasons for extended bouts of standing in the stall by lame cows. Ultimately, an extended time spent standing in the stall may be detrimental to claw health, increasing the duration of the lameness event and contributing to the higher prevalence of lameness observed in herds with mattresses. The sequences shown in the following photos (Figure sets 1 and 2) demonstrate the potential benefits of a deep-bedded sand stall for assisting lame (and non-lame) cows to stand. The rear foot is cushioned and gains traction in a deep loose bed of sand, making standing, even with a sore foot, relatively easy.
In the past, stall design has largely focused on keeping stalls cleaner to reduce stall maintenance and save labor. However, this increased efficiency may have come at the cost of reduced cow comfort. While certain stall features may be associated with cleaner stalls due to controlling where the cow lies down, it is important to note that such stalls may also be used less often, and this decreased usage itself reduces the chances of the stalls becoming soiled (Tucker et al., 2006). In short, limited-use stalls stay clean, and stalls that are used a lot get dirty! Clean cows and clean stalls are clearly desirable, but reducing cow comfort is a poor way of achieving this goal. Thus, there is a compromise between designing a stall that controls the cow to ensure optimum cleanliness and giving the cow a spacious area for ultimate cow comfort. However, free stalls designed on the basis of meeting the fundamental needs of the cow will lead to the greatest success. Therefore, if stalls are made more comfortable for the cows, greater maintenance and cleaning may be required.
Ease of maintenance, durability, and cost effectiveness are all important considerations for dairy producers when selecting a free stall bedding surface, but animal comfort and cleanliness should also be among the primary concerns. Whatever the bedding material chosen, good stall maintenance is essential. Manure and wet bedding needs to be removed on a frequent basis (several times each day), and bedding needs to be added regularly. More comfortable stalls that are used more often are more likely to become soiled, so improving the attractiveness of the stall for the cows may that mean more attention to stall cleaning and maintenance is required. More frequent cleaning of alleys may also aid in reducing the amount of manure carried into the stalls on the cows' feet and legs.
*A complete list of research references is available on request.
Selecting Corn Hybrids for Silage
The ideal silage hybrid is the one that maximizes profitability under a specific set of conditions (i.e., your farm). A multitude of factors influence profitability, but for hybrid selection, the list can be reduced to:
1. Cost of production of the silage,
2. Effect the silage hybrid has on total diet cost, and
3. Effect on milk production.
To select the most profitable hybrid for your farm, you need to know how much it will cost to produce each hybrid, its yield and nutrient composition, the cost and nutrient composition of other ingredients, intake and milk production when cows are fed the silage, and the price of milk. And, you need to know this information months before the seed goes into the ground and more than a year before you will finish feeding the silage. The chance of you choosing the "perfect hybrid" is about zero. This article will provide some general guidelines that should assist you in narrowing your choices to a group of hybrids that are likely to be more profitable than the 'average' hybrid.
Cost of production
Differences in yield (first and foremost), seed costs, and agronomic traits (for example, insect resistance) are how hybrid affects production cost of silage. Based on the average corn silage yield reported in Ohio, silage yields among hybrids could vary by about 4 tons/acre. On average, we would expect corn silage from the lowest yielding hybrid to cost about $4/ton more than the highest yielding hybrid (assuming seed prices were equal but other variable costs increased with increasing yields). At typical feeding rates and assuming everything else is equal, that difference in production costs will increase feed costs about $0.10/cow/day. A much bigger consideration is the increased land needed. If yields are 25% less, you will need 25% more land to provide the same amount of corn silage for your herd. Is using that additional land for corn silage more profitable than growing corn grain? The answer will likely differ when corn grain is selling for $1.80/bu (December, 2005, Chicago price) compared with $3.60/bu (December, 2006, Chicago price). Increased ethanol production is likely to cause a long term (at least several years) increase in the price of corn, making corn grain production a profitable enterprise for many farmers. Under current conditions, you should usually select hybrids with above average yields (even with their generally higher seed costs).
Yield, however, cannot be the sole criteria when selecting a hybrid. A high yielding hybrid will usually reduce the cost of the silage but that may not necessarily reduce the cost of feeding your cows a balanced diet. In addition, with corn silage, the primary return will be via milk income; therefore, potential effects of silage hybrid on milk production must be a factor in the selection decision.
Effect of silage hybrid on total diet costs
Composition of silage varies among hybrids, and therefore, hybrid can influence the ingredients used in a diet. Currently, the greatest difference among hybrids is in the carbohydrate fraction (starch and fiber). The concentrations of neutral detergent fiber (NDF) and starch vary markedly among hybrids, but concentrations of NDF and starch are negatively correlated. Hybrids with high NDF concentrations usually have lower starch concentrations and vice versa. Dairy diets need to contain a certain amount of NDF from forages (approximately 16 to 20% of the dry matter) and a certain amount of starch (approximately 24 to 30%) to achieve good milk production and maintain the health of the cow. A hybrid with high NDF will reduce the amount of forage needed in the diet but will increase the amount of corn grain needed (vice versa for a high starch hybrid). These changes in ingredient composition of diets can affect the cost of the ration. If you expect supplemental starch (e.g., corn grain) to be relatively high priced compared with the cost of supplemental forage fiber (e.g., hay), then hybrids with above average starch concentrations should be considered. A hybrid with above average NDF concentrations would likely be a better choice if the opposite is expected. Forage fiber is expensive and even with today's high corn grain price, using corn silage hybrids that are very low in NDF (and high in starch) usually will increase the cost of the total diet, and hybrids with moderate or above average NDF concentrations are usually the best choice. The quality of the NDF (i.e., in vitro NDF digestibility, IVNDFD) is important when choosing hybrids with higher concentrations of NDF.
Effect of hybrid on milk production
Unlike for alfalfa, NDF concentration of corn silage has not been shown to have an effect on intake and milk production; however, in most lactation studies, cows fed corn silage hybrids with higher IVNDFD ate more feed and produced more milk than cows fed corn silage with lower IVNDFD. You should select hybrids with above average IVNDFD.
General approach, in order
1. Get the seed catalogs out,
2. Identify hybrids with agronomic traits you consider necessary (for example, disease resistance, rootworm resistance, etc.),
3. From that list, choose a set of hybrids with above average IVNDFD,
4. From that list, choose a set of hybrids with above average silage yields,
5. From that list, choose a set of hybrids with average or above average NDF concentrations (consider seed price), and
6. You should never grow a single hybrid on a farm, so pick a few hybrids from that list to plant (consider seed price).
A note on brown-midrib (bmr) hybrids
Using the guidelines above, bmr hybrids would never make the cut because yields are usually lower than average (on the other hand, IVNDFD is usually well above average). Several studies have shown that feeding bmr silage increases intake and milk yield compared with conventional hybrids. Studies have also shown the response to bmr silage is much greater for early lactation, high producing cows than lower producing cows. If you group cows by stage of lactation and have the ability to maintain a separate inventory of bmr silage to feed only to that group, bmr, even with the low yield, can be profitable.