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September 2011 Archive for Dairy Talk

RSS By: Jim Dickrell, Dairy Today

Jim Dickrell is the editor of Dairy Today and is based in Monticello, Minn.

‘Pay To Play’ Dairy Reform

Sep 26, 2011

The new revisions to Foundation for the Future make the program better than the original plan.

 
Last week’s revisions to Foundation for the Future (FFTF) throw a new wrinkle, and hopefully not a wrench, into the legislative grind toward dairy policy reform.
 
In order to get government-subsidized margin protection insurance, dairy producers will also be required to participate in the dairy market stabilization portion of the plan. Some call this extortion; I would term it “pay to play.”
 
If you want the 100% government subsidized catastrophic margin protection insurance and the right to purchase higher levels of insurance on even more of your production, you’ll have to agree to cut back production (or forfeit a small portion of your milk check) when margins crash.
 
The National Milk Producers Federation (NMPF) says this is the only way to stabilize milk production during these periods. It’s also the only way the program comes in under government spending baselines. Without meeting the latter, the program doesn’t stand an ice cream cone’s chance in you-know-where.
 
But, I would argue this is better than the original plan. There, the margin insurance program was optional; the dairy market stabilization plan was not. No matter whom you were--a 5,000-cow New Mexico producer, an Amish dairy farmer milking 25 cows or a Vermont organic grazier—you were subject to the market stabilization plan. Now the choice is yours.
 
Dairy processors, of course, oppose this plan. “The International Dairy Foods Association (IDFA) supports programs like Livestock Gross Margin-Dairy and catastrophic revenue insurance that will help producers manage risk, and the government offers similar programs to farmers of other commodities with no strings attached,” says Connie Tipton, IDFA president and CEO.
 
But again, the problem is cost. Congressional budget cutters, and even President Obama, are looking to farm programs for budget savings. Not only are direct crop payments at risk but insurance programs as well.
 
There are only two ways to lower the cost of the margin insurance: 1) Reduce the level of protection to something less than $4 income over feed costs, or 2) put annual production caps on the coverage.
 
The problem is that some folks already argue that the $4 margin insurance is too low. And putting on annual production caps revisits the favoritism of the Milk Income Loss Contract program.
 
But even the MILC program didn’t work out all that well. Since MILC’s inception in 2001, some 36,000 dairy producers have gone out of business. Ninety seven percent of those producers had fewer than 200 cows; 100% had fewer than 500 cows. MILC, targeted at those smaller operations, clearly was not saving those farms, says Jerry Kozak, NMPF CEO and president.
 
What is disappointing in the new and improved FFTF package is the back-tracking on Federal Order reforms. Now, that “reform” will be limited to changing the way Class III prices are discovered. It requires USDA to come up with a competitive price survey, and then allows producers and bloc voting co-ops a “yea or nay” vote on the new system.
 
The Federal Orders would continue to announce and enforce price minimums for all four classes. In the original FFTF plan, only Class I would have had minimum prices. And this, in my opinion, would have allowed markets to clear much more quickly in times of dire surplus. Now that market clearing will be delayed 30 or 60 days as prices work their way through the surveys and formulas.
 
On balance, however, I believe the changes offered by National Milk last week make Foundation for the Future a more palatable package. If you want government-subsidized margin insurance, you’ll have to pay. Your choice. What’s not fair about that?

Bovine TB Study Reaffirms Need for National ID

Sep 10, 2011

The USDA report reveals we’re not only importing some 800,000 head of feeder cattle annually from Mexico, but 19% of TB-positive animals found at slaughter plants from 2001 through 2009 could not be source identified.

 
Last week, USDA released its exhaustive and exhausting “Assessment of Pathways for the Introduction and Spread of Mycobacterium bovis (bovine tuberculosis) in the United States.”
 
Even the title is mouthful. This 140-page assessment virtually goes herd by herd through the 60-some dairy and beef operations in California, Michigan, Minnesota and New Mexico that have come up TB-positive during the past decade. There are two things painfully clear after reading (OK, reading some, skimming most) this document.
 
A.                  You never, ever want your herd, your neighbor’s herd or even a herd a county over infected with TB.
B.                  The lack of a national animal identification program leaves the U.S. vulnerable to containing disease outbreaks, and puts the U.S. at risk of shutting down commerce if a disease more onerous than TB (think Foot and Mouth) ever is found within our borders.
 
First, Point A. If your herd comes up with a positive animal, you are faced with two options: Total depopulation or complete herd testing, removal of any positive animal, and a quarantine of your herd for at least four years. If your neighbor’s herd is positive, you’re at greater risk of infection due to potential fence-to-fence contact or wildlife bringing the disease with them as they move from farm to farm. If a herd a county away is infected, it’s likely your herd will face annual herd tests and may or may not be allowed to move animals without health certificates.
 
Michigan is a prime example. The first Michigan herd was identified in June 1998 (USDA says the original source of that outbreak might never be known). Ten months later, 45 dairy and beef herds were known to be affected. But here is the stunner:  Some 13 years later, “there are no accurate estimates as to when [Bovine TB] might be eradicated from Michigan,” say USDA veterinarians.
 
Now, Point B. USDA also shows an actual traceback from a relatively small feed yard of 1,224 head. This feed yard sourced 610 cattle from 64 sales and another 614 head from seven auction markets. Left unsaid was how many other cattle at these sites went to other yards. Tracking the source herds of these co-mingled cattle is impossible with the current state of animal identification in this country.
 
From 2001 through 2009, USDA inspectors found 329 Bovine TB-positive animals through slaughter surveillance. Of this number, 236 were of Mexican origin, 3 from Canada, 30 from within the U.S. and 63 unknown.
 
The anti-ID folks would argue that animal ID isn’t the problem; USDA simply needs to do a better job of keeping our borders secure. But here’s the kicker: We’re importing some 800,000 head of feeder cattle annually from Mexico. That suggests, if my Stewart-Peterson freebie calculator is calculating correctly, that 0.00327% of Mexican feeder cattle coming north are infected. That’s like finding a needle in a haystack of finely chopped alfalfa in a very big barn. Good luck with that.
 
And here’s kicker #2. Nineteen percent of TB-positive animals found at slaughter plants from 2001 through 2009 could not be source identified. That’s one out of five, folks.
 
In early August, USDA published its revised national ID program, now dubbed “Traceability for Livestock Moved Interstate.” It would require all dairy cattle moving interstate be identified and carry with them an “Interstate Certificate of Veterinary Inspection.” The only exemption for dairy would be cattle moving directly to slaughter plants. Comments on the proposed rule are due Nov. 9, though both proponents and opponents have asked USDA for a 60 day extension.
 
Obviously, getting a national animal traceability program in place won’t solve all of our disease problems. But it will be a start in containing their spread.
 
Following is the summary of the risk factors USDA identified in mitigating Bovine TB exposure and spread:
 
“In California and New Mexico, molecular fingerprinting techniques revealed several strains of M. bovis, indicating multiple sources of introduction. Risk factors for California and New Mexico included the importation and commingling of Mexican-origin steers, the management and biosecurity practices used by calf raisers for dairy replacement heifers, and the large influx of purchased additions. In States with similar practices and risk factors, both beef and dairy herds may face intermittent exposure to M. bovis.
 
Conversely, Michigan and Minnesota each had just one strain of M. bovis, indicating a point source of introduction and local area spread. The same strains were identified in the wildlife of each respective State, making cattle contact with infected white-tailed deer (especially contact with feed contaminated by deer) an important risk factor for the introduction and spread of bovine TB in Michigan, Minnesota, or any other area in which infected wildlife reside.”
 
Read the full report here.
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