Apr 17, 2014
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Dairy Talk

RSS By: Jim Dickrell, Dairy Today

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

A Federal Order in California Raises Tons of Questions

Apr 07, 2014

A new analysis by a dairy economist with the University of Illinois tells a tale of caution.

A new Federal Milk Marketing Order for California has been held out as the salvation for producers there, beleaguered by less-than-competitive pay price minimums established by their state order. But a new analysis by John Newton, a dairy economist with the University of Illinois, tells a tale of caution.  

California producers need to go into such a change with their eyes wide open. The cure might not be any better than the disease, and if the new order is designed badly, could be worse. At the very least, it could create unintended consequences that could reverberate within the state with the force on a mild earthquake.  And dairy farms across the country could be jolted by its aftershocks years afterwards.

Currently, the disparity in California and Federal Order pricing mechanisms means California producers often receive a lot less than farmers who market milk under Federal Orders. Much of that comes from the disparity between California 4b cheese prices and Federal Order Class III prices, which can differ by as much as $3.63/cwt. The average difference has been $1.43 from 2010 to 2013, says Newton.

And much of that comes from whey prices. California’s system caps the whey contribution to 75¢/cwt. The Federal Orders have no caps. During 2013, whey values contributed $2.30/cwt to the Class III price.

If the Federal Order system of price formulas is adopted, California farm prices would likely rise. "Thus, if higher prices paid by California cheese processors manifest along the supply chain, cheese makers could become less competitive in milk procurement and product sales," says Newton. That, in turn, could cause a change in milk processing away from cheese into other products.

Already, with either brilliant foresight or a simple reaction to world markets, Hilmar Cheese is breaking ground on a new whole milk powder plant. Dairy Farmers of America is already producing whole milk powder in its Fallon, Nev., plant, which is just a hop, skip and jump over the Sierra Nevada Mountains from California.

Perhaps the bigger problem is California’s quota, reportedly worth more than $1 billion. It currently contributes as much as $1.70/cwt. to quota owners. It’s not at all clear how quota would be handled under a new Federal Order in California, since no other state has had the same type of system. Like all things involved with Federal Orders, it gets quite complicated quite quickly. But the bottom line is this: Quotas could mean fewer dollars available for non-quota milk being shipped to pooling plants.

And then there’s the issue of pooling, i.e. when plants participate in the program and when they are allowed to "depool."California’s state program has stricter pooling rules than Federal Orders. If less stringent rules are written into the California’s Federal Order, they could allow plants to jump out of the pool more easily when prices are favorable for such a move. That, in turn, would mean less dollars available, which mean farmers still shipping into the pool would receive less.

The bottom line in all of this is California dairy farmers and their co-ops will have to carefully study these new rules before voting in a Federal Order. Even then, predicting outcomes in the complexity of national and global milk markets offers no certainty.

Yes, Federal Orders can be amended if things aren’t done correctly. But that process is arduous—even more arduous than the California’s state order amendment process. And the outcome can be just as uncertain.

Dairy Farms Can Benefit by Servant Leadership

Mar 21, 2014

It’s critical because your whole operation rests on the tone and trust that you set as a leader.

I’m not much for motivational speeches. Maybe it’s because of my dairy farm upbringing.

Yes, sermons are good. They can inspire. They can motivate you to be a better person. But come Sunday evening, there are always cattle to feed and cows to milk. And if there is a calf to pull, you pull it. That’s the way it works on the farm.

But a presentation by Tom Thibodeau at the Professional Dairy Producers of Wisconsin Business Conference a few weeks ago really struck home. Thibodeau, a faculty member of Viterbo University, LaCrosse, Wis., is a firm believer and practitioner of what he calls "servant leadership."

It’s a leadership style that gets owners and managers down in the trenches with employees. "You have to be willing to do the work that you expect others to do," says Thibodeau. Or, as Pope Francis puts it, "If you want to be a shepherd, you should smell like a sheep."

This is critical, says Thibodeau, because your whole operation rests on the tone and trust that you set as a leader. To build that trust requires four attributes:

• Honesty. Be willing to speak the truth--always. If you give your word, keep it no matter what.

• Vision. People will not commit to mediocrity. "People are motivated by doing something significant," says Thibodeau. Articulate the broader vision of why you are in business and the legacy you are trying to build.

• Inspiration. To realize your vision, you and the people who work for you must be inspired to do so. To offer that inspiration, you must have the energy to motivate employees. "A leader," says Thibodeau, "has to be a carrier of hope."

• Competency. "Provide recognition to workers that their work is important," he says. In order to do a job well, workers must be properly trained and be equipped with the right tools to accomplish assigned tasks. Failure to provide those things leads to poor performance and frustration.

A practical application of servant leadership is offered by Bob Hagenow, a sales manager with Vita Plus. A few weeks ago, he wrote a column he entitled "Motivate Frozen Employees." In it, he offered some very practical examples of servant leadership, especially during a brutal winter:

• Work a long side employees, especially during harsh weather.

• Plow snow from feed bunkers and calf hutches--before workers arrive.

• Plug in and start engines so employees are entering warm skid steers and tractor cabs at the start of their shifts.

• Serve hot chocolate and coffee (and maybe a donut or two).

• Lead by a can-do, positive, empathetic attitude.

You can read Hagenow’s entire list here. It’s a great example of "leadership by service." Learn from it.

Is Idaho’s ‘Ag Gag’ Law a Template for Other States?

Mar 10, 2014

States that attempt to pass similar legislation are in for some very nasty business. Animal rights groups play hardball.

Idaho dairy and livestock farmers are probably sleeping a little more soundly after their governor, Chuck Otter, signed into a law a comprehensive law that offers stiff penalties for anyone who surreptitiously gains access and films farm operations.

Known as the Dairy Security Act, the bill covers wrongful entry and criminal trespass onto farms, theft of records, obtaining employment by wrongful means, taking recordings of workplace activities without the owner’s consent and intentionally interfering with the farming operations. It’s clearly targeted toward animal rights groups.

If convicted, individuals face up to $5,000 in fines, a year in jail and financial judgments of up to twice the economic damage they caused, says Bob Naerebout, executive director of the Idaho Dairymen's Association. And, under Idaho "aiding and abetting" laws, organizations that employ such offenders can also be held liable.

The bill had strong legislative support, clearing the Idaho House of Representatives on a 56-14 vote. It passed the state Senate 25-10. That gave Governor Otter political cover, who came under intense pressure to veto the bill from animal rights groups and even Chobani, to sign it into law. The questions are:

1) Will the law hold water?
2) Can it be an effective deterrent to undercover filming?
3) Could it be a template for other states to emulate?

I ran those questions by Amy Bruchs, an attorney and partner with Michael Best Friedrich LLP, a law firm based in Wisconsin. Bruchs specializes in employment, labor and litigation, and has more than 20 years of legal experience in these areas.

Bruchs believes the law is sound. "Unless there are some over-riding ‘whistle blower’ protections [from other laws or regulations], it would be enforced by the courts," she believes.

For example, workers have Occupational Safety and Health Administration whistle-blower protection if they report a work safety violation, Bruchs says. But no such protection currently exists under animal welfare laws, even if an illegal act of animal cruelty occurs, she says.

"At the same time, I wouldn’t be surprised to see a court challenge to the Idaho law, or an attempt at the national level to pre-empt such laws," she says.

Some producers also fear Idaho dairies could still be targeted by undercover activists to suggest abuse is still occurring and to challenge the law. Remember, these groups have deep, deep pockets and are lawyered up. To them, $5,000 fines are pocket change. (Ellen DeGeneres’ celebrity tweet from the Oscars raised $1.5 million for the Humane Society of the United States.)

States that attempt to pass similar legislation are also in for some very nasty business. Animal rights groups play hardball. In Idaho’s case, Mercy for Animals released additional, gruesome video of alleged abuse on one of the state’s largest dairies. It didn’t matter that the dairy had already made amends to its animal welfare protocols and practices, fired the workers involved and even cooperated with authorities in their prosecution.

I’m not saying dairy and livestock groups shouldn’t attempt to enact similar dairy security protections in their own states. There might be windows of opportunities to get this done in states such as Wisconsin that have Republican control of both the legislature and governorship. But dairy and livestock groups need to go into these fights with eyes wide open. It will be a nasty, brutal fight.

The best protections for individual farms are no-exception adherence to industry-sanctioned animal welfare protocols and scrupulous hiring practices. I’m not naïve enough to believe that even this offers 100% protection. For now, though, it’s the best you’ve got.

You can read more on animal care guidelines here

And you can read about suggested downer cow handling protocols here.  

Down Cows: Dealing with the Reality

Feb 21, 2014

Here’s a sneak peak at newly developed protocols for handling downed bovines.

Down cows happen. It doesn’t matter if you have 30 cows or 300 cows or 3,000 cows. Down cows happen.

The problem is that cows can go down anywhere. In tie stalls. In freestalls. In milking parlors. In exit lanes. In foot baths. In loading chutes. In nooks and crannies of facilities no one would ever think a 1,500 lb. bovine could get into. But they can, and they do.

At some point, you have to deal with this reality. The critical issue is how you deal with it. What is acceptable, humane handling and what is out of bounds?

Mike Costin, a professional services veterinarian with Animart, has done a fairly exhaustive review of existing veterinary literature on the handling of down cattle. He found little guidance outside of generalities.

So he, along with Kurt Vogel, a dairy scientist at the University of Wisconsin-River Falls, has set about establishing specific protocols for dealing with down cows. (Vogel received his Ph.D. under Temple Grandin, the renowned animal welfare specialist.)

Costin and Vogel are still finalizing the protocols, but Costin gave farmers a sneak peek at the Wisconsin Dairy Business Association’s "2014 Access Symposium" in Green Bay, Wis., last week. First and foremost, these protocols will serve as templates. Farms will have to develop their own protocols specific to their dairies because no two facilities are alike, says Costin.

You’ll need to walk the facility with your veterinarian and identify problem areas, he says. Then you and your veterinarian will need to write specific protocols for each. It will take time to develop these, but they’ll be critical to removing a cow humanely and expeditiously.

That’s particularly true for cattle going down in choke points, such as in parlors or return alleys. You might even go so far as to consider retrofits or remodeling. At the very least, new and remodeled facilities should keep down cows in mind when building occurs.

First and foremost, every farm should identify a downer cow team. "It takes a team of individuals to move a 1,500 lb. cow," says Costin. So every farm should have a team of four individuals identified per shift who can be called upon on a few minutes’ notice to move the animal. "These should be long-term, trustworthy employees who have at least a year of employment at your farm," says Costin. The team should include a shift supervisor or manager who is calm and who has decision making authority.

"Moving a down cow is not a spectator sport. Only members of the down cow team need to be present," says Costin. Having others present adds to safety concerns for both the animal and employees, and increases the risk of having someone videotape the proceedings.

Team members should be trained in proper animal handling techniques. Hip hoists, for example, can be used to help an animal stand. But they should not be used to move animals. For that, use a sling that supports the animal both front and rear.

If a sling isn’t practical, animals should be rolled onto sleds and moved slowly to a recovery area. Rolling animals into front-loader buckets is acceptable, as long as the buckets are large enough to accommodate the animal. Some producers have dedicated buckets, equipped with rubber mats, which are used only for down cattle.

The last resort, if an animal can’t be humanely moved, is euthanasia. But protocols should clearly spell out who has the authority to make the euthanasia decision, who should do it and how it should be done. Even after euthanasia, animal should be treated with respect. "It does make a difference," says Costin.

Did National Milk Get Out-Lobbied?

Feb 10, 2014

In the end, the farm bill became as much of what people didn’t want included as what finally became law.

Now that the 2012/2013/2014 farm bill debate is finally over, it’s time to look behind the curtain to see who won what and how.

Conventional wisdom is that Speaker of the House John Boehner (R-Ohio) simply would not let the House/Senate Conference Report move to the floor of the House of Representatives if it contained supply management.

"Unfortunately, the Speaker’s threat that he would not allow a vote on the farm bill containing the market stabilization program has effectively killed our proposal within the committee," conceded Jim Mulhern, CEO and President of the National Milk Producers Federation (NMPF).

In effect, to use lobbyist lingo, NMPF would have had to "roll the chairman." Overturning the wishes of a chairman of a congressional committee rarely happens, and rolling the Speaker never does. (The Republican’s inability to "roll" Nancy Pelosi, when she was Speaker of the House, is the reason we now have Obamacare.)

Lobbying by processors and farmers opposed to supply management gave Boehner additional cover. Both Senate and House agriculture committees had supply management in their reports. "So it was imperative we won the vote in the House," says Jerry Slominski, International Dairy Foods Association (IDFA) Senior Vice President for Legislative Affairs and Economic Policy.

IDFA wooed member/leaders of each of the five Democratic caucuses, claiming supply management would raise consumer milk prices at the very time billions of dollars in food stamp aid were being cut. The strategy worked, with supply management stripped out of the House bill last summer by a vote of 291-135.

But others say Boehner’s opposition meant NMPF was fighting an uphill battle from the start. They say Democratic leaders knew supply management was dead on arrival three years ago.

With supply management gone, palace intrigue switched to the margin insurance program. Sen. Patrick Leahy (D-Vt.) was in the middle of it all, say sources. The final margin insurance premiums locked into law are far different than those originally proposed, particularly for farmers shipping less than 4 million pounds of milk annually.

Also new are 25% premium discounts for the first two years of the program for the first 4 million pounds of production. These discounts were added late in the negotiations to benefit smaller farms and encourage them to sign up.

Leahy also reportedly wanted a third tier of premiums for annual milk production that exceeded 40 million pounds (2,000 cows or there about). The premiums for this insurance were much, much higher than the other categories. They were so high that most large farms probably would not have participated.

Lobbyists for NMPF and dairy organizations who wanted all sizes of farms eligible for affordable insurance had all they could handle keeping this third tier of premiums out of the Conference Report.
In the end, the farm bill became as much of what people didn’t want included as what finally became law.

You can read the latest on the farm bill here

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