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June 2010 Archive for Dairy Talk

RSS By: Jim Dickrell, Dairy Today

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

National Milk’s Dairy Plan a Bit Schizophrenic

Jun 18, 2010

By Jim Dickrell, Editor, Dairy Today

 

I’ve said this before: There’s a lot to like in the National Milk Producer Federation’s new dairy plan, Foundation for the Future.

 

I’ve already written two editorials on it, in February and in May, and as details continue to emerge, I’ll probably be writing more. The reason: There is a very high probability that some form of Foundation for the Future will truly become the foundation for this country’s future dairy policy. With the lobbying muscle of NMPF, its 30 co-ops and 40,000-plus producers behind it, it has to be the odds-on favorite of some form of it getting passed into law.

 

I’m mostly positive about the plan because it positions the U.S. dairy industry to become a global player. It also moves away from dairy price supports and Milk Income Loss Contract payments and goes instead to a minimal level safety net of margin insurance. 

 

Foundation for the Future also does away with cumbersome price formulas used to set minimum Federal Order prices. Based on a prices that proprietary cheese plants actually pay, the new price minimums should be more reflective of actual prices paid and shouldn’t have the time lags the old system has. That in itself should reduce, if not eliminate, negative producer price differentials. 

 

But as the details on the Foundation Plan emerge, there’s at least a bit of schizophrenia built into it as well.

 

For example, the Dairy Price Stabilization portion of the plan will start withholding 2% from producers’ milk checks when the milk-feed margin dips below $6 for two consecutive months. The hope is that producers won’t want to ship milk they’re not getting paid for. That remains to be seen.

 

Even more money gets deducted as the milk-feed margin shrinks—4% (up to a maximum of 8% if the producer is above his/her base) if the milk-feed margin shrinks below $4. At the same time, however, the Margin Protection portion of the plan kicks in, paying the producer back to get him back to $4 on 90% of the farm’s production base.

 

Jim Tillison, NMPF’s Senior VP of Marketing and Economic Development, says the margin protection payments will only be paid out quarterly. The deductions from the Dairy Price Stabilization portion will happen immediately. “As one member of our board said, ‘When you’re taking 8% out of a monthly milk check, producers will adjust quickly.’”

 

Maybe. But maybe they’ll keep on milking knowing that the margin insurance will fill some of the debits.

 

NMPF is correct when it argues that the milk-feed margin concept is a better gauge of dairy profitability than milk price alone. That’s because the milk-feed margin can be affected by milk prices through over supply, lagging demand, or high feed prices.

 

The problem comes in when the Dairy Price Stabilization part of the program tries to solve all problems by cutting supply. In two out of three cases, it could actually make the problem worse. Why? If you cut supply, you raise milk prices. But if the problem is not over-supply but feed prices, you simply raise milk and cheese and butter prices and reduce demand, which in turn reduces prices which means you have to cut supply even further. The same thing happens when demand is the problem. By cutting supply, you raise prices and kill even more demand.

 

Yes, the NMPF plan would use money taken from producer milk checks to increase utilization through food banks, school nutrition programs and export promotion. The first two likely won’t build long-term demand if food is donated or highly subsidized. As for export promotion, here today/gone tomorrow rarely works.

 

I am not suggesting the solution to this conundrum is easy. If it were, commodity markets would have solved this problem centuries ago. But I am suggesting that this industry can get so immersed in the minutiae of solving one problem that the law of unintended consequences creates many multiples more.

 

Giving producers some level of government-subsidized margin protection is warranted, needed, necessary. That’s especially true if the government insists on funding and subsidizing biofuel production at the expense of feed. But I’m not sure the dairy industry really needs the Dairy Price Stabilization portion of NMPF’s plan. Simpler is better.

Animal Abuse on Your Dairy

Jun 03, 2010

By Jim Dickrell, Dairy Today editor

 

The horrific video coming out of Ohio two weeks ago was extremely difficult to watch through to the end. The video has equally enraged dairy farmers and consumers, and has given animal rights and anti-animal groups a huge propaganda coup.

 

I’m not naïve to think that abuse on dairy farms never happens. Anyone of us who has been hit in the face by a urine-soaked tail or kicked by a heifer being milked for the first time knows the natural, human instinct is to strike back. Yet even this shouldn’t happen; after all, humans are the adults in the room and need to rise above their instinctual response.

 

The abuse exhibited on the Ohio video, however, goes far beyond a tit-for-tat response. It is blatant and cruel, and should never happen. It is right that law enforcement has been called; those involved must be held accountable.

 

At the same time, every dairy farm with employees needs to take what happened in Ohio as a stern, chilling warning that something like this could happen on your farm. To prevent it, Hinda Mitchell, who heads up the Ohio office of CMA Consulting, offers these tips:

 

Above all else--do the right thing. Make sure your farm is exceeding all expectations for animal care, cleanliness and environmental responsibility. Farmers have a moral and ethical obligation to be responsible caretakers. “Consumers expect us to exceed their expectations in order to maintain their trust,” she says.

 

  Set codes of conduct for animal care, and then train and re-train employees to those standards. Require any farm worker, whether they are an employee or family member, to sign a written Code of Conduct. Violations of that Code should be cause for immediate dismissal.

 

Hire the right people. Do thorough background and reference checks. “We already know Mercy for Animals investigators have attempted to work undercover at many farms before they get hired at one—and that as soon as they’re done at one farm, they will move on to the next one,” says Mitchell.  If a potential hire is suspicious, let neighbors know.

 

Empower employees. Ask your employees how new hires perform when you are not present. And tell employees you expect them to report any abuse, strange behavior or undercover activity to you immediately.

 

Maintain strict security on your farm. Pay attention to strange vehicles, and get the license numbers of any suspicious vehicles. Alert local law enforcement if needed.

 

Stay active with industry leadership. Likewise, share information you gather in your local community about any of these activities.

 

Finally, resist the natural tendency to blame the messenger in these situations, says Mitchell. “‘They staged it.’ ‘Why did they wait so long to release it?’ ‘They’re just trying to make people vegans.’” These rationalizations miss the point.

 

“What matters is the visual image our consumers are left with at the end of three minutes of video tape,” she says.

 

That’s what is so infuriating to every dairy producer and everyone involved in the industry. One ugly, three-minute video can undo all the exceptional work you do every hour of every day providing for the well-being of your herd.

 

What it comes down to is that you, and every one of your employees, must take personal responsibility to ensure these acts do not happen. “Nothing is more important than doing the right thing,” Mitchell says.  

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