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April 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.

400,000 Cells, But Who’s Counting?

Apr 25, 2011

The new regulation for milk quality standards will have a profound effect on U.S. dairies. It’s the first step on the path to ensuring high quality milk is entering the food supply.

 
Delegates to the National Conference of Interstate Milk Shipments meet this week in Baltimore. In all likelihood, they will improve U.S. milk standards by lowering the allowable somatic cell limit to 400,000 cells/ml.
 
This is more than a decade in coming. Even then, exactly what is passed will have a profound effect on how the new regulation impacts U.S. dairy farms.
 
The National Milk Producer Federation (NMPF) proposal says a farm would be out of compliance (and unable to ship milk) if three of five consecutive somatic cell count (SCC) tests exceed 400,000 cells/ml. The National Mastitis Council (NMC) proposal says a farm will be out of compliance if the three-month geometric mean SCC plus the next SCC test exceeds 400,000.
 
NMPF’s three-of-five month procedure is currently what exists in the Pasteurized Milk Ordinance and is simple to administer. The NMC procedure is more complicated because the geometric mean must continually be calculated each month, but it is both biologically and mathematically the correct way to evaluate the subclinical mastitis levels in a herd. It also results in lower SCC averages and in fewer herds out of compliance.
 
USDA’s Animal Improvement Programs Laboratory recently used DHIA herd tests to calculate the number of non-compliant herds under the NMPF and NMC proposals. The months evaluated were November 2009 through October 2010.
 
Under the NMPF plan, the number of non-compliant herds ranged from a low of 12.9% in March 2010 to a high of 16.4% in September 2010. The weighted average was 14.1%.
 
Under the NMC plan, the number of non-compliant herds ranged from a low of 7.5% in January 2010 to a high of 11.5% in September 2010. The weighted average was 9%.
 
Granted, these numbers are generated using historical data. Under both the NMPF and NMC proposals, there will be a phase-in period with the 400,000 SCC standard taking hold Jan. 1, 2014. So, dairy producers will have about two and a half years to prepare.
 
Getting below 400,000 won’t be good enough, however. If bulk-tank cell counts drop to between 350,000 to 400,000, there’s an 80% to 90% probability cell counts will exceed 400,000 at least once during the next 30 days if cell count variation between milk pick-ups exceeds about 25,000. That’s according to an analysis of two years of 1,500 Upper Midwest bulk- tank SCC records done by veterinarian and milk quality specialist Jeff Reneau and his grad students at the University of Minnesota.
 
In order to lower the probability of exceeding 400,000 to below 25%, bulk-tank SCCs should be below 200,000, and variation between pick-ups can be no more than 75,000.
 
Yes, both the NMPF and NMC proposals require multiple months above 400,000 to trigger non-compliance. But herds that consistently exceed 300,000 will have a 50% or higher probability of exceeding 400,000 at least once each month.
 
Setting the 400,000 SCC standard is the first step on the path to ensuring high quality milk is entering the food supply. The next step will be education and implementation of existing milk quality knowledge.
 
“We have enough information to get all of our herds under 200,000 cells,” says Reneau. “The problem is we’re not getting compliance or implementation of recommendations. This is not rocket science; we can get it done.”
 
The good news is that as milk quality improves, milk production jumps significantly. Minnesota DHI records shows that with each one reduction of linear somatic cell score (LnSCS), rolling herd average increases 2,052 lb. Going from LnSCS 5 (400,000 cells/ml) to LnSCS 4 (200,000 cells/ml) means a ton more milk per cow.
 
So, the time to start improving milk quality and procedure compliance is now. Why wait until Jan. 1, 2014?

Supply Management Won’t Eliminate Dairy Volatility

Apr 11, 2011

Not only does Cornell University data confirm it, but such programs could also impede our ability to become consistent and reliable suppliers to export markets.

 

The past decade’s volatility in dairy markets was unheard of during your father’s dairy career if it spanned the 1960s, ‘70s, ‘80s and ‘90s. But wild price swings were not new or foreign to your granddaddy or your great granddaddy.

In fact, there were periods in the early 20th century that mirrored today’s roller coaster ride of prices. And their effects were likely as nauseating.

Andy Novakovic, professor of ag economics at Cornell University and the chairman of National Dairy Industry Advisory Committee, presented a history lesson and provocative analysis of U.S. dairy markets at the Association Milk Producers, Inc. annual meeting a few weeks ago. His data show that milk price volatility was not tamped down until dairy price supports effectively floored and capped milk prices in the 1960s. What this suggests, says Novakovic, is that aggressive (and I would add sometimes very expensive) federal dairy policy can dampen volatility.

PvsQ   b copyRaging federal deficits (déjà vu all over again) in the 1980s led President Reagan to conclude that the country could no longer afford billion-dollar annual dairy expenditures. Those high support prices, automatically increased every six months, only produced dairy surpluses that had no markets to stomach them.

Once those price supports were ratcheted back, glimpses of increasing volatility emerged. (See chart.) But only twice in the 1980s did milk price increase or decrease 10% or more from the previous year. Since 1996, however, two out of every three years have seen price changes of 10% or more. In five of those years, price changed 20%. And in three of those five, prices changed 30% or more.

So what changed in the mid-90s? Federal Order reforms kicked in as did the Uruguay agreement of world trade talks. All of a sudden, U.S. milk prices were more closely linked to market conditions and, more importantly, ocean-going supertankers were beginning to ferry more and more dairy products over the seven seas. The result, today, is that some 13% of U.S. milk solids are now sold internationally.  The U.S. is becoming, if it has already not become, export market dependent.

The other intriguing fact of Novakovic’s analysis is that since 1995, the U.S. has been slightly milk deficient. He defines milk surplus (or deficiency) as simply the difference between milk marketings and commercial disappearance. And since 1995, we’ve needed to import a few percentage points simply to meet commercial disappearance demand.

The most fascinating part of the chart, however, is that regardless of our constant deficit production, milk prices started behaving erratically: Up 15% in 1996, down 10% in 1997, up 15% in 1998 and on and on and on. It’s becoming clear that milk prices in the U.S. are becoming less dependent on domestic production and consumption and far more dependent on global economic shortages or demand shocks.

2009 was the classic example. Even though U.S. fluid milk and cheese sales increased, and casein, MPC and cheese imports were at their lowest levels since the mid-2000s, milk prices still dropped 30%. What happened? U.S. exports plunged 35% on a tonnage basis and 50% on a value basis during the global recession.

What is also apparent is that supply management programs that attempt to ratchet back U.S. milk production will have minimal, if any, effect on price volatility. What’s more likely is that such programs could impede our ability to become consistent and reliable suppliers to export markets, reinforcing our sullied reputation as last in, first out marketers. In a globalized market, that’s not a good place to be.

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