Larson is a third-generation dairy producer in southern Florida, milking 4,200 cows.
**Extended comments in blue
The farm bill is basically the reauthorization of agriculture payments with supply management. Unfortunately, in 2012 the writing of the bill will be unrealistic due to our country’s current financial crisis. Promises to cut taxes will make margin protection programs impractical. With $23 million to be cut before the farm bill is written, it is difficult to look at the projections and proposals logically.
In my opinion, the largest cuts in the farm bill should come from the largest percentage of funds—the 77% that is centered around nutrition programs. While this is unlikely with such a high unemployment rate, it should be considered. The government-subsidized food program is a broken system that needs to be completely overhauled.
In theory, we are in favor of all consumers having the means to make healthy choices for their families; however, a trip to your local grocery store will provide ample opportunities to see the misuse of these funds.
Budget changes are also likely to affect crop insurance and commodity subsidies, affecting our margins and bottom line. On a positive note, from our perspective, we are anticipating the replacement of some of the direct payment programs with government-funded risk management plans. The goal of the farm bill should be to ensure stable food and commodity prices by reducing the risk and market volatility that farmers have faced in the past.
Finally, the proposed farm bill threatens our future workforce in agriculture. Not hiring young people will not immediately affect our bottom line. However, the chance to work in agriculture leads many talented young people to pursue agriculture degrees in college and career choices. While safety to people and animals must be a priority, young people should have the opportunity to learn the skills and develop the work ethic it takes to succeed in agricultural and many other fields.
On a different note, most of the Southeast experienced an extremely mild fall in 2011 and winter so far in 2012. In South Florida, we have been particularly warm from November through February. We have seen a reduction in the pounds per cow during November and December as compared to 2010, due to our increased temperatures. However, the considerable advantage was continuing to grow and harvest haylage for an additional two months.
The unseasonable weather increased our inventory of haylage, resulting in a reduced ration cost. This decreased our dependency on purchased fiber sources, i.e., hay, wet brew and cottonseed hulls. Thus far, this trade-off seems to be favorable for our operation.
Another area affecting our operation is the ability to "trade" cull cows for springers. If the cull-cow market remains high and replacement costs stay relatively steady, we will continue to take this opportunity to improve our herd and financial position. Currently we are "trading" reproductive and udder cull cows milking 40 lb. to 50 lb. at a 3:2 rate for springers. Volatility in the market will not allow this long-term, but at this time it is working for us.
We are optimistic that we may see a reduction in feed costs this year. Fertilizer prices are comparable with last year, therefore we expect our corn silage price to be the same or lower this year. Our corn silage price is driven by costs to produce, not corn prices. With the blend subsidies ending this year, we are encouraged by the possibility of more consistent corn prices throughout 2012.
In this market that depends on countless factors for success, we often forget that we are producing a product that consumers must decide to buy. We believe that food safety is critical to maintaining consumer confidence and future market prospects. At Larson Dairy, we strive to ship high-quality milk and cull cows free of antibiotics.
Several safety measures are in place to make sure that we are successful. All cows must pass a Delvotest and meet the milk withdrawal periods before entering the milking string. Each cow in our herd has a medical card in which all treatments are recorded. For a cull cow to leave the herd, a shipping report is compiled with the cow’s number, medical record (including treatments given and dates cleared) and reason for leaving. Still, before she leaves, two managers have to review the information for accuracy and sign the shipping report. In addition, duplicate information is kept on our PCDART system.
This is a considerable amount of paperwork to sell and milk cows, but we are convinced that a safe and healthy food supply is the only way to maintain our customers’ confidence.
|Larson's Most Recent Prices
|Milk (3.7% bf, 4.0% prt)