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Kentucky Dairy Development Council

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  1. 1. May - June 2020 • KDDC • Page 1 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Milk MattersM a y - J u n e w w w. k y d a i r y. o r g KENTUCKY Supported by JUNE IS DAIRY MONTH! Lean Dairy Farming page 8 KDDC Milk Program page 14
  2. 2. May - June 2020 • KDDC • Page 2 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund 2020 KDDC Board of Directors & Staff Executive Committee President: Freeman Brundige Vice President: Charles Townsend, DVM Sec./Treasurer: Tom Hastings EC Member: Tony Cowherd EC Member: Greg Goode EC Past President: Richard Sparrow Board of Directors District 1: Freeman Brundige 731.446.6248 District 2: Josh Duvall 270.535.6533 District 3: Keith Long 270.670.1388 District 4: Bill Crist Jr. 270.590.3185 District 5: Tony Compton 270.378.0525 District 6: Mark Williams 270.427.0796 District 7: Greg Goode 606.303.2150 District 8: Steve Weaver 270.475.3154 District 9: Jerry Gentry 606.875.2526 District 10: Terry Rowlette 502.376.2292 District 11: Stewart Jones 270.402.4805 District 12: John Kuegel 270.316.0351 Equipment: Tony Cowherd 270.469.0398 Milk Haulers: Mike Owen 270.392.1902 Genetics: Dan Johnson 502.905.8221 Feed: Tom Hastings 270.748.9652 Nutrition: Dr. Jeffrey Bewley 270.225.1212 Dairy Co-op: Stephen Broyles 859.421.9801 Veterinary: Dr. Charles Townsend 270.726.4041 Finance: Todd Lockett 270.590.9375 Heifer Raiser: Bill Mattingly 270.699.1701 Former Pres.: Richard Sparrow 502.370.6730 Employee & Consultants Executive Director: H.H. Barlow 859.516.1129 kddc@kydairy.org DC-Central: Beth Cox PO Box 144, Mannsville, KY 42758 bethcoxkddc@gmail.com 859.516.1619 • 270-469-4278 DC-Western: Dave Roberts 1334 Carrville Road, Hampton, KY 42047 roberts@kydairy.org 859.516.1409 DC-Southern: Meredith Scales 2617 Harristown Road, Russell Springs, KY 42642 mescales2@gmail.com 859.516.1966 DC-Northern: Jennifer Hickerson 4887 Mt Sterling Road, Flemingsburg, KY 41041 j.hickersonkddc@gmail.com 859.516.2458 KDDC 176 Pasadena Drive • Lexington, KY 40503 www.kydairy.org KY Milk Matters produced by Carey Brown President’s Corner Freeman Brundige I t’s been two months since my first article and the pandemic is still influencing every decision we make. We have faced a lot of hard decisions to make because of something we had no fault in causing. Explaining how the grocery store is out of milk or will only let you buy one gallon on the same day that you had to dump the milk your cows have produced down the drain is hard to do. Conference calls and telecommunication has become a way of life. Hard on older people with gray hair. In college our computers were the size of small rooms. Guess that is showing my age. One thing I would like to get across to all of our members, is the dedication and unbelievable talents of our staff. No matter what the task or crisis we have had to deal with they have more than risen to the occasion. I always knew they were capable advisors, but my appreciation has doubled after working with them through this stressful time for all dairyman. Call them if you need help and thank them for a job well done when you get the chance. Overall dairy has fared fairly well in the assistance offered us. Thankfully, many of us took advantage of the DMC Insurance we helped to pay for. The old adage that insurance is something you have but never hope to use is certainly true. We have many issues still to address again as I stated in the last issue maybe we can get the health problems behind us, so we can concentrate on them. Thanks! Importance of Nutrient Management • Nutrient management helps reduce contamination to waterways by plant nutrients • Improve soil fertility • Prevents soil deterioration • Enhance plant productivity • Reduce costs of chemical fertilizers • Provide balanced nutrition to crops • Prevents leaching of nutrients from the soil Dairy producers are required to have a nutrient management plan for their operation. Nutrient management plans however are also a resourceful tool for your operation with many benefits that positively impacts it. KDDC is here to help any producer that needs one written or has one that needs to be renewed and updated. Feel free to reach out to your consultant with any questions or to schedule a time to get one written. Dave Roberts: 859-516-1409 Beth Cox: 859-516-1619 Meredith Scales: 859-516-1966 Jennifer Hickerson: 859-516-2458
  3. 3. ©2020 Alltech, Inc. All Rights Reserved. With the most researched yeast on the market, the Alltech On- Farm Support program and our team of Elite Dairy Advisors are able to provide the best nutritional support and service to your herd. Our team serves as a new tool for nutritionists, producers and laborers to analyze your needs and develop a customized program for your operation. Our Alltech products and services work together to increase your herds efficiency and overall profitability. The support behind the product matters. For more information please contact Elizabeth Lunsford Territory Sales Manager elunsford@alltech.com 859.553.0072
  4. 4. May - June 2020 • KDDC • Page 4 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Executive Director Comments H H Barlow E veryone in America has been affected in some way, unfortunately, most in a very negative way. The negative has played out in our dairy world in a severe way. In January 2020, I think every dairy farmer and all our support industries were very optimistic about a great year. At our Dairy Partners meeting in Bowling Green in February, there was such a positive spirit that we had put the past four extremely tough years behind us. Then, in two weeks’ time, everything changed. I remember sitting in a UK regulatory meeting in early March in Lexington when they announced the SEC Basketball Tournament had been cancelled and UK was shutting down classes. I really could not believe it was true. The dairy supply and distribution networks were the first to feel the shutdown. Who would ever believe groceries would have empty milk shelves? I still do not get the run on toilet paper…Where’s the Sears Roebuck catalog when you need it?? The sight of milk being poured down the drain was tragic, such beautiful, nutritious food being thrown away. We operate in a unique industry. During several interviews, the one big question always was, “Why is milk being dumped?”. Very few people have any comprehension of what it takes to get that milk in the bottle or block of cheese. It is a long way from the cow to the dairy case. I am daily so thankful to see that milk truck coming down the road. We must remember how many people and all the processes that our product goes through before it gets to the consumer. I wish everyone could tour a milk plant…They are truly amazing! It is so disappointing that our KDDC summer tour of the Bel Cheese plant in Leitchfield was cancelled. Cancellations have become a way of life. It was bad enough for basketball tournaments to be cancelled, but what about school, senior prom and graduations. My granddaughter worked for years for her degree and now there is no graduation ceremony. Please pray for all graduates at every level to know they still truly succeeded in accomplishing something that is exceedingly valuable. Our dairy world did not escape cancellations. All the 4-H and FFA events have been cancelled at least through June, no celebration of June Dairy Days. Life as we have always known it has been altered in 2020. My prayer is, “Never again”. That brings us to the financial side of this pandemic, where we don’t know the extent of all the ramifications. With all food services closed except for carry-out, the commodity cheese prices dropped to $1.00/lb. in April. They have since rebounded to $1.96/lb. Most dairy economists think the prices won’t hold as we go through summer. No one really knows where they are headed. As I write this, restaurants are opening back up. After eating out three days in a row at extremely popular venues, we were disappointed at the small number of patrons, especially since the management and workers went to such great lengths to make certain that everything is sanitary in every way conforming to state and federal regulation. Getting back to normal might take much longer than expected, especially if people are restrained by fear. Milk prices are extremely volatile. The forecast for mailbox prices is low from June through August. Since Kentucky markets are Federal Order V and VII fluid markets, we face a two-month lag period compared to component markets, which results in our prices not recovering as fast as the commodity cheese and butter prices. President Trump and USDA announced Coronavirus Food Assistance Program (CFAP). He pledged to put $19 billion in agriculture with $3 billion in actual food purchases for food banks and $16 billion in direct payments to farmers. Dairy fared well in both programs with between $500 million in purchases of cheese, butter, milk powder and fluid milk. Of the $16 billion in direct payments to farmers, dairy is receiving $2.9 billion. This is good considering the $16 billion covers beef cattle, pork, corn, soybeans, specialty crops and much more…every agriculture commodity. USDA announced on May 19 that all dairymen will receive $4.71/cwt for all milk produced in January-March 2020 and possibly another $1.49/cwt at a later date. There is a $250,000 cap per farm owner entity. This cap will affect many of the large dairy operations in the US. The CFAP stimulus payment is a real shot in the arm for every dairyman and is to be paid in mid-June. Dairymen should also receive payments for their corn, beans and cull cows sold from January-April 15. Call your FSA office starting May 26 to set up an appointment for signing up. Also during this time, Dairy Margin Insurance is going to make payments starting for March milk. Because of the depressed prices, the DMC payment will be over $3/cwt for at least three months. I’m very thankful that KDDC worked hard last Fall to get dairymen signed up for the DMC and paid up to $1,000 incentive for the dairymen who signed up for the full 5 years. With many financial assistance programs available, hopefully all dairymen can survive the low prices caused by the pandemic. Another stroke of misfortune hit 80 Kentucky dairymen through the Dean bankruptcy. It was announced in April that DFA bought 40 Dean processing plants and Prairie Farms bought 10. Thankfully, the 80 independent dairymen that shipped directly to Dean will not lose their market like some did in 2018. However, those same producers did not receive their May 15 settlement check for April milk. Word is that the money will come later but it has put a terrible hardship on those producers, as well as their vendors. Enough market, KDDC is still very active and available to help every dairyman, whether for quality problems, expansion ideas, nutrient management plans or energy grants. Call us anytime and we will be there to help. Our MILK program is undergoing major changes as explained in other articles in this newsletter. The KDDC board and staff are working on our 2021-2022 Agriculture Development Board grant proposal. We are exploring new ideas to continue our programs. There has never been a time like this in any of our lives, but with perseverance and God’s help, we will all get through it. Don’t hesitate to call someone if you are depressed. Stay close to your family and pray without ceasing. God bless everyone who reads this and break out the ice cream on the hot summer days. What do you say about a life altering event that you have absolutely no control over?
  5. 5. May - June 2020 • KDDC • Page 5 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Commissioner's Corner Ryan Quarles A s I write this, the Kentucky agriculture community are celebrating beef month and looking forward to celebrating June as dairy month in Kentucky. Since we cannot gather together, I hope you and yours will join me in raising a glass of ice-cold Kentucky milk (or a cone of Kentucky Proud ice cream) in an appreciation to dairy producers. Post it on your Facebook account, and encourage your friends to do the same! The big news of recent weeks involves the recently unveiled producer aid packaged released by the U.S. Department of Agriculture. While there are talks in Congress of additional funding, it is important that you take advantage of this opportunity right now by contacting the Farm Service Agency, the agency overseeing distribution of the funds. We continue to stay in contact with the U.S. Department of Agriculture, making sure that Kentucky has a seat at the table. I am incredibly proud of how our farm families have handled the pandemic. Even though we have faced unprecedented supply chain issues, the likes of which we haven’t seen in our lifetime, you and your families have risen to the challenge, and you have not disappointed. One only has to look online to see #StillFarming to witness the incredible resiliency of the American farmer, who is still putting a crop in the ground, raising livestock, and producing much needed food for our communities. I know many of you are on hard times right now, and are facing – or already have faced – some difficult decisions in the coming days, weeks, and months. This pandemic didn’t help trends already present in our agricultural economy. Please know that the Kentucky Department of Agriculture stands ready to be a resource for you and your families during this time. I encourage you to stay up-to-date with updates from the Kentucky Department of Agriculture online at www.kyagr.com/covid19. The one way we are going to make it through this is by working together. Dairy Revenue Protection (DRP) Is Here! This recently released USDA product (DRP) is designed to protect dairy farmers from the decline in quarterly revenue from milk sales. Contact us today for more information about protecting one of the biggest risks to your operation. In Business Since 1972 1-800-353-6108 www.shelbyinsuranceagency.com sia@iglou.com We are an equal opportunity provider
  6. 6. May - June 2020 • KDDC • Page 6 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Coronavirus Food Assistance Program (CFAP) Update Will Snell and Kenny Burdine T oday (May 19, 2020), the White House and USDA announced details of the Coronavirus Food Assistance Program (CFAP) as part of a White House briefing on the U.S. Food Supply. The direct payment portion of this program is designed to compensate farmers who have suffered losses due to COVID-19. Background: On April 17, 2020, U.S. Secretary of Agriculture Sonny Perdue announced the CFAP which evolved from funding provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Families First Coronavirus Response Act (FFCRA), and other existing USDA funds. CFAP will provide $19 billion, with $16 billion in direct payments to eligible farmers ($9.5 billion from the CARES Act and the remaining $6.5 billion from the Commodity Credit Corporation (CCC)) and $3 billion to purchase fresh produce, dairy and meat to support the ag economy and provide food for needy families as part of USDA’s Families Food Box Program. The remaining portion of this fact sheet outlines the direct payment provisions of CFAP. Eligible Payments: CFAP will provide financial assistance to producers of agricultural commodities who have suffered a 5% or greater price decline (from mid-January to mid-April) or who had losses due to market supply chain disruptions due to COVID-19 and face additional significant market costs. Eligible Commodities • Non-specialty crops including malting barley, canola, corn, upland cotton, millet, oats, soybeans, sorghum, sunflowers, durum wheat, and hard red spring wheat • Wool • Livestock: cattle, hogs, and sheep • Dairy • Specialty Crops including various fruits, vegetables, and nuts Additional eligible commodities, including aquaculture and nursery crops, will be announced at a later date. Plus, USDA indicated that the agency will consider additional commodities not identified in the final rule if they meet eligibility requirements. Payment Limitations: CFAP payments will be capped at $250,000 per individual and not limited per commodity as was originally reported. Payments will be excluded for any one individual or legal entity with an adjusted gross income (using averages of 2016, 2017, and 2018 tax years) exceeding $900,000 unless at least 75% of the income is derived from farming. The final rule outlines specifics for various legal entities including corporations where up to three individuals who meet USDA’s requirements for being actively engaged in farming will be eligible for up to three separate payment limits. Livestock Payment Details • For livestock including cattle, swine, and ovine, the CARES act payment rate will be multiplied by the per head volume of sales between January 15, 2020 and April 15, 2020 in each of the livestock categories listed below. The CCC payment rate will be multiplied by the highest inventory number in each of those categories from April 16, 2020 through May 14, 2020. • For dairy, the CARES Act payment rate will be multiplied by 1st quarter milk production. The CCC payment rate will be multiplied by 1st quarter milk production times 1.014 (seasonal production increase for the second quarter). • For wool, eligible inventory will be the lower of either (1) 50% of the producer’s self-certified unpriced inventory as of January 15, 2020 or (2) 50% of the producer’s 2019 production. This level is multiplied by the CARES and CCC payment rates. Crop Payment Details • An average payment rate per unit (bushel, pound, or hundredweight) will be determined for each eligible non- specialty cropbased on the decline in the weekly average of the futures prices (or weekly average of the cash prices, if futures prices are unavailable) between the average for the week of January 13-17, 2020, and the average for the week of April 6-9, 2020. • If the decline in price is 5 percent or greater between these two time periods, a payment for that commodity is triggered. • Producers of non-specialty crops will be paid based on inventory held as of January 15, 2020. • A single payment will be made based on 50 percent of a producer’s 2019 total production or the 2019 inventory as of January 15, 2020, whichever is smaller, and multiplied by the commodity’s applicable payment rates below split between funding provided by the CARES Act and funds from the Livestock Categories Unit of Measure CARES Act Payment Rate CCC Paymemt Rate Dairy Cwt $4.71 $1.47 Slaughter Cattle (mature cattle) Head $92 $33 Slaughter Cattle (fed cattle) Head $214 $33 Feeder cattle less than 600 lbs Head $102 $33 Feeder cattle 600 lbs or more Head $139 $33 All other cattle Head $102 $33 Pigs (any swine under 120 lbs) Head $28 $17 Hogs (any swine 120 lbs or more) Head $18 $17 Lambs and yearlings Head $33 $7 Wool (graded,clean basis) Lb $0.71 $0.78 Wool (non-graded, greasy basis) Lb $0.36 $0.39
  7. 7. May - June 2020 • KDDC • Page 7 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Commodity Credit Corporation (CCC). Application/Payment Process and Details • Signup will begin on May 26, 2020 at one’s local Farm Service Agency (FSA) office. Click here for a list of local offices in Kentucky. Producers must submit a completed CFAP application either in person, by mail, e-mail, or fax to their local FSA office. • USDA indicates that the application form and a payment calculator for producers will be available online once signup begins. • USDA will require several forms/information (e.g., tax identification number, farm operating structure, conservation compliance, adjusted gross income to ensure eligibility, and direct deposit information) must be on file at the local FSA office as part of the application process. • Eligible farmers will receive 80% of their CFAP payment in the initial distribution with the remaining 20% being paid at a later date if funds remain available, not to exceed the $16 billion funding limit. • USDA will not require an individual to have crop insurance coverage to be eligible for payment under CFAP. Non-specialty Crops Unit of Measure CARES Act Payment Rate CCC Paymemt Rate Barley (malting barley only) bushel $0.34 $0.37 Canola pound $0.01 $0.01 Corn bushel $0.32 $0.35 Upland Corn pound $0.09 $0.10 Millet bushel $0.31 $0.34 Oats bushel $0.15 $0.17 Sorghum bushel $0.30 $0.32 Soybeans bushel $0.45 $0.50 Sunflowers pound $0.02 $0.02 Wheat, Durum bushel $0.19 $0.20 Wheat, Hard Red Spring bushel $0.18 $0.20 Cowherd Equipment & Rental, Inc. For More Information: Cowherd Equipment & Rental, Inc. 1483 Old Summersville Rd. Campbellsville, KY 42718 270-465-2679 270-469-0398 Penta 4030 Tire Scraper J&D Head Locks Roto Grind 1090 Hagedorn 5440 Manure Spreader Silage Defacer Tire Scraper Cowherd Dairy Supply For chemicals, supplies and more from our dairy to yours, Cowherd’s has all of your dairy needs. Cowherd Dairy Supply 1483 Old Summersville Rd. Campbellsville, KY 42718 270-465-2679 or 270-651-2643 • Boumatic Milking Equipment and Chemicals • Chore-Boy Parts • BouMatic Coolers • J&D Manufacturing • IBA Chemicals • Mueller Milk Tanks Penta 4930 BouMatic Feed pusher • SCR Systems • Up North Plastics Available
  8. 8. May - June 2020 • KDDC • Page 8 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Lean Dairy Farming Dr. Jeffery Bewley, PhD, Alltech Dairy Housing and Analytics Specialist REDUCE WASTE, CREATE FLOW, INCREASE VALUE P rinciples of lean manufacturing have been applied in multiple industries for decades. The concepts were started in the 1960’s in manufacturing operations like Toyota. Recently, this concept has made its way into agriculture. Lean is a production system and a management philosophy, focused on creating more value with less resources. We work with different tools to systematically identify and reduce production waste. Progressive dairy operations have applied this concept to improve their organization processes and culture. Lean thinking employs 5 key principles toward identification of 8 types of waste, both described below. Lean is an approach toward viewing the dairy farm as a complete system. With lean thinking, dairy producers focus on getting the right things in the right place at the right time in the right quantity. Improving flow and reducing waste leads to higher quality and reduced costs. A key concept in lean is Kaizen, which means “change is good” and fosters a culture dedicated to continuous improvement. Lean employees are proactive rather than reactive and focus on working smarter rather than working harder. 1. Definining and creating value to the customer begins with thinking of the customer as the next internal stage in the process rather than as someone buying an end product. For example, the cow is the customer to the feed process. In a lean culture, each process is considered individually with respect to how maximimum value can be delivered to the next internal customer in the process. In this example, the goal should be to deliver high quality feed to the right animals at the right time in the right place. This begins with understanding the needs of the cow and developing a system to ensure these goals are met. With a lean mindset, we focus excluslively on activities that add value. 2. Creating flow in work processes helps improve efficiencies. This concept can be applied to many processes within the dairy operation, such as milking, feeding, heifer raising, harvesting, and breeding. This involves establishing and continuously standard operating procedures with optimal work flow in mind. 3. Mapping the value stream describes the process of mapping out each process and looking for waste. This is accomplished by involving all members of the team involved in a particular process. Generally, this involves a series of post- it notes to mark and move steps in the process. The goal in mapping the process is to go to Gemba (where value is created). Each activity is definied as value added or non value added and timed. Spaghetti diagrams are used to depict movement and vidually identify inefficiences. Once the current state is mapped, then the team starts to plan for the future state with minimal waste. 4. Establishing pull means to begin with the end in mind and only deliver what brings value. A great example of establishing pull is a restaurant that prepares and delivers food only as it’s ordered as opposed to preparing large quantities of food in hopes that someone orders it (push). Within the dairy system, historically we have often produced heifers with a push approach rather than a pull approach. Recently, dairy producers have started producing heifers with the end goal of how many replacemens are needed (pull). 5. Continuous improvement is an essential principle of lean. A lean culture embraces change, continually evaluates process, accepts feedback, and improves constantly. White board meetings are another key aspect of Lean. White board meetings are a simple concept. They involve weekly employee meetings around a white board. To increase meeting effectiveness, these meetings are standing meetings (no sitting), limited to 15 minutes, agenda-driven, and set with a positive tone. Agenda items may include what has happened in the last week, what good things occurred, and what wastes and improvements were identified. PICK Charts are used to determine what projects to spent time on. Items are placed into the four quadrants depicted below based on impact and effort level. Visual Management. Lean involves many visual management tools. These can include white boards or other forms of communication around the dairy to improve communication among team members. Some possible items to include on these boards include farm maps, key performance indicators (KPI’s), production and quality goals, maintenance needed, supplies needed, planting and harvesting plans, treatments and
  9. 9. May - June 2020 • KDDC • Page 9 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund vaccinations needed, watch cow lists, problems or wastes identified, actions for the day, week, or month, team priorities, holiday and vacation plans, special projects, safety issues, and emergency plans. An example of a visual management tool from the Alltech On-Farm Support Team is depicted below. 5S is another important strategy for improving workflow in a lean production system. An infographic describing the 5S process is provided below. 5S includes the use of colors and labels to help improve communication. For example, labeling pens and feed bins as shown below improves communication among employees and suppliers. Examples of the Eight Wastes in the Dairy System Defects Poor processes, sick or dead cows, poor feed, shrink, communication problems Overproduction More produced than needed, extra heifers, extra supplies Waiting For machines, cows, or colleagues Non-utilized Talent Not asking for employee input, having employees in positions that don’t fit their strengths, Transportation Wrong machinery for the job, poor logistics for cow, people or equimpent flow Inventory Purchasing too many supplies or parts, more than what is needed Motion Using the wrong tools for a task, not thinking about ergonimics within milking process, looking for tools Extra Processing Cleaning when unnecesary, dirty fans, inefficient energy use Fowler Branstetter Dairy Business Unit 317-315-4017 fowler.branstetter@elanco.com
  10. 10. DeLaval calf feeder CF1000S Automatic calf feeders are an efficient and effective method to achieve intensive calf feeding. Automatic calf feeders, such as the DeLaval CF1000S, offer the ability to manage and track the feeding program of each animal. Significant labor savings are also a potential benefit of the CF1000S. ✓ Calves growing faster ✓ Healthier calves ✓ Control over feeding cost and calf feeding operation ✓ Lower mortality and morbidity rates ✓ Earlier reproduction Rear healthy calves in less time and less work. Helps in identifying health issues early lower mortality and morbidity rates. Rear up to 25 - 100 calfs with one CF1000S. CalfApp and CalfCloud CalfApp and CalfCloud allow to keep control through internet over your calf rearing program and calf feeder well-functioning. Maximize calf growth through individual feeding. Having a heifer in weight ready to be pregnant earlier will make her productive sooner and increase her returns to the farm. Improves social development of the calf – natural behavior. Complete control over the milk feeding to each calf. Key benefits Eric Risser 423-368-7753 Zack Burris 270-576-7001
  11. 11. May - June 2020 • KDDC • Page 12 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund V shape dairy recovery? Economists define a “V” shape recovery as a sharp decline with a quick, sustained recovery. Chicago Mercantile Exchange (CME) block and barrel cheddar and butter meet the first two requirements as shown on the graph. Block cheddar was over $1.90/lb. the first of February, then fell to $1.00/lb. on April 15. Over a four-week period, blocks doubled and closed at $2.5525/lb. on June 5. Barrels and butter follow a similar pattern. Butter remained over $1.80/lb. for the first two months of the year before falling to $1.10/lb. on April 23, then closed at $1.9250/lb. on June 5. Cheese and butter’s price decline is due to the coronavirus and the resulting shutdown of much of the economy, especially food service which utilizes about 50% of the nation’s dairy production. Why are prices now rebounding and making the “V”? My list includes: • As government shutdown restrictions are lifted, the food service supply chain must be refilled. That is now happening, and cheese plants are operating at full throttle to fill the demand. • Government dairy purchases. The Coronavirus Relief Act authorized USDA to purchase $317 million in dairy products to use for food aid. Plus, the Secretary of Agriculture is using $120 million from Section 32 funds to purchase additional dairy products. To put this in perspective, at $3.00/lb., $437 million will purchase 145.7 million lbs. of cheese. It takes about 1.45 billion lbs. of milk to produce this cheese volume which equates to about 4% of the total estimated U.S. milk production in May and June. $437 million of dairy product purchases makes an impact. • When the economic shutdown started many cooperatives and proprietary plants quickly implemented various milk reduction programs. These programs reduced milk production, now making it difficult for some cheese plants to meet demand. • I look at the CME as a market of last resort. If a plant has no other viable market to sell cheese or butter it offers it at the Exchange. This is one of the reasons cheese and butter prices dropped so low. Food service orders dried up, plants needed to move product, and there was no other alternative. On the other hand, if buyers cannot find product, the Exchange offers a potential place to do so. Reports indicate some companies with USDA contracts to fill Family Food Boxes, have turned to the CME to purchase cheese, thus increasing CME prices. Sustained recovery? As stated above, the third requirement for a “V” recovery is sustained prices. Will cheese and butter prices remain at these levels? Eventually, the food service supply chain will be filled, and government purchases will end at some point. However, the stock market is getting back closer to pre- coronavirus levels. As businesses reopen, people are going back to work, employment is improving. All of this helps improve consumer confidence and bodes well for dairy demand. On the supply side, April milk production was 1.4% higher than last April. The nation’s dairy herd had 49,000 more head than a year ago. Only five states (Florida and Georgia were two) of the 24 milk reporting states had lower production than a year earlier. In the top two states, California was only up 0.3%, and production was flat in Wisconsin. Production continues to increase in Texas, with April production 4.9% greater than last April. Milk production numbers for the next two months will tell us the impact of the various milk reduction programs. However, the impact on production by coronavirus assistance payments to dairy farmers (about $6.20/cwt. on first quarter milk production) and dairy margin coverage payments (April payment of $3.47/ cwt. at the top level) is an unknown. As expected with the food service shut down, dairy product inventories grew significantly in April, especially for butter and NDM. As of April 30, the butter inventory is 26.8% higher than last April. Butter production set a new monthly record high in April. The nonfat dry milk (NDM) inventory is 41.1% higher. Better news, total cheese inventory at the end of April was only up 6.1%. Preliminary reports indicate improving demand, along with less milk, is drawing these inventories down. We will know exact numbers when USDA releases the May supply and demand data. My forecast is cheese and butter prices will soon start retreating. How much prices retreat all depends on supply and demand. How much dairy products consumers buy and how much milk dairy farmers produce. Blend prices. As stated previously, the large and quick Dixie Dairy Report June 2020 Calvin Covington ccovington5@cs.com (336) 766-7191
  12. 12. May - June 2020 • KDDC • Page 13 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Milk Prices FMMO 5 www.malouisville.com May 2020 Class 1 Advanced Price (@3.5%BF) $ 16.35 June 2020 Class 1 Advanced Price (@3.5%BF) $ 14.82 FMMO 7 www.fmmmatlanta.com May 2020 Class 1 Advanced Price (@3.5%BF) $16.75 June 2020 Class 1 Advanced Price (3.5%BF) $15.22 PROJECTED* BLEND PRICES – BASE ZONES – SOUTHEASTERN FEDERAL ORDERS MONTH APPALACHIAN FLORIDA SOUTHEAST ($/cwt. at 3.5% butterfat) April 2020 $17.49 $19.35 $17.75 May $15.13 $17.57 $15.45 June $15.83 $16.96 $16.43 July $19.38 $21.38 $19.85 August $19.37 $21.59 $19.91 September $19.23 $21.07 $19.70 Projections in bold decreases and increases in dairy product prices, makes it more difficult to project. Please keep this in consideration as you review blend price projections. Due to the lag between the dairy product prices used to calculate order prices and CME prices, plus Class I advanced pricing, southeast dairy farmers will not see any significant improvement in blend prices until the July milk check. The May and June Class I Movers are $12.95/cwt. and $11.42/cwt., respectively. The July Class I Mover is projected at $17.35/cwt. In addition, due to the new method of calculating the Class I Mover implemented about a year ago (averages Class III and IV prices instead of using the higher of), southeast dairy farmers will not directly receive the full benefit from record high cheese prices in their milk checks. As shown below, May blend prices are projected $2.00 to $2.35/cwt. lower than April. A small increase is projected for the Appalachian and Southeast orders in June, but a lower blend price in Florida. This is due to the Appalachian and Southeast orders having a higher Class II, III, and IV utilizations. The large increase in blend prices is projected for July.
  13. 13. May - June 2020 • KDDC • Page 14 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund KDDC MILK Program Jennifer Hickerson “The only thing that never changes is that everything changes” – Louis L`Amour T he year 2020 has definitely proven to be a year of unprecedented change. Thus far it has not been kind to dairy, we can only hope that as we near mid- year the signs of an upward turn will hold steadfast and continue the duration of the year. In 2007 the Kentucky Dairy Development Council (KDDC) implemented the Market Incentive Leadership for Kentucky Program or what came to be known simply as the MILK Program. The goal of the original program was to increase production within the state while maintaining good quality. To qualify a producer established a base and was required to increase the base either by 5% or 10% each year. They had to keep Somatic Cell Count (SCC) equal to or below 300,000 and have a Pre-Incubation count (PI) of equal to or below 20,000. The participant was also required to participate in Dairy Herd Improvement Association (DHIA), have a minimum of six tests per year and test at least once per quarter. At this time, the maximum an eligible farm could receive was a $15,000 cap for the year. Fifty percent coming from KDDC and fifty percent coming from the milk marketer. By 2011 herds participating in the program had increased averaging 25% more milk per cow than the state average. The year 2013 marked a record year for the KDDC MILK Program, distributing the amount of funds to KY dairy farmers in the amount of $981,879.95. The program at that point had generated an increase in milk production over base production in the amount equivalent to 7,611 tanker loads. Further the MILK Program participants had increased milk quality from lowering their average SCC from 395,000 to 250,000. Quality herd improvement continued into 2014, producers on the program averaged 21,300 pounds of milk per cow and 237,000 SCC average for that year. In 2016 a noticeable shift had begun. A demand for higher quality not necessarily higher quantity was emerging. The year 2016 also marked the year that dairy producers were introduced more in-depth to the F.A.R.M program and the requirements within it from the milk cooperative agencies. Kentucky dairy farmers ranked 1st in the U.S. in the March 2017 issue of Hoards Dairyman for increased production per cow over the past 5 years according to the USDA/NASS information with over 3,700 lbs. increase per cow. In 2017 the MILK Program saw significant changes to the overall program. In 2017 the program changed and put more emphasis on the quality instead of production. At that time, the program was separated into two parts with a tier premium level for each section. 2017 Chart #1-Premiums are based on SCC– PIC Average for the month. (Max per producer is $6,000 per year) Total Premium SCC PIC $0.25/cwt ≤ 200,000 ≤ 20,000 $0.13/cwt 200,001 - 250,000 ≤ 20,000 $0.08/cwt 250,001 - 300,000 ≤ 20,000 Chart #2-SCC cell count by percentage of herd <200,000 SCC. (Max per producer is $6,000 per year) Total Premium % of cows SCC PIC $0.25/cwt 85% ≤ 200,000 ≤ 20,000 $0.13/cwt 75% ≤ 200,000 ≤ 20,000 $0.08/cwt 65% ≤ 200,000 ≤ 20,000 First section was based on the continuation of the quality standards as in the past, 20,000 PI must have been met and a tier scale for monthly average SCC from milk market records was developed (see above) for quality premiums. The addition of the Animal Care Program participation segment was also introduced in this year along with the addition of the second section. The second section was a focus on quality based on the percentage of cows having below a 200,000 SCC from DHIA test. The new changes brought uncertainty to the dollars that would be qualified for by producers so the decision to decrease the cap per producer to $12,000.00 was made with the ability to qualify for $6,000.00 in each section of the new revised program. This program became effective April 1, 2017. We evaluated the current MILK Program qualifications and results from the changes after we had a completed yearly cycle. In 2019 we increased the tier premiums from $.25, $.13, $.08 to $.30, $.15, and $.10 respectively per cwt. We also increased the producer cap back to $15,000.00 per year, $7,500.00 cap for each section of the program. The 2019 program year had a total payout of $684,188.00 going out to those participating producers that qualified. Lifetime totals for the MILK Program at the end of 2019 were $9,553,627.04. The MILK program was based on a collaborative partnership with all Kentucky’s Milk Marketing Procurement Organizations. Then 2020 brought unforeseen changes to everything imaginable and the MILK Program was no exception. KDDC was notified after the first quarter that support from all milk cooperatives was not going to be possible, voiding the program as it was. KDDC staff swiftly sought other possibilities and scenarios to protect producers from losing the program funds and all the benefits that it delivers to Kentucky’s dairy industry. After many hours of deliberation and with the support of the Kentucky Agriculture Development Board it was decided that KDDC would continue to issue their portion of the program with the program criteria not changing for the year 2020.
  14. 14. May - June 2020 • KDDC • Page 15 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund 2020 Chart #1-Premiums are based on SCC– PIC Average for the month. (Max per producer is $7,500 per year) Total Premium SCC PIC $0.30/cwt ≤ 200,000 ≤ 20,000 $0.15/cwt 200,001 - 250,000 ≤ 20,000 $0.10/cwt 250,001 - 300,000 ≤ 20,000 Chart #2-SCC cell count by percentage of herd <200,000 SCC. (Max per producer is $7,500 per year) Total Premium % of cows SCC PIC $0.30/cwt 85% ≤ 200,000 ≤ 20,000 $0.15/cwt 75% ≤ 200,000 ≤ 20,000 $0.10/cwt 65% ≤ 200,000 ≤ 20,000 Payments are scheduled to stay on the same payment cycle. Changes that producers will see are that payments will be coming directly from KDDC and will no longer be located on your milk check and stub. If any producer has questions, please reach out to your consultant. Every producer should have or will be receiving information on the changes and a form that we will need completed for process of payments. Find here a program chart for 2020. Remember KDDC is always working for the Kentucky dairy producers’ best interest. We look forward to revising the MILK Program for 2021 and developing a beneficial program for Kentucky dairy producers. Kohl: Transforming the “Black Swan” into a “Phoenix” Maureen Hanson T his illustration, created at the Centers for Disease Control and Prevention (CDC), reveals ultrastructural morphology exhibited by coronaviruses. Note the spikes that adorn the outer surface of the virus, which impart the look of a corona surrounding the virion, when viewed electron microscopically. A novel coronavirus, named Severe Acute Respiratory Syndrome coronavirus 2 (SARS-CoV-2), was identified as the cause of an outbreak of respiratory illness first detected in Wuhan, China in 2019. The illness caused by this virus has been named coronavirus disease 2019 (COVID-19). ( CDC ) The total impact of the COVID-19 crisis on American agriculture is far from a final assessment. David Kohl, President of AgriVisions, LLC and Professor Emeritus of Agricultural and Applied Economics at Virginia Tech University, recently shared his insights on the situation during several of the Professional Dairy Producers of Wisconsin’s “Dairy Signal” webcasts. Kohl sees the “black swan” event of COVID-19 in three phases, both for agriculture and society as a whole. “At first, she was a ‘dirty bird,’ causing massive disruption and volatility in nearly every segment of American agriculture,” he said. “When the economy starts to open up, I think she will be an ‘angry bird,’ creating widespread social, political and economic angst. That phase will last at least through the election in the fall.” Eventually, Kohl envisions the third stage as the “phoenix” phase. In Greek mythology, the phoenix was a bird that emerged from the ruins of destruction as a stronger, smarter and more powerful creature than before. Still, Kohl cautioned that the path between now and the phoenix stage could be a rough one. He said he receives calls daily from farmers seeking counsel on how to best navigate the crisis. His current advice: 1. Get your financials in order. Asses your first-quarter results for 2020, and carefully document all of your losses. 2. Conduct a 3-to-4-year trend analysis. Evaluate how COVID- 19 has impacted the trend of your farm’s profitability. 3. Assess equity depletion. Divide losses into equity to determine the rate at which you currently are burning equity. 4. Reach out to your lender. One option that many agricultural bankers are utilizing is switching to interest-only, principal- deferred payment plans in the short term. 5. See your accountant. Before you proceed with any partial or full liquidation, find out the potential tax implications of doing so. 6. Seek financial and/or mental health counseling resources if needed. There is no shame in seeking counsel, whether formally or informally. Sometimes just a conversation with a trusted, older mentor can help you keep things in perspective. Kohl believes that rather than a “V-shaped” rebound, the U.S. economy will follow a “Nike-swoosh-shaped” recovery, largely because consumers will not instantly get back on their feet. “But we don’t know if it will be a ‘size 6’ or ‘size 14’ shoe! We are looking at 30 to 40 million unemployed people, plus a large percentage of others whose incomes will be reduced,” he shared. “They will be pulling in their horns and going back to the basics for quite a while.” A huge element of that scenario is the restaurant and food service trade. The dramatic impact on the dairy business created by restaurant and institutional closures will not heal overnight. About 60% of U.S. butter and 50% of cheese is consumed away continued on page 19 →
  15. 15. May - June 2020 • KDDC • Page 16 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Byproduct Feeding Tom Hastings - Burkmann Nutrition L ike most of you I thought I had lived through a lot during my lifetime but as we have discovered things can always change. A few short months ago we were discussing the prospect of improved dairy markets amid one of the most prosperous economies the country has ever known. Then the world changed. A month ago when I was asked to write this article the purpose was to offer nutritional and economic alternatives to widely used dried distillers grains. For a short period of time it looked like distillers grains may reach record prices or may have limited availability. Kentucky is home to the country’s largest Bourbon production industry, the distillers grain byproducts from this industry are high in protein and energy. It is also very palatable to dairy cattle and replacement heifers. Over the years it has become an important component of what Kentucky farm families feed their dairy cattle. Over the past two decades the ethanol industry has also grown and increased the availability of fermented dried grains to the nations livestock feed industry. As Covid 19 moved the country into lockdown and overall demand for petroleum began to slow, the Russians and the Saudis were engaged in what seemed to be a battle for crude oil market share. The Russians refused to slow production to help stabilize falling oil futures and the April crude futures contract fell from a high in December 2019 of over $60.00 a barrel into negative territory. Ethanol had no method of competing with these historically low crude oil prices and by some accounts as much as half of the industries production capacity was shut down. The price of ethanol distillers grain did rise as much as much as $50.00 per ton and we saw a short-term spike in our Kentucky distilling byproducts also. Thankfully, the rise was short lived and as demand slowed with spring grass availability and production slowdowns from other livestock segments. The market quickly returned to its previous price levels. Even though this market did correct itself with the same speed that all of our lives changed it is still worth a few words about formulation value of these important byproducts. Had dried distillers grains stayed up $50.00 per ton there would have been economic impact to our dairy farmers. In this scenario lets assume the farmer is feeding 4 pounds of dried distillers per head per day. The increased cost is about ten cents per head per day. Every penny matters but we need to use a high level of caution at this price point, a loss of even 1 pound of milk production per head per day could cost more than the increase in distillers grain. In the nutrition business trained professionals review a long list of mission critical nutrients to ensure the highest level of milk production for the lowest possible investment. We refer to this as ration optimization. This process isolates the nutrient targets and utilizes all available combinations of ingredients to achieve the desired outcome. Experienced nutritionists know there are limits to this process, the old saying the cows can’t eat the paper is very true but farmers and nutritionists alike should always be looking for best possible economic solution for their on-farm nutrition needs. Combinations of other byproducts with high levels of rumen undegradable protein are available and the critical nutrients can be met if price pressures get too high. I would encourage all dairy farmers to consult with a nutrition professional on a regular basis for the purposes of maximizing milk production, milk components and providing the highest level of nutrition at the best possible cost. The Kentucky distilling industry and the byproducts it creates are valuable to all Kentucky livestock producers. We need to utilize these products whenever possible and hope that we never again face the discussion of price increases for the reason we have of the last few months. All the best to our valuable Kentucky Farm Families. Heat, Humidity, and Dairy Cattle Reproduction George Heersche, Jr., PhD
- University of Kentucky D airy cattle reproductive performance suffers when cows are stressed by heat and humidity. The two largest impacts of heat-humidity stress are decreased estrus detection efficiency and increased embryo loss. Cows are not as active when they are hot which makes it harder for us to catch them in standing heat. Heat-humidity stress does not decrease the rate of fertilization after cows are inseminated. However, heat-humidity stress has a large negative impact on development of the embryo during the first few days after fertilization. Keeping cows as cool as possible in the summer will put more milk in the tank and result in fewer trips to the semen tank. We should use shade, water and ventilation to cool cows at the feed bunk and in the holding pen, and use shade and ventilation to cool cows where they rest. Providing plenty of cool fresh drinking water 24/7 is mandatory. We also should avoid overcrowding cows and make sure shade, water and feed are in close proximity so cows can get to all three with a minimum amount of effort. Also, work with your nutritionist to make the appropriate adjustments in the ration during hot weather.

 Using natural service is not the solution to the summer fertility problem because bulls are also subject to heat stress. They are less active and have lower quality semen when they are hot. To add insult to injury exposure of temperatures over 85 degrees for two or three days can significantly reduce semen quality for the following four to five weeks.
  16. 16. May - June 2020 • KDDC • Page 17 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund T he way the public and the media perceive animal agriculture’s environmental impact can, and should, change. New research from Oxford University and the University of California, Davis have recently debunked some of the most critical and long-standing myths surrounding animal agriculture. But can this breakthrough overcome animal agriculture’s bad reputation? The current narrative about animal agriculture says that ruminant livestock animals (e.g., beef cattle, dairy cattle, etc.) produce methane. Methane is a potent greenhouse gas. Thus, animal agriculture is bad for the environment. During a keynote presentation for the Alltech ONE Virtual Experience, Dr. Frank Mitloehner, professor at the University of California, Davis and air quality specialist, boldly proclaimed a path for animal agriculture to become climate-neutral. Yes, “you heard me right — climate-neutral,” said Dr. Mitloehner. He said he would like to, “get us to a place where we have the impacts of animal agriculture that are not detrimental to our climate.” Myth #1: Methane (the most common greenhouse gas, or GHG, in animal agriculture) acts just like other GHGs in the environment. Fact: The three main greenhouse gases, carbon dioxide, methane and nitrous oxide, all impact the environment in critically different ways, especially as it relates to their source, life span in the atmosphere and global warming potential. Carbon dioxide and nitrous oxide are known as “stock gases.” Stock gases are long-lived gases and once emitted will continue to build up in the atmosphere. Carbon dioxide, for example, has an estimated lifespan in the atmosphere of 1,000 years, meaning carbon dioxide emitted from the year 1020 may still be in the atmosphere today. Methane, on the other hand, is a “flow gas.” Flow gases are short-lived gases and are removed from the atmosphere at a more rapid pace. Methane’s lifespan in the atmosphere is approximately 10 years. This means a flow gas like methane would impact the environment for a duration that is nearly 100 times shorter than the stock gas carbon dioxide. What causes these gases in the first place? Carbon dioxide is created by the burning of fossil fuels. Fossil fuels are used as the energy source to power most homes, vehicles and industry globally. As the graph below depicts, Dr. Mitloehner refers to stock gases like carbon dioxide as a “one-way street” because they only accumulate in the environment over time due to their long lifespan. Methane can be produced in a variety of methods, but most commonly, it’s produced through the rumination process in beef and dairy livestock (i.e., belching). As a short-lived flow gas, “The only time that you really add new additional methane to the atmosphere with the livestock herd is throughout the first 10 years of its existence or if you increase your herd sizes,” explained Dr. Mitloehner. Methane levels do not increase if herd sizes remain constant because methane is being broken down at the same rate it is being produced. 3 MYTHS DEBUNKED: Animal agriculture's real impact on the environment Brian Lawless Important Greenhouse Gases to Know Gas Molecular Name Gas Type Lifespan in the Atmosphere (Years) Global Warming Potential (GWP100) Carbon Dioxide CO2 Stock 1,000 1 Methane CH4 Flow 10 28 Nitrus Oxide C2 O Stock 110 265 continued on page 18 → “What I'm saying here by no means (is) that methane doesn't matter,” he continued. “While that methane is in the atmosphere, it is heat-trapping, it is a potent greenhouse gas. But the question really is, do our livestock herds add to additional methane, meaning additional carbon in the atmosphere, leading to additional warming? And the answer to that question is no. As long as we have constant herds or even decreasing herds, we are not adding additional methane, and hence not additional warming. And what I just said to you is a total change in the narrative around livestock.”
  17. 17. May - June 2020 • KDDC • Page 18 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund Alternatively, carbon dioxide is created from extracting fossil fuels that are millions of years old and are trapped under the Earth’s surface. “These long-lived climate pollutants are only emitted,” said Dr. Mitloehner. “They are put into the atmosphere, but there's no real sink for it in a major way.” The image above demonstrates that carbon dioxide and methane are very different types of gases (stock versus flow) and have very different lifespans in the environment (1,000 years versus 10 years), but what about their global warming potential? Myth #2: The current method for assessing the global warming potential (GWP100) of greenhouse gases properly accounts for all important variables. Fact: The initial method for calculating GWP100 misrepresents the impact of short-lived flow gases, like methane, on future warming. The new “GWP*” is an improved and more representative measurement. The initial GWP100 measures produced by the Kyoto Protocol nearly 30 years ago marked a very positive step for assessing global warming. The initial documents included many footnotes and caveats to account for variability and unknown values. “But the footnotes were cut off, and people ran with (it),” said Dr. Mitloehner. “And in my opinion, that was a very dangerous situation that has really gotten animal agriculture into a lot of trouble, actually, quite frankly.” The current GWP100 measurement generates an over- assessment of methane’s contributions to global warming. Currently, in short, GWP100 measurements are all standardized to a billion tonnes of carbon dioxide equivalent. So, all non- carbon dioxide emissions are converted by multiplying the amount of the emissions of each gas by its global warming potential over 100 years value. Methane has a GWP100 value of 28, meaning it is 28 times more potent than carbon dioxide in the atmosphere. Unfortunately, this type of calculation completely omits the fact that flow gases, like methane, are destroyed after approximately 10 years and would not continue for the entire 100-year duration as described in the GWP100 formula. Additionally, it underestimates the impact that stock gases, like carbon dioxide, would have that persist in the environment for 1,000 years. Dr. Mitloehner cited Dr. Myles Allen from Oxford University as the pioneer of a new calculation called “GWP*.” The new GWP* calculation better accounts for both gas intensity and gas lifespan in the atmosphere in its measurements of global warming. This is a new narrative to explain global warming emissions and, Dr. Mitloehner said, “you will see it will gain momentum, and it will become the new reality” soon. Myth #3: To keep up with increasing demand and global population growth, the United States has continued to increase its numbers of beef and dairy cattle, thus increase methane emissions. Fact: The United States reached peak beef and dairy cattle numbers in the 1970s and has reduced its number of animals every decade since, resulting in 50 million fewer cattle in total. Over the last half-century, the United States has made tremendous progress to improve efficiency and increase productivity while also reducing total beef and dairy cattle numbers. For example, in 1950, the U.S. dairy cow herd peaked at 25 million cattle. Today, the dairy herd is approximately 9
  18. 18. May - June 2020 • KDDC • Page 19 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund million cows, yet it is producing 60% more milk — that’s significantly more milk with 14 million fewer cows! Though cattle numbers have continued to increase in countries such as India and China, this means the United States has not increased methane output — thus not increasing GHG contributions from livestock — over the last five decades. So, what does all this mean? Animal agriculture, unlike any other sector, can not only reduce its GHG output, but can also create a net cooling effect on the atmosphere (i.e., actively reduce global warming). The three scenarios shown below demonstrate the important differences between carbon dioxide and methane, and their ability to generate global cooling. With rising emissions, warming carbon dioxide increases at a growing rate, while methane also increases. With constant emissions, warming from carbon dioxide continues to increase while methane no longer contributes to additional warming. “But now, the thing that really excites me, and that's the third scenario,” said Dr. Mitloehner. “So, imagine this scenario here, where we decrease methane by 35%. If we do so, then we actively take carbon out of the atmosphere. And that has a net cooling effect. If we find ways to reduce methane, then we counteract other sectors of societies that do contribute ― and significantly so ― to global warming, such as flying, driving, running air conditioners and so on.” Examples of Dr. Mitloehner’s 35% reduction scenario have proven to be possible. Over the last five years alone, California has reduced methane emissions by 25% via a combination of improved efficiency and incentives for anaerobic digesters, alternative manure management practices and other technologies. Though the narrative on animal agriculture has been negative on climate change, there is now increasing hope and new data to debunk even the most long-standing criticisms. Dr. Mitloehner concluded, “because I know if we can do it here (in California), it can be done in other parts of the country and in other parts of the world. If we indeed achieve such reductions of greenhouse gas, particularly of short-lived greenhouse gases such as methane, then that means that our livestock sector will be on a path for climate neutrality.” from home, and some economists predict 10 to 15% of U.S. restaurants will not re-open when the rest of the economy does. Other elements of great concern to Kohl going forward are: • The possibility that other countries will take out our energy complex, undermining America’s energy independence. • Further consolidation in the economy, with big companies gaining even more control. • Knee-jerk reactions in agriculture resulting in falling land prices and the return of an “80’s-like” farm crisis. For now, Kohl advises managing the things you can control, and managing around those you can’t. “Re-evaluate your personal and business goals, and think about how you will reinvent yourself and create your own ‘phoenix,’” he suggested. “Also, avoid listening to the media as much as possible.” Kohl said this also is an important time to take stock in business, family and personal, as well as mental, physical and spiritual, blessings. “Never equate your self-worth to your net worth,” he advised. Reprinted with permission Dairy Herd Management June 2020 continued from page 15
  19. 19. May - June 2020 • KDDC • Page 20 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund R isk is inherent in most agricultural ventures, and no one knows that better than today’s dairy farm families. But, like most businesses affected by the COVID-19 outbreak, dairy farms are taking a strong hit from an economic perspective in an already tough market environment. And while there may not be any easy answers for the many issues dairy farmers face, there are ways they can proactively manage their risk. American Farm Bureau Federation’s chief economist Dr. John Newton said it is always good to be prepared for the unexpected from an insurance perspective, even when the unexpected is nowhere in sight. “When we look at the dairy industry, at the end of 2019, we saw some of the highest prices that we'd seen in some time, but we can't let that lull us into a false sense of security,” he said. “We need to protect against potential downturns, and there are a variety of programs available to help producers manage that risk through the farm bill.” According to information from the USDA’s Economic Research Service, U.S. dairy cash receipts were forecast to be nearly $42.5 billion this year. If those calculations had proved to be correct, it would have represented a more than $7 billion increase over 2018 numbers. Unfortunately, the unexpected happened; the coronavirus hit, markets closed, and prices declined, creating the perfect storm to justify the need for risk management tools. A couple of those tools include the USDA’s Dairy Margin Coverage (DMC) and Dairy Revenue Protection (DRP) programs. “We saw some producers putting insurance in place through these two programs into 2020, and at that time you didn't think you'd need it, but you got it just in case,” said Newton. “Now, in the face of significant price declines related to the coronavirus, those producers who were proactive and managed their risks are going to have an easier time weathering the downturn.” Statistical information included in a recent report from AFBF noted that current price expectations (at the time the report was written) indicated that a farmer covering five million pounds of milk, and covering milk at the maximum $9.50 coverage option, could receive nearly $100,000 during 2020. The challenge is that very little milk – only 28 billion pounds – was enrolled in DMC at the maximum protection level. As a result, few producers will actually receive this safety net protection. A recent study by the University of Minnesota, “Impact of COVID-19 on Dairy Margin Coverage and Dairy Revenue Protection Projected Indemnities in 2020,” estimated that as of April 2, “DRP was likely to make nearly double the indemnity payments to dairy farmers than USDA’s DMC program would. DRP was projected to pay more than $900 million to dairy farmers, and DMC was expected to make payments totaling nearly $500 million.” One key difference between the two programs is that DMC has a yearly opportunity to sign up while DRP is sold every day, according to Newton. New prices are posted every day, and because milk prices have seen some recent increases, he said now's the time to grab that insurance and protect against a potential downturn later in the year. “For our crop producers out there, insurance is a key component of their business, and it's slowly being adopted by the dairy industry,” said Newton. “But we finally have something that I would consider to be one of the best insurance tools ever delivered for the dairy industry, and now's the time to use it.” The Importance of Revenue Protection for Dairy Farms COVID-19 proved to be an eye-opener for many dairy producers Kentucky Farm Bureau Comprehensive Nutrient Management Plans (CNMPs). Livestock manure management and water quality BMPs. Ky Division of Water permitting and compliance. Ben Koostra - Professional Engineer and NRCS Technical Service Provider - Lexington - 859-559-4662 To place a classified ad, contact any of the KDDC Dairy Conultants or Carey Brown at (859) 948-1256 ClassifiedAds
  20. 20. May - June 2020 • KDDC • Page 21 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund T o assist with the massive number of people in need of basic nutrition during the COVID-19 crises, members of Southland Dairy Farmers have pitched in to help their local communities through donations of fluid milk and monetary contributions, including Agape Food Bank and Good Samaritan Food Bank in Kentucky. Southland Dairy Farmers and its affiliate Southwest Dairy Farmers to date have provided over $25,000 in assistance to fifteen different food banks in six states. Southland Dairy Farmers is a USDA-qualified program that supports local dairy farmer members across the southeast through initiatives that educate consumers about dairy products, nutrition, and the dairy process. Dairy farmers support the program through the USDA’s mandatory check-off assessment. “Our mission at Southland Dairy Farmers is to provide support to our local dairy farm families and their operations,” said Jim Hill, CEO of the promotion and education group. “When the COVID-19 pandemic hit our markets, our dairy farm members made it very clear that they wanted funding to be allocated to programs that helped those most in need.” Hill added, “When we were looking at COVID-19 related programs to help, it became apparent that local food banks were in dire need, and it also appeared that their situation would become worse. So, all our budgeted funds for this effort went to local food banks, those that rely solely on donations and private funding. It just made sense – local dairy farmers helping local food banks in their own communities and states.” The list of organizations benefitting from the Southland and Southwest Dairy Farmers’ efforts includes: Emmaus House (Garden City, KS); Friendship Feast Association of Dodge City (Dodge City, KS); God’s Storehouse (Danville, KY); Agape and Good Samaritan (Russellville, KY); The Kitchen and Life 360 (Springfield, MO); FeedNC (Mooresville, NC); Fifth Street Ministries (Statesville, NC); 4 Kids and Community (Perkins, OK); Food on the Move (Tulsa, OK); Food Bank of West Central Texas (Abilene, TX); High Plains Neighbors Feeding Neighbors (Amarillo, TX); Forney School District (Forney, TX); Hereford Food Pantry (Hereford, TX); Hill Country Daily Bread (Boerne, TX); Hopkins County Coronavirus Community Response (Sulphur Springs, TX); and God’s Storehouse (Danville, VA). “Through the hard work of our employees from the Southland and Southwest Dairy Farmers, and all of our dairy farm members, we know we have helped – and will continue to help – a significant number of people,” added Amanda Phelps, Director of Community Outreach for the dairy group. “And that is really what we’re all about. People in these communities know they can count on their local dairy farmers in both good times and bad." About Southland and Southwest Dairy Farmers The Southland Dairy Farmers and Southwest Dairy Farmers are an alliance of dairy farmers from Kentucky, Virginia, and North Carolina, as well as Texas, New Mexico, Arizona, Kansas, Missouri, and Oklahoma. Member dairy producers pool their resources to provide consumer education programs in dairy nutrition, to promote dairy product use, and provide dairy product information. All initiatives of the Southwest and Southland Dairy Farmer are directed by the members.” About Southland and Southwest Dairy Farmers The Southland Dairy Farmers and Southwest Dairy Farmers are an alliance of dairy farmers from Kentucky, Virginia, and North Carolina, as well as Texas, New Mexico, Arizona, Kansas, Missouri, and Oklahoma. Member dairy producers pool their resources to provide consumer education programs in dairy nutrition, to promote dairy product use, and provide dairy product information. All initiatives of the Southwest and Southland Dairy Farmer are directed by the members. Dairy Farmers Assist Kentucky Food Banks Southland Dairy Farmers Lend a Hand During Pandemic
  21. 21. May - June 2020 • KDDC • Page 22 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund D espite the remainder of time at school this year being cut short due to COVID-19, school nutrition professionals continue their commitment to serving nutritious meals to their students. The Dairy Alliance is helping fulfill this commitment. The Dairy Alliance is awarding Special Alternative Feeding Grants to schools within its 8-state coverage to fund equipment to safely distribute milk with student meals. These can be used with GENYOUth’s COVID-19 Emergency School Nutrition Fund, assisting schools nationwide in providing school meals containing essential nutrition to students during the Coronavirus pandemic, funding up to $3,000 in grants per feeding site. By April 30, The Dairy Alliance and GENYOUth had awarded Special Alternative Feeding Grants totaling $35,600 to 12 districts across Kentucky, with these special grants providing funding for coolers and other equipment at 216 school sites. This equipment allows school districts to continue feeding during COVID-19 school closures into the summer months, with the ability to be used during future school years. These grants are helping school districts throughout the state. The Dairy Alliance awarded districts like Mercer County Schools grants to provide coolers for aid in safely transporting meals to students throughout the county, each meal being served with a cold milk. Barren County Schools also received a grant for safely distributing meals served with milk to the 81% of students the district continues to provide meals to during the closure. These schools continue to support their students when they have needed resources. Serving over 20,000 meals a week in April, Henry County Schools is making a huge impact in its community through its new grant-funded coolers. So is Jefferson County Public Schools, who served over 12,000 students a day by the end of April. And Bowling Green Independent School District is using their buses and grant coolers to not only serve nutritious meals with milk, but also provide a gallon of milk to each student for the week. These and other school systems are demonstrating their enduring support to their communities even after school ends. Supporting this dedication, The Dairy Alliance continues to encourage meals served with milk through Special Alternative Feeding Grants so that equipment can contribute to nutritious meals now and in the future. Serving Milk Through Special Alternative Feeding Grants
  22. 22. May - June 2020 • KDDC • Page 23 KDDC is supported in part by a grant from the Kentucky Agricultural Development Fund S P E C I A L T H A N K S T O O U R S P O N S O R S Allied Sponsors PLATINUM Alltech Ag Central Bluegrass Dairy & Food Burkmann Feeds Cowherd Equipment CPC Commodities Kentucky Department of Agriculture Kentucky Farm Bureau Kentucky Soybean Board Shaker Equipment Sales Southland Dairy Farmers/Southwest Dairy Museum GOLD Arm & Hammer Animal Nutrition Dairy Express Services Dairy Products Assoc. of Kentucky Dairy Farmers of America ME Farm Credit Mid-America Givens and Houchens Trucking Mid-South Dairy Records Select Sires Mid America Todd County Animal Clinic Trenton Farm Supply SILVER Advanced Comfort Grain Processing Corp. KVMA Luttrull Feeds Prairie Farms Owen Transport RSI Calf Systems South Central Bank BRONZE Bank of Jamestown Bagdad Roller Mills Central Farmers Supply Double “S” Liquid Feed Genetics Plus H J Baker Kentucky Corn Growers Limestone & Cooper Maryland & Virginia Milk Producers Provimi (Cargill) QMI Wilson Trucking
  23. 23. 176 Pasadena Drive Lexington, KY 40503 859.516.1129 ph www.kydairy.org Non-Profit US Postage PAID JUN 27 Liberty District Dairy Show, Casey County Co. Fairgrounds,8:00 A.M E.T. JUL 02-03 Kentucky Jr. Livestock Expo. East, Morehead. KY. JUL 17 Harrodsburg 4-H District Show, Mercer Co. Fairgrounds, 9:30 E.T. JUL 24 KDDC Board Meeting, Taylor County extension Office, 10:00 A. M. E. T. AUG 20-30 Kentucky State Fair, KFEC, Louisville, KY AUG 25-27 Kentucky Milk Conference, Lake Barkley State Park. Cadiz, KY Calendar of Events