Dairy Day speakers predict positive year ahead

Tuesday, March 19, 2013
Photo by Murray Bishoff Market projections Speakers provided market projections and insight into recent research during the 44th annual Monett Dairy Day. Pictured, from left, are: Greg Sowder, Great American Insurance; economist Scott Brown; extension dairy specialists Dr. Stacey Hamilton and Dr. Tony Rickard, master of ceremonies.

Dairy producers heard predictions of positive market trends and innovative research during the 44th annual Monett Dairy Day, held on Tuesday, March 5 at the Monett National Guard Armory.

Scott Brown, an agriculture economist with the University of Missouri in Columbia, told the audience of about 30 dairymen that feed prices would continue to be the number one driver in dairy costs. Brown expected price volatility would continue. The general economic outlook would play a major influence on the success of dairy products in the marketplace.

The amount of corn planted in 2013 will heavily influence the dairy outlook, Brown said. In 2012, farmers planted 96 million acres. Weighing the odds that the 2012 drought will not repeat. Brown said some predictors anticipate farmers planting from 96 to 99 million acres in 2013.

For several years, corn yields have fallen below historic trends. If a typical yield develops, corn prices could drop from $7 a bushel in 2012.

"If we have another 2012, the price of corn is not done going higher," Brown said. "We could have $8 or $9 a bushel corn, or higher."

The first major indicator will surface at the end of the month, when predictions of corn acreage come out.

Policy makers have worked in recent months to develop a new Farm Bill. Brown discussed working on the Dairy Security Act as a way to limit the risk to dairy producers. Without a new Farm Bill, national policy will revert to the 2002 Farm Bill, which provided lower payments in the Milk Income Loss Contract (MILC) between costs and prices to producers.

Brown maintained real income growth would provide the strongest support for dairy products. When the price of mozzarella cheese to record prices in recent years, pizza restaurants dropped the cheese in favor of chicken wings.

With 15 percent of milk produced in the United States going to export, the international market remains very important, including what other countries produce. Most of the milk on the market in the last 12 months continues to come from the United States and New Zealand in equal quantity.

Brown said with economic growth in Asia predicted to grow by 6 to 7 percent over the next 10 years, he considered staying in those markets very important. Even at best projections, income growth in the U.S. is only projected to rise by 3 percent over the next two years.

"I think we need to go down in cow numbers to get prices up," Brown said. A tough environment has developed where even when producers leave the business, larger operations continue. Someone else buys the available cows and keeps milking, maintaining the supply.

Milk production rose by half a percent in January. Brown hoped for production to fall back to 2012 levels. Otherwise, he said his price outlook would grow more pessimistic.

"I'm reasonably optimistic about the second half of 2013 in feed and milk prices," Brown said. "Exports are driving prices up."

Brown cautioned that unlike 2009, producers have no equity reserve left to fall back upon. With budgets tight, producers need progress on margin protection more than ever.

Insurance benefits

Insurance provided the topic for Greg Sower from Great American Insurance Group. Sower said the federal crop insurance program enabled producers hit by the drought in 2012 to stay in business.

The cost to the federal government to offer the insurance ran $16 billion, compared to early estimates of up to $60 billion. Compared to expenses for Hurricane Sandy, Sowder said crop insurance remained a good investment, even for the federal government, providing money to farmers that is spent in communities and with farm supply and equipment manufacturers.

Producers have until March 15 to sign up or change their coverage. Sowder said Congress secured crop insurance funding through 2013. Future funding will fall under the next Farm Bill.

Research may reveal new ways to increase dairy production. Dr. Stacey Hamilton, dairy specialist with the University of Missouri Extension, said confinement dairies have found feeding accelerated milk replacement to calves, with higher protein and lower fat, helped calves not only grow faster but to also produce more milk two years later.

In seeking an explanation, the dairy at the Southwest Research Center near Mt. Vernon has started the first trial comparing small frame pasture-fed cows on the same regimen. Hamilton expects to see an increase in milk production, though possibly not as much as 800 to 1,500 pounds of milk in the first lactation seen in the earlier studies.

Animal health strategies

Jared Grantland, a veterinarian with Animal Clinic of Monett, provided a primer on vaccination strategies for cows. He reviewed six different types of vaccines, noting how several are less stable and reliable than others.

Grantland detailed a wide range of pathogens, from viral and bacterial to problems that attack animals in specific parts of their anatomy. He specified which vaccines combat individual problems and how to take a proactive strategy in keeping animals healthy.

Dr. Tony Rickard, extension diary specialist, served as master of ceremonies. The conference was a joint undertaking between the extension and the Monett Chamber of Commerce. A barbecue lunch was provided by the chamber.

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