Dairy Information: Center Focus Column

No Sacred Cows

By Jayne Sebright, Executive Director

Did you know that, in India, it is possible to see a cow lying down in the middle of the town market? That is because, in India, the Hinduism religion elevates cows to a sacred place, deeply respected and above question. In fact, if you research the term “Sacred Cows,” it is said to define something that is unreasonably immune from criticism.

Fortunately, in the US, we don’t have to worry about stepping over cow pies to get to the actual pies in the grocery store. However, if you look at current marketplace dynamics, you have to question whether there are any sacred cows influencing our dairy industry right now.

JayneIn the latest USDA Milk Production Report, cow numbers in the US were reported at 9.331 million head, the highest level since December 2008. The numbers continue to grow, despite the fact that milk prices have fallen nearly 50 percent in the past 24 months, with the April 2016 All-Milk Price reported at $15.00 per hundredweight. A study by Penn State Extension Dairy Team estimated the average breakeven milk price for Pennsylvania dairy farms in 2016 at $19.10 per hundredweight, more than $4 above the April price.

If you are watching milk futures prices lately, you may have noticed a slight uptick in prices lately. However, most analysts would tell you the dynamics are not in place quite yet to sustain that increase. In fact, some say it could be another six to twelve months until prices rebound to a profitable level. With exports down 31 percent from a year ago, domestic sales stagnant, and milk production continuing to climb, the market is simply out of balance. Until that balance is restored, milk prices will struggle to rebound.

No matter your herd size, management style or business structure, every dairy farm should already be evaluating strategies and solutions to work through this downturn. So, what “sacred cows” should we be re-evaluating, both in our own businesses and in the broader industry?

In Your Dairy Herd

A dairy nutritionist recently reminded me how important it is for every dairy farm to know and continually re-evaluate the threshold when cows become marginal. He said that it depends on your herd average, the cost of your feed and other factors, but there is a minimum level of milk production in every herd when the cost of keeping a cow outweighs both the short-term and long-term benefits of having her in the herd. Knowing that breaking point and quickly making the decision to cull her or, if close enough to calving, dry her off is critical.

Another consultant shared how a dairy farm he works with culls any cow that has mastitis. He believes the cost of treating her and risk of her being exposed to it again outweighs the value in keeping her. While that might not be the strategy for every farm, it is important to know your threshold for somatic cells and clinical mastitis in your herd. Don’t let one cow cost you your quality premium.

As dairy producers, we need to recognize that we are harvesting beef as well as milk. Treating cows with health issues until the point of no return can also be a tremendous loss. Often keeping older cows or cows that are far out in lactation can lead to issues like fatty livers and other symptoms that can ultimately cause fatality in the herd. Make sure you’re sending a quality product to market, no matter if it is milk or beef.

In Your Business

On every dairy farm, sacred cows exist both inside and beyond the barn. Look closely at your operation and consider what they are. Are you keeping employees around because of relationships when they’re not producing the results you expect or when you could get by with fewer employees? Are there neighbors down the road who you could partner with to own equipment or custom harvest your crops? What other partnership opportunities exist? It’s our nature as dairy farmers to be fiercely independent. But sometimes that can be our Achilles Heel.

In New York and other parts of the country, neighboring dairy farms have come together to own equipment, expand their dairy operations and even build milk processing plants. Locally, there are those who have partnered to create their own milk hauling or custom harvesting business. These are the folks that are leading the industry because they’re letting go of old paradigms to find unique ways to make dollars stretch further.

In Your Conversations

The last area where we have to continually look for sacred cows is in our conversations. How we communicate with our partners, employees, family members and suppliers is critical during this downturn. Remain open and proactively reach out to share how you are working through this period and what obstacles you’re facing. The Center for Dairy Excellence has waived the application fee on our Dairy Decisions Consultant Program, and that program might be tremendously helpful in working as a family to put everything down on paper and outline your strategy for moving ahead.

With June Dairy Month, we also have to let go of the sacred cows that exist in our conversations with consumers. The world is changing, and consumers are asking more and more about things we don’t feel as comfortable talking about: Non-GMOs, factory farming, and animal welfare are often words that create barriers between the farm community and consumers. But we have a great story to tell. Don’t be afraid to address questions about those topics. Often the questions come just because the consumer doesn’t know enough about the topic.

Dairy Checkoff has some tremendous programs to help farmers be more prepared to answer the questions that make us feel uncomfortable. Key messages, informational resources and workshops are all geared toward giving you the tools to feel comfortable and confident in that conversation. To learn more about these resources or the tools the Center for Dairy Excellence offers to help you work through the downturn, call the center at 717-346-0849. You can visit our website at www.centerfordairyexcellence.org or Mid-Atlantic Dairy Association’s website at www.dairyspot.org.