California dairies get temporary price hike

Late is better than never, and something small is better than nothing at all.

Long after the worst has passed, and far too late to help those dairy families who have already gone out of business, California milk producers were granted a three-month “hardship” price increase in all five milk classes by the state’s Department of Food and Agriculture on December 16.

The increases which begin January 1, 2010, and end March 31 are largest for Class 1 products (35 cents per hundredweight) and smallest for manufactured dairy products (10 cents per hundredweight). Overall, they are estimated to translate into an average blend price increase of 15.5 cents per hundredweight.

January 2010, however, is light years after the fact when milk producers struggled with 20-year low milk prices during the first half of 2009 and forced some operations out of business. For all of 2010, milk prices are currently forecast to be at or above $15.

For the average California dairy (which last year produced just over 1.8 million pounds of milk per month), the temporary increase works out to $2,794 in extra income per month.

In making the announcement, the Department noted that the California dairy industry lost approximately $1.4 billion during the first nine months of 2009. By our calculations, the three-month temporary price increase will generate about $16 million in total additional income.

California “Happy Cows” flap was a flop

Job outsourcing and lost revenue for California were in the news in an odd way last month, when an article in the L.A. Times said filming of the hugely popular “Happy Cows” TV commercials was being moved from the nation’s No. 1 dairy state to New Zealand to save money.

Not so, said the California Milk Advisory board, which adamantly stated in a press release that, “Any ads that show actual California cows have always been – and always will be – filmed and produced completely in California.”

The newspaper’s article, which featured an impressive collection of amazingly lame dairy puns, incorrectly gave the impression that the four days of sound stage work that are being done in New Zealand – yes, it is cheaper to do it there – meant all future ads will be filmed there, as well.

Not a chance, said the CMAB. The press release pointed out that the filming in New Zealand is just a fraction of the total cost of a new campaign in which unhappy cows from around the world “audition” to become California Happy Cows. After the footage is shot, the 40 to 60 days of work needed to finish each of the 10 commercials will be done entirely in California.

For years, Happy Cow commercials featuring California cows have been filmed in the scenic coastal foothills of Petaluma, just west of the Napa wine area.

Putting family farm faces on the No. 1 milk state

Building greater consumer confidence in dairy products by showing the tremendous care and caring that California dairy families put into what they do is the focus of 15 compelling videos at www.realcaliforniamilk.com, hosted by the California Milk Advisory Board.

Filmed at dairies up and down the state, the beautifully crafted videos don’t focus on “where does milk come from?” as much as they do on some of the people who produce it -- in their own homes, in their own fields and corrals, and in their own words. There are no scripts or sets or suits, just real California milk producers and their families talking honestly and spontaneously about what they do and why they love doing it.

The two-minute vignettes are informative, engrossing and often surprising slices of Golden State dairy Americana. Not only does the unabashed joy of working with animals and producing wholesome food come ringing through loud and clear, but there are also some unexpectedly touching, poignant moments when memories of sacrifice and loss are recalled.

The videos brim with insight and surprises, calves and kids, gorgeous cinematography, and sincerity that can’t be rehearsed. They also put real, reassuring faces on the No. 1 milk state that debunk the corporate farming myth and skewer the myopic “factory farm” stereotype. Whether you take the time to watch a few videos or all 15, we think you’ll be glad you did.

California Dairy Board’s “Milkdonkulous Giveaway”

The California Milk Processor Board has come out with some one-of-a-kind websites lately. From the exceedingly interactive “Got Milk?” website to the fancy Spanish-speaking “Toma Leche” site, the sunshine state’s Milk Board surely is wowing site visitors. And they’ve done it again — this time in rock opera style. Battle for Milkquarious is the name of their new competition and website. The website includes a lengthy 1970’s/futuristic-style rock opera video that features White Gold, the supposed hero of Milkquarious. Milkquarious is the island completely powered by milk, of course. Just to forewarn you if you watch it, the movie was created with today’s teens in mind. It’s completely satirical.

The site invites California Public High School students to submit rewrites to scenes in the movie. Visitors of the website can watch submitted scene rewrites and vote for a winner. The winning student will win $20,000 for his or her school’s arts programs, a second-place winner will receive $10,000 for his or her school, and eight other schools will receive $2,500.

Tail-docking law signed in California

The nation’s largest dairy state will also be the first to make tail-docking of cattle illegal effective January 1, 2010.

California Governor Arnold Schwarzenegger, who earlier this summer derided Senate Bill 135 banning the practice, approved the measure October 11 in a mass signing with 477 other bills. It adds cattle to an existing State Penal Code Section covering horses which makes it a misdemeanor to cut the solid part of the tail, except in medical emergency. Trimming of tail switches is not prohibited.

Introduced in February by State Senate Food and Agriculture Committee Chairman Dean Florez, SB 135 encountered little opposition as it sped through the legislative process. It was approved 58-15 by the State Assembly on September 3, and 26-12 by the State Senate on September 8.

Although relatively few California cows are believed to have their tails docked – industry estimates are just 1.5 to 3 percent – tail-docking is a practice that even the American Veterinary Medical Association has officially opposed since 2004.

California does not figure to be the only state banning the practice for very long. The Humane Society of the United States has already said it will now work for the same legislation in other major dairy states.

California tail-docking bill now goes to governor

Tail docking of cattle is poised to become illegal in the nation’s largest dairy state after lopsided votes of approval in both the California State Assembly and Senate. Governor Arnold Schwarzenegger, who publicly derided the measure earlier this summer, must now sign it to become law. If he does, California will be the first state to ban the practice.

Senate Bill 135 was introduced in February by California Senate Food and Agriculture Committee Chairman Dean Florez. It adds cattle to existing State Penal Code Section 597n covering horses which makes it a misdemeanor to cut the solid part of the tail, except in medical emergency. Trimming of tail switches is not prohibited.

The measure was approved by the State Assembly on September 3 by a vote of 58 to 15 and by the State Senate on September 8 by a vote of 26 to 12.

At the height of the state’s lengthy and contentious budget struggle in July, Schwarzenegger derided the bill during a press conference, saying, “In the midst of a budget crisis they’re debating about cow tails, and I think that this is inexcusable.”

Several European countries already ban tail docking, and, since 2004, the American Veterinary Medical Association has had an official policy opposing the practice.

California dairy producers losing over $8 per cwt

Rising costs and falling prices continue to wreak havoc on dairy producers across the country. The situation may be the worst on the west coast based on numbers just released by the California Department of Food and Agriculture.

During the first six months of this year, the average price paid to California dairy producers was $10.47, while it cost $18.51 to produce milk during the first three months of the year. That spread yields an $8.04 loss for every 100 pounds of milk leaving the farm. High feed costs have been depressing margins for some time. Even with last year's substantially higher milk prices, the profit margin was only 16 cents due to high feed prices which pushed production costs to $17.31.

While all costs have been rising, it has been feed costs that have risen the most, moving from $6.48 during the first quarter of 2005 to $9.82 this spring. As CDFA points out, comparing the first quarter of 2005 with 2009, grains, minerals, and supplements costs per ton increased 56 percent. Meanwhile, dairy-quality alfalfa hay rose 63 percent per ton. To read the entire report, download this pdf, or visit the website. stats_2009_mid-year_report-1.pdf

Crisis unites California co-ops

Continuing financial crisis has resulted in perhaps an unprecedented level of unity between dairy cooperatives in California.

On July 16, members of the state's four largest co-ops signed documents creating the Western Milk Cooperatives Agency (WMCA). The new organization is a marketing agency in common (MAC) consisting of California Dairies, Inc., Dairy Farmers of America Western Council, Land O’Lakes, Inc., and Security Milk Producers Association. Of the 41 billion pounds of milk produced in California last year, about 33 billion pounds were marketed by all co-ops in the state. The four WMCA members accounted for approximately 31 billion pounds.

Signing the MAC agreement in the accompanying photo were (l-r): Fred Douma, representing SMPA; Tony Mendes, representing CDI; George Mertens, representing DFA; and Cornell Kasbergen, representing LOL.

WMCA spokesman Eric Erba, vice president of government relations for CDI, explains that a MAC is simply a group of milk marketing co-ops that work together in a variety of ways to help market products under a common agreement. He says WMCA’s objective is to identify ways that its members can work together, move milk more efficiently and cost-effectively, and match market supply of dairy products more closely to market demand.

“The first thing we’re going to be looking at is to identify ways to reduce hauling costs for everyone,” Erba adds. “We’re already setting up a meeting with all the transportation and dispatch people at the four co-ops to discuss how we can send one co-op’s milk to another co-op’s customer if it means a shorter haul.”

The Hilmar experience

If you take a trip to California and find yourself surrounded by thousands of little, curious brown cows, you know you’ve entered Hilmar country. This past week Hoard’s staff had a chance to visit Hilmar and some of the dairies that make up Hilmar Cheese Company, which annually produces more cheese from one site than any other manufacturer in the world.

We visited the Charles Ahlem Ranch, owned and operated by Chuck and Mark Ahlem, where 5,000 Jersey cows make their home. This farm features a 50-cow rotary parlor with a robotic postdipping system, and also uses RFID implants in the rear leg to track the animals. The Ahlem Ranch has been a pioneer farm in the dairy industry making use of cutting edge technology such as the robotic postdipper, RFID implants, running a stationary TMR mixer, and being ahead of the game in environmental stewardship.

Chuck is one of the founders of the producer-started Hilmar Cheese Company, which averages nearly two million pounds of cheese made per day.

We also had a chance to visit with the Hilmar farm interns who are scattered across different operations throughout the area. These interns are learning the ins and outs of large-scale farming and are hoping to take home management skills and professional relationships that they can use in the future. Look for more information on the Hilmar internship program in an upcoming Young Dairyman article.

2008's high feed costs eroded any profit in California

Near record mailbox prices for milk were not enough to prevent many California dairyman from losing money last year. Keep in mind these losses occurred prior to the current downward trend in milk prices.

In recently tabulated financial data by the accounting firm Moore, Stephens, Wurth, Frazer, and Torbet, they reported that dairy farms in Southern California were hit the hardest with feed costs rising $467 over the previous year to reach a total of $2,178 per head. That resulted in a net loss of $333 per head or $1.64 for every 100 pounds of milk (cwt.)

Feed costs ran equally as strong in Kern County at $2,114 per head, up $550 compared to 2007. However, financial losses were not near as bad, reaching $45 per head or 20 cents per cwt.

In the San Joaquin Valley, the heart of California's dairy industry, feed costs were only up $350 compared to the previous year's $1,700. However, the losses were higher than those in Kern County, reaching $152 per head or 65 cents per cwt.

Feed costs were up between $231 and $367 in other states where the accounting firm does business. However, dairies in Arizona, Idaho, New Mexico, and the Texas Panhandle had profits ranging from Arizona's $86 to Idaho's $351 per head.


To see the complete report, download the attached PDF file below.

12.31.08%20Dairy%20Trends.pdf

Tail docking might be banned in California where most cows aren’t docked

Senator Dean Florez might be best known as the proud co-sponsor of Proposition 2 in California which bans the use of certain housing systems for veal and laying hens. He is also a well-known ally of the animal rights organization, HSUS. While Proposition 2 didn’t have a direct effect on the dairy industry, it was a foothold for what came next. This spring, he introduced a bill that would ban tail docking on dairy farms.

Tail docking isn’t common in California. A recent survey of 12 large animal veterinarians asked about tail docking practices of their dairy clients. A total of 294,339 cows were included in the study from the San Joaquin Valley and the Northern Sacramento Valley. The results of the study showed that 90.6 of the dairies do not dock tails and 88.7 percent of cows do not live in operations where it is practiced. In addition, several studies have shown no benefit to the practice.

Cassandra Tucker is an assistant professor at the University of California Davis. Tucker, before the vote, wrote in the California Dairy Newsletter, “If this bill passes, it would be part of a nationwide trend to set standards for how farm animals are cared for in the U.S.” The bill then did pass, by a vote of 27 to 12. What practices could be regulated next?

Sunny means money at California dairy

“Golden sunshine” is a phrase that has more meaning than ever these days at Scott Brothers Dairy in San Jacinto, Calif.

That’s because about 30 percent of the electricity used at the 1,000-cow dairy is produced by photovoltaic solar panels mounted on its commodity barn roof. Founded in 1913, the family operation run by Stan Scott and his sons, Bruce and Brad (pictured here), is one of just a handful of dairies in the state that are generating zero-emission renewable power from the sun.

Installed last November, phase one of the Scotts’ solar setup consists of 312 photovoltaic panels that convert sunlight into electricity throughout the day which is put back into the utility grid operated by their local electric company. Second and perhaps third phases of the system may eventually be added to roofs that span the calf area and the maternity/hospital area.

Although expensive at roughly $400,000 up front, Bruce estimates that electric bill savings, state renewable energy rebates, federal tax credits, and tremendously accelerated depreciation rates make payback period for the current system less than five years.

“On top of that, the public relations benefit for this is fantastic,” he says. “We process our own milk and make several dairy products, and our customers ask us all the time for “image-conscious” products that are environmentally friendly. They get very excited when we tell them our dairy is solar-powered.

“Being proactive is the only way dairying and agriculture are going to keep any kind of positive image with consumers; we can’t hide from sight,” he adds. “Solar is something that can work for many dairies; plus it requires practically no maintenance.”

Dairy big player in world's eighth largest economy

Despite all the computer electronics in Silicone Valley and Hollywood's massive stake in entertainment, it is agriculture that competes right with the high-tech industries as an anchor of California's economy. And that is quite impressive, given California's rank as a stand-alone world economy which currently stands at eighth and fluctuates between fifth and tenth, depending on the year.

Despite all the press California's wine gets, it is the dairy industry's milk and cheese that takes the top spot in the agricultural sector, capturing roughly 20 percent of all cash receipts in 2007. That means one in five ag dollars comes from dairy. Next on the list is greenhouse and nursery stock at 11 percent and then grapes at 8.4. Rounding out the top five are lettuce at 6 percent and almonds at 5.8 percent.

Dairy's impact on California is even more impressive given the fact California is the world's fifth largest supplier of food and agricultural commodities. California's agricultural sales are twice that of any other state in the Union.

Tail docking and antibiotics under fire in California

When proposition 2 passed in California, new housing restrictions were placed on egg-laying hens, veal calves and pregnant sows. Just last month, California Senate Majority Leader Dean Florez introduced a bill that would outlaw tail docking. The American Veterinary Medical Association (AVMA) opposed proposition 2 but does not stand behind tail docking.

Just today, we learned of the Majority Leader’s plan to prohibit schools from serving meat or poultry products from animals treated with antibiotics. The bill would also place a ban on antibiotics for non-therapeutic and prophylactic uses. Finally, the bill would require state and local governments, when purchasing meat supplies, to prefer meat supplies produced without the use of medically important antibiotics as feed additives. See the .pdf link below to view the bill.

SB416.pdf

One thing is for certain; farmers and animal agriculture advocates across the country should be ready to educate the public on the measures we take to be good animal caretakers. Comment below to share your thoughts.

Feed prices taking their toll

As milk prices remain in the cellar, the high cost of feed is placing further strain on producers nationwide. For farms west of the Mississippi the strain may be the greatest in California. In a just-released report from Moore, Stephens, Wurth, Frazier, and Torbet — a California-based accounting firm, net incomes for herds throughout the state were ranging from negative $138 per cow in Southern California to $188 in the heart of cow country, California's San Joaquin Valley. On a per-hundredweight basis that's a range from negative 90 cents to $1.13. Farm profits were higher for farms in Arizona, Idaho, and the Texas Panhandle. The only region in the accounting firm's report with lower profits was for farms in New Mexico.

While those numbers may seem livable, keep in mind that was during a time when California mailbox prices were near $16.25 for the state. Now, mailbox prices may drop by $4 to $5 or more, bringing severe financial hardship to farmers.

Feed prices remain robust. In January, 14,444 tons of Supreme alfalfa hay was sold with prices ranging from $170 to $268 per ton. Rolled corn was selling for $187.50 to $196.60 per ton; soybean meal at $359 to $361; and whole cottonseed at $317.25 to $319.25.