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VOLUME XVIII, NO. 12 |
TEXAS DAIRY REVIEW |
DECEMBER 2009 |
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2009 in review: Luck is the only thing left when you’ve given all you can Dairy family encounters SHOCKING reality in dairy barn Dairy farmers may have a Merry Christmas, afterall Senators urged to include raw milk facilities in food safety regs |
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2009 in review: Luck is the only thing left when you’ve given all you can |
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The 2009 dairy industry has been full of surprises. For starters, no one expected it would become known as the worst year in dairy history in more than 40 years. The industry was suddenly caught up in fighting a battle on two fronts: the despair of a global recession in addition to plunging and out-of-control milk prices on the home front. The coupled circumstances proved overwhelming and dreadful to milk producers. So, as the year comes to an end, it is “adios” and “good riddance” with the prospect of a brighter and more prosperous 2010. Hopefully, the New Year will bring a little luck, too, ---which is the only thing left when you have given your 100 percent. A giant shadow is cast The good news reveals milk prices are slowly rebounding and returning to the normal trend with school returning in August and the holiday season. The Milk Market Administrator’s report for October’s statistical uniform price in Federal Order 126 showed $14.05 per hundredweight. No November report is available yet. But, it is a little too late for many who are still dealing with the affliction of a wretched year. Many dairy families struggled just to stay afloat and for some, a giant shadow has been cast over their family farms forever. Most financial institutions said it will “take years for dairy farmers to pay back debt that has been created on top of debt.” While banks managed to fathom the storm along with the dairies, it will be interesting to see what happens next, as prices continue to climb. Currently, lending institutions are remaining quiet and very confidential about the matter. Eagerness causes oversupply Although the general idea for the U.S. is to strive for bigger and better things, apparently such an intense eagerness to grow caught up with the milk industry in 2009. In 2009, an oversupply of milk combined with loss of U.S. exports brought milk prices rapidly tumbling. Corn prices that had skyrocketed throughout 2008 brought other commodities to a higher level also and just when it all was beginning to taper-off, milk prices bottomed-out at the government safety net. A whammy on each end of the spectrum was a little too much. Out of control For the most part, the 2009 dairy industry was out of control. No one seemed to know which way to turn or what to do about it including the government, the leading industry organizations, the cooperatives, nor the dairymen. Projections were way off the charts while normal price trends turned abnormal and were not even close to staying on track. CWT works throughout ‘09 But, one program that seemed to remain intact throughout 2009 was Cooperatives Working Together (CWT), a voluntary farmer-funded self-help program. According to a recent independent economic analysis, CWT has generated a return on investment of $1.54 per hundredweight so far in 2009 and added $2.4 billion to farm-level milk receipts in a year when dairy income is expected to shrink by more than $10 billion because of the global recession. The recent October herd retirement is the fourth herd retirement CWT has conducted in the past 12 months; the third one this year, of which final results have not yet been released. The herd retirement in late 2008, plus the two herd retirements so far in 2009, has removed 226,000 cows from the nation’s dairy herds. Although the program has drawn some criticism from those who do not think it has worked as well as it should, others who went on the buyout, somehow seemed to make it work for them. In fact, some dairymen who opted for the herd retirement, forfeited their 10% (held by CWT to keep producers out of the business for one year) and immediately went back in. But, they said they had no choice but to do so. Cooperatives and Dean targeted In 2009, the cooperatives were heavily targeted for not stepping up to the plate with a workable solution for the dairy woes experienced in the past year. The largest cooperative, Dairy Farmers of America (DFA) was most criticized for poor leadership in a time when leadership was critical. But, on behalf of DFA, it did manage to get its members a little help by issuing portions of patronage checks and special cash payments in various months from April through October. Also heavily questioned was how Dean Foods, the largest processor in the U.S., managed to report a $76.2 million dollar profit for the first quarter of 2009 when dairies were at their most critical point. Three U.S. senators from the Northeast who referred to the dairy industry as a “disaster” wondered the same thing and have determined to get answers about Dean Foods and other entities linked to the high-dollar corporation. Seat gets hotter But, the hot seat for Dean got even hotter. Lawsuits filed against Dean and DFA by 4,000 dairy farmers in the Northeastern and Southeastern part of the US accused both entities of monopolizing the market. In addition, the US Department of Justice (DOJ) Antitrust Division launched their own investigation into the competition and antitrust issues in the dairy industry. The suits are still ongoing. In the past month, Dean Foods announced it has dropped current supply agreements with DFA at eight plants in the southeast and Pennsylvania and initiated its new Dairy Direct program for independent producers. Revelations for improved prices Some of the best deeds performed in 2009 were revelations by such people as Gary Genske, a dairy farmer and CPA from California, who suggested several ways to improve producer pay producer prices such as: enforce the Pasteurized Milk Ordinance (PMO) and Oversite of Chicago Mercantile Exchange (CME); change rules to include Milk Protein Concentrates (MPC)s and Casein as “milk;” consider producer-motivated temporary reduction of production; continuance of the CWT program; and, to produce products the world demands. In addition, the Holstein Association USA launched their industry solutions with the Dairy Price Stabilization Proposal while Arden Tewksbury, manager of the Progressive Agriculture Organization (PAO), introduced a new pricing system proposal entitled, “The Federal Milk Marketing Improvement Act.” Both of these proposals may be viewed on the internet. One of the most heartwarming articles in 2009 was a two-part series in “Dairying Outside the Box,” by guest writer Nova Schouten. Nova partners with her husband, Pete, on a dairy in Selden, Texas. Her story entitled, “Dear Diary, Dear Dairy, Dear God,” came straight from the heart about wading through her own frustrations while trying to keep her head above water during the 2009 crisis. Most memorable was Fred Lueck’s story on how he, and his wife Judy, struggled with their feelings after selling their cows when he agreed to the CWT herd retirement program last December. But, the lost feeling experienced by Fred and Judy was soon retracted when they began to watch the dairy disaster unfurl in 2009. One of the highlights of 2009 was the Southwest Dairy Field Day at Sierra Dairy owned by Alan Vander Horst. The successful May field day seemed to brighten the spirits of dairymen and exhibitors in attendance. Select’s overall agenda questioned One of the most attention-grabbing stories of 2009 and to watch out for in 2010 are plans by Select Milk Producers of Artesia, New Mexico, to build a new fluid milk bottling plant in the Central Texas region in the next two years. Although recognized in the industry as one of the most robust and progressive cooperatives, some Central Texas producers view Select as extremely aggressive and have reservations about the cooperative’s overall agenda. The plant purportedly is a dual purpose operation that will handle both Grade A and organic milk to be built in the next two years if financing becomes available. A Select board member said their members are optimistic about the plant and have signed 10-year agreements to help Select move forward with their newest endeavor, but some Central Texas producers have raised concerns. The organic matter Central producers question Select’s organic strategy since many organic dairies have gone broke and that part of the milk industry has suffered immensely during the recession and downturn of 2009 milk prices. Some contracts for organic may not be filled at the same outstanding prices they once brought because customers refuse to pay the outrageous price it brings in retail stores during this recession period that is not forecast to end soon. “Scary possibility” Another concern raised is if the plant will dramatically affect the central Texas milk market as suspected. Depending on Select’s negotiations for a cheap milk price with outlets such as Wal Mart and others, it could drive all producer pay prices down in central Texas since they also may be forced to sell the cheapest priced milk. “It is a scary possibility” said one producer, adding, “but, Select has been known to conquer amazing feats in the past. They already supply milk to HEB, the largest grocery chain in Texas and who knows what will follow.” NMPF strikes out to eliminate “loophole.” Producer-handlers were hit hard in an effort by National Milk Producers Federation (NMPF) and a USDA recommendation to limit the current producer-handler exemption. Considered a “loophole” by NMPF and others, the new recommendation amends all producer-handler definitions in all Federal Milk Marketing (FMMOs) orders so that “those with sales of more than three million pounds per month” (approximately a 1200 cow dairy) “will be treated the same as other bottling operations and must share with other farmers their Class I profits in their respective Federal Order regions.” While the longterm objective to close this loophole is considered a victory by NMPF, producer-handlers interviewed by the Texas Dairy Review more or less view it as another unnecessary intervention in the dairy industry by the US government---encouraged by cooperatives and NMPF. Feds step in to provide relief On a federal level, legislation in November of 2009 signed by Pres. Obama included a $350 million appropriation to the dairy industry for emergency assistance. Prior to that, USDA expanded the Dairy Product Price Support Program to the end of October that was expected to boost farm- level income by $243 million. Other USDA steps to help farmers included liquidating 200 million pounds of surplus milk powder; reauthorizing the Dairy Export Incentive Program (DEIP); and expediting the payments under the Milk Income Loss Contract (MILC) program. |
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Dairy family encounters SHOCKING reality in dairy barn |
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As the milk market went downhill this past year, Deb and Pete Oldengarm, owners of Alliance Holsteins in Lingleville, were trying to find ways to cut costs in any way possible. But, what they found was unexpected. The Oldengarms had no idea their barn was in “electrical disrepair” until they met Brian Acuff of Pyramid Energy Resources. Brian introduced the Oldengarms to GESPER, an innovative, environmentally-friendly electronic evaluation device that provides numerous benefits to homes or businesses. The GESPER unit assures customers of a reduction in kilowatt hours consumed; lower electric bills; whole premises surge and lightening protection; great efficiency and longer life of motors and electrical devices. “Brian guaranteed I could cut my electric bill by at least 10% or I would get my money back,” Deb said. “He suggested I have my electrical systems evaluated, and what he found was SHOCKING!!!” The onsite survey of the Oldengarm barn tested electrical panels and distribution where it found excessive stray voltage…a bad situation for any dairy barn. The Oldengarms did not realize how their old electrical system was making their cows sick and hurting their milk production. “Brian even found that one of the utility transformers to our dairy had gone bad and may have contributed to our having frequent motor failure,” Deb said. “Had Brian not done the evaluation, the power company would not have ever known one of the three transformers had gone bad. I called the utility and they replaced it quickly, but again, we didn’t even know we had this problem.” Deb admits she and Pete were at first very skeptical and struggled over making the investment on the GESPER. ”Would we really save 10% on the electric bill?” They questioned. Simply said, Deb said when times are tough, many dairy farmers are just trying to get by---by putting band aids on this and duct tape on that. “God knows, times have been tough. Sometimes you can’t afford to step over a dollar to save a dime. “But, because of the money-back guarantee and the problems Brian solved, we both agreed on the installation. We leased the GESPER equipment, so we didn’t even have to spend much money up front," Deb said. Most dairy farmers are fully aware of how super-sensitive cows are to electricity and it seems stray voltage had been coming from an improperly grounded 240 volt wire connection in the Oldengarm milking parlor that leads into the stalls. The amount of stray voltage was nearly ten times the safe amount and electrocuted the cows by “energizing” the bars with voltage where they come in contact with them as they narrow, inside the parlor. Deb said after the full installation, the first thing they saw change was their “milking girls” marched right into the parlor without having to be heavily coaxed or persuaded. In addition, there were less sick cows and less mastitis, meaning less medicine to buy and veterinarian bills to pay. She said their summer electric bills did not spike like last year, either, even though they had more milk to cool and more cows than last year. “Looking back over the last six months we can see many more benefits than expected. After the installation, we are saving almost 20 % on the electricity bill and not replacing pumps and motors from burning out before their time. We haven’t had to change florescent bulbs monthly--- in fact, none, the last six months. “We had a direct hit by lightning on the dairy barn and nothing failed and there was no fire. What peace of mind the GESPER gives us. We are getting one for the house and the irrigation system, too.” Deb and Pete are convinced about the benefits of GESPER and recommend all dairy farmers should have their barns evaluated. “The cost of the energy saving equipment will pay back in 18 months. The lease payment is less than what we’re saving on power costs so we’re actually ahead in monthly net costs,” Deb said. “As a dairy farmer, I care passionately about my livestock and the land for the next generations,” Deb said. “I am proud of what I do for a living and my lifestyle. I want to do my best to preserve my family farm and I believe a dairy farmer can use nature and new technologies in energy preservation to sustain the farm.” Deb believes strongly in making a smaller carbon footprint that can save nature and money, too. “Energy is a hot topic lately and the cost is traditionally going to get higher as life goes on. We should all try harder to save energy and use nature to supply lower cost energy. Dairies can use geothermal to cool milk or heat water as well as use solar or wind to generate electricity. “So, as you look at finding ways to earn back some of what you lost over this past year-and-a-half, don’t forget to look at your electrical system that can be costing you more than you know. Keep the GESPER in mind and what it has done for our dairy,” Deb said. Deb added she recommended Pyramid Energy to her neighbor, Dr. Ervin Coblentz. Coblentz owns and operates a 3,000 calf ranch operation, who wanted to upgrade his electrical system. “We recently consolidated several electrical panels at the time of the GESPER installation,” Coblentz said. “We feel better knowing we have lightening and surge protection for our electrical equipment.” For inquiries email: brian@pyramidenergyresources.com. |
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Dairy farmers may have a Merry Christmas, afterall |
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Santa Claus may come early this year if the USDA will get on the ball and go ahead and disperse the $290 million in emergency assistance for direct payment to dairy farmers as legislated and approved by Congress last month. Another $60 million of the appropriation is to be used to purchase cheese for food banks and nutrition programs. Rusty Rose, executive director of the Erath County Farm Service Agency (FSA) said he has verified Erath County producers’ production records from February through July 2009 and other information as requested by the USDA. “We submitted the producer records to USDA as soon as the information was compiled. I don’t yet know exactly how the direct payments to producers will be dispersed but we are waiting to hear on how to process the program further.” The dairy assistance came at a time when farmers were facing a price-depressing oversupply of milk combined with loss of exports. The dairy aid was included in an agriculture appropriations bill under an amendment sponsored by Vermont independent Sen. Bernard Sanders. Milk prices in general are reported to have dropped to about $11 for every hundred pounds of milk this year, down from $19 last year, and in some areas, lower than that. Sen. Herb Kohl (D-WI), lead Senate negotiator, said it was his understanding the $350 million support to dairy farmers and the industry will use guidelines determined by Agriculture Secretary Tom Vilsack under an expedited process. Vilsack had three main goals in administering the aid: 1) The payments must be directed to actual dairy farmers; (2) The payments must go out as quickly as possible; and (3) the payments must reflect as much regional equity and fairness as possible. |
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Senators urged to include raw milk facilities in food safety regs |
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Although unpasteurized, or raw, milk products pose a significant food safety hazard, facilities producing these products are not covered by any of the food safety regulations proposed so far this year by Congress. These facilities also remain exempt from existing regulations enforced by all states, which are know as the Pasteurized Milk Ordinance (PMO), that set the standard for maintaining the safety of the nation's milk and milk product supply. Cheeses made from unpasteurized milk that have been aged to eliminate the risk of food borne illnesses are not considered raw milk products. The International Dairy Foods Association (IDFA) and the National Milk Producers Federation (NMPF) have asked senators planning to mark up key food safety legislation in early December to rectify this omission. In a letter to Senators Tom Harkin (D-IA), chair of the Senate Committee on Health, Education, Labor and Pensions, and Michael Enzi (R-WY), the committee's ranking member, the dairy groups called for requiring all facilities producing raw or unpasteurized milk products for direct human consumption to register with FDA and adhere to the tried-and-true food safety requirements that are followed by all other facilities producing milk products. "Before pasteurization became widely utilized during the 1920s, human consumption of raw milk was one of the major sources of food borne illnesses and one of the primary causes of infant mortality," said IDFA CEO Connie Tipton and NMPF CEO Jerry Kozak in the letter. "It is important to the health of the American public, and for the continued confidence in the dairy industry, that the new food safety legislation bolsters the success of the PMO program and applies any new FDA requirements to raw milk and raw dairy products." The PMO covers all aspects of hazard analysis, planning and monitoring from farm to plant to delivery of finished milk products to retail outlets. These extensive requirements are enhanced and updated every two years through a coordinated program between FDA and state regulatory departments, resulting in very low numbers of food safety problems for pasteurized dairy products. Raw milk products intended for human consumption have been associated with a much higher incidence of food-related illnesses. But these products and facilities producing them are not required to comply with food safety plans, record keeping and access, and other regulations that are triggered by registration with FDA. IDFA and NMPF support the proposed "FDA Food Safety Modernization Act" and urge the senators to expand the regulations to include facilities producing raw milk products for direct human consumption. In addition, the dairy groups would like the bill to recognize that state inspections of dairy facilities under the PMO already meets necessary food safety requirements and no duplicate functions are warranted. Because facilities following the PMO already pay fees for state licensing and inspections, IDFA and NMPF recommend that these state fees be credited against any new FDA registration fees if such fees are added to the food safety bill. The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation's dairy manufacturing and marketing industries and their suppliers, with a membership of 550 companies representing a $110-billion a year industry. IDFA is composed of three constituent organizations: the Milk Industry Foundation (MIF), the National Cheese Institute (NCI) and the International Ice Cream Association (IICA). IDFA's 220 dairy processing members run more than 600 plant operations, and range from large multi-national organizations to single-plant companies. Together they represent more than 85 percent of the milk, cultured products, cheese and frozen desserts produced and marketed in the United States. IDFA can be found online at www.idfa.org. The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance the well being of dairy producers and the cooperatives they own. The members of NMPF's 30 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies. *International Dairy Foods Association November 24, 2009 |
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Shoppers become more creative in recession |
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This holiday shopping season is all about the economy and people are making changes to gift-giving. The National Retail Federation’s (NRF)s annual holiday survey reports Americans in general will not declare an end to the recession until they see a reduction in unemployment. So, this holiday season, shoppers are still hesitant about the money they spend and many are still shopping frugally. The survey said the economy will impact where people shop, with 70% planning to head to discount stores. While the Wal Marts of the world will top out at getting the most shopper business, a slumped economy has a way of bringing out the creativeness in shoppers. It is reported as much as 11% plan to buy gifts from thrift stores or resale shops. Many are giving more practical gifts, joint gifts, or making gifts while last year’s decorations seem good enough instead of buying new. With 2009 coined as “the holiday season of the bargain hunter,” more than half of the people said sales or everyday low prices will be the deciding factor on where they buy. Retailers with minimum inventories are telling consumers to shop early while consumers, used to waiting until the last minute for good deals, might plan to hold out for better sales. Retailers are expected to market heavily on the front end to entice shoppers into the stores but it is anybody’s guess when customers will finally start to bite. The survey said it will be paying close attention to how the increase in credit card minimums and interest rates may impact spending. The increase was unexpected and is an expenditure that Americans do not like and many cannot accommodate. But this is another reason why many may shy away from credit cards and look toward retailers who offer layaway. Greeting card spending will not drop as much as other categories. Americans said they will spend 2% less on greeting cards this year (compared with 17% less on friends and 15% less on co-workers). So, be prepared to receive a card in the mail instead of a gift. But, after all, it’s the thought that counts. The only expenditure category that rose is eating, along with candy and food spending that increased about $10 per person. People may be giving away pies or cookies or planning holiday get-togethers to offset the expense of traditional gift giving. While people may worry that gift cards are impersonal, they remain the most asked-for item. Gift-cards offer a choice in whether the receiver spends the card on personal enjoyment or entertainment or uses it for more practical matters like food, gas, or cleaning supplies. But, the best thing, whatever one does with it, it can remain confidential. The web will influence one in three holiday purchases this year, and retailers are using the Internet not only as a sales channel but also as a marketing vehicle. Cyber Monday on Nov. 30, was offered as an alternative to traditional shopping on Black Friday, Nov. 27, the day after Thanksgiving. Department stores, such as Macy’s, JCPenney and Kohl’s, are doing a nice job with private label products, positioning themselves as discounters (at least on price) and creating an environment where young adults between 18-24 like to shop. But, keep in mind that young adults are most likely to wait until the last minute to shop, meaning a large portion of department store sales might come in very close to Christmas Day. The number of people who plan to make additional, non-gift purchases for themselves or their family declined this year, and those who will make additional purchases will also spend less on them. It is just not in the budget this year for people to treat themselves and they are most likely to focus on the people who are on their lists. |
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Stephenville Christian School “Fuels Up to Play” |
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In a learning atmosphere that begins each day with prayer, Stephenville Christian School since 1993 has been providing a structured, disciplined environment where students Pre-K through grade 6 can maximize their God-given abilities. The school strives to provide a Christ-centered education to the whole student through spirit, mind, and body where part of the curriculum focuses on the importance of physical education. Like most of today’s schools, whether public or private, physical activity is a major challenge to get students “up and running” to improve their overall health. In an effort to showcase the importance and benefits of a healthier body, Dairy MAX and The National Dairy Council® huddled up with the National Football League (NFL) to entice America's students to eat right and stay active with “Fuel Up to Play.” This free program focuses on empowering kids in grades 4-10 to get up and play for 60 minutes a day and to "fuel up" with the food groups kids don't normally get enough of--- like low-fat and fat-free dairy products, fruits, vegetables and whole grains. Eloise Rylaarsdam, head director of Stephenville Christian School, is a firm supporter in the importance of the “Fuel up to Play” program and is excited about the benefits it brings to the school’s students. In mid-January, the school will officially kick-off the “Fuel Up to Play” program. The school will be divided into three teams where the 5th and 6th graders will be team leaders over first through 4th grade participants. All the students will compete for prizes based on how many minutes of exercise per day they perform. “We have tentative plans for Tarleton State University (TSU) players and physical education students to mentor each of the teams’ activities. The competition will last for four weeks,” Rylaarsdam said. For the nutrition part of the program, the students will be taught about eating healthy foods and producing a cookbook with kid-friendly recipes. “Kids thrive on competition. In the mornings, we’ve already started an exercise program at 8 a.m. for those who come to school early. It gets them awake and pumped up for the school day,” Rylaarsdam said. Schools enrolled in “Fuel Up to Play” receive the easy-to-implement School Wellness Activation Kit, online marketing tools and bonus goodies. The kit includes a menu of activities and colorful display materials - customized with local NFL team insignia - that inspire students to become physically active for 60 minutes a day and eat nutritious and healthy foods. To receive your school's free kit or for more information about Fuel Up to Play 60, simply go to http://www.fueluptoplay60.com. Currently, Individuals and Schools can Participate and Obtain Chances to Win Tickets to a Cowboys or Texans Home Game, NFL Player or Mascot Visit to Your School, Fitness Equipment for Your School or Broadcast Journalism Equipment for Your School by “Eating healthy and moving more.” “Fuel Up to Play” can be used to complement an existing school wellness program, or to help a school get started. Enrollment for the 2009-2010 school year is now open. Dairy MAX said supplies are limited so don't delay if interested in the program. |
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