Upper Midwest Growth:
Perspectives From The Farm

Optimism For 2010

Volume 134, No. 29 Friday, January 15, 2010

If good information is the foundation of good policy-making, then the Upper Midwest should study the facts behind strong milk production in 2009. Can processors, academia and government play a role in sustaining this milk-making momentum in 2010?

The macro-data is clear: Wisconsin milk production in 2009 was 2.9 percent higher than 2008 through November; in Michigan production was up 2.8 percent and Minnesota production rose 2.7 percent. Production in other top 10 milk production states was flat to down, with the exception of Texas, up 5.5 percent through November 2009.

For a closer look, WCMA interviewed a small group of dairy producers in Wisconsin to learn the factors that impacted their milk production last year, and to learn their prognosis for making milk in 2010.

Low milk prices in 2009 battered the bottom line of each producer interviewed, yet decisions on feeding strategies and herd size, as well as cool summer weather, caused a variety of milk production outcomes.

Dan Monson, Spring Grove Dairy, Brodhead, WI (2,000 cows) noted: “Last year created challenges greater than any I’ve seen before in the dairy industry. We learned from the experience, but the dairy was not able to cut costs sufficient to balance the books. We lost money in 2009. Any further cuts would have compromised herd health or reproductive health. In 2010 we will hold the line on good nutrition - you can’t take short cuts when it comes to the health of the cow.”

Spring Grove maintained milk production volume through the addition of 150 cows in 2009. Production per cow fell about 5 percent. “We lost some reproductive performance and some production with the use of lower-cost feed components,” Monsen stated, “but into November and December our performance is coming back on track.”

Dean Strauss, Majestic Meadows Dairy, Sheboygan Falls, WI (825 cows) told WCMA: “Majestic Meadows held steady on milk production in 2009 with the addition of 150 cows to the herd. Mild weather aided a phenomenal year for breeding animals and the basic components of the diet, forage quality, was excellent.
The dairy minimized purchase of additional ingredients to reduce costs.”

The farm lost money in 2009, Strauss stated, “but our year was not as bad as some of the published figures.” Majestic Meadows lost about $175 per cow in 2009, Strauss said.

Bob Topel, North Crest Dairy, Waterloo, WI (285 cows) moved quickly last winter to reduce herd size when milk prices began to decline. “We looked at the cost of production, the cost of purchased grain, and culled fairly heavily”" Topel said. As a result the farm’s overall milk production declined 8 percent throughout the year, but the production per cow remained steady.

“Our losses in 2009 wiped out two years of gains on the farm,” Topel stated. “We’re going to survive. We made zero capital purchases in 2009. We looked at every expense, negotiated with suppliers, and changed some suppliers. As far as labor is concerned, we thought we were running a tight ship, but we looked harder and managed to reduce hours to eliminate the equivalent of one full-time employee. There’s always something you can learn from these difficult times and we’ll be healthier for it when prices turn for the better,” he told WCMA.

Jim Ostrom, Milk Source LLC, Kaukauna, WI is a partner in Omro Dairy, Tidy-View Dairy and Rosendale Dairy. Ostrom noted that weather played a large role in Wisconsin’s milk production increases in 2009.

“We didn’t see suppression in the milk production curve for our cows this summer due to cooler temperatures. As a result, cows in Wisconsin produced above average through the summer and bred back sooner, meaning we can expect an earlier calving season next spring.”

“In Wisconsin, farmers grow their own feeds and face lower input costs. We’ve built up equity in land which has allowed us to weather the financial crisis better than other areas,” Ostrom said.

“Most of all, Wisconsin farmers are cowmen,” he said. “We put the dairy cow first, perhaps even before our best financial decisions. I think milk production in the state has benefitted from that cow-centered perspective.”

Jerry Meissner, Norm-E-Lane Farm, Chili, WI (2,200 cows) and his family added 10 percent more cows to the herd in each of the past three years and in 2009 production per cow rose 5 percent.

“A year like 2009 really forces you to be a better manager,” Meissner stated. “There are very few things we’re willing to cost-cut on the animal side. We didn’t change rations, the nutrition for the cows, because in the long run you have to keep the cows healthy and producing if you want to survive. We did cut back somewhat on BST use.”

The dairy lost money in 2009. “I have never been through a year like 2009 when you look at the milk price vs. the cost of inputs,” Meissner said. “We cut back considerably on capital purchases. We couldn’t offset the low milk prices with cost reductions. Like a lot of farms, we used up our operating loan and going into spring we’re renegotiating our loan with our banker.”

Jim Mlsna, Ocooch Dairy, Hillsboro (580 cows) stated that “I tell everyone that everything is fine except the checkbook. Cows are producing well, feed is good quality, labor is stable, but we used significant equity in 2009.”

Milk production rose 6 percent for Mlsna’s herd and he’s set a goal of 90 pounds per cow in 2010. Ocooch Dairy held cow numbers stable in 2009 but cooler temperatures, good feed and a new barn and milking parlor and advanced electronic information systems improved performance.

“Cooler temperatures made a big difference. Our fans ran around the clock for only one week in the summer of 2009,” Mlsna said, with no night operation after that. Hot August weather that generally causes a slump in milk production during October and November didn’t happen in 2009, he noted. “Cows bred better this year and the feed quality from 2008 and 2009 was excellent,” Mlsna said.

Clearly there was no generic response to 2009’s rare combination of record low milk prices, high input costs and unusually cool temperatures in the Upper Midwest. Yet each of these farms managed the variables and expressed optimism for 2010 in these interviews.

A follow-up column will look at these producers’ plans and goals for 2010, and Jim Ostrom summed up the previous year with this: “I think 2009 shows that Wisconsin’s dairy industry is here to stay.” r

John Umhoefer has served as executive director of the Wisconsin Cheese Makers Association since 1992. You can phone John at (608) 828-4550; Fax him at (608) 828-4551; or e-mail John Umhoefer at jumhoefer@wischeesemakersassn. org

 

Other John Umhoefer Columns

Blue Skies or Bust
Pushing Back Against A Tough 2009
Support Demand, Not Price
Dairy: A Good Bet in a Bad Economy
Wisconsin's Future: Growth
Keeping Sustainability Real
Nose Dive
Dairy Dives into 2009
 UnCOOL
Consider This...
 Fulls Vats
Implement Make Allowances ASAP
Security Reforms
Spring Forward
A Week of Clarity
The California Whey






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