Image provided by: University of Oregon Libraries; Eugene, OR
About Capital press. (Salem, OR) 19??-current | View Entire Issue (Aug. 11, 2017)
12 CapitalPress.com August 11, 2017 Subscribe to our weekly dairy or livestock email newsletter at CapitalPress.com/newsletters Dairy/Livestock Official: NAFTA talks have high stakes for U.S. dairy By CAROL RYAN DUMAS Capital Press The U.S. dairy industry has a lot at stake in the admin- istration’s upcoming renego- tiation of the North American Free Trade Agreement, a top industry official says. On the one hand, the indus- try doesn’t want any harm to come to bountiful exports to Mexico. On the other, there’s a lot to be desired in trade rela- tions with Canada. In testimony to the House Agricultural Committee, Tom Vilsack, U.S. Dairy Export Council president and CEO, asked committee members not to jeopardize the gains made in free access to Mexico. He also called for needed action on Canada’s protectionist pol- icies. NAFTA is indisputably the U.S. dairy industry’s most im- portant trade deal and has been enormously beneficial in liber- alizing dairy trade with Mexi- co, he said. Under the agreement, Mex- ico has grown to be by far the largest export market for U.S. dairy. U.S. dairy shipments to Associated Press File Tom Vilsack, U.S. Dairy Export Council president and CEO, testifies on Capitol Hill in Washington, D.C. The former secretary of agricul- ture told the House Agriculture Committee that the North American Free Trade Agreement has been a boon to dairy trade with Mexico but there are shortcomings in trade with Canada. Mexico in 2016 totaled $1.2 billion, up from just $124 mil- lion in 1995, he said. “For much, if not all, of this we have NAFTA to thank,” he said. Last year, Mexico account- ed for 47 percent of U.S. ex- ports of nonfat dry milk, 31 percent of cheese and 38 percent of butterfat. Before NAFTA and Mexico’s join- ing the General Agreement on Trade and Tariffs — called GATT — the only dairy-re- lated U.S. exports to Mexico were some nonfat dry milk shipments for government feeding programs and a small number of breeding cattle, he said. GATT was the predeces- sor to the World Trade Organi- zation. “NAFTA has been the driv- ing force behind this growth and is the reason the U.S. share of Mexico’s dairy imports is 73 percent today,” he said. Without NAFTA, the du- ty-free access U.S. companies enjoy to Mexico could evapo- rate and be replaced by WTO most-favored nation tariff levels, which could result in tariffs of 45 percent to 125 per- cent, he said. Mexico is negotiating with the EU on preferential access to the Mexican market, and discussing with New Zealand and Australia how to move forward with the Trans-Pacific Partnership, he said. The U.S. withdrew from the 12-nation TPP earlier this year. “Conceivably, all three of our major competitors could see improved access to the Mexican market in the com- ing years. That’s what makes NAFTA absolutely essential for our industry,” he said. It currently provides U.S. exporters with uniquely pref- erential access to the Mexican dairy market and is the vehi- cle the U.S. needs to remain competitive should Mexico open new inroads to U.S. competitors, he said. “Because of NAFTA and Mexico’s commitment to a mutually beneficial trading re- lationship, we currently have very few problems with Mex- ico in dairy. It is our goal … to help keep it that way,” he said. Canada, on the other hand, has created a dairy trade rela- tionship with the U.S. that can best be described as “heavily strained,” he said. The Canadian government continuously creates new classifications, categories or standards to make U.S. dairy exports noncompetitive with domestic products. Other issues include tariffs, subsi- dizing exports and Canada’s acceptance of trade-limit- ing geographic indicators on common-food names in trade agreements with other coun- tries, he said. “In short, the United States has a tremendous amount of unfinished business with Can- ada with respect to NAFTA,” he said. The U.S. dairy industry is united in its desire to pre- serve what is working under NAFTA with Mexico and ad- dress what isn’t working with Canada, he said. Oregon Robotic milkers popular despite dairy slump dairy Reduced dependence honored on labor attracts more farmers for its sustainable practices By MATEUSZ PERKOWSKI Capital Press By ALIYA HALL Capital Press RICKREALL, Ore. — Rickreall Dairy is the first farm in Oregon to receive the national Outstanding Dairy Farm Sustainability Award. The dairy near Salem was one of three U.S. farms se- lected this year for the award by the Inno- vation Center for U.S. Dairy. The award is given for sus- tainable prac- tices in such areas as cow Louie care, energy Kazemier conservation, water conser- vation, nutrient management and business and employee relations. The third-generation farm, owned and operated by Lou- ie and Lori Kazemier, hous- es 3,500 Holstein cows that produce approximately 50.4 million gallons of milk annu- ally — about 138,000 gallons a day. In addition to the dairy’s daily operations, it has an open-door policy and hosts guided tours for between 2,000 and 3,000 first-graders annually from Salem, Dallas and Independence, Ore., Louie Kazemier said. Among the sustainable ef- forts Kazemier has pursued is a partnership that allows him to send the dairy’s solid waste to his neighbor’s cropland for the use as natural fertilizer in exchange for feed. “Every dairyman has to do this,” he said of sustainability. “We save money, it lowered costs of production and it makes us more money by sell- ing manure.” The dairy’s other sustain- able practices include col- laborating with a local food processor to recycle water for irrigation for his 1,100 acres of crop land as a means of saving water, which is recycled three times before it is used for irri- gation. He also tests the soil to make sure no nutrients get into the ground water, according to the Oregon Dairy and Nu- trition Council. The dairy has 25 employees with an average tenure of 20 years. Rickreall is a member of the Northwest Dairy Associa- tion, a farmer-owned cooper- ative that sells more than $2 billion in dairy products an- nually through its subsidiary, Darigold. Of the 3,500 Holsteins, Ka- zemier milks about 1,700; the others are either heifers or dry cows. When the antiquated milk- ing parlor at the Abiqua Acres dairy became obsolete, the farm’s owners opted not to re- place it. Instead, they installed a new state-of-the art barn equipped with two robots that milk the cows at their convenience. The machines will allow the farm to eventually expand its milking herd from 90 to 120 cows without having to hire employees, said Darleen Sichley, who runs the farm with her husband, Ben Sichley, and her parents, Alan and Barbara Mann. “Robotics made a lot more sense than building a parlor and hiring help,” she said. The Sichleys and Manns operate the dairy entirely them- selves, so delegating the milk- ing chores to robots frees up hours they’d otherwise spend in the milking parlor. “We get our lives back,” said Ben Sichley. Milk prices have fallen since the family began planning for the project, but they’re confi- dent the robotic milkers will pencil out over the long term by allowing the farm to remain employee-free. “We’ve always been fami- ly-run,” said Darleen. Dairy farmers’ average “mailbox” price per hundred- weight of milk — the amount of the check they get in the mail, minus transportation and other costs — plunged from a peak of nearly $26 per hun- dredweight in 2014 to a trough Mateusz Perkowski/Capital Press Visitors to the Abiqua Acres dairy near Silverton, Ore., observe cows as they enter a robotic milking system during a recent open house. Dairymen have continued to invest in robots despite lower milk prices. of roughly $14 in 2016. The price has since risen to more than $17 per hundredweight. A hundredweight of milk is 11.63 gallons. Despite their leaner earn- ings, dairy farmers have con- tinued to invest in robotic milkers because of the concern over worker shortages, said Mark Brown, a regional gener- al manager for DeLaval Dairy Service, which makes and sells the machines. “That’s what’s driving it, more than anything,” Brown said. DeLaval has seen sales of robotic milkers grow through the milk price slump, though demand would likely be even stronger if the industry was experiencing an economic up- swing, he said. “If milk prices were high, I don’t think we could build them fast enough,” said Brown. While the lowest-cost milking systems will cost $1 per hundredweight or less to operate — compared to $2 or $3 per hundredweight for ro- botic milkers — farmers still see the automated systems as worthwhile, said Larry Tranel, an extension dairy specialist at Iowa State University who’s studied the economics of the machines. Robots aren’t so much more expensive than many conventional milking parlors as to deter dairies from invest- ing in the technology, since farmers are drawn to the re- duced dependence on hiring workers, he said. “They’re trading labor for technology,” Tranel said. If immigration enforcement gets more strict, dairies also face the prospect of having to pay higher wages to attract U.S.-born employees, said Brian Gould, an agricultural economics professor at the Uni- versity of Wisconsin-Madison. “If the dairy industry is go- ing to have to pay more for la- bor, it’s going to make robotics more attractive,” he said. Aside from cutting labor, ro- botic milkers automatically col- lect data about cattle productiv- ity and other traits that improve dairy management, said Brown of DeLaval Dairy Service. New features and software are constantly being developed, including infrared cameras that photograph each cow to track how it’s responding to feed ra- tions, he said. “The machines are designed so that any future technolo- gy can be retrofit onto them,” Brown said. Data analyzed by robotic milking systems can also alert farmers to any developing health problems before they’re readily noticeable, said Bob Russell, director of DeLaval Dairy Service North America. “All those metrics can help give you an advance indication the cow may be becoming ill,” he said. Robotic milkers have grown popular enough that cattle breeders are aiming for “robot ready” cows with characteris- tics such as more uniform ud- ders that make teats easier for the machine to locate, he said. U.S. cattle inventory hits nine-year high By CAROL RYAN DUMAS Capital Press U.S. cattle inventory, July 1 (Mid-year report suspended in 2016 due to budgetary constraints.) While the beef cow herd shows the industry is continu- ing herd expansion, replace- ment heifer numbers suggest that heifer retention is slow- ing and the expansion is start- ing to wind down. Beef and dairy cattle and calves in the U.S. on July 1 totaled 103 million, 4 percent higher than July 1, 2015. The USDA National Agricultural Statistics Service suspended the mid-year inventory report in 2016 and 2013, but the most recent July 1 inventory count is the highest since 2008. The higher count was ex- pected, considering herd ex- pansion efforts since 2014. Without a 2016 mid-year re- port, there were no compar- isons but looking at the last two years, the numbers clear- ly show significant growth in the total herd and in the beef cow herd in particular, said Derrell Peel, Oklahoma State University Extension live- Item Cattle and calves Beef cows and heifers that have calved Replacement beef heifers (Million head) 2015 2017 98.2 30.5 103 32.5 4% 7 4.8 4.7 -2 Item (Million head) 2015 2017 Calf crop 34.1 Source: USDA NASS stock marketing specialist. At 32.5 million, the num- ber of beef cows, including heifers that have calved, is 7 percent above the 2015 mid- year count. And the ratio of the July beef cow inventory to the January level (104 percent) is the highest since 1993, during the last full-blown herd ex- pansion, he said. Compared with histori- cal data, “that’s a big enough ratio to confirm we are still expanding the cow herd this year,” he said. Percent change 36.3 Percent change 6 Capital Press graphic The data on replacement heifers are a little harder to interpret, but the numbers are quite a bit smaller in this re- port, suggesting heifer reten- tion is slowing, he said. Beef replacement heifers on July 1 were down 2 per- cent from July 2015, and the ratio of those heifers to Jan- uary’s count is the lowest in the data series, he said. It’s harder to see a cyclical effect in replacement heifer ratios than in beef cow ratios, but the July to January ratio is 73 percent, compared to a long-term average of 89 per- cent, he said. In addition, heifer slaugh- ter is up 11 percent thus far in 2017, and the number of heif- ers on feed was up 11 percent in the second quarter of this year. “All those things together would seem to suggest we’re not saving heifers as aggres- sively as we have,” he said. The 2017 calf crop is ex- pected to be 36.3 million head, up 3 percent from 2016 and up 6 percent from 2015, USDA reported. “It’s just part of the story of ongoing herd expansion. We expected it would be big- ger,” Peel said. That means more feeder cattle supplies and increased beef production for another couple of years, he said. The estimated feeder cat- tle supply outside of feed- lots is 37 million head, 5 percent above the 35.4 mil- lion head on July 1, 2015, USDA said. Dairy Markets Lee Mielke Dairy prices riding a roller coaster By LEE MIELKE For the Capital Press A ugust started with strengthening dairy prices despite the lower global dairy trade auction but relapsed. The cheddar blocks climbed to $1.7875 per pound last Tues- day, the highest price since Feb. 2, 2017, but closed Friday at $1.6975, down 5 3/4-cents on the week and 11 3/4-cents below a year ago. They gave up 1 3/4-cents Monday and 2 cents Tues- day, slipping to $1.66. The barrels shot up 11 1/2-cents last Tuesday, hitting $1.66, highest since Feb. 8, 2017, and reduced the spread to 12 3/4-cents, but finished the week at $1.53, down 2 1/2-cents and 35 cents below a year ago when they peaked for the year at $1.88. Five cars of block were sold last week at the CME and 48 of barrel. Monday saw the barrels hold steady, then lose 2 cents Tuesday, slipping to $1.51, 15 cents below the blocks. Midwest cheese produc- ers report that milk supplies are still available but no- ticeably lower, according to Dairy Market News. Many Western cheese producers report there is plenty of milk available and processing facilities are at or near full capacity. Domestic demand is solid but traders remain hopeful that exports can ef- fectively soak up their heavy stocks. HighGround Dairy’s Monday Morning Huddle reported that China’s cheese demand was “certainly mas- sive last month and reached record highs. Volumes from New Zealand were up 74 percent from a year ago and represented 55 percent of market share and a record high from that country.” “China imported 1,291 metric tons from the U.S. during June, strongest vol- umes since April 2015; sec- ond quarter imports from the U.S. were up 77 percent from the prior year to 3,372 MT, representing 11 percent market share,” according to HighGround. Butter was also on a roller coaster. After all it is fair season, and a lot of product made its way to the CME. It climbed to $2.7375 per pound Thursday but closed Friday at $2.73, up a penny on the week and 46 cents above a year ago, with 63 cars selling last week. The spot butter lost 3 1/4-cents Monday and melted another 3 3/4-cents Tuesday, to $2.66. Butter makers continue to report that weekly sales fig- ures are improved from last year. Western contacts report that processors do not have any problem getting cream. Butter supplies are comfort- able and domestic butter de- mand is good. International demand seems to be pick- ing up due to higher foreign prices. Cash Grade A nonfat dry milk closed Friday at 86 1/4-cents per pound, up a quarter-cent on the week and 3 cents above a year ago. The powder was down 1 1/4-cents Monday and held there Tuesday at 85 cents per pound. The July Federal order Class III milk price is $15.45 per hundredweight, down 99 cents from June but 21 cents above July 2016 due to low- er cheese, dry whey and non- fat dry milk prices. It also topped California’s comparable Class 4b cheese milk price by 16 cents, the lowest differential since No- vember, 2016, when the 4b topped the Class III by 69 cents.