12 CapitalPress.com
August 11, 2017
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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.