Friday, March 18, 2022
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Dairies must look
beyond government
help, economist says
By MATEUSZ PERKOWSKI
Capital Press
SALEM — Dairies need
to sharpen their business skills
because they can’t count on
income from the government
anymore, according to econo-
mist Dave Kohl.
Federal support has helped
the agricultural economy
weather the turbulence of the
past few years, but that time is
ending, he said.
“Basically, the govern-
ment put us on steroids. Now
we’re going to have to cut our
teeth as we move forward,”
Kohl said March 8 at the Ore-
gon Dairy Farmers Associa-
tion’s convention in Salem.
Federal cash represented
about 72% of dairy farmers’
net income in 2020, the year
the coronavirus pandemic
broke out, he said.
“There are still going to be
some checks but they’re not
going to be as generous as in
the past,” Kohl said.
To thrive in spite of
the
uncertainty,
dairies
should focus on incremen-
tal improvements to their
planning, goal-setting and
record-keeping, he said.
“People who do well, do
a lot of little things 5% better.
A lot of the 5% is the boring
stuff ,” Kohl said. “It’s called
sweating the small stuff .”
A thorough understanding
of a dairy’s cost of produc-
tion is key to fi nancial health,
but too few farmers heed that
advice, he said.
“Less than half of ag busi-
nesses know their cost of pro-
duction,” Kohl said.
The upcoming decade
is going to see a major gen-
erational transfer of cap-
ital — how that’s man-
aged will also determine
whether businesses thrive, he
said.
“If you don’t do that prop-
erly, you know who wins?
Uncle Sam and a bunch of
high-priced lawyers,” he
said.
The challenges facing
farms will likely mark the
2020s as “the decade of eco-
nomic and fi nancial divide,”
between those who adapt to
the changes and those who
don’t, Kohl said.
“Volatility can be chal-
lenging but it can also be
opportunistic,” he said.
Oil prices will be worth
watching: Current high levels
are undermining consumer
confi dence, and 80% of farm
inputs track those fl uctua-
tions, Kohl said.
“Our economy is very
enmeshed with oil,” he said.
The general economy can
expect to face headwinds
from the aging of the “Baby
Boomer” generation, since
many are likely to see declin-
ing health this decade, he said.
“Watch us get more con-
servative in our spending,”
Kohl said.
Labor expenses are a
major consideration for farms
and other businesses, which
will have to invest in robotics,
he said.
Until self-driving trucks
become a reality, though,
the U.S. is likely to continue
enduring supply chain prob-
lems due to the trucker short-
age, Kohl said.
Dairies will need to com-
pete with milk alternatives
and the farm industry should
generally expect impacts
from a greater focus on “envi-
ronmental, social and gover-
nance” values, he said.
Activist investors are lead-
ing the charge to improve
company scorecards on these
criteria, which is bound to
aff ect farmers and cause con-
troversy, he said.
Kohl said his cream-
ery business was evaluated
on these “ESG” values by a
major buyer.
Its reliance on recyclable
glass and minority and female
employees helped the cream-
ery pass the test, he said. “You
checked these boxes, you can
still sell to us.”
Dairy
E. Oregon farm turns to desert-adapted
sheep breed to improve dairy business
By SIERRA DAWN McCLAIN
Capital Press
LEXINGTON, Ore. —
Farm owner Terry Felda has
seen fi rst-hand the value of
matching genetics to envi-
ronment: raising a breed
of dairy sheep adapted
to her region’s specifi c
microclimate.
Introducing genetics from
the Assaf breed into her fl ock
the past few years has been
transformational, boosting
productivity and improving
her farm’s sustainability.
“We can already see the
diff erence,” said Felda, 59.
For more than a decade,
Felda ran her operation with
standard American dairy
sheep crosses: Lacaune
and East Friesian breeds.
The problem was that these
breeds need good pasture
and a temperate climate to
thrive, and Felda’s 450-acre
farm lies among the dry,
crumpled hills outside Lex-
ington, in Eastern Oregon’s
semi-arid Morrow County.
Felda’s ewes struggled on
ranges with limited forage.
“I felt I had to put a lot of
feed and time into them to
get them to where I wanted,”
Sierra Dawn McClain/Capital Press
Terry Felda holds a lamb.
said Felda.
For years, she wanted to
bring in genetics from breeds
better adapted to arid cli-
mates, such as the Awassi,
native to Israel, or the Assaf,
a cross between the Awassi
and the German East Frie-
sian sheep.
The Assaf, according to
the Israel Dairy Board, is
prized for high milk produc-
tion and tolerance to almost
all climates. The breed has
spread across Eurasia and
today is the most important
dairy sheep breed in Spain,
according to the Journal of
Dairy Science.
Felda was one of many
Dairy groups support crackdown on ocean carriers
Capital Press
Dairy groups are in full
support of the Ocean Ship-
ping Antitrust Enforcement
Act introduced in the U.S.
House by Rep. Jim Costa,
D-Calif.
The legislation would
remove exemptions from
federal antitrust laws for for-
eign shipping carriers and
address unfair practices that
harm U.S. businesses.
“U.S. dairy export-
ers experience a litany of
unfair practices from for-
eign-owned ocean carriers
— including unprecedented
shipping rates, fees often
incurred out of the export-
ers’ control, intentional lack
of transparency and con-
tinually rolled bookings,”
said Krysta Harden, presi-
dent and CEO of U.S. Dairy
Export Council.
Due to the high con-
centration of power in the
largely foreign-owned ship-
ping industry, American
dairy exporters have little
option other than to accept
these unwarranted fees and
T
delays as a business expense,
she said.
“We commend the intro-
duction of this important leg-
islation to revoke the anti-
trust immunity that these
shipping lines exploit at the
expense of American pro-
ducers and consumers, and
we urge Congress to expedi-
tiously pass this measure into
law,” she said.
The bill has cospon-
sored has eight cosponsors,
including Reps. John Gara-
mendi, D-Calif.; Dusty
Johnson, R-S.D.; and
Adrian Smith, R-Neb.
“At a time when ocean
carriers have been enjoy-
ing record profi ts, U.S. dairy
producers have been bearing
the brunt of the export sup-
ply chain crisis, with over
$1.5 billion in added costs
and lost sales in 2021 alone,”
said Jim Mulhern, president
and CEO of National Milk
Producers Federation.
The legislation would
rein in the enormous power
foreign-owned
shipping
lines wield over American
exporters, he said.
Apply less, expect more?
Milk estimates lowered again
By LEE MIELKE
For the Capital Press
American farmers who
wanted Assaf genetics, but
for years, the U.S. blocked
importation over concerns
about scrapie, a disease that
aff ects sheep.
Finally, in 2017, after
years of negotiations with
USDA, the Spanish Depart-
ment of Agriculture and
European
Union
offi -
cials, the U.S. sheep indus-
try brought in Assaf semen
through a University of Wis-
consin-Madison project.
The Dairy Sheep Asso-
ciation of North America
secured some of the semen,
from which Felda got her
fi rst batch for Tin Willows
Dairy and Sheep Ranch.
“To be able to fi nally get
(the genetics) was huge,”
said Felda.
In 2019, she introduced
the semen into her fl ock
through laparoscopic artifi -
cial insemination. In 2020,
she had her fi rst cross-bred
50% Assaf lambs. In 2021,
she milked the crosses.
Felda said the Assaf-
crosses gain weight faster
and seem well-adapted to
handle heat, stress and min-
imal forage. The ewes also
produce more milk.
Before introducing the
new genetics, each Lacaune-
East Friesian dairy sheep
was fed and milked twice a
day but produced only 300 to
400 pounds of milk annually.
Last year, each 50% Assaf
ewe was fed and milked only
once a day but produced
up to 500 pounds of milk
annually.
Felda expects the num-
bers would be higher if she
milked twice daily, and
because last year’s milk
came from crosses, Felda
anticipates even higher pro-
duction in future years as
her ewes approach purebred
Assaf status.
DAIRY
MARKETS
he Agriculture Depart-
ment again lowered
its estimate for 2022
milk production, citing lower
dairy cow numbers and
slower growth in milk produc-
tion per cow, and raised milk
price projections in the lat-
est World Agricultural Supply
and Demand Estimates report
(WASDE).
2022 production and mar-
ketings were estimated at
226.0 billion and 225.0 billion
pounds, respectively, down
1.2 billion pounds on produc-
tion. If realized, 2022 produc-
tion would be down 200 mil-
lion pounds or, 0.1%, from
2021.
Price forecasts for cheese,
butter, nonfat dry milk and
whey were raised from the
previous month, based on cur-
rent prices, lower expected
production, and continued
demand strength. The higher
product prices resulted in both
Class III and Class IV milk
prices being raised.
Cheese is now projected
to average $2.03 per pound
in 2022, up 13 cents from last
month’s estimate, and 35.55
cents above the 2021 average.
Butter was projected at
$2.5750 per pound, up 18.5
cents from a month ago and
84.25 cents above 2021.
Nonfat dry milk was pro-
Lee
Mielke
jected at $1.74 per pound, up
7.50 cents from last month’s
estimate and 47.1 cents above
the 2021 average.
Whey is projected to aver-
age 71 cents per pound, up a
half cent from last month’s
estimate and 13.6 cents above
the 2021 average.
The 2022 Class III milk
price is projected to average
$21.65 per hundredweight, up
$1.35 from what was expected
a month ago, and $4.57 above
the 2021 average of $17.08.
The Class IV average was
projected at $23.70, up $1.40
from a month ago, and $7.61
above the 2021 average of
$16.09.
The war in Ukraine is
especially impacting global
grain markets, and the
USDA lowered its export
data on corn and wheat
from the region. Ukraine’s
corn exports were reduced
6 million metric tons, and
the March 9 “Daily Dairy
Report” warned, “Even if
other exporters, such as the
U.S., increase shipments
to partially off set lower
Ukrainian exports, the result-
ing supply shortage is none-
theless expected to keep
global corn prices elevated.”
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