Despite my intentions to keep milk prices out of my conversation, I find this to be a good time to bring them up anyway as we are back in the realm of historically high futures prices and it's a lot more fun to talk about $20 milk than $12.
I realized shortly into my venture into risk management that good or bad, I was going to be stressed about milk prices despite the fact I don't milk cows for a living. Being as I started in 2009 and cut my teeth through months of the most devistating price cycle in history, I have spent considerable time trying to help dairy farmers manage through nasty prices, and stressing (to a lesser degree of course) right along with them. I grew up working on a dairy, sharing in the joys and challenges of that lifestyle; I have spent years in school studying the industry, building relationships with people devoted to dairy and making delicious, nutritious dairy products, and I while I may not technically milk cows, I'm still completely intertwined with milk markets. As a result of my ties to dairy and job working with forward contracting milk prices, I have spent considerable time watching the futures market and while I'm no expert, I have noticed a couple things.
First, futures markets are not to be confused for future price indicators. Make no mistake, futures are a way for people to make money and they spend a lot more time studying trends and fundamentals than your or me. As such, if there is a big secret to making money on milk futures, they would know it first.
Second, there is no big secret to making money on milk futures. I say this because I believe the markets work to tell you, based on things known and unknown at that time, expected future supply and demand relationships (prices). When the price is "good" to you, take advantage of the futures price. If you do this consistently, you will thoretically have a price that works for your business consistently. And like the saying goes, no one ever went broke making money. It's not about always beating the market, its about always having a price that keeps you in business.
Third, decide if you are speculating or striving for risk management. If you take a futures position (lock in a milk futures price) because you are convinced the market will go up or feel strongly it will go down, you are speculating. That's fine, just realize this is not the same as consistently protecting a price that works for your farm business.
Fourth, the milk price is affected by numerous factors domestically and internationally, and these will continue to drive the market crazy. It will create opportunities, such as $20 class III milk, which translates to $22-$25 to most of our Northeast farms- which we are currently enjoying- and it will create challenges, such as significant and unpredictable volatility.
I am thrilled to see prices so high because I know full well how badly farms need this price recovery. I do hope however, that farms will realize that markets will keep moving, and they have tools available to help them manage prices and the crazy ups and downs. We are not in traditional markets anymore, and risk management is a valid option for farms looking to add predictability to their milk check!
That's all from that particular soap box.
Til next time,
Wednesday, June 1, 2011
Thursday, May 5, 2011
Food for thought article
October 25, 2010 | By Louis P. Longo (Hoard's Dairyman)
Are Mega Operations a Threat To Family Farms?
ONE of the enjoyable things about retirement is that it gives me time to visit area dairy farms and chat with the owners regarding their operations and the dairy economy in general. Because, on occasion, I write articles for Hoard's Dairyman, they supply me with a lot of information and personal opinions, that otherwise might not be obtainable. They spare no words in expressing their opinion, good and bad, regarding my writings and other articles in Hoard's.
The price of milk and its cause always is a sore subject. Not realizing it, they are providing me much food for thought and writing. One issue in particular is the future of the so-called "family farm."In my conversations with the smaller dairy operations (250 cows or less), the subject of the large mega dairy operations nearly always come up. Most argue that these large operations are a threat to "family farms" and are the prime cause for surplus milk supplies and the low prices. As I view them, their arguments are not entirely based on fact. They argue that the family farm expands because of need while the mega farm operation expands because of greed, I do not agree.
The demise of the "family farm" over the past two or three decades was self-imposed ... not brought on by others. There have been great changes in farming technology such as free stall housing, milking parlors, computers, value-added markets, and so forth. All of these changes came up gradually, and some families did not adapt accordingly. Therefore, they could not survive the ever-changing dairy economy. The gradual changes in dairy farming technology bring up an old adage: "If you were to throw a frog into a pot of hot water, his reflexes are so great that he would jump out unharmed. However, if you were to take the same frog and place him in a kettle of cold water, and gradually increase the heat to a scalding point, you will kill the frog." So it was with the smaller operations. They found themselves in hot water when it was too late. Of course, high land values also played a big part.
What's a family farm?
In my conversations with these smaller farmers, they continually talked about the "family farm . . . the. family farm." How do you define a family farm? Is there a true definition of such an operation? Is it the size of the operation? Is it a farm that was handed down from generation to generation?
As I see it, there is no relation between size and a family farm operation. I know of a number of dairy operations that milk more than 1,000 cows that are, in effect, family operations. One in particular has well over 1,000 cows with four family members involved in the operation and ownership. They did not expand because of greed, they expanded as the family_ grew and came into the operation. The third generation now is the operators. Rightfully, they call themselves a "family farm," although they do have eight employees. I visited a ISO-cow operation which is run by father and son with two part-time helpers. They also regard their operation as a "family farm."
The label "family farm" in some ways gives a false impression to the nonfarm community. Consumers may visualize the family farm as a sacred operation where only family members do all the work. The "title" musters much compassion and sympathy from our city cousins when anyone threatens its well-being. The label "mega dairy farm" gives the impression of an existing monster, ready to eat up all family operations when, in effect, it itself is a family operation and not an individual milk price killer or small-farm destroyer.
Who can we blame when the price of milk is too low? Government programs? Mega farm operations? It is and always has been the economics of supply and demand. It is the same for any marketable product.
Contrary to what some may want to believe, the "mega farm" is not the only culprit, it's all milk producers in general. When commercial airlines have low consumer demand, what do they do? They reduce their flights. When the price of milk drops, what do many dairy farmers do? They add cows in trying to have adequate cash flow to the business. I did that when I was farming, and my operation was considered by all who visited as a family farm.
Finger pointing never has solved an economic problem. It only builds animosity and fosters lack of unity among our own people. Total cooperation among all dairy farmers is what is needed to balance supply with demand. Cooperative ownership of the surplus milk is by far the best way to balance supply with demand, and it cannot be accomplished with this "finger pointing" separatism that seems to exist.
As I pointed out in a previous article (March 10, 2010, page 188), the Yankee Milk Cooperative (now Agri-Mark) in 1973 owned partially all the surplus in the New England market and was successful in obtaining substantial over-order premiums. They amounted to more than $30 million to dairy farmers within 22 months. There was no finger pointing at that time ... it was a total unified accomplishment.
Getting back to the family farm ... I have my own definition. It is a farm, no matter how large or how small, where all ownership and a substantial amount of management is supplied by family members. I consider this a politically acceptable definition.
This type of farm is a very economically competitive entity with no fear of possible threats from large mega farm operations. Why? Because the cow is an individual creature that produces best when catered to. Most of these farms have a very low cull rate, relatively short calving intervals, and low calf mortality rates giving them the possibility for selling bred heifers. If drastic drops in milk prices were ever to occur, and the possibility does exist, the mega farm operations stand to lose more or even collapse whereas the family farm as I have described it will be more likely to survive under the worst economical condition. Here's why.
When a good bit of labor is family, the labor cost is actual income to the farm whereas the nonfamily farm's labor cost, workmen's compensation deduction, health, and other insurances are out-of-pocket costs. As I see it, those farms hold within themselves cost items for self destruction when a time of lasting economic disaster ever occurs. Family farms by far are the most competitive entities in farming.
The surplus milk problem must be dealt with by all, big and small alike. Total cooperation will be needed to be successful in balancing milk supplies. As I see it, dairy farmers are like the proverbial frog in the pot of cold water, and surplus milk is the fire that is gradually heating. The more the surplus, the greater the heat. Are you going to sit still and be ~ scalded or do something about put ting the fire out? The easy thing is to blame the big guys who are sitting in the kettle with you.
Food for Thought
Hi all and happy Thursday!
The sun is FINALLY out here in Syracuse and I'm keeping my fingers crossed that it allows for my maiden kayak voyage to take place, and more importantly, for much needed field work to commence in full force across the New York farmlands.
I came across an article written by Louis Longo for Hoards this fall that I'm posting as suggested reading. I hope you find it as intruiging as I did. Growing up in New Hampshire, a very traditional dairy area, it was ingrained in me that family farms were the backbone of the dairy industry. I worked for one, my fellow 4-H friends were born and raised on them, and at that point, I couldn't fathom that the 1,000 cow plus dairies that litter the countryside in my current location, were anything but competition in it's most devious form.
Today I know better, and I can appreciate the hard work and precise management that goes into dairies of all sizes, and more importantly, I now realize that the size of the farm does not dictate the quality of care the cows receive. It does not signify the committment of the owners to the task of producing a nutrious food, nor does it guarantee success or failure to that individual business. I love driving through New England, passing by turn-of-the-century red barns and seeing cows grazing hillsides. I also love driving by the large dairies near my new home- with their rows of barns perfectly aligned, signifying the advancements our industry has made in the past several decades and our commitment to producing milk and dairy products to feed a growing global population. I believe our country has room enough for both types of dairy farming; for embracing our foundation of putting in an honest day's work, caring for the environment and our animals- and magnifying these core values to keep up with growing food demand. There is no winner when the size of dairy farm defines its value to the whole, so I hope we can learn to take pride in all of our quality farms, and turn rather to more important issues at hand.
til next time,
The sun is FINALLY out here in Syracuse and I'm keeping my fingers crossed that it allows for my maiden kayak voyage to take place, and more importantly, for much needed field work to commence in full force across the New York farmlands.
I came across an article written by Louis Longo for Hoards this fall that I'm posting as suggested reading. I hope you find it as intruiging as I did. Growing up in New Hampshire, a very traditional dairy area, it was ingrained in me that family farms were the backbone of the dairy industry. I worked for one, my fellow 4-H friends were born and raised on them, and at that point, I couldn't fathom that the 1,000 cow plus dairies that litter the countryside in my current location, were anything but competition in it's most devious form.
Today I know better, and I can appreciate the hard work and precise management that goes into dairies of all sizes, and more importantly, I now realize that the size of the farm does not dictate the quality of care the cows receive. It does not signify the committment of the owners to the task of producing a nutrious food, nor does it guarantee success or failure to that individual business. I love driving through New England, passing by turn-of-the-century red barns and seeing cows grazing hillsides. I also love driving by the large dairies near my new home- with their rows of barns perfectly aligned, signifying the advancements our industry has made in the past several decades and our commitment to producing milk and dairy products to feed a growing global population. I believe our country has room enough for both types of dairy farming; for embracing our foundation of putting in an honest day's work, caring for the environment and our animals- and magnifying these core values to keep up with growing food demand. There is no winner when the size of dairy farm defines its value to the whole, so I hope we can learn to take pride in all of our quality farms, and turn rather to more important issues at hand.
til next time,
Monday, April 25, 2011
on the road again
I hope everyone enjoyed the Easter holiday as much as I did! The sun and flowering trees in southeastern PA were much appreciated after the drawn out Syracuse winter.
Sitting around the table for Easter dinner, I was able to appreciate another of my favorite things, dairy! I started thinking about how many of the dishes I was enjoying had dairy products in a staring or supporting role... creamy scalloped potatoes, savory pineapple filling, even the delicious strawberry pretzel dessert (I am becoming a huge fan of PA Dutch food!) were brought to us courtesy of dairy products! While these are the more decadent examples of dairy in the diet, I was just as appreciative of my Chobani greek-style yogurt for breakfast this morning, and the cheese on my sandwich at lunch. You don't need a special occation to enjoy the nutrition and yum! found in dairy products.
Here on the inevitable Monday, I'm glad to be heading back out on the road- this time out to New England for a few days to talk with farms about milk price risk management. This is a favorite destination as it affords me the opportunity to stop at home (in leiu of a hotel) and check in on the cows and parents. While I don't love the windshield time, I do enjoy seeing dairymen (and women) face to face, touring the country side, and adding some variety after a few months at my desk. I may even get lucky and find an early ice cream stand!
'til next time...
Sitting around the table for Easter dinner, I was able to appreciate another of my favorite things, dairy! I started thinking about how many of the dishes I was enjoying had dairy products in a staring or supporting role... creamy scalloped potatoes, savory pineapple filling, even the delicious strawberry pretzel dessert (I am becoming a huge fan of PA Dutch food!) were brought to us courtesy of dairy products! While these are the more decadent examples of dairy in the diet, I was just as appreciative of my Chobani greek-style yogurt for breakfast this morning, and the cheese on my sandwich at lunch. You don't need a special occation to enjoy the nutrition and yum! found in dairy products.
Here on the inevitable Monday, I'm glad to be heading back out on the road- this time out to New England for a few days to talk with farms about milk price risk management. This is a favorite destination as it affords me the opportunity to stop at home (in leiu of a hotel) and check in on the cows and parents. While I don't love the windshield time, I do enjoy seeing dairymen (and women) face to face, touring the country side, and adding some variety after a few months at my desk. I may even get lucky and find an early ice cream stand!
'til next time...
Thursday, April 21, 2011
brown swiss, bloodlines, and broken windshields
Last night was supposed to be my night to visit Design, my calf housed at a friend's farm a few towns away. Unfortunately, last night instead was spent on the phone with insurance and autoglass replacement, after a sizeable stone took out my windshield. I caught myself thinking, ugh... why do I bother?!
This answers that.
To say that I love cows is an acurate statement, but I especially LOVE Brown Siwss. Just like dogs and cats, there are breeds of cows, each with a characteristics that differentiate that breed from all others. I refer to Swiss as the big brown cow, not to be confused with Jersey's, the small brown-ish cow, or Holsteins, the big black and white cow. While I ventured into Holsteins for a year back before I was 10, I have otherwise been entirely devoted to the big brown cow. They tend to be associated with having big ears, a kind disposition, being slow moving, slow thinking, and in general, a mild mannered cow. They are the cows who get their heads caught in the corner brace of a fence in the field while reaching for an illusive patch of grass. (true story).
If you own or work with Swiss however, you probably learned fairly quickly not to underestimate them. I can personally attest to dragging and/or chasing my fair share of these "docile" bovines to or from various pastures, up and down country roads, and through or around numerous show rings. They tend to appreciate their food- often chasing smaller cows away from the feed bunk, and they do not appreciate unexpected changes to their plans- such as being trained to lead for the shows. Unfortunate, since I own cattle for the sake of showing them.
While I love all Brown Swiss, I do have a favorite; Dee. She was my original purchase- the first cow I ever owned. Photos of Dee outnumber photos of my family 3 to 1 in my apartment. And to clarify, she's not the Brown Swiss with the head stuck in the fence. She's the other kind. The kind that seem to be a little too thoughtful, and entirely too stubborn for my own good. She's the foundation of my blood, sweat and tears venture into owning and raising my own cows. She'll turn 12 this September, and while she's slowed down, no one accuses her of mellowing. I like to think she's feisty. My parents, who are Dee's primary caretakers now that I'm in NY, have another word to describe her. Either way, after an 11 year investment, Dee is part of the family.
About a year and a half ago, Dee wasn't doing so hott. She had been pregnant and aborted multiple times, was slow walking around due to complications of a difficult calving a couple years prior, and in general, she had reached the point where we were questioning whether keeping her around was the right thing to do. I had just sold her last daughter to another farm, but I kept her calf named Design, who could carry on the bloodline. Even so, it wasn't a decision I wanted to have to make. Fortunately, Dee took to a last ditch effort to get her bred (pregnant), and with fingers crossed, we anxiously awaited December, and Dee's due date. This winter, I made plans to be home the weekend we expected the calf, and sure enough, Dori arrived problem free. It felt like the best Christmas present ever.
Several months later, my Dee family is thriving. Dee herself has pulled a complete 180, walking better, milking more, and reviving the complete personality we all know her for. Her daughter Dori placed 3rd in a nice class of winter calves at the Spring Dairy show in NY earlier this month and is growing like a weed. I even have Dee's granddaughter, Design, housed at a friend's farm here in central NY. Being able to visit my cow without driving across states, and the anticipation of showing this summer is priceless.
All of this keeps me going, even when I can't quite get out to see the Swiss themselves. The excitement and anticipation, seeing years of hard work develop into better and better cows... this is what it's all about for me.
'til next time,
This answers that.
To say that I love cows is an acurate statement, but I especially LOVE Brown Siwss. Just like dogs and cats, there are breeds of cows, each with a characteristics that differentiate that breed from all others. I refer to Swiss as the big brown cow, not to be confused with Jersey's, the small brown-ish cow, or Holsteins, the big black and white cow. While I ventured into Holsteins for a year back before I was 10, I have otherwise been entirely devoted to the big brown cow. They tend to be associated with having big ears, a kind disposition, being slow moving, slow thinking, and in general, a mild mannered cow. They are the cows who get their heads caught in the corner brace of a fence in the field while reaching for an illusive patch of grass. (true story).
If you own or work with Swiss however, you probably learned fairly quickly not to underestimate them. I can personally attest to dragging and/or chasing my fair share of these "docile" bovines to or from various pastures, up and down country roads, and through or around numerous show rings. They tend to appreciate their food- often chasing smaller cows away from the feed bunk, and they do not appreciate unexpected changes to their plans- such as being trained to lead for the shows. Unfortunate, since I own cattle for the sake of showing them.
While I love all Brown Swiss, I do have a favorite; Dee. She was my original purchase- the first cow I ever owned. Photos of Dee outnumber photos of my family 3 to 1 in my apartment. And to clarify, she's not the Brown Swiss with the head stuck in the fence. She's the other kind. The kind that seem to be a little too thoughtful, and entirely too stubborn for my own good. She's the foundation of my blood, sweat and tears venture into owning and raising my own cows. She'll turn 12 this September, and while she's slowed down, no one accuses her of mellowing. I like to think she's feisty. My parents, who are Dee's primary caretakers now that I'm in NY, have another word to describe her. Either way, after an 11 year investment, Dee is part of the family.
About a year and a half ago, Dee wasn't doing so hott. She had been pregnant and aborted multiple times, was slow walking around due to complications of a difficult calving a couple years prior, and in general, she had reached the point where we were questioning whether keeping her around was the right thing to do. I had just sold her last daughter to another farm, but I kept her calf named Design, who could carry on the bloodline. Even so, it wasn't a decision I wanted to have to make. Fortunately, Dee took to a last ditch effort to get her bred (pregnant), and with fingers crossed, we anxiously awaited December, and Dee's due date. This winter, I made plans to be home the weekend we expected the calf, and sure enough, Dori arrived problem free. It felt like the best Christmas present ever.
Several months later, my Dee family is thriving. Dee herself has pulled a complete 180, walking better, milking more, and reviving the complete personality we all know her for. Her daughter Dori placed 3rd in a nice class of winter calves at the Spring Dairy show in NY earlier this month and is growing like a weed. I even have Dee's granddaughter, Design, housed at a friend's farm here in central NY. Being able to visit my cow without driving across states, and the anticipation of showing this summer is priceless.
All of this keeps me going, even when I can't quite get out to see the Swiss themselves. The excitement and anticipation, seeing years of hard work develop into better and better cows... this is what it's all about for me.
'til next time,
Wednesday, April 20, 2011
Why am I doing this?
Fair question.
I'm writing for the same reason I hope you are reading; because dairy is important and it deserves some attention! It's not just because dairy farmers are good people, or because cows are wonderful animals to work with, or even because milk is a wholesome, delicious food; it's all of that, but for me, it's because I am wholy invested in the dairy industry, and I'm concerned you aren't getting the whole story.
Let me elaborate.
I have loved cows since I was 7. Unlike many dairy farmers, I wasn't born into a farm family. I started working on a farm when I was 8, trading summer afternoons helping with farm chores for the privilage of taking a calf to the county fair to show as a 4-H project. From there, I spent more than a decade as an active 4-H'er, honing my skills in public speaking, dairy knowledge, teamwork, and leadership, all the while working on that local farm, learning to care for cows. At 12, my parents bought my first calf, Dee. At 18, I left home to attend college for Agri-Business and Dairy Science. Now, just shy of 24, I spend my work days teaching dairy farmers about milk prices. I still have Dee, she's a retired show cow now, but I have a daughter and granddaughter of hers to show at the fairs this summer. I When I call home, I'm asking how the cows are. When I talk to my boyfriend, it's impossible to avoid topics such as milk prices or a story about one of the 1,500 cows he works with every day.
I'm not just invested. I'm immersed. and I love it.
I want you to love it too. Maybe it's because you had a grandfather or uncle who milks cows, maybe it's the cows grazing in the field on your way to work, maybe you just really love cheese. Whatever the connection, I hope you have one. If not, consider this your invite into the dairy industry. I'll do my best to share stories about how milk is produced, as well as the folks who make it all happen. I want you to know where your food comes from and I'm hoping to shine a positive light on all things dairy, because we don't always get the glowing spotlight. Some of what is publicized is just wrong- animals being mistreated, poor farming practices, and mistruths about dairy product safety and nutrition- things that just shouldn't happen. I hope to show you that a vast majority of dairy farmers do it right, and are proud of the results of their efforts. It's a great way to earn a living.
So that's why I get up every morning and go to work, and why I get up at 4 am to wash my cows at the fair, and why I'm writing. That, and I really do love cheese.
'til next time,
I'm writing for the same reason I hope you are reading; because dairy is important and it deserves some attention! It's not just because dairy farmers are good people, or because cows are wonderful animals to work with, or even because milk is a wholesome, delicious food; it's all of that, but for me, it's because I am wholy invested in the dairy industry, and I'm concerned you aren't getting the whole story.
Let me elaborate.
I have loved cows since I was 7. Unlike many dairy farmers, I wasn't born into a farm family. I started working on a farm when I was 8, trading summer afternoons helping with farm chores for the privilage of taking a calf to the county fair to show as a 4-H project. From there, I spent more than a decade as an active 4-H'er, honing my skills in public speaking, dairy knowledge, teamwork, and leadership, all the while working on that local farm, learning to care for cows. At 12, my parents bought my first calf, Dee. At 18, I left home to attend college for Agri-Business and Dairy Science. Now, just shy of 24, I spend my work days teaching dairy farmers about milk prices. I still have Dee, she's a retired show cow now, but I have a daughter and granddaughter of hers to show at the fairs this summer. I When I call home, I'm asking how the cows are. When I talk to my boyfriend, it's impossible to avoid topics such as milk prices or a story about one of the 1,500 cows he works with every day.
I'm not just invested. I'm immersed. and I love it.
I want you to love it too. Maybe it's because you had a grandfather or uncle who milks cows, maybe it's the cows grazing in the field on your way to work, maybe you just really love cheese. Whatever the connection, I hope you have one. If not, consider this your invite into the dairy industry. I'll do my best to share stories about how milk is produced, as well as the folks who make it all happen. I want you to know where your food comes from and I'm hoping to shine a positive light on all things dairy, because we don't always get the glowing spotlight. Some of what is publicized is just wrong- animals being mistreated, poor farming practices, and mistruths about dairy product safety and nutrition- things that just shouldn't happen. I hope to show you that a vast majority of dairy farmers do it right, and are proud of the results of their efforts. It's a great way to earn a living.
So that's why I get up every morning and go to work, and why I get up at 4 am to wash my cows at the fair, and why I'm writing. That, and I really do love cheese.
'til next time,
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