Dairy producers look to expand, modernize to meet challenges

On a November morning in eastern Missouri, while waiting for the milk truck to arrive, Perry County dairy producer Charlie Voelker reflects on his recent decision to construct a new milking building. By Benjamin Herrold.
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It was actually a fairly straightforward decision. He had a son who decided he wanted to get into the dairy business, and the old milking barn was built in the 1950s.
“We were either going to have to modernize or get out of the business,” he says.
Voelker also knew that with tight profit margins, if any, efficiency was key.
“That’s the reason why we did this — to be more efficient,” he says. “This cuts our milking time in half.”
The new building allows Voelker to milk 20 cows at a time, and with it constructed and operational, he is gradually building up his herd numbers, aiming to get up to about 200 milk cows. He has Brown Swiss cows, and he and his son grow all their own forages.
They also get brewer’s grain from the brewery in St. Louis.
For Voelker, who serves on the board of directors for the Missouri Dairy Association, 2014 was his best year. Since then the industry has been more challenging, more of a break-even proposition.
“It’s kind of a tough time,” he says.
But Voelker says tough times can be a good time to expand because it can be cheaper, and because efficiency is even more important in such times.
Dave Drennan, the executive director for the Missouri Dairy Association, says 2016 was a challenging year.
“Most of the year, we’ve been under our cost of production,” he says.
Drennan says cost of production is about $17 per hundredweight.
He says the Margin Protection Program (MPP) has not helped as many producers as they’d hoped, with the formula not reaching many producers.
“It hasn’t been the kind of safety net we hoped it would be,” he says.
Drennan says he expects in the next MPP signup cycle, producers will be less interested in signing up, and likely opting for minimal, catastrophic event coverage.
“The mindset is not good,” he says.
Lower dairy exports have also hurt prices. Still, Drennan says that at the World Dairy Expo, experts and producers repeatedly said the response to challenging conditions has been to expand and modernize. Interest in robotic milkers is higher than ever, he notes.
Scott Brown, an ag economist for the University of Missouri, says the last few months have provided a slightly better outlook in a bad overall year.
“It was a tougher year,” he says. “It varied a little. April through July or August, probably pretty tough for a lot of folks. … We have seen some recovery of late.”
Some producers have received MPP payments to ease some financial pressure, but many producers aren’t benefitting from the program, Scott says.
“Most folks aren’t very happy with how the Margin Protection Program has worked so far,” he says.
Brown says the margin is milk prices minus feed costs, and low feed grain prices have limited payouts.
“They probably grow a significant portion of their own feed, so they haven’t seen the decrease in feed costs,” he says.
The export trends are key for milk prices, Brown says. The strong U.S. dollar, high stocks of dairy products and other geopolitical issues have hurt exports.
But Brown says a number of important dairy countries are reducing milk supplies, and there has been a recovery in the demand side. China could also present an opportunity. All in all, he is hopeful for an increase in exports and milk prices.
“I am cautiously optimistic we’ll get higher milk prices,” Brown says.
Voelker is also optimistic about the dairy industry. He walks down the feeding alley on his farm. Three gentle, 9-year-old Brown Swiss cows shared an early lunch.
“I just like their temperament,” he says.
This is Voelker’s favorite part, working with the animals that help him earn a living.
“I like working with animals,” he says. “I’ve always loved the cows.”
Source: Stuff

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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