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0906 PD: Where’s the beef?

Darren Olsen Published on 21 September 2006

Back in the late 1980s, Wendy’s hamburger chain ran a series of commercials which featured three old ladies contemplating big buns and little meat patties. The catchphrase that swept the country became, ‘Where’s the beef?’ What’s funny is it’s probably more applicable today as we look at the latest monthly milk production reports from the USDA.

With everyone else, I watched the heat waves that gripped the country in July. Some areas have since found a little relief, but I, along with many others, have wondered how milk production would fare under these extreme conditions. Quite honestly, the July output numbers were shocking – but not because of a dramatic drop – rather because of the lack thereof.

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It took me a few days and reading several different views on the matter to realize how much production had dropped, but the offset came in total cow numbers.

Fourteen of the top 23 milk-producing states saw either a drop in production or a near standstill in comparison to last year. That alone should have signaled a big decrease to the industry and at least a modest increase in prices, but with the addition of 107,000 more cows to the system over last year, the drop resulted in no more that a tiny ripple in the bulk tank of the United States.

Take California for example. Milk production for July was down 1.1 percent. That should have signaled an upward trend for prices, but cow numbers were up 0.9 percent, resulting in a net loss of only 0.3 percent for the month of July.

As you look across the country, the same picture plays out in several states. Wherever there was a loss, somewhere there was an offsetting gain to keep milk production up.

The trend flows throughout the entire industry. Dairy replacements continue to be ample to keep the milk supply flowing. As of July, we stand nearly 100,000 replacements ahead of this time last year. Even worse is the trend that we are close to 200,000 milking replacements ahead of two years ago.

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If that isn’t bad enough, the latest milk-feed ratio is floating around the 2.35 to 2.40 range, well below the much-sought-after 3.0 or higher range. Oh, and dare I mention the latest alfalfa production figures, which put our favorite forage supplies in decline by 6 percent compared to last year. With a drought extending through the entire midsection of the country, beef producers are looking everywhere for forage, and they are willing to pay to get what they can.

I spoke to a farmer in Oklahoma a few days ago that had just made a purchase of hay from South Carolina. He noted the bill to haul the hay would kill him, but he was left with no other options if he wanted to stay in business.

The situation, unfortunately, is not going to see much improvement until cow numbers come back down. The last 20 years have seen an unparalleled growth pattern in our industry. That growth is now starting to catch up with us. I read yesterday that in 1990, milk prices were at $13.90 per hundredweight, and experts said that was starting to kill off farms. We only wish we were there today.

To stay in the thick of things, producers need to be eliminating any animal that is not meeting its potential or close to it. With prices as they are, there is no reason to keep around something that won’t help the situation. It is just where things stand today, and there is no way around it.

Be that said, I did get an awesome grill for Father’s Day, and I am ready and willing, anytime, to grill some hamburger. PD

—Darren Olsen, Editor

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