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Dairy Industry Report: Weather, economics lead to small somatic cell count increase

Progressive Dairyman Editor Dave Natzke Published on 29 March 2016

Weather and the economy likely impacted somatic cell counts last year. Dean Foods will close a milk plant in Louisiana, and Walmart will build one in Indiana. This and other U.S. dairy industry news can be found here.

Weather, economics lead to small somatic cell count increase

Although the increase was small, a 2015 summary of Dairy Herd Improvement (DHI) test-day results revealed somatic cell counts (SCC) were up compared to a year earlier. Milk quality specialists and veterinarians contacted by Progressive Dairyman suggest two reasons for the increase: weather and economics.

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Nationally, average 2015 test-day herd SCC was 204,000 cells per milliliter (cells/mL), up 4,000 cells/mL from 2014. It marked the second consecutive year average test-day SCC posted a small increase.

Prior to 2014, average test-day herd SCC has declined eight straight years, and was down nearly 100,000 since 2005, according to the Council of Dairy Cattle Breeding and USDA’s Animal Improvement Programs Laboratory.

Of reporting states, 21 had lower 2015 average SCC than in 2014; 25 states had higher averages. Perhaps surprisingly, several southwestern states exhibited the largest increases compared to a year earlier, with New Mexico, Texas, California and Arizona among the top five for year-over-year increases.

Weather factors into the risk for higher SCC, a measure of milk quality and udder health. According to the National Oceanic and Atmospheric Administration, 2015 average temperatures and precipitation were above average across the South, and extending all the way to the Pacific Northwest. Precipitation was also above average in many major dairy states, especially Texas and New Mexico.

Seasonality also has an impact. SCC increased from May through August, and then declined from August through November. The highest quality milk was produced in November and December.

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Another factor is economics. USDA data shows the U.S. milking herd grew throughout most of 2015, as dairy farmers built on record-high 2014 milk prices, and lower production costs helped maintain income margins for much of the year.

Combined with high dairy replacement cow and heifer costs, producers held on to more cows longer, including those with elevated SCC levels. The increase in cows per herd continued, from 177.3 in 2014 to 185.9 in 2015. Test-day milk yield was up from 76.2 pounds to 77.2 pounds. As herd size increased, milk yield generally increased and SCC declined.

Herd test days higher than the federal limit may overestimate the percentage of herds shipping milk exceeding that limit, because milk from cows treated for mastitis is excluded from the bulk tank, even though it is included in DHI test data.

Read the full report.

Dean moving Louisiana production

Dean Foods will phase out a milk processing plant in New Orleans over the next several months, moving operations to Hammond, Louisiana.

According to the Brown’s website, Brown’s Dairy, originally known as Brown’s Velvet, was founded in New Orleans in 1904.

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Brown’s Velvet was purchased by Southern Foods Group of Dallas, Texas, in 1993. With the creation of a joint venture between Southern Foods Group and Suiza Foods in 1999, Brown’s Velvet became part of Suiza Foods’ Southwest Region in 1999, and officially changed its name to Brown’s Dairy in 2000.

With Suiza’s acquisition of Dean Foods in 2001, Brown’s Dairy becomes part of Dean Foods Southwest Division in 2001.

After surviving Hurricane Katrina and rebuilding its market, Brown’s dairy was cited as one of the most profitable dairies in the Dean Foods dairy group in 2011.

Milk processed in New Orleans is distributed throughout Louisiana and in Alabama, Mississippi and Florida. In addition to milk and chocolate milk, Brown’s Dairy also produces eggnog, whipping cream, fruit drinks and tea.

AMPI milk volume, foodservice sales up

Growing milk production on member farms and increased orders from foodservice customers combined to push sales for Associated Milk Producers Inc. (AMPI) to $1.7 billion in 2015.

“Milk production on member farms grew 3 percent last year,” Donn DeVelder, AMPI co-president and chief executive office, told members attending the co-op’s annual meeting. “The cooperative’s network of plants operated at capacity throughout much of the year, and total cheese production surpassed 430 million pounds.”

Sales to foodservice customers account for 78 percent of AMPI’s consumer-packaged cheese and butter sales, up 7 percent from 2014. Processed cheese production at the cooperative’s consumer-packaged cheese plant in Portage, Wis., set a new record in 2015, and sales rose 17 percent.

A second year of high demand and record prices for cream and bulk butter made sourcing raw product challenging and placed downward pressure on returns from the cooperative’s butter-packaging plant in New Ulm, Minn. That, coupled with the financial impact following a December 2014 fire at the Portage plant, resulted in a $1.6 million loss for 2015.

Headquartered in New Ulm, Minnesota, AMPI owned by 2,200 Midwest dairy farm families from Wisconsin, Minnesota, Iowa, Nebraska, South Dakota and North Dakota. They market about 5.9 billion pounds of milk annually.

Clark, Leahy to lead Farm First Young Cooperators’ committee

Janet Clark of Vision-Aire Farms in Eldorado, Wis., was elected chair of the FarmFirst Young Cooperators’ Steering Committee. Clark farms with her husband, Travis, along with her parents, Roger and Sandy Grade, and her brother, David Grade. 

Mike Leahy of Leahy Farms, Inc. from Brandon, Wis., was elected vice-chair. He farms with his family, including his parents Jerry and Carolyn Leahy and his two younger brothers Eric and Jon.

Based in Madison, Wis., FarmFirst Dairy Cooperative represents nearly 5,000 farms in Wisconsin, Minnesota, South Dakota, Michigan, Iowa, Illinois and Indiana through policy bargaining, dairy marketing services, laboratory testing opportunities and industry promotion.

Learn more about FarmFirst Dairy Cooperative.

Peterman named Organic Valley ag research lead

Organic Valley, America’s largest cooperative of organic farmers, named Logan Peterman, a Madison-based agricultural research analyst, to lead the organization’s organic research initiatives. He will lead on-farm data collection and analysis for farm advisory staff, while simultaneously serving as the liaison to the organic agricultural research community.

Peterman formerly served as farmer resource manager for Organic Valley, functioning as liaison to the farmer-owned cooperative’s in-house team of professionals in veterinary care, ruminant nutrition, agronomy and animal care.

Dairy Business Association elects three

Dairy Business Association members elected three new directors. Farmer representatives are Cody Heller, president of Heller Farm Inc. and chief executive officer of Central Wisconsin Ag Services, and Lloyd Holterman, a lifelong dairy farmer and partner in Rosy-Lane Holsteins. Corporate representative is Cindy Leitner, co-owner/chief financial officer and operations manager for LDS Inc., a dairy equipment and service provider.

DBA members re-elected Gordon Speirs, Shiloh Dairy LLC, Brillion, as president. Other officer are: Jen Keuning of Conestoga-Rovers & Associates Inc., Green Bay, secretary, and Tom Crave of Crave Brothers Farm, Waterloo, treasurer.

Dairy industry still processing Walmart’s potential impact

More than a year away, Walmart’s planned entry into the milk processing business is already sending ripples through the dairy industry.

Walmart announced plans for a milk processing facility near Fort Wayne, Indiana. Construction of the 250,000-square-foot facility will start this summer, with completion in the summer of 2017.

The plant will produce Walmart’s Great Value and Member’s Mark white and chocolate milk, serving 600 Walmart and Sam’s Club stores in Indiana, Illinois, Ohio and northern Kentucky. Milk will be sourced from dairy farms in Indiana, Ohio and Michigan.

Find the full Progressive Dairyman article.

Dairy Farmers of America holds 18th annual meeting

Stronger financial returns at the cooperative level helped take some of the sting out of lower milk prices at the farm, Dairy Farmers of America (DFA) leaders told members attending the organization’s 18th annual meeting.

Reflecting global supply and demand imbalances, weaker milk and dairy product prices translated into much lower DFA member milk prices. The 2015 average DFA milk price was $17.18 per hundredweight, down almost $7.00 from the $24.17 per hundredweight average in 2014. The 2015 average was the lowest in the past five years.

As a result, milk payments to members totaled $7.94 billion in 2015, down more than $3 billion from the $10.94 billion paid in 2014.

Find the full Progressive Dairyman article.

Arla, DFA joint venture to produce cheddar cheese in western New York

Denmark’s Arla Foods, Dairy Farmers of America (DFA) and eight U.S. dairy farmers are forming a joint venture to build a premium cheddar cheese production facility in western New York.

Facility construction is expected to begin this fall, with cheese production starting in fall of 2017. Investment in the joint venture is estimated at $58 million.

The joint venture will be 70-percent owned by DFA, the largest dairy cooperative in the United States. DFA will manage the operation.

Arla, the fifth largest dairy company in the world, will invest about $11.8 million, and have a 20 percent ownership stake in the joint venture.

The eight New York dairy farms, all DFA members, will invest capital and annually supply about 14 million pounds of milk to the facility. They will own 10 percent of the joint venture.

The new joint venture is an outgrowth of a business – Craigs Station Creamery – created in fall of 2014, when DFA and the eight farms invested $12 million to build a cold separation plant, producing standardized milk and cream.

The farms, all located in New York’s Livingston and Wyoming counties, include Lawnell Farms, Coyne Farms, McCormick Farms, Baker Brook Dairy, Southview Farm, Synergy Farm, Noblehurst Farms and Mulligan Farm. Each milks an average of 1,500 cows. They will own 10 percent of the joint venture.

Find the full Progressive Dairyman article.  PD

Dave Natzke
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