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Veteran Advisor

from the parlor pit 10-14

Guess what todays topic will be? 

 

 

 

Cheese first than onto the stupidity or our leaders. ( sorry I am a little cranky this morning)Smiley Mad

 

First Dommino's is launching a new 6 cheese pizza.  THey hope to use this blend to enhance flavor and bring back customers.  To get me back they would need to have a store closer than a hundred miles away.  But I do applaude the effort.

Our cheese plant states that now production is in line with supply and another cheese plant is actually behind in Milk so they are coming to us for more milk to supply thier contractual obligations.

Milk has been kina on a roller coaster ride.  Yesterday the nov. fu tures was traded in a range of 20 cents while dec traded in a range of 30 cents in the end both closed lower on the day.  with nov class 3 futures closing at 16.13 down 2 and dec. closing at 15.13 down 4.  current month class 3 closed at 16.82 up 2.

Looking ahead in the near future we stand to lose 1.69 of the class 3 price with current futures movement.  With feed costs dramatically higher this is going to really put on the squeeze.

 

And now onto the leadership.

 Here is a press release issued yesterday by NMPF.

Foundation for the Future Only Answer to New Reality of Higher Feed Costs
ARLINGTON, VA – A few months ago, the U.S. Department of Agriculture (USDA) was projecting a record corn crop. However, last week USDA projected a national yield of 155.8 bushels per acre, well below last month's projection of 162.5 bushels and lower than an analysts' average forecast of 159.9 bushels per acre. The 2009 yield was a record 164.7 bushels per acre.
The USDA projected final corn output was at 12.664 billion bushels, down from its September estimate of 13.160 billion bushels and from the average analyst estimate of 12.950 billion bushels.
Today, the Environmental Protection Agency (EPA) partially granted Growth Energy’s waiver request application submitted under section 211(f)(4) of the Clean Air Act. This partial waiver will allow fuel and fuel additive manufacturers to introduce into commerce gasoline that contains greater than 10 volume percent (vol%) ethanol and up to 15 vol% ethanol (E15) for use in certain motor vehicles once certain other conditions are fulfilled.
As a result of both of these announcements in the last week corn, soybean, and soy meal prices have all rapidly increased, causing feed prices to likely be 50% higher than in April. Given current futures prices for feed and milk, NMPF projects milk-feed margins to be lower than they’ve been at any time in the last decade, with a couple of exceptions in 2009.
This is exactly why we need to pass Foundation for the Future, including the Dairy Producers Margin Protection Program. Foundation for the Future margin protection was specifically designed to protect producers against unforeseen or excessive feed prices caused by government programs to incentivize renewable energy programs, increases in demand, and/or shortage in stocks or production yield, among other things.
Shocks to the corn market like we have experienced in the last week are devastating to animal agriculture producers’ bottom line. The USDA report lowering corn production last week and the EPA announcement of E15 today solidify the need for Congress to seriously consider dairy policy reform as soon as next spring when the 112th Congress convenes.

 

 

I don't think I will have space in this post for my response to this self promoting propoganda so I will follow up with my two e-mail responses to Chris Galen in a reply to this post.

Be safe, JR

11 Replies
Veteran Advisor

two email replies to Chris galen

I wrote this right after lunch when I heard the big show announce the ruling by EPA.

 

Chris, this is JR and I am more than a little hot under the collar at todays ruling by the EPA to allow for the use of a higher blend of Ethonal. 

I farm in Iowa.  My Dad and I milk about 120 cows and the last two years have been disasterous. Just as we were getting back to breakeven the short crop and now this ruling have made our feed price skyrocket.  It is Time for NMPF to be very proactive about combatting the increase in feed costs which have directly led to the huge losses in the dairy industry.  We need to start a PR campaign aimed at stopping this destructive policy on two fronts.

1. The policy is now causing food prices to rise which will curb demand and will lead to fewer farms in the US who raise livestock.

2. The increase in ethonal mandates needs to be accompaineed with an early out option on CRP acres to alleviate the confined crop acres which we now have.

This requires your immediate attention it must be addressed as price is only a part of our profit equation the majority of our profit comes from controlling expense and right now we have no way of doing that, with goverments willingness to change the rules mid stream.

This action today requires a press release and a full out media blitz against this injustice to dairy farmers across this great nation. 

Please address this in a timely manner as this ruling today is not a law but it certainly holds much sway with the politicians in Washington who will give in to the enviromentalists and the corn lobby for sure. 

Thanks for reading this.

 

And here is my response to his reply.  I am not going to print his reply as he has not given me premmision but let me say his answer was very short sighted I believe,

 

 

Chris thanks for your response.  I had read the press response that NMPF had made already.  I  (and I am sure  you already know)  am not for a supply mgt plan in any way shape or form.  And this proposal will lead to the wide spread use of a supply mgt program. 
     The practicality of it alone is questionable.  I am having trouble affording my property insurance, and now you want me to buy another Insurance? 
 Chris your program will work just like crop insurance and let me tell you from my experience the base rate is to low to pay the bills.  You have to have coverage at 90% before it really pays. Which means most years you simply are trading dollars.
 
 I have no more dollars to trade!
 
So instead of your proposal which will take time to pass even if a majority of farmers want it. Please consider using your voice in a two prong aproach and decrying this horrid proposal at best and at worse please ask that crp rules be relaxed so hay acres can be planted and still qualify for pmt. this would free up more acres for corn effectivly driving down the price of corn. 
Chris we need relief now. Not in 2011 or 2012 but now!  This industry will not be the same in 6 months. It can't be.
JR
I know this ruling is only the first step but if the livestock industry doesn't step up now and let our voice be heard we have no right to complain when the last cow leaves the building.  We cannot let the preminitions of the floor trader from yesterdays "from the floor" become reality. 
Alls I can say is sucks to be me. JR
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kjnobrien
Friend

Re: two email replies to Chris galen

Didn,t U have a chance 2 lock in a much lower feed cost and choose not 2?  We have a large dairy in the area that seems to have money to buy every piece of land that comes for sale near them.  I will keep it short but I am glad to be paid for raising corn & bean now instead of the government paying me to raise crops for less than cost of production. 25 yrs of that was enough. instead of complaining about the price of corn I wish you would complain about the price of milk thank you

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Veteran Contributor

Re: two email replies to Chris galen

What goes around, comes around. Todays dairy industry is built around cheap corn. Dairy has expanded  greatly on the idea of growing your forages and buying the grain because you can buy it cheaper than you can grow it (sucked to be a grain farmer then). Cheap feed has passed. Someday expensive feed will pass. I'm just wondering why you want to bring down the grain farmer instead of improving dairy demand with new milk uses.

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Highlighted
Veteran Advisor

Re: two email replies to Chris galen

kjnobrien thanks for reading! 

NOw you brought up something that just made me laugh here's your quote:

 I will keep it short but I am glad to be paid for raising corn & bean now instead of the government paying me to raise crops for less than cost of production. 25 yrs of that was enough.

How do you think that your not getting paid by the gov.?  THe ethanol mandate along with the blenders credit gets passed right back to the farmer by allowing the industry to pay an above the market priice. Don't believe me?  Why then does the industry seem so worried about losing that credit? 

Just becasue now the check doesn't have ldp on it doesn't for one minute mean that the tax payers are not still subsidizing your side of this industry. Insead you are just having paul gettin robbed to pay peter. 

this is just like back in the 96 farm bll when the direct pmt. got automatically figured right into the rents.

The ethanol industry just passed the blenders credit back through to the grain farmer in the same wayhe farmer passed the direct pmt. back to the landowner.

So sorry to burst your bubble but your still on the gov. dole just that now you won't find that pmt. on ken cooks EWG web site. JR

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Veteran Advisor

Re: two email replies to Chris galen

Red so using your logic when you grain guys complain about the price of seed corn or fertilizer you have a legitimate reason to bitch but a dairy farmer complaining about his input costs is some how wishing evil on his neighbors?

As to why not complain about te price of milk why? I got over 18$ for my milk this month.  Only 7 times have I ever gotten paid this amount. But even then it doesn't cover all costs.  And going forward we can see this is the high.  Demand has hit our blender wall and with the huge amount of folks on food assistance be it through WIC or school lunches as we work higher the cost to the federal budgt becomes burdensome require either the reduced usage of dairy products or a reduced cost.

This means the gov. has to get the cst down.

How are they going to do that?

Cut the blenders credit I'll be willing to bet that unless the dollar goes a lot lower that we will have corn start witha 4 at least and probably with a 3. 

Again the gov gives and the gov takes away.  JR

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Frequent Contributor

Re: two email replies to Chris galen

Wow.  For a guy who normally can see the silver lining on every mud puddle......I haven't heard you this negative in quite a while.

 

As my family has expanded out cattle feeding enterprise in the last year, I share your concern.  Of course, in theory feeder cattle prices should flex inversely to that of corn......but they really haven't changed this week since the run up in corn.  I am fortunate that I grow all of the corn that I feed although I'm kind of scratching my head at the all the acres of hay I raise .......but it's better than buying it and the crop rotation is probably the best thing for our "gently" rolling hills in southern Iowa.

 

I feel your pain, though.  This will be one of those gut check years that make you wonder why you do what you do.  I was raising hogs in 98.....made it through that but did decide to give it up in 2003.  Was a hard decision at the time but i really don't regret it.  Of course I'm sure I didn't have the investment that you do in your parlor and facilities.

 

I wish I could tell you this too will pass......but I know you've heard that already.  Just remember to appreciate your health, family and the fact you get to do what you love every day.  I hope you never have to trade it in for a real job.

 

fwiw.......

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kjnobrien
Friend

Re: two email replies to Chris galen

Partly what I get for keeping it short. I'm sure some livestock boys cheered U tell em jr.  I will not try to change your mind but will further my view,  You were subsidized 4 those 25 years in my view but i'm not laughing about it.  It also allowed the Jack De Costers of the world to cash in on my subsidy with little regard for neighbors or the environment.  A far as subsidizing Ethanol it is much better than subsidizing big oil with tax breaks and our military presence in the mid East . Our small town (1700) has lost to young men in this war  making 2 widows and 4  fatherless children.  I would much rather sub a renewable fuel than give our money 2 people who would say death 2 America, thus saving lives and creating jobs. I am not much of a typer nor good at putting my words in print thus i seldom post but read everyday I can.  I will stick with the view U boys need more 4 your milk & meat.  I am sorry times are tough for U but we will have to agree to disagree.  I am still trying to keep it short. thanks 

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Veteran Advisor

Re: two email replies to Chris galen

Trust me friend I am no typer either!  I kinda like that Brad pasley song where tells himself I should of taken typing class in High School!Smiley Very HappyAnd I certainly can't disagree with your response about DeCoster and many other large Livestock operations.  If you have had time to read any of my posts u will realize that I have said for to many years that corn was kept cheap which allowed the afore mentioned to grow an unsustainable businees on the backs of rural America. 

How our towns would be better if cheap corn hadn't driven us to huge corporate livestock farms!  But this being factored in the corn lobby was forced in many ways to find away to get away from the direct nipple feeding so many had grown accustomed to, thanks largely to the exposure that EWG brought to the dollar amounts of the subsidies. 

Yes it is horrible that so many have to die for the protection of a natural resource which we currently have an abundance of right here at home!  Wouldn't we better off to allow those Men to work here exploring and harnessing our natural resources rather than fighting in a country were they are neither wanted or appreciated?

Having said all that I am tired of hearing that for 25 years that livestock was haviong it so good at the expense of you cash croppers.

We had our share of tough times in that period as well.  I can remeber 01-03 milk just sucked everything was tough and all I heard was get bigger or get out!  The Farm Credit guy came out and said get rid of all your ground hire all the feed put up sed out your heifers to a custom raiser...... all the standard Land grant dribble!  I remeber in 96 buying 6 dollar corn which adjusted for inflation was much higher than the run up in 08.  Remember we had a dairy diversion program in 83 and a herd buyout in 85.  We didn't do those things because we were awash in Money and taken a point in marketing from OPEC decided to limit supply! NO we were going broke then too. 

Hogs got killed so many times ....well just read the post before yours.  Beef guys got creamed when we had the buyout and when pork got so cheap in 98. Not to mention the CRP acres which raised values on any available pasture ground that was left.

So maybe we have to agree to disagree but pleasse don't stand back and keep saying that some how us livestock guys had 25 years of record earnings while our cropper cousins were in the poor house.  Because that isn't the truth either.

In the end what ticked me off the most today was really what started last night in my emails with Chris.  His standard answer to combating socialism is more socialism .  Well I am tired of suck the big sows titty and I would hope that all of ag would stand up and say were big boys keep your sow and take the pork with her we'll do it ourselves! I hope this clarifies with you my position, JR

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Frequent Contributor

Re: two email replies to Chris galen

I have to agree with Kjnobrien.  It's no secret that Americans pay more for entertainment than for food.  We've gotten spoiled and complacent.  Every year we hear the crowing that Americans spend less of their disposable income for food than the year before, and at the same time, to add insult to injury, the producers' share of the food dollar continues to go down.   The fact is ag has been in a multidecade depression.  Our kids have been forced from the farms into the cities and our communities have been gutted.

 

Luckily, I locked in the corn needs for my feeder cattle in the upper threes when I had the chance, but I expect that in the future I'll be paying more.  But I break from my fellow cattlemen in that I believe we in livestock should take our profits from the market place, not from the growers that produce our feedstuff.  Americans can pony up a little,  we in ag have been packing American society long enough.

 

As for subsidies, the most glaring of all is the cost of US military policing of international oil.  If that cost was reflected at the pump instead of being added to the national debt to be passed on to our children, than any number of alternatives, and conservation, would be viable.

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