from the parlor pit 7-21

[jrsiajdranch]

Sorry guys it's been awhile we've been chopping hay pretty musch whenever we can find a spot that is ready.  After a disasterous 2nd cutting we don't want to lose anything to the weather this time. 

On to the dairy market news. HOORAY blocks closed yesterday at 1.60 per pound that is the highest since dec of 09. we have taken out the high for the calendar year which was set in the first two weeks of JAN. 

I sure hope this is a sign of good things to come.

I don't want this post to be a downer but I also don't want to ignore the realities of the dairy industry at this time.  Folks the financial constraints of the past two years are reaching critical mass.  I have talked to 4 dairyfarmers in the past week who are all contemplating a complete liquidation or a chapter 12 reorg.  My dad talked to a lawyer from the west side of the state who said he has been in the ag law profession since 73.  He went through the dairy crisis of the seventies and the farm crisis of the 80's.  He said the past 18 months have been the worst he has ever seen it. 

Folks it is tough out there don't kid yourselves if you are struggling you are with the majority right now. 

CWT is rumbling that they have taken several very large herds out in this last round of bids. It seemed they focused on larger herds. I haven't had the time to fully research that angle yet.

Yesterday the Semen salesman came around.  I have only known him for about a year. real nice guy. He told me that He was tired of going around to farms as there was way to much doom and gloom. He said about every farm is on a pay as you go plan (full disclosure so am I) WHile I was standing ther talking with him he got a call from another dairyman who needed supplies and he said he finally had the money to purchase them and was wondering if he could get resocked right away as he had been out for a while.  I just want you to realize it is tough but in the end I think we will come out of it.  Today the sun is shinning and the hay is drying. I just wish it would blow some dry heat around here as the wheat is still to wet to cut. I keep poking into it but the stems are so tuff it is hard to get it through the old 1460.  Yesterday twice I was out there with the rocking wrench unpluggin the rotor. In 80+ degree heat that can get to be work.

Last week was the oliver antique auction which our 4-H club had the food booth at.  Stuff didn't sell like they had hoped (personally I think the collector market is a little to saturated).  But the 4-H club made out pretty well.  Now the kids are hoping to have enough to go to Adventureland for a day we will see what happens.

It was really hot and some of the kidss put pop and water in a little cooler and carried it to the crowd while the bidding was taking place. they made out like bandits.

After a while one old farmer in overalls bought a water and then gave the kids a 50 cent tip!

Well the kids thought that was great! so they got a cup and wrote tips on the side two kids were by the wagon selling the pop and my youngest Jordan was standing there holding a tip jar. 

THey made $42 dollars in tips! LOL

Then my son thought he would just walk around asking for money. when he got to some oldtimer he would just say would you like to donate to the 4-H club?

People started giving him money! It was hilarious.  The kids had fun the adults almost melted in the heat and a lot of old iron got sold.  Just another day in farming.  It sure is a great community of folks we get to be around. Some days that makes it worth it.

BY the way yesterday I got into it on Ethanol with Jan mickelson of WHO radio. I don't think I did avery good job but I still tried.

http://www.whoradio.com/pages/pp_janmickelson.html

That is the link to his page if you download his show from yesterday you can hear me talk a little. Its from about 27 minutes on for another 12 or 15.  tell me what you think.

BE safe oops I'm late to start chopping gotta go. JR

[swiz1979842]

JR, I listened and I think that you did fine. This is all such a can of worms. I am a corn farmer. I like ethanol. I like the blenders credit. I wish it were a dollar a gallon. How is that for honesty?

Now, I understand why you do not. There is no doubt that ethanol raises corn prices. This directly raises JR's cost of production for his milk. Is this fair? Probably not, but it is not the first thing that was not fair. You admitted that at one time other government programs artificially lowered the price of corn. This was good for JR or his predecessors. Was it fair? Probably not. Before we get rid of the ethanol subsidy, should the livestock industry refund to the grain growers 50 cents a bushel on many billions of bushels of corn that they got a great deal on? Isn't going to happen.

It is just too bad that livestock related prices cannot adust to these imput prices so that we could all just get-a-long(Rodney).  A couple of years ago, I thought that it would eventually happen and maybe it still will. But it seems to be taking its sweet time. To me, it is just crazy that bottled water costs about the same as bottled milk.

After admitting my pejudice on this matter, I do like the idea of trying to create our fuel here and not from some godforsaken place with a bunch of pychos that hate us. I haven't seen too many aircraft carrier groups out there in Iowa to protect those cornfields. I wonder what it costs us all to protect the strait of hormuz.. My guess is that it is many, many times more than any ethanol or other ag subsidy. As always, I could be wrong.

Anyway, hang in there and be careful with that chopping.

[frankne]

If you werent 340 miles away you could come get the stripper head and be done with the wheat.

[behog]

He is a dairymen so we probably wants all the straw he can get.  Especially in Iowa.  There does not seem to be much straw in that neck of the woods.

About the dairy crisis.  I agree.  I was trying to make it through this rough time without borrowing any money, other than my normal line of credit which is maxed out.  I am not going to make it.  I decided to borrow some money and refinance and add a few cows and put in a larger milk tank.  That way I can go to every other day pick-up instead of everyday.  They are really hammering me on the stop charges.  If I am in a pickle, I am sure many more are much worse off.  My debt is pretty low as I started 10 years ago and after a refinance and purchasing some new equipment over the years I am getting my note paid down pretty good. 

As I was making my financial statement which I have not done in 2 years I was shocked.  I knew that I had lost some equity but this is crazy.  With the drop in dairy cow prices and the maxed out line of credit I realized that in two years I have lost 20 percent of my equity. 

But I am going to keep my head down and keep moving forward.  I suspect that one day things will turn around.

Many of these dairys had lenders that were waiting for cow prices to rebound so they could be liquid before they sell out.  Well many just can not wait any longer.  Take a 1000 cow dairy.  Cows may be worth around 1000 per head.  2years ago they were worth at least 1500.  Thats 500000 dollars.  Then, if they have heifers add them into the equation.  Your getting close to a million in equity that has vanished.