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why alfalfa is becoming cheaper.....

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  • why alfalfa is becoming cheaper.....

    it's long and inter-related but the dairy farmers are not being paid enough to feed the cows any longer....so the alfalfa contracts are being cancelled left,right and sideways....read on


    Global milk glut squeezes dairy farmers, consumers

    By CHRISTOPHER LEONARD, AP Business Writer Christopher Leonard, Ap Business Writer – Mon May 25, 2:34 pm ET

    BARNHART, Mo. – A collapse in milk prices has wiped away the profits of dairy farmers, driving many out of business while forcing others to slaughter their herds or dump milk on the ground in protest. But nine months after prices began tumbling on the farm, consumers aren't seeing the full benefits of the crash at the checkout counter.

    The average price for a gallon of milk at grocery stores last month is down just 19 percent from its peak of $3.83 in July. Farmers, on the other hand, got $1.04 a gallon in April — 35 percent less than they were paid last fall. This winter, wholesale prices were down as much as 45 percent.

    Price disparities are a fact of life both for farmers and anyone who shops at a supermarket, but the nature of milk — how it's stored, priced and sold around the world — makes the gap all the more dramatic. In fact, the price that farmers get has been wildly volatile for years, creating a succession of booms and busts felt from pastures to the grocery store.

    With each turn, proposals are floated to end the pricing seesaw, which at one extreme squeezes the profits of farmers and the other squeezes dairy processors. Any fix that boosts the price of milk runs the risk of bumping up how much consumers pay, too.

    Today, frustrations are spilling over as the price crash creates widely divergent fortunes within the milk industry, boosting profits for the middlemen like dairy processors while pushing farmers to the edge of bankruptcy.

    Darrell Kraus, a dairyman in Barnhart, spends almost as much today on hay and other supplies for his herd of 160 cows as he did a year ago, but he's getting paid less for a gallon of milk than his father in the 1970s. He blames middlemen who buy the milk from the dairies, process it and sell it to grocery stores at higher prices.

    "Somebody's getting a cut of this, but it's not the dairy farmer," he said. "It's sad, but they're going to see a lot of dairy farms go out of business."

    At a grocery store in Fayetteville, Ark., Katherine Thacker noticed how milk prices were slowly falling — but not as drastically as last year's price hikes. She was surprised to learn that the lower wholesale milk prices were being absorbed by dairy processors.

    "That's kind of criminal, isn't it?" she said.

    Milk processors and supermarkets see it differently.

    Last fall and summer, they swallowed losses because of high wholesale milk prices and government-mandated ceilings on what they can charge. They're now recouping some of what they lost and anticipating a rise in prices this winter, said Mike Nosewicz, vice president of dairy operations at Cincinnati-based Kroger Co., which operates its own dairy processing division and sells milk through 2,400 supermarkets.

    At the heart of the problem is the nature of milk. Unlike grain farmers who can hold out for better prices by storing crops in a silo, dairymen must sell raw milk to processors or else it spoils. And cows keep producing whether the economy's expanding or in recession.

    The price paid by processors to farmers is set by the U.S. Department of Agriculture based on commodity markets, which rise and fall with global demand. Some of the raw milk is processed into milk for stores as well as butter, yogurt and other products for U.S. consumption. The rest becomes powdered milk, cheese and whey for international and domestic markets.

    U.S. milk exports soared last year and demand grew in countries like China while supplies dropped from Europe and Australia. U.S dairy exports jumped to $3.82 billion, or 11 percent all milk production in 2008 according to the U.S. Dairy Export Council. Wholesale prices jumped.

    Dairies responded to the demand by increasing production.

    But once the global recession accelerated last fall, demand, particularly exports, fell off a cliff.

    U.S. farmers were suddenly faced with too much milk and too many cows. Wholesale prices crashed. Farmers found themselves spending more to maintain their herds than they were being paid for raw milk.

    "It's an inequity that cries out for attention, consideration and action," said Sen. Robert Casey, a Democrat from the dairy stronghold of Pennsylvania. Casey projects that 25 percent of his state's 7,400 dairy farms could disappear because of the crisis.

    Casey said most lawmakers are focused on short-term solutions — loans or subsidies — to help farmers bridge the period of depressed prices. But he said Congress should also explore why processors and retailers are keeping their prices high while wholesale prices collapse.

    Farmers also are lobbying for a bill that would change the USDA pricing system for milk so that wholesale prices reflect what they pay for feed, fuel and other supplies.

    If that happens, milk would be the only commodity of its kind to have a government-set price determined in part by the cost of production, said Scott Brown, dairy analyst at The University of Missouri's Food and Agricultural Policy Research Institute.

    "Anytime you put in place a policy that raises farm-level prices, those are going to get passed along to the consumer," he said.

    U.S. Secretary of Agriculture Tom Vilsack also said he is not eager to remake the USDA milk pricing program. Instead, he wants to see if a range of recent actions might buoy wholesale prices. USDA recently donated 500,000 pounds of excess powdered milk to needy countries to reduce U.S. supplies, and a new program will pay farmers to slaughter more than 100,000 dairy cows.

    Some farmers say faster action is needed. They're dumping their milk on the ground to draw attention to the crisis.

    Jan Morrow, a farmer in Cornell, Wis., dumped milk on May 4 to protest the lowest whosesale prices she's seen in 25 years of farming. If prices don't rise, she says she may have to sell her cows.

    Eddy Lekkerkerk, a 42-year-old dairy farmer outside Filer, Idaho, planned to participate in another milk dump on May 31. But he fears he may not be in business that long. For five months, he hasn't made payments on the roughly $800,000 he borrows annually to buy feed for his herd of 1,000 cattle. He said his bank is forcing him to sell his herd to pay his debt.

    He predicted many of his neighbors will have no choice but to follow him off the farm.

    "It's going to be ugly. This is historic stuff going on," he said. "The dairymen are nervous, and they are scared."
    Production Acres,Pro A Welsh Cobs
    I am one of the last 210,000 remaining full time farmers in America.We feed the others.

  • #2
    Sounds too complicated for me, but if the demand is down, what end does it serve to jack the prices up artificially? I feel for anyone whose livelihood depends on the vagaries of something as complicated as "markets".
    Click here before you buy.

    Comment

    • Original Poster

      #3
      Originally posted by deltawave View Post
      Sounds too complicated for me, but if the demand is down, what end does it serve to jack the prices up artificially? I feel for anyone whose livelihood depends on the vagaries of something as complicated as "markets".
      well we all live and die on the oil futures and the processors say that they are having to recoup their losses from last year...

      the part that figures in the horses is this...alfalfa is grown here in the States for the dairy market...horses eating alfalfa is a tenny tiny itsy bitsy slice of that market....the horse alfalfa just rides the dairy wave...

      if and when the dairies cancel the contracts and or go out of business....the alfalfa farmers then turn around and just plant something else that does make money....so then there are no "leavings" for the horse market....

      best
      Production Acres,Pro A Welsh Cobs
      I am one of the last 210,000 remaining full time farmers in America.We feed the others.

      Comment


      • #4
        Originally posted by Tamara in TN View Post
        .... and a new program will pay farmers to slaughter more than 100,000 dairy cows. .......

        That sounds just lovely- another dairy buyout program ala Graham/Rudman. It didn't work in the 80's, but lots of good cattle got killed and buried (they didn't go for meat). To this day if DH, who basically grew up on a prestigious dairy farm, hears anything about Graham/Rudman or dairy buyout, he goes off in a tirade.

        Comment


        • #5
          And meanwhile the price of a gallon of milk in my area keeps going up. Between $3.89 to $4.89 depending on percent.
          You jump in the saddle,
          Hold onto the bridle!
          Jump in the line!
          ...Belefonte

          Comment


          • #6
            I don't know a whole lot about the economics of it all, but it just seems like the agricultural markets have been all kinds of messed with. Before our recent Army mandated move, I was fortunate enough to be in a location that I bought all our dairy products straight from a dairy. Reduced our grocery bill, regular deliveries, fabulous customer service, and the BEST milk/cheese I've ever had.
            Equestrian Photography

            Comment


            • #7
              Misty, the price of milk in New England is guaranteed by the Northeast Dairy Compact, which assures that the farmers make an agreed-upon price no matter what the market does (this is greatly simplified; it's been years since I was actively involved in the dairy industry, but I remember the discussions when it went through). So, our milk prices tend not to drop, & no lovely cheap alfalfa for my poor ulcer sufferer!
              ""I'm a believer that there's artistry in everything from a lawn gnome to a desk chair to a symphony to an Andy Warhol painting. There's art in absolutely everything." --Darren Criss

              Comment


              • #8
                Hey Teach...you keep popping up once in a blue moon! Knock that off and just stick around, you're missed when not around.

                Yeah...I know we don't drop prices and honestly despite drinking more milk than a calf probably does I deal with it because I prefer to see our few dairy farms left in CT stick around.

                I don't think I've *ever* seen cheap alfalfa here...does anyone even grow it in this area at all? We have a craptasticly short growing season...some areas get such multiple cuttings that I can only imagine the cost of any hay getting 4 or more cuttings around here dropping dramatically.
                You jump in the saddle,
                Hold onto the bridle!
                Jump in the line!
                ...Belefonte

                Comment

                • Original Poster

                  #9
                  Originally posted by MistyBlue View Post
                  some areas get such multiple cuttings that I can only imagine the cost of any hay getting 4 or more cuttings around here dropping dramatically.
                  local growers cannot compete with the 5,000 acre farms out west in so far as input costs BUT the freight that it takes to bring hay from WY to say, PA ,will increase the overall costs of the hay to bring to you....and then the WY hay will be the same or more as a local premium once the freight is added in....

                  and the NE is as bad as FL for super high frieght rates as nothing ever leaves either area with any regularity...so the frieght companies charge to go in there than other areas

                  regards
                  Production Acres,Pro A Welsh Cobs
                  I am one of the last 210,000 remaining full time farmers in America.We feed the others.

                  Comment


                  • #10
                    Agree with Tamara - the little guys can't compete with the big guys.

                    I read recently that in a few years 85% of all dairy production in the US will be in the hands of a few mega farms.

                    Just found out my neighbor is going to start selling cow shares. I am hoping my grandma still has her old Dazey churn. I'm absolutely fed up with grocery store prices - and I hardly buy anything at the store as it is. I bought a loaf of bread last week - one of the few brands that actually had fiber in it and not high fructose corn syrup and brown dye... it was almost 4$.

                    If they slaughter those cows and sell them for meat beef prices are going to be affected.

                    Oh great.
                    Brothers and sisters, I bid you beware
                    Of giving your heart to a dog to tear.
                    -Rudyard Kipling

                    Comment

                    • Original Poster

                      #11
                      Originally posted by JSwan View Post

                      If they slaughter those cows and sell them for meat beef prices are going to be affected.

                      Oh great.
                      well Angus makes the best steaks and Holstein the best hamburger....

                      having hand milked before it's not something I look forward to...but we do go thru 7 gallons a weeks at $4/gal

                      thanks to Rep Niceley we can also sell shares on dairy animals....but then I recall milking..... with certain jersey that liked to kick.....in the cold and snow and wind and ...argggggggggggggghhhhhhhhhhhhh

                      somehow I think I can happily pay $30/week to get out of it....

                      best
                      Production Acres,Pro A Welsh Cobs
                      I am one of the last 210,000 remaining full time farmers in America.We feed the others.

                      Comment


                      • #12
                        My guys are almost 700lbs now - if the grass holds up I'm gonna eat well this winter.

                        Pigs are eating my leftover eggs and are doing quite well - over 125lbs now.

                        Mr. JSwan wanted a milk cow but like you - I have milked before and would rather have needles stuck in my eyes than do it again.

                        I'll happily by a share - and the leftover milk I'll just feed to the pigs.

                        Originally posted by Tamara in TN View Post
                        well Angus makes the best steaks and Holstein the best hamburger....

                        having hand milked before it's not something I look forward to...but we do go thru 7 gallons a weeks at $4/gal

                        thanks to Rep Niceley we can also sell shares on dairy animals....but then I recall milking..... with certain jersey that liked to kick.....in the cold and snow and wind and ...argggggggggggggghhhhhhhhhhhhh

                        somehow I think I can happily pay $30/week to get out of it....

                        best
                        Brothers and sisters, I bid you beware
                        Of giving your heart to a dog to tear.
                        -Rudyard Kipling

                        Comment


                        • #13
                          A few years back we visited Fallon, NV. If you call it up on Google Maps you'll see a green oasis in the Nevada desert. The reason Fallon is green is the Truckee River Diversion Canal. The River begins at Lake Tahoe and ends in Pyramid Lake. The Derby Diversion Dam sends part of the River flow into the Canal. Treaties limit the amount that can come out of Tahoe and set a minimum into Pyramid.

                          Much of the green around Fallon is alfalfa production. They get six cuttings per year (we were there in early Oct. and they had just finished the last cutting; the night we stayed there was the first frost).

                          The relevance of this is that water to grow alfalfa is controlled by a local water district and it's supply is controlled by the Federal Government. As some folks in CA are learning (to their discomfort) the Government (State or Fed) can cut water allocations quickly and deeply. This could rapidly undo the decline in alfalfa prices caused by a reduction in demand by dairy farms.

                          Government regulation of anything always mean "winners" and "loosers." Logic and rationality and science are not always the criteria used to make decisions.

                          Just something to think about as we see the national regulation of everything increase.

                          G.
                          Mangalarga Marchador: Uma Raça, Uma Paixão

                          Comment


                          • #14
                            Originally posted by Guilherme View Post
                            As some folks in CA are learning (to their discomfort) the Government (State or Fed) can cut water allocations quickly and deeply.
                            Ya, but the weather has a lot to do with it, too.
                            http://www.latimes.com/news/nationwo...,1077488.story

                            Our snow is covered in dust this year, and the snowpack is melting faster. We got water up the whazoo 2-3 weeks earlier than average, so it will run out faster. The folks in CA better take it while they can get it, cause it won't last as long this year.

                            this does explain why we still got stacks of last years alfalfa left around the neighborhood. Prices still at last years high $170-180/ton for big bales, but we won't be cutting for another 3 weeks. Small bales getting REAL hard to find. Most guys don't want to mess with horse people.
                            Are you feeding your horse like a cow? www.safergrass.org

                            Comment


                            • #15
                              Originally posted by deltawave View Post
                              I feel for anyone whose livelihood depends on the vagaries of something as complicated as "markets".
                              And that would be - well, everyone.

                              Originally posted by Tamara in TN View Post
                              well Angus makes the best steaks and Holstein the best hamburger....

                              best
                              Hm but don't they get a lot of the commercially raised beef cattle by crossing beef and dairy cows and intensively raising the calves for meat?

                              If the national dairy herd reduces - the redundant milk cows will go for pet feed - the impact on the beef market will be from the loss of their progeny.

                              The farmers who'll be worst hit are the ones with huge herds and huge mortgages.

                              And of course the beef you North Americans have become accustomed to eating is 'grown' by stuffing the beasts with maize, beef tallow and antibiotics in feedlots to grow them to slaughter size in 14 months - the point at which they have to be slaughtered anyway because after then they start to develop tumours because of the grossly unnatural diet and lifestyle.

                              So hardly healthy produce whether in the form of the milk from the mothers or the meat from the off spring.

                              Then you have the links to the mass production of maize and its companion planting of nitrogen fixing legumous plants - soya and lucerne (aka alfalfa) - and the impact this has had on what used to be the among the most highly productive fertile land in world - ie loss of top soil, changes in the soil ecosystem from over reliance on chemical fertilizers, herbicides, pesticides and anthelmintics.

                              And the use of excess legumes and their by products in pet food manufacture.

                              What's that biblical saying - 'you reap what you sow'?

                              It's not for nothing that the USA (and any other country which has followed the USA's agricultural and food production and preparation model) is suffering from an epidemic of obesity and related metabolic disorders.

                              You are what you eat.

                              Have a nice day.

                              Comment

                              • Original Poster

                                #16
                                =George Myers;4122011]And that would be - well, everyone.
                                Hm but don't they get a lot of the commercially raised beef cattle by crossing beef and dairy cows and intensively raising the calves for meat?
                                oh heavens no....ground meats are almost totally dairy slaughter steers or dry cows...prime steak cattle are always pure beef breeds...now you can opt for bulls with low milk EPD daughters and then also pick for a high gain EPD's as well...we also ultrasound for carcass quality...no one wants dairy/beef crosses in a herd much past white bags in the angus mamas...there are some "odd" homestead types who think they will reinvent the wheel but they are so far off as to be silly....



                                And of course the beef you North Americans have become accustomed to eating is 'grown' by stuffing the beasts with maize, beef tallow and antibiotics in feedlots to grow them to slaughter size in 14 months - the point at which they have to be slaughtered anyway because after then they start to develop tumours because of the grossly unnatural diet and lifestyle.
                                the hamburger most are accustomed to is fed 90 days in a feedlot.... as this is as said before non breeding heifers slaughtered and steers....

                                if the cows are broke way down and not non breeders they are sent straightaway in to the old "canners class of slaughter animals...


                                steak types are segregated by breed type (which also has to do with latitude) and sex....and these can be kept 120 days...

                                previous to this normally however the packers pay people to grass feed them for <x> days until they are sent to the feedlots....locally,Eastern Livestock pays <x> dollars to private landowners for the weight gained on their fields while the cattle are kept there...

                                they follow a standard model that is nationwide...the cattle are weighed on arrival and on departure and a check issued...it's the easiest "boarding" a person can ever do...

                                it is economically impossible to raise the cattle the way you are suggesting...no one can afford to confinement feed beef cattle this way...except maybe the Kobe beef folks....



                                It's not for nothing that the USA (and any other country which has followed the USA's agricultural and food production and preparation model) is suffering from an epidemic of obesity and related metabolic disorders.


                                .
                                people are fat as they do no hard physical labor anymore...nor did their parents....efficient models of animal production allow people who would normally be too poor to afford red meats "all they can eat"...instead of sticking to rice and grains....and seeing red meat as "treats"

                                see modern China as an example...their poor can now afford red meat every day and their overindulgence in it (and soda pop)has increased their waistlines....

                                regards
                                Production Acres,Pro A Welsh Cobs
                                I am one of the last 210,000 remaining full time farmers in America.We feed the others.

                                Comment


                                • #17
                                  Originally posted by George Myers View Post
                                  Hm but don't they get a lot of the commercially raised beef cattle by crossing beef and dairy cows and intensively raising the calves for meat?
                                  Well, no. Dairy bull calves are castrated and raised for the beef market. As a rule dairy and beef breeds are not crossed. Sometimes dairy farmers will use a beef "clean-up bull" on cows that are having problems getting bred by AI, and some will use a beef bull with high calving ease on their first calf heifers. The offspring is generally a terminal cross, i.e.- they will be raised and slaughtered for beef, not bred.

                                  Comment

                                  • Original Poster

                                    #18
                                    Originally posted by shakeytails View Post
                                    The offspring is generally a terminal cross, i.e.- they will be raised and slaughtered for beef, not bred.
                                    right and this cross makes up a tiny part of the overall market...

                                    best
                                    Production Acres,Pro A Welsh Cobs
                                    I am one of the last 210,000 remaining full time farmers in America.We feed the others.

                                    Comment


                                    • #19
                                      Originally posted by George Myers View Post
                                      And that would be - well, everyone.



                                      Hm but don't they get a lot of the commercially raised beef cattle by crossing beef and dairy cows and intensively raising the calves for meat?

                                      If the national dairy herd reduces - the redundant milk cows will go for pet feed - the impact on the beef market will be from the loss of their progeny.

                                      The farmers who'll be worst hit are the ones with huge herds and huge mortgages.

                                      And of course the beef you North Americans have become accustomed to eating is 'grown' by stuffing the beasts with maize, beef tallow and antibiotics in feedlots to grow them to slaughter size in 14 months - the point at which they have to be slaughtered anyway because after then they start to develop tumours because of the grossly unnatural diet and lifestyle.

                                      So hardly healthy produce whether in the form of the milk from the mothers or the meat from the off spring.

                                      Then you have the links to the mass production of maize and its companion planting of nitrogen fixing legumous plants - soya and lucerne (aka alfalfa) - and the impact this has had on what used to be the among the most highly productive fertile land in world - ie loss of top soil, changes in the soil ecosystem from over reliance on chemical fertilizers, herbicides, pesticides and anthelmintics.

                                      And the use of excess legumes and their by products in pet food manufacture.

                                      What's that biblical saying - 'you reap what you sow'?

                                      It's not for nothing that the USA (and any other country which has followed the USA's agricultural and food production and preparation model) is suffering from an epidemic of obesity and related metabolic disorders.

                                      You are what you eat.

                                      Have a nice day.
                                      What a bunch of nonsense there, not even worth explaining real life to someone that would believe all that and much less repeat it.

                                      One problem with another dairy buy-out, like the one in 1986, that is going on now, is that much of that extra product of the 100,000 dairy cows slaughtered at government expense, that means taxpayers money, as the government is paying the dairy producers for those cows they choose to give up, will be competing directly with the beef industry's products.
                                      It has already knocked the price down just from the market expectations, when the talk was fresh and will some more as it hits the markets directly.

                                      In a way, it is like a domino line, hit one and many others keep falling down, each hitting the other and the impact will be much greater than just the alfafa demand weakening.

                                      Comment


                                      • #20
                                        Shame about the farmers. Milk's about $4.00/gallon here. The best hay comes from northern NY or Canada. Local hay is mostly crap. Don't think I've ever seen alfalfa hay from the west though and it's tough to get period. My hay dealer says that's because very few horse people want more than 10-20% alfalfa in their horse hay.

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