PriorityIACTM

the Smart bacteria & Nutrition CompanyTM

PriorityIACTM

the Smart bacteria & Nutrition CompanyTM

PriorityIACTM

the Smart bacteria & Nutrition CompanyTM

PriorityIACTM

the Smart bacteria & Nutrition CompanyTM

forhealthycows.com

Hoober Feeds,only Authorized Reseller in the region specializing in feeding

the P-One ProgramTM

For Healthy CowsFor Healthy Cows®®

From - the Smart bacteria & Nutrition CompanyTM

makers of P-One™ and the P-One Program™

Contains a source of live (viable) naturally occurring microorganisms, Amylase which can hydrolyze starch, Protease which can hydrolyze proteins, beta-Glucanase which can hydrolyze ß-glucans (a type of non-starch polysaccharide), Hemicellulase which can break down hemicellulose.

Guaranteed AnalysisTotal Propionibacteria (minimum) .............................................16 billion cfu/lb (35 million cfu/gram)(Propionibacterium freudenreichii)

Total Yeast (minimum) ...........................................................300 billion cfu/lb (661 million cfu/gram) (Saccharomyces cerevisiae)

Enzyme Activity (minimum)Bacterial Amylase (Bacillus subtilis) ...........................................................................59,000 BAU/lb.Fungal Amylase (Aspergillus oryzae) ......................................................................... 47,625 SKB/lb.Fungal Protease (Aspergillus oryzae) .........................................................................34,020 HUT/lb. beta-Glucanase (Trichoderma longibrachiatum) ..............................................................454 BGU/lb.Hemicellulase (Aspergillus niger).....................................................................................113 HCU/lb.

IngredientsSodium bentonite, yeast culture, rice hulls, dried yeast, dried Bacillus subtilis fermentation extract, dried Aspergillus oryzae fermentation extract, dried Trichoderma longibrachiatum fermentation extract, dried Aspergillus niger fermentation extract, sodium silico aluminate, mineral oil, dried Propionibacterium freudenreichii fermentation product.

Directions for UsePre-fresh Cows (or Lactating Cows): Feed DCP at 1 ounce per head per day for 14–21 day period to colonize and act as a lactic acid utilizer. Follow with feeding P-One™ (see P-One label for proper use).

For proper use, consult your P-One Specialist.

Storage RecommendationsStore in a cool, dry area out of direct sunlight.

Manufactured For: Priority Int’l Animal Concepts™

3504 County Road CRManitowoc, WI 54220 USA

FULL WARRANTY/DISCLAIMER INFORMATION IS ON OUR WEBSITE: forhealthycows.com

Net wt. 30 lb. (13.64 kg)

EZ OPEN – Hold Wide Tape…Pull Small Tape

Found Only in Priority IAC Products

Branded Strains of Smart bacteria: A4000h™ ..................... Pediococcus pentosaceusA2020™ ...............................Enterococcus faecium2E-1™ ..................................Enterococcus faeciumEF141™ ...............................Enterococcus faeciumLC222™ .................................... Lactobacillus caseiLBR1000™ ..............................Lactobacillus brevisLP100™ ............................ Lactobacillus plantarum

Your

P.O. Box 393216 Mill LaneGordonville, PA 17529 The Feedbag

Volume 18 Issue 2

This Month’s Grain Highlights By: Darren Martin

CORNIn January the USDA came out with the annual crop produc�on summary for 2017. The USDA has the US corn crop at 14.604 billion bushels. Chart below compares the last couple years:

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�ey Understand...�e PPD

Trying to Catch UpWinter is a great

�me of year. Harvest is over and it isn’t fit to do anything in the fields for spring. Not much to do but morning and evening chores. That leaves lots of �me to catch up on all of those things that have been put off for the last 9 or 10 months. Those fix-up jobs that we used baler twine and duct tape on knowing that when winter gets here we will fix them right. That book work and budget planning that we didn’t sit at the desk for, because the field work had to come first. The “honey-do” list that we were able to dodge because of �me that was needed for plan�ng and harvest-ing. This is the �me of year to relax and catch up. Maybe even get ahead. I would like to report to you that winter has given me some opportuni�es to catch up. However, I can’t. If anything, I am further behind now than I was before winter even began. It seemed like the bi�er cold weather that we had for several weeks just added jobs to my list of items to repair properly and to my “honey-do” list. And if I would have go�en �me at my desk I probably would have worked on the next issue of “The Feedbag”. The fact that it has taken several months to get to another issue should give you a good idea of how busy I have been. I finally decided that if I wait un�l I have some free �me to catch up on “The Feedbag”, we may not have another issue un�l 2020. So, rather than pu�ng it off un�l I have �me I decided to put other things off and fire up

As of February 15, 2018

the computer for the latest issue. Before we jump in, two things are on my mind. First, I am not looking for sympathy from any of you over my busyness, you all are just as busy, if not busier! When I hear about some of the frozen things that some of you had to deal with I feel pre�y good about my situa�on. Second, if you see my wife, please don’t tell her that her “honey-do” list somehow got lost! We hope you enjoy this issue of “The Feed-bag”.

Looking at the Business Side of the Business.

There are many facets to running and managing a dairy farm. There is milking cow management. There is dry cow management. There is herd replacement management. There is crop management. And there is business management. Most of the dairy farmers that we have worked with in the past and that we are currently working with enjoy a lot of the facets of running a dairy farm. They enjoy growing crops. They enjoy trying to get the cows to milk well. They enjoy seeing baby calves grow up into adult animals coming into the herd. The one thing they don’t enjoy is managing the business side of their business. Many farmers find it hard to spend �me at their desk, however it is a necessary part of the dairy business and

Corn: $4.15 / bu below this �me last year when corn was $4.45/buSoybeans: $9.70 / bu Soybean Meal: $375 / ton up from last year’s price of $320/ton

While this past harvest wasn’t as large as 2016, it’s s�ll large enough to make it 2nd largest crop we’ve seen. Even with a slightly smaller crop, the huge carryover from last year combines to keep prices in at just over $4.00/bu locally in PA. Penn-

sylvania also benefits from a 20% increase in produc�on coming from within the state over the 2016 crop.Current corn prices are around $4.15/bu which is a below last year at this �me when we were at $4.45/bu.

SOYBEANSIn the soybean market, South America has everyone’s a�en�on as Argen�na is

in drought condi�ons. With the dry condi-�ons, Argen�ne producers are holding onto current bean inventories as they don’t know if the new crop will replenish

their bins. With Argen�na being the world’s largest exporter of soymeal, this has caused the soymeal market to rally up - in the first half of February meal has gone up over $35/ton. Even the unim-pressive U.S. exports and good produc-�on expected out of Brazil is unable to hold back the market which seems focused on Argen�na’s dry weather forecast.Soybeans have increased to $9.70/bu and trailer loads of soybean meal are at $375/ton which is up from last year’s price of $320/ton.

As always, a lot can change in the grain markets. I enjoy talking with you when you call in to our office, please feel free to call me to discuss grain purchasing and forward contrac�ng opportuni�es.

WITHIN THIS ISSUEThey Understand...The PPD.Understanding PPD and looking at wheather or not manage-ment styles should change.

Grain Highlights. Comparing the corn harvest for the past five years. Also looking at the drought condi�ons in Argen�na and the effects on the soybean market.

By: Tom Nauman

More on Page 2

Producer Prices for January 2018Bu�erfat: $2.4531/poundProtein: $1.6612/pound

Other Solids: $.0787/pound

SAVE THE DATE!Priority IAC™ Producer Mee�ngs

February 27th: Cobleskill, NYFebruary 28th: Walnut Bo�om, PA

March 1: New Holland, PAAsk your Hoober Representative for

more information!

is more important now than ever. I find it very interes�ng that we deal with a number of successful dairy farmers and �me and again we see that the farmers that are successful seem to find �me to spend at the desk to do things other than just ge�ng the bills paid. They are looking at their business as a business and they don’t just hope for enough money to come in the milk check to pay bills. They plan for milk price downturns. They research the best ways to use money when the milk price is good. They understand that they cannot assume that good milk produc�on will automa�cally produce a profitable business. They realize that the saying “take care of your cows and they will take care of you” is s�ll a true saying but it is not a complete saying. To them, a more complete saying would be “take care of your cows and they will give you opportuni�es, but you have to manage those opportuni�es well.” Over the years I have had a chance to work with some very good dairy farm managers and have learned a lot about managing the business side of this business. I thought that with the current slump in milk prices, now would be a great �me to share some of the things that I have learned from these successful dairymen. This and the next couple of issues of “The Feedbag” will be devoted to giving you some insight into how they manage the money side of their businesses. To add a li�le more insight to it, I will share some of the lessons that I have learned the hard way as they pertain to what is discussed. Each of the topics we talk about will start with these words “They Understand….”. Hopefully you will find this informa�on interes�ng and useful in your own dairy opera�on.

They Understand….The PPD.

Ok, right now I know some of you are laughing. You are thinking “no one

their understanding of how you get paid. That statement may also affect how they get paid. Because of the complicated factors surrounding the PPD, you don’t ever want to give up components for the sake of a high volume of milk. This would be the case if you always had a high PPD but the PPD is going to need to be a lot more than your hauling cost in order to jus�fy sending a lot of water out the door. The PPD is not something you can count on. If you start back in 2014 and go to your most recent milk check, your average PPD value (before the loca�on differen�al deduc-�on) was $1.33 per cwt. Take off your loca�on differen�al and it was $.93 per cwt. That would mean $930 for every 100,000 lbs of milk on the average. So, if you got your cows to give a li�le more milk but lost a point or 2 of fat and/or protein, you might s�ll be be�er off, right? Probably not and we will go into that math in a bit. The problem is that the PPD is highly variable and unpredictable in the immediate future. During the last 4 years, the peak on the PPD was $3.20 per cwt. The month prior to that it was $.32/cwt. The month a�er that it was $1.39. During that high month you could have made a lot more money if you pushed your cows hard and sent more pounds out the door even if it meant giving up components. The month prior and the month a�er, that same strategy would have lost you money big �me. So when farmers tell me they want to push their cows to get more milk or they say they could make more money if they milked be�er, I always try to bring the conversa�on away from pounds of milk in the tank and take it towards pounds of compo-nents in the tank. The successful people I referred to earlier tend to make a nice amount of milk but aren’t necessarily the highest in produc�on. They also don’t jump at

for an assumed hauling charge. In Lancaster County, that figure is usually set at $.40 per cwt. The closer you are to Boston, the lower that figure is. Therefore, if you take $.40 from $1.27, you are ne�ng only $.87 per cwt for the fluid value of the milk. Be�er than nothing, right? If you were in Wisconsin and you had a $.40 loca�on differen�al, they would actually be deduc�ng money from your milk check to the tune of $.27 per cwt. If you cannot find these individual figures on your milk check, they may be combined together. Some companies or co-ops just list the PPD and have the loca�on differen�al already deducted, so you may see a figure that is slightly different than the ones listed above. If you need help with finding this on your check, ask your Hoober Feeds representa�ve to help you find it.

So now, would you manage your cows differently if you were going to get $.87 per cwt for the fluid value of your milk, versus ge�ng a deduc�on of $.27 for the fluid value? You probably would. You would begin to ask the ques�on, “How could I send the same or more pounds of fat, protein and other solids without sending all of that water? If you were in Wisconsin you may already be thinking, “I can skim off some water and have less of a deduc�on.” Yes, you could, except that it’s illegal to do that. It is called adultera�ng the milk and if you get caught you can get into a heap of trouble. In a bit we will look at some legal ideas to take advantage of this, but let’s take one more step in talking about the PPD.

Don’t Worry About Your Fat Test, They Don’t Want to Pay You Much for it Anyway.

Some of you have heard that a lot through the years. I have heard it many �mes from farmers who are struggling with low fat test and they may have heard it from their feed salesman or from a neighbor. If you ever hear that from a Hoober Feeds representa�ve, let me know right away!! That person and I will have a serious discussion about

the latest greatest idea for pushing more milk out of the cows. They wait to see what it does to components. They understand that they need to do everything possible to get as many pounds of fat and protein out of their cows as they can but they don’t have to have the highest pounds of milk. Let’s close this out by looking at some examples of money ne�ed in the milk check with varying levels of produc�on and varying levels of components:

Given the prices above for compo-nent values and deduc�ons, we would see the following amounts For several produc�on scenarios:

What is the lesson here? Don’t push for more milk? NO. The lesson is that you don’t want to give up compo-nents for the sake of more milk per cow. As you can see, with the most recent pricing, 12 lbs more milk ne�ed less money with the compo-nents that were given. And this is just part of it. Not only does it net less money, it also takes a lot more feed to support the higher milk produc-�on level. Which means that it is a big �me loser. This also will be our lead in to next month’s Feedbag where we will look at the statement “They Understand…Income Over Feed Cost”. Join us next month.

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- From Page 1

Understanding PPD-continuedunderstands the PPD.” I recently spoke at two mee�ngs and in both of them I asked the groups “Who knows what the PPD is?” About a third of the hands went up. Then I asked “Who under-stands the PPD?” No hands went up but there were a lot of chuckles around each room. I think that it is important for every dairy person to understand the PPD at least a li�le bit because understanding it may change how you manage your cows. I must admit that I have studied it but I s�ll don’t fully understand it. However, I think I can explain it to you in a way that helps you to think about how your milk price is determined and whether your management should change because of it. In order to best make sense of it, you should probably have your latest se�lement check in front of you as you read this.

In 1990 we changed from the old system of pricing milk to the current system we have. That system is call Mul�ple Component Pricing, or MCP for short. With this system, the whole-sale price of various dairy products around the country are monitored. These prices are used to determine the value of the various components in your milk; the fat, the protein and the other solids. Every month the govern-ment determines a value of each of these components and you are paid that value. That value is constant across the whole US in the various federal orders. Whether your milk goes to a bu�er plant, an ice cream factory or a cheese plant, we all get the same price even though the cheese plant may be able to make a higher value product from the milk than a bu�er plant can. This idea of trea�ng all milk the same in price, no ma�er where it ends up, began back around the depression and s�ll carries through to today. Milk in a bo�le has the highest value per unit of milk produced because very li�le processing is required to get it into the hands of the consumer. However, if none of your milk ends up at a bo�ling plant, you would not be able to capture that

value. The government has said, as stated earlier, that everyone gets treated alike no ma�er where your milk ends up so each month the government calculates what percentage of the milk produced in each federal order ends up going into a bo�le for fluid consump-�on. In the northeast federal order that percentage is usually around 30%, give or take a few points. So, you need to be compensated as if 30% of your milk went to a bo�ling plant. In order to compensate you, each federal order calculates a “Producer Price Differen�al” which is essen�ally calcula�ng and giving you the extra value that 30% of your milk would have captured had it gone into a bo�le for fluid consump�on. Are you with me so far? Good. Locate that number on your milk check. If you are looking at your most recent check you will see that value is $1.27 per hundredweight. Now let’s move on.

Each federal order calculates its own PPD. The amount of milk in our area that is consumed as fluid milk is a lot higher than an area such as Wisconsin. Why? We have a lot of large ci�es with lots of people. Wisconsin has more milk and considerably less people. Therefore, on a percentage basis, their fluid u�liza�on is significantly less. On the latest milk checks out there they saw that the fluid u�liza�on (Class 1) was only 10.6% in their area and their PPD was $.13 per cwt. In our area, every 100,000 lbs of milk ne�ed $1,270.00 for the value of milk going into a bo�le. Out there, every 100,000 lbs ne�ed $130. Month in and month out we tend to have some of the highest PPD values in the country because of our popula�on centers. However, this is not all of the story. You don’t actually get that much. Each federal order has a central loca�on. Ours is Boston, Massachuse�s. Your distance from Boston determines a deduc�on that comes from the PPD and that deduc�on is what is called your Loca�on Differen�al. The PPD would be calculated as the extra value of fluid milk in Boston, but you would need to get the milk there in order for it to have that value so a deduc�on is ins�tuted