Current

When Disease Hits a Small Farm (BusinessWeek online, Feb. 8, ’07). In late October, 2005, a dozen of Michigan farmer Doug Kirkpatrick’s 55 cattle “tested positive for bovine tuberculosis in a required annual test. . . .further testing over the next few weeks determined that one heifer possibly had TB, and that sent Kirkpatrick's farm into a downward spiral. . . . during the approximately 100 days between when the farm was quarantined . . . . and the animals taken in mid-February, 2006, Kirkpatrick . . . . figures his cost for food alone at $70 per day, or more than $7,000. . . . In order to resume farming, . . . he needed to convince (USDA and MDA) he had adequately de-contaminated his farm. . . . The process of completely cleaning and power washing all his equipment and feeders, and having everything disinfected . . . took more than four months. . . . Once that step was completed, he needed to obtain approval of "a herd plan"—a highly detailed plan for management of his farm. . . . In the meantime, Kirkpatrick's business has been decimated. . . . the $56,000 in compensation he received for the slaughtered cattle and pigs. . . is more than half gone, spent on the fixed expenses associated with keeping the farm going.” Read the complete article at Small Farm.

Making a Profit? Pay Down Debt, Plan, Innovate (Lancaster Farming, Jan. 27, ‘07). “It is widely accepted that farm profits tend to be quite cyclical,” writes Matt Harsh, Ag Economic Development Educator in Cumberland County. “I think most ag bankers and financial advisors would agree that in a year where you turn a profit, it is always a good idea to pay down debt if you have it. . . . Plan for retirement . . . Profitable years are an excellent time to put aside money in tax-favored retirement accounts or into some other non-farm asset as a form of retirement savings. . . . Profitable years are a great time to catch up on deferred maintenance, replace worn-out facilities, . . . and bank roll the big ticket itmes you may have been putting off, not only from a business standpoint, but from a tax standpoint as well. . . . Try something new. . . . now is the time to ‘play’ with something outside of the norm. . . . If you’ve had a good run, accomplished all your goals, and are ready to stop farmng, maybe now is the time to do that.”

Growth and Opportunity for the U.S. Dairy Industry (Penn State, Agricultural Economics & Rural Sociology, Jan. 26, ’07) is a summary of Sec. Wolff’s December Round Table discussion on dairy policy. “Current U.S. dairy policy is too complex and limits market creativity and dairy product innovation. With slow growth in domestic consumption of dairy products, dairy policy changes need to stimulate new product development to meet the growing export market.” Considerations advanced include: strengthen the safety net for producers; develop export markets; improve the federal order system; and, provide price discovery. Read the complete summary at http://dairyoutlook.aers.psu.edu/reports/Pub2007/WolffsDairyPolicyPaperJan2007.pdf.

Better milking performance eyed in Japan. “The daily challenges of mastitis, milk quality and milk prices experienced by U.S. dairy farmers are painfully shared by Japanese farmers,” writes Bill Gehm in a special report to Farmshine (Jan. 5, ’07). “Milk production per cow is similar to the U.S. with a focus on milk quality and low somatic cell counts. The price of milk is around 80 to 100 yen per kilogram or about $35 to $45 per 100 pounds. These milk prices may appear very attractive to U.S. farmers but the high cost of importing forages and stiff SCC penalties leave Japanese farmers economically challenged. Elevated somatic cell counts can subtract 20% to 50% from milk prices. As a result, Japanese farmers are very interested in solving the mastitis problem. . . . In spite of their best efforts and attention to details of accepted practices, mastitis and milking performance remain a significant problem.”

The Shifting Geography of Milk Production is the last in the three-part series by Dr. Jeffrey Stokes in Lancaster Farming (Jan. 6, ’07). “This article addresses the shift in milk production toward the western states,” noting that Idaho “is poised to overtake Pennsylvania in terms of total milk production. . . . To what can we attribute this shift? States such as Idaho offer an abundant water supply, relatively less expensive farmland, qualified labor, low population density yet reasonably close proximity to large population centers to market milk. . . . according to USDA figures, the number of dairy farms are declining each year in Idaho, just as they are in Pennsylvania. However, in 2005, Idaho had 850 dairy farms, implying an average number of cows per farm of about 550 head, compared to Pennsylvania’s average of just more than 60 head per farm. . . . East Coast populations are still going to demand milk in the future and the region, including Pennsylvania, will continue to supply milk for these consumers. How to supply that milk profitably is the most important question facing the industry in Pennsylvania. Better technology that lowers the unit cost of production and farm size growth will continue to be the most important factors influencing the profitability of the industry.”

Growth and Opportunity for the U.S. Dairy Industry: Recommendations from Secretary Wolff’s Dairy Policy Round Table Discussion (Jan. ’07) “Current U.S. dairy policy is too complex and limits market creativity and production of manufactured dairy products. With domestic consumption of dairy products stagnant, dairy policy changes need to stimulate new product development to meet the growing export market. This would have the added benefit of removing some farm gate price volatility, which is a hardship on producers. These policy considerations, coupled with the 2007 Farm Bill Reauthorization, provide the dairy industry a rare opportunity to fundamentally improve demand and strengthen producer prices. This brief discussion paper, an outcome of Secretary Wolff’s Round Table discussion on dairy policy, assesses current dairy policy and outlines considerations for reform.” A link to this report appears at the bottom of Ken Bailey’s website under "New Reports" (Look for bottom center of the web page).

Dairy Outlook Forecasts (Jan. ’07). Dr. Ken Bailey writes, “Class III prices are expected to rise from $11.89 per cwt in 2006 to $14.23 per cwt in 2007, a rise of $2.34 per cwt. Class IV prices are expected to rise from $11.06 per cwt in 2006 to $13.73 per cwt in 2007, a rise of $2.67 per cwt. And finally the all-milk price is expected to rise from $12.91 per cwt in 2006 to $15.53 per cwt in 2007, a rise of $2.62 per cwt. Our only risks for these higher Class III and IV prices are due to expectations regarding the milk supply. If milk production continues to grow we will have excess inventories of butter and cheese, which will depress prices. However, it is likely that the CWT program will be announced which will reduce cow inventories. That could help tighten the milk supply sufficiently to maintain current market outlook, at least for the short run.” Read the complete Dairy Outlook newsletter at http://dairyoutlook.aers.psu.edu/reports/Pub2007/DairyOutlookJan2006.pdf.

Cars, Trucks & Tax Deductions (American Nurseryman, Jan. 15, ’07). Financial and tax consultant Mark Battersby writes, “As part of its crackdown on overstated adjustments, deductions, exemptions and tax credits. . . the IRS has issued guidelines for deducting car and truck-related business expenses. . . . Although the tax laws are vague, the IRS continues to stress the importance of keeping complete records to substantiate all items reported on the annual tax return. In the case of car and truck expenses, the type of records required depend on whether you claim the standard mileage rate or actual expenses. . . . An employee’s personal use of an employer-provided vehicle generally is considered a taxable fringe benefit. . . The IRS is under pressure to at least make a dent in the estimated $30 billion of annual tax revenue lost because of overstated deductions, credits and exemptions. The car and truck expenses of every . . . business, as well as those involved in those businesses, most likely will be closely scrutinized.” More details are available on the IRS website at http://www.irs.gov/newsroom/article/0,,id=163780,00.html.

Protect Your Web Site (Greenhouse Product News, Jan. ’07). The OFA (an association of floriculture Professionals) domain name “was hijacked by a foreign entity, which most likely intended to resell ofa.org for a profit (3-letter .org domain names are extremely valuable). . . . Domain name hijacking will continue to increase due to loopholes in Internet law and inconsistent procedures between registrars (the company you purchased your domain name through).” The article offers “three steps you can take toward achieving a secure domain name: Use a domain name record service such as www.whois.com to confirm all contact information is current. . . .Contact your registrar to place a registrar lock on your domain. . . . Add your registrar’s domain name to your spam filter so that E-mail from your registrar will not be inadvertently classified as spam.”

Animal Tags for People? (BusinessWeek online, Jan. 11, ‘07). Under the federally supported National Animal Identification System (NAIS), digital tags are expected to be affixed to the U.S.'s 40 million farm animals to enable regulators to track and respond quickly to disease, bioterrorism, and other calamities. Opponents have many fears about this plan, among them that it could be the forerunner of a similar system for humans. . . . While the NAIS remains voluntary on a federal level, and there is no formal people identification system as yet, . . . executives are moving aggressively to position their companies for the day when chips in animals and people are the norm rather than the exception.” Read the complete story at Animal Tags.

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