This weeks Pfizer Animal Health “Vet Visit,” Dr Doug Braun continues his series on BVD with prevention and management tips.

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The change of season hasn’t ended the summer of discontent for dairy farmers – politically or economically. As the leaves change color, the question is, can dairy farmers come back from a long losing streak?

Dairy Profit Weekly editor Dave Natzke reported on Friday’s DairyLine that through August 2009, U.S. average milk prices have been running nearly 40% below the same period in 2008, taking a toll on dairy cash flows and cash reserves. The most recent USDA report showed August 2009 U.S. milk production was down slightly from a year ago, as economic factors continue to push cow culling higher.

“Like the changing weather, there are some regional differences,” Natzke said. Latest USDA estimates show California and Western cow numbers and milk production are down compared to a year earlier, while cow numbers and milk production are steady or growing in the Midwest and parts of the Northeast.

According to Bruce Jones, dairy economist at the University of Wisconsin-Madison, the structure of California dairy farms and the need to buy more feed has resulted in far worse negative cash flows – forcing them to use cash reserves – at a faster rate than other regions.

National and regional dairy leaders continue to discuss policy alternatives and strategies to address the dairy economy. The question, however, is whether dairy farmers can survive much longer. “I’ve heard from many dairy producers and organizations in the past couple of weeks who say things are on the verge of economic collapse, unless things improve dramatically, and quickly,” Natzke said.

The new season has brought some hope. Cheese and nonfat dry milk prices, as well as federal and California milk marketing order prices, have begun a slow climb from depressed levels. The outlook for large corn, soybean and hay crops has helped bring feed prices down.

Most in the dairy industry agree on one thing, that U.S. milk pricing is in need of repair, and National Milk’s Strategic Planning Task Force has developed a four featured approach to do that, according to Chris Galen in his Thursday report.

The low milk prices obviously forced the issue, Galen said, to think long term and develop some kind of consensus. The first two legs of the plan are to revamp the current producer safety nets, the MILC program and the price support program. The idea would be to revise them and create a dairy producer income insurance program similar to the crop insurance program that exists for row crop farmers.

A third leg would be to improve the Cooperative Working Together program by getting more participation so it can have more impact, and fourthly, to reform the Federal milk market order program which many see as flawed.

Fleshing out the details as to how to do this is next, according to Galen, and “Whenever you talk about making changes in dairy policy, the devil is in the details.” He said this is exciting because the economic recession and the pain of low milk prices can be a catalyst for making important changes.

There are a number of proposals being floated, including legislation on Capitol Hill, but I asked Galen if the dairy industry can unite around a plan. He said that is the challenge to build consensus but “By doing this through National Milk and going then back out to the countryside and selling people on a package, not one idea or another, but a whole package of changes, we thing that this stands a much better chance because it will be comprehensive.”

Wednesday’s DairyLine listeners heard the testimony of New York dairy and beef producer, Glen Taylor who recently completed the beef check off’s on line “Masters of Beef Advocacy” program. Taylor said the program equipped him to confidently speak with consumers about the beef industry and the things that are important to it.

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Being able to present this message is becoming more and more important, according to Taylor, who will be using his skills at an upcoming local consumer food group that has invited him and others to talk about how beef producers operate and look out for consumers in their production efforts.

Two key issues that Taylor sees as important are animal husbandry, which addresses consumer concerns over animal welfare, and environmental stewardship, which addresses care for the land. Without taking that course, Taylor said farmers don’t give them much thought because they are day to day activities that farmers do naturally and almost “take for granted,” but do practice them “as best we can.” It’s important to let consumers know this, he concluded.

Success Strategies’ John Ellsworth talks about winning and the patterns of success.

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Alan Levitt, editor of the CME’s Daily Dairy Report, said in Tuesday’s broadcast that the dairy markets have turned stronger the last two weeks and what’s significant is that the price gains were broad based. It’s not just one product, he explained, prices for cheese, butter, milk powder, and whey were up last week and buyers are starting to get a little more aggressive.

Declining milk production is on their minds, he said, evidenced in Friday’s report, plus revisions to July data turned an increase into a small decline and, while there weren’t big reductions “it’s a start.” Cow numbers continue to decline as well, according to Levitt, as has been the case for most of the year. But, he added that milk production has remained pretty strong in the Midwest though output in the west and southwest is weak where a lot of the butter and powder manufacturing is located.

Other encouraging signs, according to Levitt, include the fact that manufacturers have stopped selling product to the government and international prices are up 20-30 percent across the board over the last three months.

“We’re starting to get some positive signs,” he said, but he warned that he didn’t want to get carried away because “We will bump into some price resistance as they climb and we still have a long way to go.”

We don’t know what’s going to happen to support prices or any of the other possible government measures over the next six weeks, he said, but “It’s been the most encouraging week we’ve seen in the dairy market in quite a long time.”

When questioned about demand Levitt said it’s almost like the flip side of supply. “When buyers sense the supply is going to be tighter, they tend to buy more,” he concluded. “Nobody wants to get caught short as we come up to fourth quarter holiday buying. People start ordering a little more and that’s all contributing to it.”

The use of dairy ingredients is a growing part of the dairy industry and the dairy check off is working to keep it growing. Stan Erwine, DMI’s Vice President of Producer Relations, reminded DairyLine listeners in Monday’s “DMI Update” that over 1 billion pounds of milk are used each year as an ingredient in another food or beverage product.

He talked specifically about Starbucks, a company that uses over 2 billion pounds of fluid milk in their coffee products. Starbucks came to DMI about two years ago, seeking help with the development of some new menu items, Erwine explained, and one of the ideas that resulted from that was the use of dry whey protein with fiber in a new smoothie called Vivanno. Vivanno consist of fruit, milk, and a powder blend of dairy whey protein, according to Erwine.

Starbucks uses about 3.7 million pounds of whey protein, he said, which requires more than 550 million pounds of milk but “It’s been a successful launch of a healthy new product that adds to Starbuck’s menu.” And, a third flavor was just introduced so Vivanno is available in banana chocolate, orange mango, and now strawberry banana.

It’s important to come up with new and innovative ideas to spur dairy product use Erwine concluded, and it’s really a response to “a dramatically changing consumer who wants new flavors and new products and they want them conveniently.”

Dr. Doug Braun of Pfizer Animal Health tells us how BVD affects calves.

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U.S. consumers ate a little less cheese in 2008, according to Dairy Profit Weekly editor, Dave Natzke, in Friday’s broadcast, but lower retail prices may help bring consumption levels back up.

Latest estimates from USDA’s Economic Research Service (ERS) indicate 2008 U.S. per capita cheese consumption was 32.5 pounds, down about three-quarters of a pound from 2007’s peak of 33.2 pounds.

While the decline isn’t much, it does represent the first year-to-year per capita decline in cheese consumption in more than two decades, according to Natzke.

Per capita consumption of American-type cheeses, such as cheddar and Colby, hit about 13 pounds in 2008. That was actually up from 2007, he said, but it was offset by a decline in the consumption of all other cheeses.

2008 per capita consumption of Italian-type cheese last year was just over 14 pounds, down about a quarter pound from 2007.

In the Italian category, Mozzarella, which is the most-consumed cheese in the U.S., was estimated at 10.7 pounds, down from 2007’s record of 11.1 pounds, but still the second-highest total ever.

“If retail prices are a factor, we should see a rebound in cheese consumption,” Natzke said. Consumer Price Index (CPI) data just released by the Bureau of Labor Statistics, shows August 2009 retail dairy prices were down 0.4 percent compared to July 2009, and down 10.4 percent compared to August 2008.

Checking individual products; August retail prices for fluid milk were down 0.7 percent from July and nearly 18 percent less than August 2008. Retail cheese prices declined for the 12th straight month, down 0.8 percent from July and down 11 percent from a year ago; and even butter prices, which had been rising throughout summer, were down 0.3 percent from July and down 8.5 percent from August 2008.

The dairy CPI is falling more than other foods, according to Natzke. The index of all foods eaten at home was unchanged from July, and down just 1.6 percent from August 2008.

National Milk’s Chris Galen discussed their proposal for Uncle Sam to purchase cheese to help dairy farmers in his weekly Thursday DairyLine report. At issue is the $350 million that was included as an amendment to an agricultural spending bill offered last month by Senator Bernie Sanders (I-VT).

Senate and House leaders will meet in a Conference Committee to decide how to best spend that money, Galen reported, so National Milk called for the cheese purchases because it believes that to be the most effective way to help dairy farmers as well as needy families suffering from the nationwide recession. The other methods, direct payments or raising support prices, would not be as efficient in the Federation’s opinion, according to Galen.

When asked if the cheese purchases might have a negative impact on the market by impacting consumer sales elsewhere, Galen replied, “We expect that it will have a positive impact on the cheese market because there will be, all of a sudden this new demand for consumer cheese that wouldn’t have been there before.” He said the Federation doesn’t see this competing with any other commercial demand because “these food banks are going to be giving the product away just to certain specific populations of consumers.”