Dr. Mark Kirkpatrick, dairy specialist with Pfizer Animal Health, begins a series on Metritis.

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With USDA likely to pay out emergency aid in December, and stronger domestic dairy sales improving the milk price outlook for 2010, things are looking better for the nation’s dairy farmers next year. Dairy Profit Weekly editor Dave Natzke weighed in on the global picture on Friday’s DairyLine.

A report presented in mid November at the joint annual meeting of the National Dairy Promotion and Research Board (NDB), the National Milk Producers Federation (NMPF) and the United Dairy Industry Association (UDIA) indicates there could be a 7 billion pound shortage of milk by the year 2013.

According to Natzke, the best opportunity for the U.S. dairy industry to compete in the global market is coming in the next 5-8 years. The U.S. dairy industry has great potential to be a world dairy supplier – if it makes some changes.

Speaking to nearly 1,000 dairy producers at that meeting, Clinton Anderson, a partner in the business consulting firm of Bain & Company, said a study conducted in conjunction with the Innovation Center for U.S. Dairy estimates worldwide demand for dairy products will grow faster than available supply, leaving the United States with a window of opportunity.

He warned, however, that structural constraints get in the way of the United States serving that market. Some major challenges the report cited include severe pricing volatility, market distorting pricing mechanisms, and insufficient customer focus. In other words, failing to produce dairy products in the form the world market demands. Failing to address these issues, as farmers and processors working together, will lead to a less competitive U.S. dairy industry, Anderson concluded.

It’s been a difficult year for the dairy industry and it doesn’t seem like there’s much to be thankful for this Thanksgiving. But “There is light at the end of the tunnel,” according to National Milk’s Chris Galen, who said on Thursday’s DairyLine that if you are still in business, prices are turning around and are looking much better in 2010.

“Consumers have been very faithful,” he said. A lot of people have less money to spend, but are still buying dairy products. “So we should be thankful for everyone that had dairy products on the dinner table during this holiday.” he concluded.

Dairy farmers have always been “animal welfarists,” according to Shelly Mayer of the Professional Dairy Producers of Wisconsin.

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Mayer talked about it in Wednesday’s Beef Board Update and said “Animal welfare and how we care for our animals has always been the center of what we do on each of our dairy farms.

She said now is the time to stand up proudly and share with customers and consumers how well we are doing as far as taking care of our animals. She added that producers are not in the business unless they first enjoy working with the animals. “That’s what the dairy industry is all about, before we make a pound of milk we all know we have to take care of that cow so that she ultimately takes care of us an our family,” Mayer said.

The beef and dairy checkoff programs help give the consumer a look into our farms and “therefore they can see how milk is made and how meat is grown and what we’re doing on our farms everyday.”

“Animal welfare and animal well being is not a new way of thinking for the dairy industry, all of us have been thinking about this for a long time,” she said. Now, more consumers are curious about where there food is coming from and are asking questions about how animals are cared for, which according to Mayer, is a great opportunity to share how we really get the milk from the cow to the consumer table.

“So it’s a great opportunity to share all the care, all the work, all the science, all the understanding that goes into taking care of those cows.”

Success Strategies John Ellsworth reminds us that now is the time to provide a fiscal checklist for the upcoming year.

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The cash dairy markets continue to show a steady increase. Dairy economist Brian Gould, Associate Professor at the Department of Agricultural and Applied Economics at the University of Wisconsin-Madison sees that continuing, especially in light of what is going on internationally.

The production in New Zealand and Australia is not going to be as high as initially forecast. “Since July, we’ve had a steady increase in the international prices of whey, skim milk powder, cheddar and butter,” he said. “And they are increasing not only in dollar terms but also relative to the U.S. prices.”

Gould says the outlook is great for the continued increase in demand for U.S. dairy products. “Given the increase in importance of export markets, I think it bodes well for the continuation of higher cheese prices in spite of having pretty high cheese stocks,” he said.

In terms of relative values, the ratio in New Zealand , dry whey is about 40 percent above the U.S. domestic price. Nonfat dry milk –skim milk powder is 30-35 percent over and butter is about 20 percent higher, “Making our export markets very attractive relative to what they were just six, seven months ago,” Gould concluded.

Dr. Gary Neubauer, Dairy Technical Services Consultant with Pfizer Animal Health, discusses a training program being offered to veterinarians.

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Do you remember that “emergency” aid that lawmakers wanted dairy farmers to have to help them through these grueling hard times? The holdup has been USDA’s decision on how to distribute the $290 million in emergency funds approved in the fiscal year 2010 ag appropriations bill and signed into law by President Obama in late October. But, the program now has a name; the Dairy Economic Loss Assistance Payment (DELAP) Program, but other details are still sketchy, according to Dairy Profit Weekly’s Dave Natzke in Friday’s broadcast.

USDA’s Farm Service Agency sent instructions to county and state FSA offices on Wednesday, November 18, in preparation for administration of the program. According to the instructions, the Milk Income Loss Contract (MILC) program will serve as the basis for determining the amount of payments individual dairy farmers will receive, Natzke reported, although provisions pertaining to eligibility, payment formula, payment rate, and processing were not announced.

USDA said DELAP regulations have not received final clearance and won’t become official until they are published in the Federal Register. The instructions to FSA officials gave no timetable as to when dairy farmers will be able to receive the funds, according to Natzke, although top USDA officials have said they anticipate the money will be available in mid to late December. “In the meantime, dairy farmers suffering through one of the worst financial years ever will have to wait a little longer,” Natzke concluded.

An independent economic analysis of the CWT program shows a return on investment of $1.54 per hundredweight so far in 2009 for dairy farmers. National Milk’s Chris Galen said “It’s the answer to the bottom line question of what has CWT done to help dairy farmers in 2009.”

Galen reported that, as in the past, Dr. Scott Brown, Professor of Ag Economics at the University of Missouri and an expert on how various farm programs affect farmers, was commissioned to assess the voluntary program’s impact on dairy farmers across the U.S.

The $1.50 does not include the current ongoing CWT herd removal, according to Galen, who also reported that the cumulative impact of CWT’s export program and herd retirement has added $2.4 billion to farm level milk receipts this year, a year where dairy income is expected to be down more than $10 billion because of the global recession. It would have been far worse, Galen said, had we not had CWT in place.”

CWT’s impact is much greater this year, according to Galen, because this has been the most aggressive year of CWT’s six year history. It has removed about 200,000 cows in the past 12 months and the important thing to keep in mind is that when Dr. Brown does his analysis, he shows a linger impact going into the forward years. We conducted two herd retirements in 2008 so part of the reason we have $1.50 per hundredweight enhancement in milk prices is because of those herd retirement last year in addition to the two that were conducted earlier in 2009. For more information, log on to www.cwt.coop.

Milk production in the 23 major States during October totaled 14.3 billion pounds, down 1.1 percent from October 2008. September revised production at 14.0 billion pounds, was down 0.5 percent from September 2008.

The September revision represented an increase of 16 million pounds or 0.1 percent from last month’s preliminary production estimate.

Production per cow in the 23 major States averaged 1,721 pounds for October, 21 pounds above October 2008.

The number of milk cows on farms in the 23 major States was 8.32 million head, 196,000 head less than October 2008, and 22,000 head less than September 2009.

California was down 5.3 percent, due to 78,000 less cows and a 20 pound drop per cow from a year ago. Wisconsin was up 3.5 percent, thanks to a 50 pound gain per cow and 5,000 more cows. New York was down 1.5 percent. Cow numbers were off 11,000 but output was up 5 pounds. Idaho was down 1.4 percent, with a decrease of 8,000 cows. Output per cow was unchanged. Pennsylvania output was unchanged from September, on a 30 pound gain per cow but 10,000 less cows, and Minnesota was up 2.5 percent on a 30 gain per cow and 3,000 more cows.

The biggest increase was Indiana, up 4.4 percent, thanks to 2,000 more cows and 55 pounds more per cow. Wisconsin was next, followed by Illinois. The biggest decline occurred in Arizona, down 10.6 percent due to an 20,000 decline in cow numbers. Colorado was next, down 8.9 percent with 11,000 fewer cows. Missouri followed with a 5.4 percent loss.