Florida Dairy Business

The Florida Dairy Business
March 1997

Milk Markets

The basic formula price (BFP) was up $.52 in February, and the effect will be felt by Florida dairymen in the April pay price . The basic formula price affects the Class I price two months later. With high Class I utilization rates in the Florida market orders, Class I prices and associated premiums largely determine pay prices. Class I utilization was 81% in February 1997, last year for the same month it was 87%. Florida is the only state in the Southeast which has been showing increased production in the last few months compared to a year earlier. Florida coops have shipped surplus milk out of state to processing plants whereas a year ago they imported. This difference is reflected in the lower utilization rate for February 1997 and this lowers the blend for a given BFP.

With the an increase of $.52 in the BFP, Florida coops lowered the announced April 1997 premium $.52 from March (see table bottom right). The coops in the Atlanta area lost even more premium for April compared to March in efforts to hold market share by remaining competitive. This has increased the price differential between the Southeast and Florida orders.

Class I Milk Prices and Net Premiums (announced)
	Feb 97		Mar 97		Apr 97
Location	Class I	Premium	Class I	Premium	Class I	Premium
Atlanta	14.42	2.38	15.02	1.78	15.54	.85
Up. FL	14.92	3.29	15.52	2.39	16.04	1.87
Tampa	15.22	3.49	15.82	2.59	16.34	2.07
Miami	15.52	3.74	16.12	2.84	16.64	2.32

The bottoming out of the BFP last Nov-Dec has been realized in Florida mailbox milk prices in Jan-Feb (see graphs at right). Note the increase in the premium since November 1996 reduced the drop in mailbox prices. Although the February 1997 blend price was $1.75 below February 1996, the February 1997 mailbox price was $.56 higher than for the same month a year ago, largely because of the higher premium.

That's the past. Most 'experts' expect the BFP to be relatively steady through spring and increase in summer through fall. Although the price is expected to be well below last year's, it will be 'among the highest ever.' One thing that is certain is that current pricing and market mechanisms have made the price volatile. The assault on the National Cheese Exchange following the collapse of the BFP in late 1996 may lead to a new 'price discovery' method for cheese, a key component of the BFP. The next few months should see resolution of this issue.

Much more important for long term milk pricing for dairymen is the Federal Order reform process. Proposals for Fedral Order reform were released by the USDA on March 10th. Topics included changing the national pricing structure, how the basic formula price should be calculated or replaced, how milk products should be classified, and simplified and uniform federal order provisions. Descriptions are available in many popular publications or from the USDA. Groups in the Southeast are being formed to assess the potential impact of the proposals on Southeast markets and to engage the political process which will ultimately determine the final form of proposals that prevail. Stay tuned.

Michael DeLorenzo

Dairy Business Analysis Project

Some comparisons of expenses and operating margins from DBAP are shown at the left. It is important to remember that these numbers do not represent a random sample of dairies from Florida or from the categories shown. Also, some categories have as few as 3 dairies. We won't report data for categories with fewer than 3 dairies. This is why Panhandle is not listed as a region.

Click for enlargements.

Some interesting comparisons can be made, however, and more participating dairies would increase the accuracy. More importantly, more participation would provide more dairies with individualized analyses of how they compare to state, regional or dairy type averages. It would, for more dairies, identify opportunies for improvement based on actual Florida data. How do you compare? Which area can you improve to increase your economic competitiveness the most?

Key to Figures: As a measure of operating margin, net operating income (NOI) per cow is calculated. In our calculations NOI is accrual adjusted revenues minus accrual adjusted expenses, not including depreciation and costs of herd expansion.

Only data from dairies contributing complete information was used (there were 20). The upper 25% is calculated as the upper 25th percentile of dairies (n=3) ranked by NOI per cow. This takes out herd size as a factor. The lower 25% represents the lower 25th percentile (n=5). Herd size numbers were 1-350, n=3; 350-600, n=5; 600-1000, n=5; 1000-2500, n=5; 2500+, n=4. For region North/Central, n=9 and Southern, n=9. Southern is south of I-4. Heifer raising status is determined by having a minimum level of 30% of cows as heifer inventory (heifers raised, n=16; no heifers, n=4). Cropping status is determined by a minimum of 0.25 tons dry matter harvested per cow (crops, n=12; no crops, n=8). Milking frequency is based on two versus three times daily (2X, n=9; 3X, n=11).

Michael DeLorenzo, Marvin Hoekema

It's Spring Cleaning Time

Now that the weather is getting warmer it is time to do your spring cleaning. Heat, humidity and mud will bring about increased mastitis. The cow cooling systems need to be started, the milking systems need a tune-up. Give your cows an Easter present of better health and production. Don't lay an egg and do nothing! It's time to do the following to prevent mastitis and increase milk quality and production.

Dismantle and clean the pulsators, replace all rubber piston caps.
Flush out pulsator and vacuum lines.
Wash your vacuum controller and change the filter.
Change belts and the oil in the vacuum pumps.
Repair or replace floor-mounted cow washers before the mud begins.
Clean the condensors of your refrigeration system and have the freon level checked.
Haul out old dirty mud in pastures and lot and clean dirt and cow carpet if needed.
Clean all cooling fans on the dairy, replace or tighten if you have belt driven fans. Tighten or replace belts.
Check all pumps, filters and water pipes of your cooling system.
If you need help on cooling, let me know and I will gladly help. Let's not start the year off by lowering production, shutting down the reproductive system and getting sore feet all before Mother's Day -Shame!
We have been finding mycoplasma in cooling ponds and cow wash ponds, drain them or dig new ones, power wash the ponds if you found mycoplasma in them.
We found mycoplasma in mastitis or pot herd lots, they need to be cleaned and dirt replaced often.
Mow your pastures. I've seen some thistles the size of cellular phone towers in some pastures. These and careless weeds only cut the teat ends of heifers and dry cows, let the flies eat and give you lots of 3 quartered heifers and mastitis in cows.
Dip your dogs, it will keep the fleas out of your truck.

David Bray

Bulk Tank Cultures Can Help Diagnose Problems

Bulk tank milk analysis is an important tool for troubleshooting high bacteria counts in farm milk. These tests and interpretation methods provide an indication of whether high bacterial counts are due to mastitis, pre-milking hygiene, equipment cleaning and sanitation, or incubation of bacteria in the milk handling system during milking. This is invaluable information to the dairy producer and processor. The recommended tests include:

Standard Plate Count (SPC): The Standard Plate Count is the number of colony forming units in one ml of milk when incubated for 48 hours at 32° C (90° F). The SPC should be less than 5,000 if cow and equipment sanitation is good and cooling is adequate. A SPC of less than 1,000 indicates excellence in all of these areas. Most industry standards require a SPC of less than 50,000.

High bacteria counts may result from Streptococcus agalactiae mastitis infection in the herd. If the SCC and SPC are both high, a thorough bulk tank culture should be performed to determine the type of mastitis organisms present in the milk. This information is useful to manage mastitis in the herd. Other types of bacteria represent contamination from the environment. These organisms are transported during milking from the skin of the udder into the milk and onto milk handling equipment. These bacteria multiply during the milking process and may continue to multiply between milkings if they are not removed or killed.

Lab Pasteurized Count (LPC): The Lab Pasteurized Count is the number of bacteria per ml of milk which survive laboratory pasteurization at 62.8° C (143° F) for 30 minutes. This procedure kills the usual mastitis-causing bacteria leaving only those organisms from the environment which can survive elevated temperatures. These types of organisms will grow and multiply in the milk handling equipment if cleaning and sanitation procedures are inadequate. The LPC should be below 100 to 200 if equipment cleaning and sanitation are good. A LPC below 10 indicates excellent equipment hygiene.

Coliform (Coli): The major source of coliform bacteria in bulk tank milk is transportation on the udders of cows from the environment. The Coli count thus provides an indication of both the effectiveness of cow preparation procedures during milking and the cleanliness of the cows' environment. Coliform counts between 100 and 1,000 are generally an indication of poor milking hygiene. Coliforms will also incubate in residual films left on milk contact surfaces. Coliform counts in excess of 1,000 suggest incubation in milk handling equipment. A Coli count less than 100 per ml of milk is considered acceptable for raw milk for pasteurization. In states where raw milk may be sold to consumers, Coliform count must be less than 10/ml. Coli counts less than 10 indicate excellence in both pre-milking hygiene and equipment sanitation.

Another test which indicates the cleanliness of cows when they are being milked is the sediment in the bulk tank milk. A sediment level less than 1.50 mg per gallon is considered acceptable.

Source: "Troubleshooting High Bacteria Counts in Farm Milk." 1997 NMC Annual Meeting Proceedings, pg. 65.