“To retain respect for sausages and laws, one must not watch them in the making.” — Otto von Bismarck (Chancellor of the German Empire, 1815-1898) Recently, I traveled to Washington, D.C. to attend the American Feed Industry Association (AFIA) Board of Directors meeting. Each year, this meeting is held in the nation’s capitol to allow visits to senators, congressmen, USDA, FDA, the U.S. Commodity Futures Trading Commission (CFTC) and other government officials. I have made these visits a number of times over the years and they always make for interesting discussions. That said, seeing the political process up close reminds one of sausage making – it’s not a pretty process, although the final product can be quite good.

Just over 12 months ago, I reported Xcheque.com’s analysis of the delicate balance of supply and demand in the U.S. market. At that time, the milk price and margin available in the U.S. was at odds with the value of milk commodities in international markets. The conclusion that U.S. milk was undervalued has proved correct with prices rallying and a return to more sustainable margins for most of 2011. So how do things look one year later and what is the prognosis for the rest of 2012? Unfortunately, the current state of the market is an ugly sight and is only going to get worse if you believe that the futures market is a guide.

More and more dairy producers are learning about their risk management tools and strategies. However, the industry is “a long way from maturity” when it comes to consistent use, says John VanSickle of the Food and Resource Economics Department at the University of Florida. Maybe that’s because producers are finding a lot more success producing milk these days. Record production is predicted for 2012 and, while educators are doing their best to increase use of available tools, barriers to price risk management still remain.

California dairy producers and cheese makers filled the room and faced off at a Sacramento public hearing called to determine if adjustments are needed in the pricing structure for Class 4b milk. On May 31 and June 1, dairymen and their trade association leaders emphatically called for fairness in pricing that more closely tracks the Class III whey value. Cheese makers speaking at the hearing claimed changes that result in higher prices set for the milk used in cheese production would drive more production out of the state, discourage investment in California cheese plants and leave them at a competitive disadvantage.

Phosphorus (P) is a vital nutrient for many physiological processes in the body and instrumental in milk production. In fact, nutritionists and producers often say that P is crucial for reproductive performance, although there is no literature to date that corroborates this statement. However, P is well known for its negative environmental implications when not properly handled in manure.

“Steve, you gotta take that expensive blood meal out of my mix. That stuff is costing me a fortune,” growled the grizzled dairy farmer whose hair was in little tufts from trying to pull it out while doing the monthly financial books. I had heard it before. I knew the reasoning behind it. If it costs a bunch, it cannot be good.

More dairy nutritionists are embracing the practice of amino acid balancing. For those that have, the economic rewards have been excellent. This is particularly true for producers paid the Class III component formulas – where milk protein continues to be the most valuable, followed by milk fat and other solids. Payments for milk protein make up more than 50 percent of a producer’s milk check and milk fat accounts for about 35 percent.

Using a vertical auger mixer just wasn’t delivering the total mixed ration Andrew Kuehnert and his family wanted for their Midwestern dairy.

Recent movement in the ethanol industry to extract some of the oil from the co-product distillers dried grains with solubles (DDGS) has grabbed the attention of the livestock feeding sector. With change comes opportunity and the dairy industry is poised to capitalize.