Iowa Dairy Farmers Rely on Resiliency to Stay Afloat
Resiliency is a common characteristic seen in all farmers, even when facing tough economic times. Dairy producers are experiencing record-low prices and have had to make management decisions to survive.
“We are dealing with lower prices, but we still have to produce a good, consistent product. We can’t cut back on too much or our cows won’t continue to produce that good, consistent product,” says Jason Brockshus, a partner in Brockshus Family Dairy near Ocheyedan, Iowa.
The Brockshus family milked 40 cows in the 1990s, expanded to 250 by 2000, and now milks 600 Holstein cows. This made it possible for Jason and younger brother Travis to join their parents, Bruce and Susan, in running the northwest Iowa operation.
“Times are challenging right now,” Brockshus says. “We wonder if things are bad because we made the wrong decisions or because of factors we can’t control.”
The addition of a new barn and technologies in 2015 made increasing the cow numbers possible, but he says it also has led to learning what their lending limits are at their local bank and what they can do to continue business as usual.
Mark Stephenson, University of Wisconsin dairy economist, says balance sheets are hard to look at right now. “We saw milk prices at a high in 2014, but now we’ve seen four years of consistently low prices,” Stephenson says. “We expect 2019 to be better, but we’re not sure it will be enough.”
Brockshus says his family has had to make some changes that they never thought would be part of their operation. Two big changes were in breeding cows to beef bulls and not raising their own replacement heifers.
“These two go hand in hand. It took time to come up with the best way to save some money,” Brockshus says. “In the past, we used sexed heifer semen and embryo transfer to get the best genetics in our replacement heifers. When it was brought up that the genetic pool in the Holstein breed is small and we could purchase the genetics we needed, our decision became easier.”
The Brockshuses have been breeding their cows to Angus bulls and a few Charolais bulls for the past year and a half to produce a beef-type calf that is sold to a local feedyard. They found it is still important to select bulls that will give them proper calving ease and solid black calves to meet the market demand.
“Our dairy cows are fed a lot higher energy diet than most stock cows would be fed, thus, giving the gestating calf every opportunity to grow. We’ve had to look for bulls to use that are definitely calving ease,” he says.
When the family came to this decision, it made sense to begin purchasing replacement heifers also. They still feed and breed some of their own Holstein heifers to add to the herd, but when they run out, replacements will be purchased.
“We’ve figured it will cost about half as much to purchase a bred female than if we raise our own replacements,” Brockshus says. “Since we were not willing to cut other corners in our operation, this seemed like the best way to save money.”
The beef-cross bull calves are currently sold for $230 at a few days of age, when he says he nearly has to give away a Holstein calf – bull or heifer.
Labor and feed
One area they have found that can’t be cut is labor. Having four family members working on the farm and milking 600 cows for nearly 22 hours per day takes good-quality labor. Training new employees is time consuming and the Brockshuses want to treat employees right, including offering eligibility for a raise after every 2,000 hours worked.
Another of the biggest expenses for dairy farms, besides labor, is feed. Brockshus says they only farm 400 acres and have to purchase a large amount of their feed, thus, they keep good relationships with neighbors. This gives them an outlet for the manure from their farm and a source for purchasing silage and haylage.
“We can’t afford to make too many cuts in feed, as it will affect the milk quality, including butterfat and protein,” he says.
Exports affect prices
With the fluctuating export markets for dairy products, marketing is a key part of a dairy farm’s success. Stephenson says dairy exports have been steady for the first part of 2019, but increases to important markets such as Mexico, China, and Asia can help improve prices.
The Brockshus dairy is a member of the Associated Milk Producer, Inc. (AMPI) cooperative and markets its milk to the plant in Sanborn, Iowa, where cheddar cheese is produced.
AMPI has 10 plants that are spread across Iowa, Minnesota, South Dakota, and Wisconsin. In total, its members deliver 5.7 billion pounds of milk annually to the plants. New technology is continually added to the facilities to produce the dairy products consumers demand.
Brockshus says his father is in charge of the marketing part of their business and talks to the AMPI representatives on a regular basis to be sure they are getting the most competitive price they can for their milk.
“We know, as dairy farmers, we are resilient. It’s just how we are made. We also know that times are tough, and we need to have a Plan B… or C, D, and E if things aren’t working,” says Brockshus. “I think I am a pretty optimistic and positive person, but everyone should have someone who can be there when needed. For me, that person is my wife, Sheena.”
She has an off-farm, nonagriculture job and provides her husband and their children with a positive outlook on life and their lifestyle. One which Larry Tranel, Iowa State University Extension dairy specialist, says is very important.
“Everyone deals with stress differently. Historically, farmers have dealt with stress in different forms regularly, but lately it has been dairy farmers. How successful a farming operation can be is very dependent on having the right attitude and knowing when you need help,” Tranel says.
Stephenson says while 2019 doesn’t look to show huge improvements, it should be better than 2018. Dairy farmers have programs through the 2018 Farm Bill that can help cover some losses.
“Prices are supposed to get better. In the short term, we will continue to have a tight culling protocol. Cows have to pay their way or they can’t stay,” Brockshus says. “We know the dairy industry might not look the same in five or 10 years, but we have to do what we can to make it through the hard times.”
study shows need for strong U.S.-Japan trade treaty
A study released January 31, 2019, by the U.S. Dairy Export Council projects that new trade agreements made by Japan will benefit U.S. dairy global competitors while reducing sales of U.S. dairy exports.
Australia and New Zealand have the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in place with Japan. On February 1, 2019, a Japan-EU Economic Partnership Agreement took effect.
The study, which was conducted by Tokyo-based Meros Consulting, shows that without a strong U.S.-Japan trade treaty, competitors will seize a cumulative $1.3 billion in dairy sales over the next decade. That would climb to $5.4 billion once the agreements are fully implemented over 21 years, the report says.