P26—Lancaster Farming, Saturday, October 8,1983
The Milk -A
Check : iT
TOM JVBCHAK
County Agent £
Confusion Continues
If dairy farmers are confused
about their production plans as we
begin a new marketing year in
October they should be used to it.
For a business that has, in the past,
been the envy of agriculture for its
stability, it has set records of
uncertainty, if not confusion, in the
last 30 months.
Ever since the President and the
Congress stopped the scheduled six
month increase in the milk support
price at $13.10 on April 1, 1981
producers have never been sure of
what would happen next. The
support price is still at $13.10 but
almost every month it has been
threatened by changes suggested
by the Congress, the ad
ministration or the industry.
From the Kansas City con
ference of March 1982 right up
through the last session of
Congress there have been literally
dozens of solutions suggested.
Many of these wold have
drastically changed the marketing
picture for most producers but no
one was ever sure which one it
would be. Farmers were being led
in a different direction with each
change in the reports of what
program was getting enough votes
to win. It took Congress a year to
pass the present legislation in
September 1982 but the ink wasn’t
dry before it was taken to court to
add to the confusion. In the
meantime, two dozen more
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proposals were introduced in
Congress in this session with still
no decision made on a
replacement.
It was bad enough dealing with
the uncertainty of Congressional
action now we have the added
confusion of what the drought; the
PIK program and the Dairy
Refund Program will do to milk
marketing and production. Action
has already been taken by some
farmers who don’t have enough
forage feed for the winter and
lower dairy cattle prices locally
have already reflected their
decision. However, for the
majority of farmers the confusion
continues still on what will happen
next in the support program; how
well they cope with rising feed
prices and lower milk prices;
would it help to participate in the
Dairy Refund Program and what
will happen when all that PIK com
comes on the market?
Last First
Taking the last one first it ap
pears that the way things are
turning out in this part of the
country, farmers aren’t going to
see much of that PIK com on the
farm. All of it will be in
Philadelphia with the farmer
paying the cost of hauling if he
wants to bring it home and if he has
some place to store it. It’s more
likely that most farmers will leave
it where it is and take the money.
They can use the money to buy
feed at home but I’m guessing that
many - when they look at the price
of feed and the price of milk - may
spend it on something else. They
may not sell the corn until they see
which way the milk business is
going or just to put the money in
1984 income but locally, at least, I
think it will be sold.
However, whether it’s brought
home and fed or sold at the
warehouse, some farmers are
expecting it to produce a drop in
feed prices at the farm that would
be helpful. Most people in the grain
business don’t see this happening
in the long run because there isn’t
nearly enough PIK corn to make
up for the crop losses from the
drought. Here in Pennsylvania we
'normally produce about 135 million
bushels of com and PIK will
provide only 10.5 million. It’s a lot
of com but not enough to cover our
losses from the drought.
Nationally PIK will put a billion
bushels on the market but ac
cording to the last report on
September 12 this year’s crop is
about 4 billion bushels short of last
year. Com prices may go down and
up this fall and winter but it’s
expected they’ll average high
enough to raise dairy feed prices.
Reductions in beef and hogs won’t
be enough to help either.
Support Progran
Confusion is still the word for the
future on price supports because
even though we’ve started a Dairy
Refund Program in September
new law suits are being started on
the 50 cent assessments in spite of
a ruling by the federal court in
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stitutional and there were no
procedural errors. Now we have a
petition for a rehearing by a three
judge panel or a hearing of the
entire case by all nine judges in the
appellate court. Another new law
suit has been started by farmers in
New York and is expected to have
a hearing this week.
In addition, Congressmen are
beginning to make noises about
introducing the compromise bill
now that we have a cease fire in
Lebanon and it looks like it will be
a long time before we find the
“black box” in the Sea of Japan. If
the administration and grain state
Senators would give up on a target
price freeze it could happen unless
someone insists on amendments
that would throw it back into
committees where it would likely
die. The only thing we’re certain of
is the uncertainty.
Refund or Not
The question of participating in
the Dairy Refund Program has to
be answered individually. Each
farmer will have to determine his
base; examine his present
production and make a decision.
This is one time when averages
will do you no good no matter how
much you read about production
increases or cost savings. Com
paring your base to your present
production is a start and if you do
nothing else you should at least get
your base established at the ASCS
office. With all the uncertainty of
what price support program may I
get voted in next, having your base <
on record could be important in the -
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future.
Knowing your costs per hun
dredweight of milk is the next
piece of information you’ll need.
These vary greatly between herds
and feed costs alone can vary as
much as two dollars a hundred
between herds. And remember
how much money you need each
month for mortgage and debt
payments because after Sep
tember it will be six months before
you get the first refund check.
The Dairy Refund Program is
not for everyone but according to a
recent study in Order 2 one third of
the farmers are now producing
below their base. If you’re one of
them it’s very likely it would pay
you to participate but the only way
you’ll know is to dig out your own
records and take them to the ASCS
office.
Of all these uncertainties the
most certain is a rise in feed costs.
With Pennsylvania farmers
feeding a pound of grain for every
2.5 pounds of milk there’s lots of
room for change. Especially if
you’re lucky to have sufficient
forage feeds on the farm. Start now
on a forage testing program in
cluding a least cost grain mix and
cut your grain to milk ratio down to
the bone - just for starters.
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