B26—Lancaster Farming, Saturday, January 21,1984
Tbe
.*. Dairy
. - Business
jL M By
Newton Bair
It’s decision time for the new Federal Dairy Option Program. Every
Diaryman, including YOU, should study it carefully before making a
decision whether to sign or ignore it completely. Please remember that
even if you decide to ignore it, you will nevertheless be affected by the
success or failure of the program Nationwide. You will be making a
committment either way.
What Information Do You Need?
1. Obtain copies of your monthly milk statements for the calendar
years 1981 and 1982.
2. List them month by month on the work sheet obtained from A.S.C.S.
List the butterfat percent for each month, and calculate a weighted
average fat percent for the two years. Here is the formula for one month;
(Jan. ’Bl lb. milk x % fat) + (Jan. ’B2 lb. milk x % fat)
(Jan. ’Bl milk + Jan. ’B2milk)
1981
#Mllk
4500
For example:
(4500 x .034) + (5500 x .032) (convert % to decimal)
= .0323 % weighted
average for January.
This must be repeated for each month in order to establish your base
divide by (4500 + 5500)
ACC
N
SUBST
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A MARKET^INC
TWO CONVENIENT LOCATIONS:
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SSSIS Phone (7! 7) 533-4060
Should Yon Sign Up For DO
%Fat #Milk
3.4 5500
1982
%Fat
3.1
A.S.C.S. will require the weighted average butterfat tor each Quarter of
your base year, as well as the actual production for the base year. Your
base production will be the higher of 1982 milk or the average of 1981 and
1982.
3. You will also need to list your plan to cull or sell the cattle (over six
months old) during the 15 months of the contract period. Obviously, you
can’t reduce your herd all at once, but you should have a plan for
reducing the number of producing cows so that you can stay within the
contracted production level.
4. Decide the amount of reduction that will be most advantageous to
you. Many hdersmen will find their highest total return by selecting the
highest percentage contract reduction, or 30 %. However, to be on the
safe side and avoid the penalty for exceeding 30%, don’t contract to
reduce your base production more than about 27%. You are allowed a
tolerance of 3% above or below your contracted base.
The only way to decide how much to reduce production is to use some
kind of work sheet, so you can see the financial effects of your decision.
That means a lot of pencil pushing, but it will be time and effort well
spent.
Benefits Of The Program
Reduced costs: (Herd of 50 cows, reduced base by 23%)
1. Cost to keep cow 15 months, $l4OO x number culled.
Increased income;
2 Income from sale of culls.
3. Sale of excess feed and forage.
4. Reduced labor.
5. Diversion payments ($lO.OO per hundredweight for the milk not
produced.
6. Interest income from invested money,
A test run on the computer, using the worksheet published by Doan’s
Agricultural Service, shows that one dairy of 50 cows with a herd average
of 17600 lb., culled 20 cows over a 15 month period (average of only 190
cow months because they were not all culled at once). Reduced
production is 23% of base. His reduced costs will be about $l6BOO, and
increased income will be $50950.
He will have reduced income of about $30927, leaving a total benefit of
in excess of $20,000.00.
The big decision of course, centers around what will happen after 15
months. Will you continue at the reduced production level, come back to
the present level, or go above the 1983 level? And how will you come
back? Will you raise heifers, buy cows, or both?
Use a Computer
There are several computer programs in the hands of competent people
that can help you make a wise decision. Don’t give up without trying to
estimate the effects on your operation. We all hope that the “other
fellow” will cut back enough so that we don’t have to. You may be missing
some benefits by not giving it a try
DOVER. Del. Arthur sprouts and cabbage. “With In addition to his formal
Loughton, horticulturist at the Delaware growers showing in- presentation on Tuesday,
Agriculture Canada Experiment creasing interest in these crops, Loughton will participate in an
Station in Simcoe, Ontario, and an the information he will present informal breakfast meeting on
internationally recognized should be most timely,” says Wednesday to give growers further
authority on cole crops, will be a University of Delaware extension opportunity to discuss new
major speaker at the sixth annual vegetable specialist Ed Kee. “It is developments in cole crops.
Delaware Vegetable Growers’ interesting to note that consumer For more information regarding
meeting, Tuesday and Wednesday interest in these crops is also on the the overall program for the two
at the Sheraton Inn in Dover. rise for both the fresh and day event, contact county ex-
Loughton’s specialty is variety processed products. Other parts of tension offices in Newark, Dover
selection and production of the country also are producing or Georgetown, or call Ed Kee at
occoli, cauliflower, brussels more cole crops.” 856-5250.
Cole crops to be topic
Drug
workshops
planned
UNIVERSITY PARK - Two
workshops will be held to update
ag business personnel on the legal,
economic and public health con
cerns of drug residues in meat,
milk and eggs.
The sessions are open to feed
company personnel, animal health
product distributors, ag business
professionals, and any point-of
sale person who is handling animal
health products, medicated feeds
or farm chemicals.
The first workshop is planned
Feb. 16 from 9 a.m. to noon at the
Sheraton Inn, State College. This
meeting immediately precedes the
Penn State Dairy Herd
Management Conference Feb. 16
and 17.
The second is March 9 from 1-4
p.m. at the Lancaster Farm and
Home Center.
The program includes topics
such as: Residue situation in
Pennsylvania, What are the rules
(and laws)? Why withdraw!
times? Economics of residue
violations, Tests for residues,
Prescription vs. over-the-counter
drugs, Responsible drug
salesmanship, and materials for
producers and agribusiness.