Ag economic conditions are still quite strong in 2022, but how long will that last? Nate Kaufman, vice president and Omaha bank executive for the Federal Reserve Bank of Kansas City, spoke during the recent Agricultural Outlook Forum in Kansas City. He told the audience during a presentation that incomes are still in good shape.
“Economic conditions in agriculture are remarkably strong. And I want to start here because this is not something I would have said probably two-and-a-half years ago. And I think it is an important place to start just because of how significantly different conditions are today relative to what we might have said back then. Incomes are incredibly high. We’ve seen commodity prices pick up, and yes, there are very high input costs that are leading to some concerns, but generally speaking, economic conditions in agriculture, with some caveats, are quite strong.”
Land values are a good example of the strength of the ag economic conditions.
“Land values, for example, are about 25 to 30 percent higher than what we might have seen before the pandemic. That was a time that land values had been declining the first couple of months of the pandemic, and it was maybe thought that we would see further declines, but here we are a couple of years later and seeing that conditions are much stronger. Before the pandemic, we worried about gradual increases in loan defaults. We looked at bankruptcy rates, we looked at other things that we thought there was going to be more financial stress and not less going forward. And the reality is that loan delinquencies are at one of their all-time lows, working capital levels are very high, and producers are generally in a strong position. And so, we’re seeing again from a financial picture things are rather strong there too.”
Despite the current strength of the ag economy, analysts expect slower economic growth next year.
‘Six percent growth in 2021 and 2022, that number is expected to be less than one percent, and there are concerns about economic growth in 2023. The second one is inflationary pressure. For those 10 years that we spent in the longest economic expansion on record after the financial crisis, inflation was generally less than two percent. And the Federal Reserve, as many of you may know, has a goal for inflation at two percent. We’re at eight percent, and that’s significantly higher than two. There are concerns about what inflationary pressures might do concerning some of the costs that have been mentioned.”
The other significant headwind is the interest rate.
The last one that I’ll mention then is interest rates. At the end of 2020. If you were to look at some of the projections that Federal Reserve officials would have suggested would be appropriate interest rate policy for 2022, many would have indicated that rates were likely to still be approximately zero by the end of this year. Instead, we’re in a different environment. And this is in large part because of inflation, where we’re now seeing interest rates closer to four to four-and-a-half percent by the end of this year.”
The Ag Outlook Forum was sponsored by the Ag Business Council of Kansas City and Agri-Pulse.
Dairying in Ireland was an irresistible topic to a writer who grew up working at the Gerhold Brother’s Dairy of Castlewood, South Dakota. While on vacation in Ireland, Frank Costello, the gentleman that rented a beautiful cottage to us, put me in touch with a local dairy farmer named Tom Clesham. One phone call and a couple of texts later, I was on my way to visit the Clesham Farm in County Mayo, near Cong.
The 96-acre dairy farm stretches back several generations through his family tree. However, Toms’ father, Tim, and the rest of the Clesham family milked cows until 1990, when Tim switched to beef cattle. Over the next several years, the father-son farmers bred pedigree Limousine cattle alongside their commercial beef herd after leaving dairying.
But Tom became frustrated with the volatility of the Irish beef sector, something American beef farmers know all too well. So, looking at the books, Tom felt it wasn’t financially doable to keep raising beef animals. After 23 years, it was time to go back to dairying, and the work began in 2013.
“The process wasn’t too bad because a lot of the milking facility was still here,” Clesham recalled as the milk truck pulled into the yard. “Originally, when we took the equipment out, we filled the pit with clay, put plastic over it, and then covered that with cement. When we went back to dairying, I just undid that process.”
He runs a six-unit parlor that Clesham would like to make larger as he plans to expand his herd. When he redid the milking parlor, Clesham planned ahead by leaving room for a total of eight units. Once the cows are inside the parlor, Clesham hits a button to dispense feed into the automatic feeders to keep the cows busy while they give their milk.
“Every time I hit the button, I know they’re getting .6 kilos of ‘nuts,’” he said. “It’s a dairy pellet ration, or a ‘nut,’ as I like to call it, with a load of different ingredients. The cows are currently getting a 14 percent protein nut called ‘Grass Match,’ and is for feeding at lower levels while still giving a higher level of minerals and things for when they’re out on the grass.”
“At the end of the year, I’ll start giving a little more protein in their pellets because they won’t be out on the grass as much,” Clesham added.
Cows get wiped pre-milking with a paper towel, and he’ll pre-draw them to check the cows, milk them, and then he applies teat dip from a spray bottle. “It’s also got a peppermint smell to it, and I think that helps with the flies,” he added.
As American dairy farmers know firsthand, expanding a parlor is a big undertaking. Clesham bought secondhand Pyrex parlor equipment over 20 years ago. The steelwork in the parlor will stay, but he plans on replacing everything else, including his milk pump, which is a diaphragm, in favor of an electric pump.
“It really wouldn’t be a difficult process, but it will be an expensive one,” the 40-year-old farmer said with a grin. “I got the equipment you see here off a well-known online platform in Ireland called ‘Done Deals.’”
From the first discussion about returning to dairying to the first milking, Clesham estimates it took two years to complete that particular journey. He spent a lot of time in meetings with the local milk cooperative on the way to running a full-time dairy and is quick to credit his father Tim’s knowledge of the business in getting it running.
“I also have a neighbor down the road named Martin Jennings who’s about the same age as I am and was a great help to me,” he added. “He’s a great friend of mine and is always at the end of the phone to ring him up and ask him about things I didn’t understand. Mark was a great help in that regard.”
It was at this point in the conversation that the milk truck was backing into the yard to hook up to the bulk tank. For the last few years, the milk coming out of the Clesham’s bulk tank won awards from Animal Health Ireland for its low Somatic Cell Count. “It doesn’t make you any more money,” he said with a smile, “but the cows stay healthy, and that’s important in dairying.”
Clesham credits that success to the cleaning routine and the drying-off process he uses for the cows. “Last year, I started doing a few culture tests on the cows,” he recalled. “That’s going along with my veterinarian and knowing what sort of bacteria we may be fighting by getting the right antibiotics.
“I’ve also been fairly strict when it comes to drying off cows,” Clesham says. “I won’t do too many at a time. I also never dry off cows in the evening; I dry them off in the morning. They’re standing up for a bit longer in the day and seal up. We treat them with dry cow therapy and teat sealers. If we do it in the evening, they’re probably laying down for the night soon afterward.”
With a big smile, Clesham added, ”Some people may say you’re daft, but it’s just the silly things I do.” Each of his dairy cows has a minimum of eight weeks when they’re dried off, not milked, and can recover to put on condition to calve again.
Calving season on the Clesham farm usually begins around the first of February. He gets the bull out to the cows and aims for them to calve in a six-week period. “I generally try to have the cows dried off by December,” he added, “and they’re off in January and hopefully calving by the first of February.
“I breed all my replacement cows,” Clesham said. “The only calves I keep for myself are Friesian females. All the rest of the calves will get sold.
“There’s a push now in Ireland that emphasizes the welfare of dairy-born calves that will be finished and put into beef,” he says. “The push says that that the animals are worth something even if they won’t bring you a lot of money. Family farmers in Ireland will still call the vet for a sick bull calf even if that might cost more than what he’s worth.”
Ireland has new regulations in place to ensure proper animal care for its 1.55 million dairy cows, including one that prohibits farmers from selling calves until they’re at least 10 days old. “It’s just to make sure the navel is dry, the calf is reasonably hardy, and it keeps two-and-three-day-old calves from going into the market, which is a good thing,” Clesham said.
Most, if not all of the milk produced in Ireland, comes from grass-fed cows. Clesham, one of more than 18,000 dairy farmers in the country, says that’s the most profitable way to do dairying in Ireland. In fact, the Irish dairy industry markets itself as selling “grass-produced milk from small family farms.” He said that is what makes Ireland dairying unique.
The temperate Irish climate allows farmers to grow large quantities of grass over a long season, so the 40-year-old farmer rotates his 80-cattle herd through a handful of different pastures, called “paddocks.” It’s going to get a little trickier over the next several weeks as the grass “slows down a bit come July” when grass gets a little “stemmy.”
“During this rotation through the paddocks, I’m going behind the cows and mowing the paddocks, which I call ‘topping,’ and trying to cut back any stringy grass that they won’t eat at this stage,” he said. “I think it allows the grass to come back a little better when I mow after the cows eat all they can get to.
“Some guys think it’s better to mow the grass before the cows come into a paddock,” Clesham added. “Other guys say it’s better to skip paddocks entirely and make baled silage out of it. We do cut some silage here in addition to running them out on paddocks.”
As with most American dairy farms, the milk goes to a local cooperative for processing. Clesham says Irish co-ops are now paying bonuses from dairy farmers for higher-quality milk, so the higher the protein and butterfat content, the higher the check. Clesham works on what’s called an “A, B, C Milk Payment System.”
While walking on the road running between different paddocks, Clesham stops in front of a new building to house the cows before they head into the barn for milking something American farmers might refer to as “stanchion barns.” The cows lay on rubber mats in each of their cubicles. While some Irish dairymen may put down chopped straw or sawdust, he puts down lime in each cubicle.
“The manure pit is down below where the cows walk,” Tom said. “We spread it out on our land here. It’s mixed around and stirred before it goes into vacuum tanker vehicles that put it down on the land.”
Speaking of caring for the land, an American Farm Bureau survey in November 2020 showed that Americans trust their farmers to do the right things when it comes to sustainability and the environment. Clesham feels the Irish hold their dairy farmers in equally high regard.
“What we produce is grass-based, and I suppose, is more environmentally friendly than big barn systems that feed a lot of grain,” he said.
Carbon emissions Is another topic that American farmers understand, and the conversation has also begun in Ireland. The dairyman says there’s “been a little bit of flak” when it comes to farming and carbon emissions.
“I’m not an expert on the topic, but I do think some folks have been led a bit astray on what it is,” Clesham said thoughtfully. “There are some cattle on lands across Ireland, but there are also huge plots of land that absorb carbon too. On my farm, I can easily say I have more trees than cows.”
That in no way means Clesham isn’t concerned about caring for the environment. After all, if he doesn’t take care of his land, he won’t be able to continue dairying into the future, something he clearly loves doing. “As we talk here, you can see I’ve planted a long row of flowers I call my ‘Bee Bank,’ he said. “That’s to help the bees in my area stay healthy.”
Clesham is currently milking 47 cows and looking at more. He has visited with a government-run advisory service (Teagasc) that helps farmers with their dairying plans. At one point, they discussed not having any heifers and just having milking cows on the acreage.
“I might be able to milk over 70 cows then, but that would lead to other troubles,” he said. “I’d have to find a source for heifers. I’m definitely going to milk a few more next year as I have 16 in-calf heifers that will add on to the milking herd.”
Dairying is not the only thing keeping him busy: He’s working at the Falconry School on the grounds of Ashford Castle near Cong, Ireland, and raises pheasants for future hunting opportunities.
Water is a touchy subject, especially when it comes to our agriculture and environmental discussions these days. I have to admit that I was worried about this from day one. The Environmental Protection Agency announced it intends to reverse the Navigable Waters Protection Rule.
American Farm Bureau Federation President Zippy Duvall his organization is very concerned about the idea and its potential impact on the nation’s farmers.
“The American Farm Bureau Federation is extremely disappointed in the Environmental Protection Agency’s announcement that it intends to reverse the environmentally conscious Navigable Waters Protection Rule,” Duvall says, “which finally brought clarity and certainty to clean water efforts. Farmers and ranchers care about clean water and preserving the land, and they support the Navigable Waters Protection Rule.
“Administrator Regan recently recognized the flaws in the 2015 ‘Waters of the U.S. Rule’ and pledged not to return to those overreaching regulations,” he added. “We are deeply concerned that the EPA plans to reverse the Navigable Waters Protection Rule, which puts the future of responsible protections at risk. We expected extensive outreach, but today’s announcement fails to recognize the concerns of farmers and ranchers.”
Duvall, a third-generation Georgia farmer, says this is an important moment for EPA Administrator Michael Regan and will be pivotal to his ability to earn the trust of farmers on this and other administration priorities. Duvall says the EPA boss must “keep his word” to recognize the efforts of agriculture and not return to flawed, overly-complicated and excessive regulations.
“We call on the EPA to respect the statute, recognize the burden that overreaching regulation places on farmers and ranchers, and not write the term ‘navigable’ out of the Clean Water Act” Duvall says. “On this issue, and particularly prior converted croplands and ephemerals, we also urge Secretary Vilsack to ensure that we don’t return to the regulatory land grab that was the 2015 ‘WOTUS’ Rule.
Duvall adds that clean water and clarity are paramount, which is why farmers shouldn’t need a team of lawyers and consultants to farm.
From a personal perspective, why can’t we meet in the middle here? You do realize that farmers don’t get to stay in business and pass on the operation to their kids if they don’t take care of their environment?
Am I anti-environment by being concerned about farmers? I’m not. I’m saying there has to be a way to preserve the environment and still allow farmers to make money. After all, they do feed us, remember? Food doesn’t just show up at Safeway.
Farm State of Mind in recent years can be summed up in one word: stress. While things are starting to turn around due to higher commodity prices, it doesn’t mean farmers are out of the woods yet.
In recognition of May as Mental Health Month, the American Farm Bureau Federation launched a comprehensive, easy-to-use online directory of resources for farmers, ranchers and their families who are experiencing stress and mental health challenges.
The directory, which is on the Farm State of Mind website at farmstateofmind.org, features listings for crisis hotlines and support lines, counseling services, training opportunities, podcasts, videos, published articles and other resources in every U.S. state and Puerto Rico. Listings for crisis support, counseling and behavioral health resources that are available nationwide are also included.
“For far too long, farmers and ranchers have been trying to cope with increasing levels of stress on their own,” said AFBF President Zippy Duvall. “Our Farm State of Mind campaign is encouraging conversations about stress and mental health in farming and ranching communities. It is so important to spread the word that no one has to go it alone.
“This new online directory of stress and mental health resources in every state gives farmers, ranchers and rural communities a user-friendly, one-stop shop to find services in their area that can help them manage farm stress and find help for mental health concerns. Whether you’re looking for information about how to recognize and manage stress, trying to find counseling services in your area or are in need of crisis support, you can find help here.”
National research polls conducted and published by AFBF in 2019 and 2021 showed that a number of factors including financial issues and the impact of the COVID-19 pandemic are impacting farmers’ mental health, highlighting the need to identify local resources that can help farmers and ranchers cope with chronic stress and mental health concerns.
The Farm State of Mind directory lists resources specifically geared toward farmers, ranchers and rural communities in states where these specific services are available, with additional listings for county and statewide mental health and other support services in every state. The listings can be filtered by state and type of resource, including hotlines, counseling services and published information.
AFBF partnered with the University of Georgia School of Social Work to research available resources across the U.S. and Puerto Rico and compile comprehensive information included in the directory.
Farmers and ranchers are encouraged to share the directory with their family, friends and community networks to ensure widespread awareness of the availability of these important resources.
Minecraft. The chances are good that you know what it is if you have kids. Would it surprise you if I said the dairy industry was thinking outside the box and turning to a video game such as Minecraft to help promote its products? Dairy Management Incorporated held a press conference recently to announce a partnership with four of the most influential gamers in the world to promote itself to people in “Gen Z (early teens to early 20s).”
The idea started growing late in 2019 when the dairy industry found out that per-capita dairy consumption hit its highest level in 60 years. America hasn’t consumed this level of dairy products since 1960, so the question is how to keep this trend going into the future? Dairy Management Incorporated CEO Tom Gallagher says you reach out to younger people on platforms where they already engage with each other.
Dairy industry sustainability is another key driver in the new idea. “The businesses of dairy, such as the co-ops, the processors, and the manufacturers, have collectively set the goal of becoming carbon neutral by 2050,” Gallagher said.
“Dairy Management’s role in that is to support the environmental science, communications, and other relationships in achieving that goal,” he added. “While sustainability is important, it also has to be profitable for the industry. We are working on several different test cases on various farms to prove that profitability is possible, or what might need to change to make sustainability profitable.”
Gallagher said there is no sustainability without profitability. Without improving sustainability, farmers and the entire industry will likely be subject to very pejorative regulations in the future. It’s a chance for the industry to be proactive and avoid excessive regulations.
So how does Minecraft fit into the discussion? DMI had five college interns over the past summer who were in their low 20s and MBA students. DMI gave them the challenge to figure out how they would promote dairy sustainability to Gen Z if they had 10 million dollars to do the job. The students came up with the idea of promoting dairy through the video games that Gen Z plays.
Joanna Hunter is the Executive Vice President of Communications with DMI, who says the dairy industry will work with four of the most well-known Minecraft gamers in the world. It’s a chance to reach the Gen Z audience through a platform they’re already engaging in.
“We are going to work directly with four gamers who combine for more than 120 million followers,” she said. “Each of the influencers will take part in a virtual visit to dairy farms of different sizes and locations across the country, and every farm will have its own sustainability practices.
“After that virtual visit, the gamers will take what they learned and build a dairy farm in Minecraft,” Hunter added. “They may challenge each other, or they may challenge their followers to build the best dairy farm.”
The overall goal is for the gamers to engage others in that sustainability story and how dairy farmers are working hard to bring a nutritious and sustainable product to their audience. The gamers will be putting out dairy-related content through November. Hunter says it’s a great time to use the platform for a unique two-way engagement with the intended audience.
This kind of work doesn’t get off the ground without direct support from dairy farmers. Aric DeJager owns and operates Icon Holsteins in Kersey, Colorado. His role will be to provide on-site dairy farm education for the four gamers through FaceTime. Like a lot of folks older than Gen Z, he’s learning about Minecraft from younger relatives.
“I’m learning a lot about the scale of this from my nieces and nephews,” he said. “I’m just figuring out exactly how popular this stuff is. These gamers will have 40 million young and impressionable people watching them build their dairy farms on Minecraft. I’m really excited to see how this goes forward from here.
“I think this is a great step in the right direction,” Jager added.
Gallagher says things are changing, and the industry has to change with the times. The days of three cable TV channels are over, and it’s a new generation of marketing.
“Things like traditional television and cable news just don’t present the same marketing opportunities they once did,” Gallagher said. “We have to go where the people are. Over the next year, we’re going to test some new things, including Minecraft.
“Through GenYouth and Fuel Up to Play 60, we’ll be doing some things with NFL Madden,” he added. “Retailers are starting to create their own media cloud as the more traditional forms of advertising have declined in their reach a bit. Companies like Quaker have gone to 70 percent digital advertising, with more and more retailers following suit.
“As retailers continue to test their own channels, we’ll be doing more and more testing with them,” Gallagher added.
Dairy industry sustainability is another key driver in the new idea. “The businesses of dairy, such as the co-ops, the processors, and the manufacturers, have collectively set the goal of becoming carbon neutral by 2050,” Gallagher said.
“Dairy Management’s role in that is to support the environmental science, communications, and other relationships in achieving that goal,” he added. “While sustainability is important, it also has to be profitable for the industry. We are working on several different test cases on various farms to prove that profitability is possible, or what might need to change to make sustainability profitable.”
Gallagher said there is no sustainability without profitability. Without improving sustainability, farmers and the entire industry will likely be subject to very pejorative regulations in the future. It’s a chance for the industry to be proactive and avoid excessive regulations.
So how does Minecraft fit into the discussion? DMI had five college interns over the past summer who were in their low 20s and MBA students. DMI gave them the challenge to figure out how they would promote dairy sustainability to Gen Z if they had 10 million dollars to do the job. The students came up with the idea of promoting dairy through the video games that Gen Z plays.
Joanna Hunter is the Executive Vice President of Communications with DMI, who says the dairy industry will work with four of the most well-known Minecraft gamers in the world. It’s a chance to reach the Gen Z audience through a platform they’re already engaging in.
“We are going to work directly with four gamers who combine for more than 120 million followers,” she said. “Each of the influencers will take part in a virtual visit to dairy farms of different sizes and locations across the country, and every farm will have its own sustainability practices.
“After that virtual visit, the gamers will take what they learned and build a dairy farm in Minecraft,” Hunter added. “They may challenge each other, or they may challenge their followers to build the best dairy farm.”
The overall goal is for the gamers to engage others in that sustainability story and how dairy farmers are working hard to bring a nutritious and sustainable product to their audience. The gamers will be putting out dairy-related content through November. Hunter says it’s a great time to use the platform for a unique two-way engagement with the intended audience.
This kind of work doesn’t get off the ground without direct support from dairy farmers. Aric DeJager owns and operates Icon Holsteins in Kersey, Colorado. His role will be to provide on-site dairy farm education for the four gamers through FaceTime. Like a lot of folks older than Gen Z, he’s learning about Minecraft from younger relatives.
“I’m learning a lot about the scale of this from my nieces and nephews,” he said. “I’m just figuring out exactly how popular this stuff is. These gamers will have 40 million young and impressionable people watching them build their dairy farms on Minecraft. I’m really excited to see how this goes forward from here.
“I think this is a great step in the right direction,” Jager added.
Gallagher says things are changing, and the industry has to change with the times. The days of three cable TV channels are over, and it’s a new generation of marketing.
“Things like traditional television and cable news just don’t present the same marketing opportunities they once did,” Gallagher said. “We have to go where the people are. Over the next year, we’re going to test some new things, including Minecraft.
“Through GenYouth and Fuel Up to Play 60, we’ll be doing some things with NFL Madden,” he added. “Retailers are starting to create their own media cloud as the more traditional forms of advertising have declined in their reach a bit. Companies like Quaker have gone to 70 percent digital advertising, with more and more retailers following suit.
“As retailers continue to test their own channels, we’ll be doing more and more testing with them,” Gallagher added.