This episode was recorded in Fort Wayne, Indiana, during the 2025 Tri-State Dairy Conference.
Dr. Nicholson details the high points of his presentation, including a milk price outlook, implications of changes to milk and milk component pricing that will take place in June, and changes in butterfat value over time. As a result of the pricing changes, milk component values are expected to decrease. (3:15)
Net impacts on milk prices for a dairy will depend mostly on where they’re located, but also a little bit on how their milk is currently priced. Dr. Nicholson expects a decrease of around $0.32/cwt for dairies in his area. The panel discusses how a dairy might shift management and feeding to try to increase milkfat to recoup that loss. Dr. Zimmerman asks if the pricing changes will affect fat and protein pricing equally or differently. Butter and other non-fat solids are all going to have the same impact every month. But protein is slightly different because the formulas for protein pricing use both the price of cheese and the price of butter, and those factors interact. Brian comments the impacts for a cheese and powder type of dairy stand to be quite different from a fluid milk dairy. Chuck talks about some of the background as to why dairy cooperatives and dairy producers voted in favor of the milk pricing changes. (8:16)
The panel discusses the impact of cheese demand on component pricing and production. Billions of dollars worth of cheese processing capacity are coming online in the next couple of years, so demand should remain strong. Tariffs are definitely bringing a lot of uncertainty to the market. Some of the new cheese plants have a lot of whey processing capacity on the back end to add value. Whey products are one of our major exports. (13:54)
Brian talks about the shift in what’s considered an acceptable butterfat percentage over the span of his career. The panel talks about the influence of genomics and feeding management on that trend. Dr. Lock talks about a recently completed study in his lab feeding fresh cows two different levels of metabolizable protein and supplementing 0%, 1% or 2% of a 60:30 palmitic-oleic fatty acid blend. Cows fed a higher level of metabolizable protein and a 2% fatty acid blend produced 9.5 kilograms more energy-corrected milk in the first three weeks of lactation. He mentions the protein had more of an impact on milk fat than he had anticipated, that protein and fat supplementation showed additive positive effects, and there was a carryover effect after supplementation ceased. (21:04)
Dr. Lock summarizes some recent work on feeding high oleic soybeans to lactating cows. The panel chats about roasting vs. not roasting soybeans, transportation costs and economics. Dr. Lock’s group is now looking at feeding the oil from high-oleic beans to see how the response differs, if at all, from feeding the beans. (25:42)
Dr. Nicholson predicts a pretty good margin year for 2025, forecasting about $3 above the average long-term margin, even with the upcoming milk pricing changes. The big wild card is exports and trade policy, which could have a significant impact on what margins look like going forward. (31:32)
Panelists share their take-home thoughts. (33:36)
Scott invites the audience to Bourbon and Brainiacs at ADSA in Louisville - a bourbon tasting with all your favorite professors! Sign up here: https://balchem.com/anh/bourbon/ (37:55)
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Scott Sorrell (00:10):
Good evening everyone, and welcome to the Real Science Exchange, the pubcast where leading scientists and industry professionals meet over a few drinks to discuss the latest ideas and trends in animal nutrition. We've got a good one teed up for you today with Dr. Chuck Nicholson from the University of Wisconsin. And we're gonna be reviewing his presentation titled, emerging Issue Impacts of Changes in Milk Component Pricing on Dairy Farm Revenue. So Chuck, welcome to the Real Science Exchange, your first time here to the pub. Thank you for joining us. Yeah, great to have you. To start us off, why don't you just kinda give us some background about yourself.
Dr. Chuck Nicholson (00:46):
So, I'm an agriculture economist focused on dairy. I have the pleasure right now working in very dairy centric state of Wisconsin, but have previously worked at universities and other key dairy states like California, New York, Pennsylvania, and Vermont.
Scott Sorrell (01:01):
Good, excellent. Happy to be here. Yeah. Happy to have you. Before we get started, I'd like to introduce our co-host, Dr. Clay Zimmerman. Hello, clay. Good to see you.
Dr. Clay Zimmerman (01:10):
Good to see you, Scott. Thanks.
Scott Sorrell (01:12):
Color commentary today is going to be Brian Troyer. He's with Caledonia Farmers Elevator from Michigan. So, welcome Brian. Glad to have you. Why don't you tell us just a little bit about yourself?
Dr. Clay Zimmerman (01:24):
Okay. yeah, thanks for having me, Scott. I've been at Caledonia now for a little over 20 years. I, I work primarily as a dairy financial consultant. I do a lot of business plans and budgeting and financial analysis, things like that. I also do some dairy nutrition tech support for our team, and it's a variety of other things with our, our co-op and provide some leadership to the, the younger staff that we have. I've been, I've been in the industry for 40 plus years, so I have a little bit of whatever you call that. Wisdom. Wisdom or something. Wisdom,
Scott Sorrell (01:56):
Expertise, absolutely. Experience. We love it. Yes. Yeah. Thanks for joining us. Thank you. And next is Dr. Adam Lock. Adam, you're no stranger to the Real Science Exchange. Welcome back. Thank you. Appreciate having you here. Don't you give to the folks just a little bit of background on yourself. Sure.
Dr. Adam Lock (02:10):
Yeah. Adam Lock. I'm from a dairy farm in England. Been at Michigan State now since 2009. I have a research extension appointment, lipid digestion, metabolism. Yeah,
Scott Sorrell (02:20):
Milk bath. Excellent. Yeah. Yeah. Welcome back. Now, I understand that your mother's a bit of a fan of the Real Science Extension. She likes
Dr. Adam Lock (02:26):
To listen to a lot of them. I introduced them to a last last Christmas when I went back to England to bring, pick her up here. And she certainly has a five star rating of which one she likes and doesn't like. And not afraid to tell me, which ones have the best speakers on or not, so, or which ones. And, and I won't go any further than that, but she, she, she listens to quite a few of them now. So.
Scott Sorrell (02:47):
Maybe we can get her to give us one of those five star ratings and maybe a review on, on Apple that
Dr. Adam Lock (02:53):
Yeah. For, for, yeah. We might have to help her with that, but
Scott Sorrell (02:55):
Yeah. Help with that. So she's not a, she's not a, a tech savvy, no. Yeah. Okay. No,
Dr. Adam Lock (03:02):
My 13-year-old despair, sometimes
Scott Sorrell (03:05):
Just like my dad. Yeah. Chuck, why don't you start us off by telling us a little bit about the presentation, kind of some of the big key points that you're gonna cover in, in, in it today. Sure.
Dr. Chuck Nicholson (03:15):
I'm gonna start out by kind of putting what I'll say later on into context. A lot of people will think about outlook being something, what's the milk price gonna be? What are margins gonna look like? I wanna set the stage by talking a little bit about that. And then the core part of the presentation is really thinking about something that is changing how we will be pricing milk and milk components here in the United States for about 75% of the milk going forward. Talk about some of the implications for that. The spoiler alert is that will likely mean for a lot of farms that component values will be going down compared to where they have been in June. And then I wanna segue that into talking about how we have changed the values of butter fat over time, longer term perspective on that. And I think Adam's gonna help me back clean up not directly in the presentation, right? Maybe he doesn't know that yet. But we'll talk about some work that is looking at the the impact on farm profitability of feeding oleic soybeans to increase milk fat yields in, in dairy cows. So that's kind of where we're going with this.
Scott Sorrell (04:18):
Oh, excellent. So one thing that kind of caught my eye is that the com component values going down seems counterintuitive to me. It seems like we ought to be bringing more value to components
Dr. Chuck Nicholson (04:33):
That would be the dairy farmer's fervent desire, for sure. Yeah. And I'll tell you in the presentation a little bit, bit of details about why this is happening and how it's gonna work. But the basic idea is we have a, and this is where Adam's mother, I think, checks out think about this. We have this very complicated system of setting minimum prices for milk that's based on component values, and we're gonna make some changes to that. And the changes to the way we do that are the thing that's gonna bring the component values down, at least in the short term.
Scott Sorrell (05:05):
Okay. And why are we making these changes? What's, what's behind that?
Dr. Chuck Nicholson (05:09):
Basically because we've had a system that has been a little bit dysfunctional over the past few years of pricing milk and more and more milk has been opting out of that pricing system. USDA had a series of very lengthy administrative hearings. I felt sorry for the people from USDA who had to sit in that room down in Indiana and listen to months and months of folks talking about this. And they determined at the end of it, the evidence supported making the kinda changes that they're gonna be making. Yeah. And so that will be implemented. It was actually voted on by dairy farmers throughout the country. And basically those changes were approved by dairy farmers and their organizations. And that will start happening in June. Here we're June milk checks.
Scott Sorrell (05:58):
Okay. One more question before I turn it over to the panelists. So we operate in, in a global economy here we did before tariffs anyway. So, what impact is this going to have on maybe the global price of milk?
Scott Sorrell (06:20):
The economics of feeding reassure precision release choline ReaShure is fed during the transition period. And because it's fed for such a short period of time, it costs just $15 per cow. And yet the benefits will continue to generate income. Throughout the year, cows fed ReaShure produced five pounds more colostrum, which pays for your ReaShure investment on the very first day of lactation cows. Fed ReaShure also produce five pounds more milk per day every day. That means after the first day, every day is payday invest in ReaShure during the transition period and recoup your investment on the very first day of lactation after that. You got it. Payday.
Dr. Chuck Nicholson (07:09):
So, compared to what's going on with Terrace right now, this is kinda not that big a deal. It's important for dairy producers for sure. They might notice some changes especially in the first few months as these new price regulations come in. The longer term picture is gonna be more influenced by what we're doing on trade policy and how much we're gonna be able to export to some of our key trading partners.
Scott Sorrell (07:31):
Yeah. Okay.
Dr. Adam Lock (07:33):
So I was gonna say, Scott, one of the, I I think I started getting to know Chuck maybe last year or the year before last around some of our soybean work with the United Soybean Board. And when we were talking about, and I was asking him about the milk pricing, and I realized how heavily involved he's been, that's why we fought, he'd be an excellent to come here and speak to the nutrition community about the milk pricing and the changes and how it will impact how they may want to feed, need to feed cows as
Dr. Chuck Nicholson (08:01):
Well. Yeah. I, I'll be counting on you guys to say how we should change feeding cows since that's not really my thing. Yeah, yeah.
Dr. Adam Lock (08:08):
So, so Chuck, short term, what will the net impact be on milk prices for the dairy?
Dr. Chuck Nicholson (08:16):
Well, so that depends on where you are in the country. And it depends a little bit on how your milk is currently being priced, and I'll break that down as we, we talk about it. But the basic idea is we may be looking at reductions in a per hundred weight price of milk calculations here for the Mideast order would be about 32 cents a hundred weight. That's roughly one 2% of what that milk price might look like. The thing that we gotta keep in mind though, is that that's like what, what hits the ground in June, but if you start messing around with what the milk price is and with what the margins are on farms, both people buying milk and people making milk are gonna start making a little bit different decisions. And I'll talk about how that's gonna have some impacts as we spread out over the next five years. Okay.
Dr. Adam Lock (09:10):
So that's interesting with the, I think you said 30 cents. So is there then a way to look at, say, well, what would I have to change in my milk components to get back that 30%, you know, if I was producing the same a hundred pounds of milk, is that a, an extra 0.2 units of butter fat, or,
Dr. Chuck Nicholson (09:27):
I guess that's, that's what I'm counting on you Okay, Adam, to say to people. Yeah. At the end of that.
Dr. Adam Lock (09:31):
I'm just wondering, you know, how, how much would you have to get changed to get back to where you were?
Dr. Chuck Nicholson (09:36):
Well, you, you could, you could calculate what that additional milk fab would need to be. So if you think about that one, 2% thing, that's if you can increase the test, then actually make it work on the feeding side, feed cost side that would, that would be where you might be. And that's actually part of the reason to talk about the high oleic soybean element of that too, is boosting those butter fat yields.
Dr. Adam Lock (09:57):
So will the pricing changes affect fat and protein pricing equally or differently?
Dr. Chuck Nicholson (10:04):
Great question a bit differently. So for butter and other solids and non-fat solids those are all gonna have sort of like the same impact every month. Protein is a little bit different because the protein formulas the way we calculate the protein price depends on both the price of cheese and the price of butter, and they interact. So if you think about the range of possible values on protein, it's about 10 cents per pound is what we're looking at, based on how those prices have fluctuated over, over time. Okay.
Dr. Clay Zimmerman (10:42):
To, to piggyback on that, Chuck, so I've listened to dairy farmers complain about the way we price milk for the last 15 years, but yet it, it feels like in this deal, at least in the mid east where you and I live, you know, we're gonna lose in June, our milk, our milk checks are gonna shrink, is everything that I read. So was this driven by the processors? 'cause I asked somebody, I said, why did farmers sign off on this? If you're a cheese and powder guy, it's gonna go the wrong way. If you're a Florida and you're a fluid guy, it's gonna be great. But that was confounding to me.
Dr. Chuck Nicholson (11:19):
Yeah. So one of the reasons why primarily cooperatives got on board with this was many of those cooperatives are in the same situation of they buy milk and they make it into products, and they gotta figure out how they're gonna meet those manufacturing costs. And we don't have super good evidence about exactly what was going on, but we have some anecdotal stories that basically said co-ops were taking a deduct from that minimum price. And so, which they can do. And they were not maybe paying farmers the full value of those components anyway. And without trying to sound too, too cynical, it's not a good, you know, sort of visual if you're saying USDA reports this minimum price and you're paying your members something that's a bit less than that. And so that was part of them getting on board and also trying to get, part of this idea was trying to get more milk back into the pricing system itself, the thing we call the pool.
Dr. Chuck Nicholson (12:23):
And they could do that by providing those kind of senate incentives through the changes in the, in the pricing structure. So the, the bottom line on that is that if you look at the things that USDA is gonna report, all those numbers go down unless you're in a place where there's a lot of fluid milk utilization, and then you're gonna see an increase. What we don't know is exactly if you're not already getting that price, what happens? So for some farms we may actually not see much of a decrease. And for some farms, particularly those that haven't been part of the pricing system, they might actually see a price increase might see some premiums coming back in the marketplace. And so it's, it's a bit of a challenge to think about individual farms being in different positions. And it also, as I said, depends on where you are in the country. Well,
Scott Sorrell (13:13):
To kind of build on that, do you see this changing long term where it makes sense to dairy? So do you see the dairy populations moving around geographically?
Dr. Chuck Nicholson (13:23):
I, I think we see a lot of that happening anyway, but this probably won't be a major impact on, is it good to be in Wisconsin? Is it good to be in Florida? This is relatively minor compared to the larger forces that are kind of at work in terms of where we're making investments in dairy facilities, processing plants in dairy farms. Yeah. Yeah. Okay.
Dr. Adam Lock (13:46):
I assume the predictions are still that increasingly more and more dairy is gonna go into products as opposed to, to fluid milk.
Dr. Chuck Nicholson (13:54):
That's been a long-term trend. We've seen a little bit of a recovery in terms of per capita consumption of beverage milk. But the, the share that goes into cheese has been the real driver. And so that is likely to continue. We seem to have an insatiable appetite for pizza is one of the big motivators for that. Yeah,
Dr. Adam Lock (14:17):
I thought it was interesting talking about that, the cheese piece in the changing components with one of the presentations at at Western about, is it over the last 10 years we're now making one, is it a pound more cheese from a hundred pounds of milk than we were 10, 15 years ago? And so I thought that was very interesting. That might, that probably will continue as well if we continue these trends with components.
Dr. Chuck Nicholson (14:41):
Yep. So in the, historically, we actually used to put extra solids into the vat. We'd put non-fat dry milk into a cheese vet, sometimes actually cream. Also to boost the solids on both the fat and the non-fat side. With the increase in the components that you guys are generating there on the nutrition side and the, with the help of the genetics, we don't need to do as much of that anymore.
Dr. Adam Lock (15:01):
Yeah. I think they're more skimming having to take the cream off it now, so.
Dr. Chuck Nicholson (15:04):
Yeah. Yeah.
Scott Sorrell (15:05):
Chuck, you asked the question earlier, how will this change how we feed cows? And so maybe I'd like to toss that to our nutritionist here. We got three nutritionists on the panel. Any ideas or thoughts in terms of how it will change how we feed cows?
Dr. Adam Lock (15:20):
I, I think to answer that one question for Chuck is, even with the slight changes in the pricing yield of fat, yield of protein coming off a farm is still what's driving the milk check. Is that correct?
Dr. Chuck Nicholson (15:32):
I mean, that's, that's the main part of that. Yeah. Okay. I mean, it's, the value of the components is that price times the quantity. Yeah. So as you had pointed out earlier, if you can make more components for a hundred pounds of milk, that can be an offset to any of the price reductions that we're looking at. And again, keep in mind this is, you know, one 2%, which is not, you know, gonna be desirable for any farmer to say, Hey, you're taking a 1% pay cut on components right now. But there are things you can do to try and offset that, as you've, you've pointed out. Yeah.
Dr. Adam Lock (16:06):
So we've made really major strides in milk fat percentage here in the US and it's really accelerated the last few years even. Yeah. Is the, so, so what's the long term outlook for butter pricing in your opinion?
Dr. Chuck Nicholson (16:28):
So nobody knows. No. We have seen strong demand for butterfat both here in the United States and globally. And if you look at the global trends we're gonna continue to see increased demand for all kinds of dairy products. And the butterfat part of that included, it's been a little bit surprising to me that we've grown the component value so much in farm milk and yet we will, you know, continue to see for probably the next couple years strong better prices and perhaps increasing better prices after that. I think it's a little bit more murky because one of the things that we're really good at doing here in the US and better now really, I think, than anywhere else in the world, is we can make more milk in a hurry when there's incentives to do that. Right. And we got the land base, so we got the infrastructure in place to make that happen. We're gonna have tons of like billions of dollars worth of cheese processing capacity coming online here in the next couple years that's gonna require more milk to fill those plants up to where they should be. So there's, there's a lot of potential there. And whether or not we can overdo it is kind of the thing that I think we need to keep an eye on. Right?
Dr. Adam Lock (17:42):
Yeah.
Dr. Clay Zimmerman (17:43):
That, that's one thing I've always said. In, in this country, we have an amazing ability to make a lot of milk in a hurry. Like, whenever in one of my old econ professors at Michigan State said this, you know, when we, when we make, when the price of milk goes down, we can make more milk. 'cause We need more volume when the price of milk goes high, we're really good at making a lot of milk because we want that extra milk check. So we're our own worst enemy in the US because, because our system is kind of un sort of unregulated compared, we don't have a quota system like some countries do. If we ever get to that point, then that will, I think, change some of the things we're talking about too. But butter and cheese and, and stuff, I think that it seems to me that looks like it will continue to grow Yeah. And demand.
Dr. Adam Lock (18:29):
But from, so from a nutrition point of view, I dunno what you think, Brian, but to me it sounds like I don't think we're necessarily change our focus in on nutrition of driving fat and protein yields. Is is that kind of what you're thinking as well? Yeah. So I don't see a big change. Yeah.
Dr. Chuck Nicholson (18:47):
There, there're still valuable components. Yeah, right. They're just a little bit less valuable coming into the middle of the year here than they would've been otherwise. And again, these are notable but relatively modest changes to what that would look like. An economists, you gotta be careful about trusting economists there. Especially a professional economist. But, you know, we would say if the component has less value, you may push the cow a little bit less hard to get that right. Yeah. The other alternative is you figure out some kind of feeding strategy is gonna get those components back that actually will pay. Right. And that's in part of where this high oleic soybean idea comes in. Yeah. Right.
Dr. Adam Lock (19:22):
So with all of the cheese production capacity coming online, that should be favorable for milk protein prices, right?
Dr. Chuck Nicholson (19:30):
Yes, it should be. One of the key things that we'll have to keep an eye on is many of those plants were built with the idea that they would support export markets. And so we're at a very uncertain time with regard to where our export volumes are gonna be over the next couple years. And so I guess we'll have to see that may also change a little bit the trajectory of when people bring those plants online. Yeah. that kind of thing. Which would affect both what, what's going on with milk production and component production, the pricing and then also what we're actually able to do in our, our export markets that Yeah.
Dr. Adam Lock (20:12):
With some of these new cheese plants, I know the one in Michigan that came on, they have a lot of whey processing capacity on at the backend to, you know, make more value outta that. Does that shift into that, does that long term drive more value in protein? If you can get more out of the non cheese part of it as well?
Dr. Chuck Nicholson (20:31):
Yeah. We, we, we've definitely moved in the direction of taking more of that stream and turn it into products that have value. And actually one of our major exports for a variety of reasons, animal feed infant formula is actually various forms of whey products. Right. And so that's part of the incentive that's going on with bringing these big cheese plants online. There's mac and cheese, and then there's also these products that actually tend to be, you know, more shelf stable. You can ship 'em longer distances growing demand outside the US for them to Right. Not
Dr. Adam Lock (21:03):
Interesting.
Dr. Clay Zimmerman (21:04):
The other thing I've observed is, as we made this shift from like, when I got outta school for 50 years ago, you know, we would a 3, 2, 3, 3 butterfat was very acceptable, but we weren't compensated for anything much above that. Like, we only got penalized if we got below a three. And today if you had a three, somebody would think something's wrong with your farm. So, and when we went to component pricing and then in the last five to 10 years we've incentivized that protein in butter, well, when butterfat took off, that's when we really figured out how to make more butterfat. And so I always say farmers are, are really good at figuring out how to capture that dollar. If you can tell me it's gonna be worth something, I'll figure out how to get it. And that's what I've, that's what we've really have done. Some people want to give genomics a lot of credit for this big jumping butter fat. And I argue it's actually more pro more nutrition related. There's probably two schools of thought on that. And I'm probably, even though I'm a quote unquote geneticist by training, I'm in the minority apparently on this. 'cause Every talk I hear, they want to give genomics all the credit for the increase in, or a lot of the increase. Adam and I argued about this last week at Reno, but it was
Dr. Adam Lock (22:18):
Funny. I was just gonna say, well, I think actually the, the, but interesting, the timing of the increases in fat value did coincide with the increase in, in genomics. And I've learned a lot, listened to a lot with Mike Vander har about this recently. And I think it's both. You're not gonna have one without the other. Right. actually I read a recent hordes article from a geneticist that actually put more credit on the nutrition than the genetics side, but you definitely have to have both there. Right? Yeah. So it's kind of amazing where we've gone and where might we go. Yeah. You know, with that, that's
Scott Sorrell (22:54):
Kind of a nice segue. I had a nice conversation yesterday with your grad student. He was talking about some research that he's done where you're able to I think you were feeding fatty acids and amino acids and significantly increasing milk solids. Would you want to talk a little bit about that? Yeah, sure.
Dr. Adam Lock (23:11):
I don't wanna spill as take highest thunder too much. He's presenting that abstract to ADSA this summer. But it was fresh cows we were feeding, and it kind of built on some stuff that Bill Weiss did at Ohio State. Cornell have done some around transition period. And hay designed the study where we had two levels of metabolizable protein, like a standard and then a bit higher. And then we fed either zero one or 2% of our, of a oleic blend, like a 60 30 that we've been doing a lot of work with. And across, if you just took the, the lowest, you know, the, the zero low protein to the high protein high fat, that was nine and a half kilos more energy corrected milk in in the first three weeks. Interestingly, and this is something actually I think we are gonna talk a bit more at a DSA in a nutrition session there around milk fat.
Dr. Adam Lock (24:04):
Some of the changes you do to the protein side of the diet actually has a bigger impact on milk fat than it does on milk protein. And actually it had overall had a bigger impact on milk fat than the fat supplementation. Yeah. But importantly, the effects were additive, so you get the best of both. And then there was a carryover effect on the fat side as well. So we are learning more and more. Right? Sure. And I kind of, I think I couched it last week and Reno was, you know, with all of this, can the nutritionist keep up with the genetic progress? And I think we're doing a good job Yeah. That it's gonna, it is gonna be, how do we keep doing that? So, you know, yeah. New technologies, innovative ideas and that, especially in that early lactation cow, if we set her up right there, I think we can have some long term benefits. But yeah, we're excited. I'd like to get more involved in some of the, how the, you know, how do those amino acids impact milk fat as well? So, yeah.
Dr. Adam Lock (25:00):
Interesting. How, yeah. How long was your supplementation?
Dr. Adam Lock (25:04):
Three weeks, the first three weeks. And then we put them on a very simple diet and there was a carryover effect as well. So I did some of the economics for his presentation here in the student competition. And it was, it was, I mean, obviously the va the cost of the diets were a lot more, yeah. Yeah. But, you know, income over feed cost was the, the key thing there. And Chuck and I have had some interesting discussions lately about cost of diet versus the milk, and I guess everyone has different philosophies on that as well, right? Yeah,
Dr. Chuck Nicholson (25:30):
I actually, Adam, I, I'd be interested in hearing what your summary would be of the biological response, if you will, of the oleic studies that I'll be talking about the economics for. Okay.
Dr. Adam Lock (25:42):
So we've actually, I think we're doing a, a webinar Yeah. In June, I think to talk more about that. But you know, Alicia Bales, who actually works with Brian now, and Caledonia actually helps support some of her graduate work as well along with the United Soybean Board. Done a series of studies now, you know, around the unique, you know, I think high oleic soybeans is a very unique ingredient, and I think out there in the market has that level of oleic acid in its oil, it's about almost 80%. So it's that oil within high oleic soybeans is the unique piece of it, right? So we've had a lot of data now around potential benefits of oleic acid in transition cows, fresh cows on fatty acid absorption. And in really interesting, is it really, it, we get very good responses in energy corrected milk in, in high in the highest producing cows.
Dr. Adam Lock (26:34):
So is that maybe we're getting better at more nutrients absorbed more energy being partitioned to the mammary glands. So we've, in under our conditions we've always seen improvements in milk yield, fat yield, and, and, and mostly protein yield as well when we're, when we're feeding them. So Chuck's done a series of analysis on the economics on our first two studies, our dose response, and then raw versus roasted. And I think everyone would be very interested in seeing some of that tomorrow and how it's looked over the last 10 years of milk pricing. But I think importantly how you price the beans as well, you know, homegrown versus are you buying them in at different premiums, so. I would certainly go if, you know, my recommendation would be to roast, you know, if it's on farm, there's some additional costs, interest some, you know, consistency things you have to be there. But I'd be roasting them. I think it's definitely, you, you get a better response.
Scott Sorrell (27:31):
Now, you talked a little bit about homegrown versus purchased a lot of the, the dairy cattle in the United States can't grow soybeans. Right. And so what's the economics look like? Does it make sense to, to ship soybeans to California?
Dr. Adam Lock (27:46):
Yeah, I'm not sure it makes sense to go that far. We're, I mean, we're seeing some big changes in Michigan right now. Yeah.
Dr. Clay Zimmerman (27:53):
Right. We've, we've looked at that. And so the transportation costs even across our state is, you know, depending on again, what you gotta pay for the bean, if you're gonna buy it from a crop farmer. And up until this year, the crop farmer probably hesitated to grow it because of the chemistry involved with killing the weeds around it. Like a, a good friend of mine is a one of those 10,000 acre farmers who said they're not gonna pay me enough to grow that bean to change my tillage practices. But this year I think that is changing and that will change how those beans are gonna be priced. And then, but there's times when we do the economics in house when we do a diet and it doesn't pay to, to buy or transport too far. Got it. Yeah. So it'll be, but most Michigan dairymen probably grow some soybeans. Like we have a corn soybean rotation on most of our, our farms and then some alfalfas. So if, if it fits to grow the soybeans, we've, we've got guys that wanna do that. And we've actually had some crop farmers call our, our co-op and say, at least, no, they're not gonna pay us enough to grow conventional soybeans. Can we grow these for you guys? And so we've kind of done the math and figured out what we could pay to, to do that. So
Dr. Chuck Nicholson (29:11):
Yeah, there's kind of this sweet spot between paying the farmer that you're gonna buy from enough to get 'em interested based on the things you've been talking about, and then not pricing it out of being a, a good addition to the ration. And that's kind of the, the sweet spot that we're gonna talk about later on here. Yeah. Yeah.
Dr. Adam Lock (29:28):
So I think in those areas where there are dairy, strong dairy and soybean growing, you know, farmers communities, that it, it makes a lot of sense. But your, your idea about shipping to California is interesting because these beans were originally, you know, developed for crushing and using the oil. Right. And I've had a few instances of nutritionists say to me, we can't get the beans, but I can get the oil because there you go. Yeah. And that depends on a whole series of economic things. But so we're actually doing a study right now with the oil because if we can see if we can replicate the responses that we see with the bean with the oil, which is the unique part of the Bean that potentially opens up its use in other, in other markets, I think,
Scott Sorrell (30:13):
Do you see run and disturbance with the oil versus the beans? I will
Dr. Adam Lock (30:16):
Tell you in a couple months time. Alright.
Dr. Adam Lock (30:21):
So, but I would've said maybe if we did this a decade ago. Yeah. Yeah. But we've learned a lot, you know, that's, you know, when I first moved over here Right. That coming here was the first time I'd seen a butter of fat below four, you know? Right. So now, you know, so, you know, it's actually, I think I remember Kevin Harvey made a good point about this. You know, we don't really talk about milk fat depression now, but maybe we should to some extent, but our bar of where, you know, anything maybe below a free nine now is a milk fat depression. Whereas, you know, when I first moved over here, if I had, if a farm had a free five, they were doing really good. Right? Yeah. So, yeah. So it's so it's interesting like that. So, you know, I think we, I mean we've act, I think our highest dose in that study is 2% added oil. With the high ole. So, you know, you have to set the rest of the diet up well, but I'm excited to see those responses.
Scott Sorrell (31:13):
Yeah. Keep nutritionists employed. Yeah, exactly. Yeah. Alright. Chuck, have we missed any high points of the talk that, that we need to cover?
Dr. Chuck Nicholson (31:24):
I'm trying to think here.
Dr. Adam Lock (31:26):
So, so what is the, what is the outlook for 2025 for dairy in the us?
Dr. Chuck Nicholson (31:32):
So if you think about the, the baseline that we might start from, we're actually likely to look at a pretty good margin year. 23 for a lot of folks was a low margin year. We actually got down to some record low margins for a brief period of time. In the middle of the year 24 was a pretty good year because we had some moderation on the feed price side and some pretty strong milk prices. For this year, we're not looking at 23 and we're not looking at a 24, but we're looking at something in the middle. My forecast for that will be at about $3 above the average long-term margin. Okay. milk minus ration value that, you know, shapes up to be you know, pretty reasonable year. And that's despite the fact that we're looking at these pricing changes coming up mm-hmm
Dr. Clay Zimmerman (32:47):
Yeah.
Scott Sorrell (32:48):
Right. Exactly. Anything else in,
Dr. Adam Lock (32:54):
No, it's been a good discussion.
Scott Sorrell (32:55):
No, it's been a great discussion. I've, I've enjoyed it. Wanna thank you guys for joining us. What I'd like to do is, before we close it out, just kind of go around the table and kind of give a one or two key takeaways for the audience. And if you don't mind, clay, I'd like to start with you.
Balchem (33:11):
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Dr. Adam Lock (33:36):
Yeah. So really looking forward to hearing your full talk later. Thank you. But yeah, I think from a nutritionist perspective as we discussed, I don't think anything will change here short term, right? It's, it pays to feed from milk components period, and nothing's going to change that. But yeah, we just need to continue to do what we're doing. And Adam, I'm actually really excited to hear about this, this new research that you've been doing.
Scott Sorrell (34:07):
Yep. Yeah, absolutely. Brian, any thoughts from you?
Dr. Clay Zimmerman (34:11):
Yeah, a couple just on looking out over the next year, I was just, I'm working on some budgets right now and I'm also looking at first quarter numbers as part of my financial work and, you know, the cost of production, I just tell producers, you gotta keep an eye on that and you need to understand it. A lot of producers don't know what it costs to make a hundred pounds of milk. And so when these, when things get a little tight on the farm, they don't, they kind of panic. And so I said, let's figure that out. But I think, and I always tell guys another five pounds of milk economically, we don't wanna buy this five pounds of milk, but if, if we can get five pounds of milk doing something like feeding high ole beans or some other management practice, that makes a world of difference in your cash flow and, and your bottom line. And in a year like this, that makes, that's the difference between the people that survive and the people at the end of the year that decide to sell their cows. Talk
Scott Sorrell (35:05):
To me a little more about that, buying that five pounds of milk. What, what do you mean by that? Using,
Dr. Clay Zimmerman (35:09):
So it's gonna, if it's gonna cost me $3 to get $3 worth of milk, I'm buying the milk. And what Adam was talking about his study, I, I listened to his students talk yesterday and, you know, they were investing a, a buck 70 and getting two 70 to $3 worth of milk that I can sell that all day long to my guys. So, yeah. Yep.
Dr. Adam Lock (35:29):
And the other aspect of that, I remember hearing someone else, you may be paying $3 more, but you're also then diluting out the cost of the That's true. You are, yeah. So I've heard that with palmitic acid before, for example, right. Where they just say, well, I only get, I get this right for the, for the milk fat, but I'm, I'm here mm-hmm
Scott Sorrell (36:01):
So, yeah, no, that's a great point. Yeah. Any final thoughts, Adam?
Dr. Adam Lock (36:04):
This has been really interesting. Yeah, it has. And I'm, I'm glad Chuck has joined us down here at Tri-State. I feel everyone's going to, you know, gain a lot of information and I, I think knowing that, you know, we're gonna continue to drive components and the only change with that would be if there was a sea change in, you know, everything that was going more to fluid and less the cheese and yo yogurts. And so I, you know, I think for us, you know, knowing that we got still continue to focus on how to we can more efficiently and increase fat and protein, I think that's, yeah. That's a really good take home for
Scott Sorrell (36:36):
Me. Yeah. Yeah. Great comments. Chuck, take us home. Okay.
Dr. Chuck Nicholson (36:40):
So my takeaway is it's looking like a fairly reasonable margin year in most parts of the country. And that's despite the fact that we're gonna see these pricing changes in June that are gonna at least initially lower component values for folks who are actually playing in part of the regulated system of low pricing that we have here. And then there are some wild cards out there that relate to our economy, our trade policies that folks should keep an eye out for both directly themselves. And you're gonna help 'em out when they're, they're looking at that and through their organizations to kind of have voices be heard. Yep.
Scott Sorrell (37:18):
Yeah. Good. Chuck, this has been an interesting topic. Thank you for joining us. It's been good. Great
Dr. Chuck Nicholson (37:23):
To be here. I'd even be happy to come back. Yeah, well,
Scott Sorrell (37:25):
We'll have,
Dr. Chuck Nicholson (37:25):
If I ever had something to say.
Scott Sorrell (37:27):
Absolutely. Absolutely. Anytime. Clay, thanks again. We'll see you later on today. Brian, thank you for joining us for the first time here. We'll have to have you back as well. Thank you. Enjoy, Adam. Always great to see you. Tell your mom I said hi. I'll, I'll
Scott Sorrell (37:42):
To our loyal audience. Thank you for coming along with us. Once again, we hope you learned something, we hope you had some fun, and we hope to see you next time here at Real Science Exchange, where it's always happy hour and you're always among friends. Hi, I am Scott Sorrell. I'm here to invite you to a very special event at the upcoming ADSA conference in Louisville. It's gonna be a bourbon tasting. We're calling it bourbon and brainiacs. Now, why do you call it bourbon and brainiacs? Because we're gonna have all your favorite professors there doing a bourbon tasting. We're gonna have six to eight bourbons there. We're gonna be recording a podcast and doing the tasting. While we're there, we've even got a a bourbon, a barista, which I'm not sure exactly what that is, but we're gonna have one of them there. Now listen, this is only for 120 of our favorite friends. That's all this place holds. We're gonna have it at the Fraser Museum. It's a bourbon museum there in Louisville, and so only 120 people can can fit in there. And so we want you to be one of them. And so to become one of the one 20, all you have to do is go to alchem.com/bourbon and register. Once those 120 slots are gone, they're gonna be gone. But I hope to see you there.
Balchem (39:00):
We'd love to hear your comments or ideas for topics and guests. So please reach out via email to anh.marketing at balchem.com with any suggestions, and we'll work hard to add them to the schedule. Don't forget to leave a five star rating on your way out. You can request your Real Science Exchange t-shirt in just a few easy steps, just like or subscribe to the Real Science Exchange. And send us a screenshot along with your address and t-shirt size to anh.marketing at alchem.com. Balchem's real science lecture series of webinars continues with ruminant focused topics on the first Tuesday of every month. Monogastric focused topics on the second Tuesday of each month, and quarterly topics for the companion animal segment. Visit balchem.com/realscience to see the latest schedule to register for upcoming webinars.