RITTMAN, OHIO – Exports, proposed estate tax reform and environmental issues were among the topics of discussion during a dairy summit hosted by the Wayne Ashland Dairy Service Unit, before the 2021 Dairy Twilight Tour at RMD Dairy, Ltd in Rittman.

The event drew a mix of university and industry representatives, producers, and elected officials.

During opening remarks, Matthew Dotterer, a member of the host family expressed his appreciation to the audience.

“We appreciate you, we need you, you need us,” said Dotterer. “We are in this together.”

The last 10 years have been a roller coaster for the dairy industry, according to Dianne Shoemaker, extension dairy specialist with The Ohio State University.

While Ohio lost 1,000 to 1,500 dairy farms over the past decade, cow numbers continue to climb as cows move to different farms. Milk prices have been driving the charge. One bright spot is there is still a good export market.

“There is too much milk, from too many cows,” Shoemaker said. “Until we get that under control it will continue to be a challenge. But the beauty in Ohio is that there are multiple ways to be successful,  but producers need to be good business people.”

She added that the current Federal Marketing Order, which was established during the 1930s for a local market, hasn’t been revised to meet the needs of the international market producers are working in today.

Shoemaker said change doesn’t come easy and producers will have to work together to create a workable federal order. She said producers should consider looking at risk management tools.

“Risk management tools are important management tools, but you need to know your cost of productions,” Shoemaker said. “The Dairy Margin Protection program is a little bit flawed, but it is still a good safety net. The challenge is that the base was established on production levels from 2011, 2012 and 2013. Currently, there is legislation working its way through Congress to allow farmers to increase their base levels.”

H2Ohio is a joint effort on the part of the Ohio Department of Natural Resources (ODNR), Ohio Department of Agriculture (ODA) and the Ohio EPA to look at water quality issues in Oho, according to Dorothy Pelanda, director of the ODA.

Pelanda said the ODNR is working on projects to restore or create wetlands to help filter sediment and improve water quality, while the Ohio EPA is working with municipalities and small villages to repair sewer systems and failing septic systems. ODA is working with farmers to develop manure management plans and identify good management practices to reduce runoff.

Pelanda said the goal of H2Ohio is to reduce the phosphorus level in Lake Erie by 10 percent. Currently, there are 1.1 million acres in 14 counties are enrolled in the program designed to offer farmers financial incentives to implement practices on their farms with the ultimate goal of improving water quality in Lake Erie. Recently, the program was expanded to include 10 additional counties in Ohio’s Western Lake Erie Basin.

“H2Ohio is an opportunity to show Ohioans the great things that farmers are doing,” Pelanda said. “Together with the administration and the legislators and the Ohio Agricultural Conservation Initiative, I believe that Ohio is on the right path to making changes in water quality.”

Pelanda said it will take some time for  H2Ohio programs to turn things around but at the same time, they offer farmers a chance to show they are leading the way to improve water quality in the Great Lakes.

Pelanda also highlighted improvements to the animal diagnostic testing program with plans to build a state-of-the-art facility on the ODA campus. She mentioned the creation of a working group pulled together with stakeholders from across the dairy industry to work on price discovery, producer price differential and other federal milk order issues to help producers find ways to combat price fluctuations in the dairy sector.

Moving from water quality, Barry Ward, director of OSU extension’s Income Tax School, said federal legislation such as the American Family Plan could have a major impact on the future of agriculture. One proposed change is to eliminate the stepped-up basis. This change would mean that heirs to property and other assets would have to pay taxes on the increased value of the inherited assets.

At the state level, the Family Farm Regeneration Act would allow farmers to take a tax credit if they sell assets to new or beginning farmers.

Representatives from John Deere, AGC, and New Holland shared challenges faced by their industries.

Andy Nelson, marketing operations manager for John Deere said 2020 presented new challenges for the company.

“We like to meet our customers,” Nelson said. “We developed virtual tours to allow us to interact with our customers. We think that will continue in the future.”

Nelson said the company is working on new technology that will allow livestock producers to monitor manure applications on their fields. 

Craig Unverferth, territory business manager for AGCO Corp., said with more people working from home, they also took on home improvement projects, which saw an increase in demand for small horsepower tractors. Unverferth said demand for those tractors was up 20 percent. He said demand for larger tractors is up as well.

Another reason for increased demand is that the equipment line on many farms is older, but as farmers see good prices for farm commodities they are replacing equipment. Right now there is at least an eight-month lead time on new equipment, with orders out into the middle of next year.

“But as we move into next year, we should see inventory levels improve,” Unverferth said. “But farmers are planning to replace equipment they need to start planning earlier.”

He added that shipping costs have increased sharply, mainly due to a shortage of shipping containers. He said parts are still in good supply but manufacturers are still dealing with labor shortages.

Unverferth said engineers are looking at ways to make equipment more comfortable, more efficient and help farmers be more profitable. “We are trying to be more farmer-focused,” he said. “How can we make it easier to do business with AGCO.”

A lot of positive things have happened in the industry over the last 15 months, according to Richard Egleston, territory business manager for New Holland. Egleston said demand for equipment is up but there were challenges as well.

Farmers are starting to update their aging fleets, but dealers are seeing supply chain issues. Egleston said manufacturers did not have a chance to build inventory ahead this year. He said orders are out into 2022,

“We may see things normalize six to nine months out from now,” Egleston said. “Right now we aren’t sure what is driving future growth, but at the same time, dealers are offering current deals to encourage producers to think ahead about their purchases and preorder their equipment.”

Egleston added that the dealer structure is changing as there are fewer dealers with larger operations at more locations.

Scott Higgins, CEO of American Dairy Association Mideast and Ohio Dairy Producers Association (ODPA), told those in attendance that the industry saw restaurant and food service sales decline by 44 percent while retail sales increased by 57 percent during 2020. Butter sales, yogurt and cheese sales are also up. Domestic consumption is up by seven pounds. Export sales are right at 17.8 percent, with a goal of 20 percent during 2020. Higgins said that their goal is to find new ways to make milk more consumer friendly. On the ODPA side, the group is gathering information on dairy policy and pricing, and water quality issues as H2Ohio expands into an additional 10 counties in northwest Ohio. 

Higgins said environmental stewardship  is even more critical now as consumers want to know how dairy compares to other beverages. They also want to know how farmers work to protect water quality and the environment makes dairy a good option for consumers.

For Leon Wengerd, CEO of Greenfield Farms Coop, told the audience that when faced with challenges such as we have faced in the past 18 months, relationships and networks are critical. “We need to work together and be there for each other,” he said.