12/7/2018

1

Glimpse into the Future

Dr. Gordie Jones

Partner

Central Sands Dairy LLC

“Predicting the future is like driving a car blindfolded,

following the instructions of someone looking out the back

window.”

12/7/2018

2

A look back before a look forward

Remember we are here because we love cows!

12/7/2018

3

“Pleistocene Mega fauna”

–Born during the last Ice Age

The First Farmers• Were in Mesopotamia

• Modern day Iraq

• Large headed grains

• Wheat, Barley, Triticale

• A stick in the sand

• A little water and we were farmers!

12/7/2018

4

The First Farmers

• Our First fences

• Were to keep the wild cows out!!

• She opened the gate

• And we now had a cow!

Only 11 species were able to be domesticated.

• Our Cow is the star!

• She Provided POWER, Protein, & Fertilizer

• She truly is the foundation of civilization.

• The foster mother of the human race

• All of the domesticated animals are “herd” species - looking for a leader

• Except the Cat!!

12/7/2018

5

Covenant;

To care for, and

keep

The

Star

of the

show!

12/7/2018

6

PM Fricke, Ph.D.

Trends in the Dairy Industry over the last 25 years can be best described by

the term:

CHANGE

Four Major Forces Shaping U.S. Agriculture

• Industrialization / consolidation of production– The dairy industry is in a phase of rapid structural

change– Large dairy production technology has irreversibly

dominated the industry • Globalization of markets

– No beef moves to Japan from North America• Food safety issues

– BSE, E. coli 0157, organic markets, fear based food marketing

• Consumerism– Low fat, low carb, “happy cows”

12/7/2018

7

U.S. Dairy Farms & Cows(1940 – 2015)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

Co

ws (

x10)

& H

erd

s

0

20

40

60

80

100

120

140

160

180

200

Avera

ge H

erd

Siz

e (

Co

ws)

Cows (x10) Herds Herd Size

Source: USDA-NASS, AFBF, FASS

Herd size doubles

~ every 10 years

It’s the Economy Driving EfficiencyDisconnects in Costs of Goods and Services (inflation), Living Expenses, Sale Price

0

20

40

60

80

100

120

140

160

180

200

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Pri

ce

In

de

x

All Items

Food

Retail Dairy

Farmgate Dairy

Supplies

Wages

Feed

Source: 2003 NMPF Dairy Producer Highlights

12/7/2018

8

Dairy Sectors

• Sunset dairies– Small dairies that will shut down when the current owner

retires or leaves for economic, age, or lifestyle reasons

• Niche dairies– Production for a specific market or with a specialized system

(organic, grazing, Amish, Registered Embryos, etc.)

• Lifestyle dairies– Operate with considerable off farm income for personal

lifestyle reasons

• Large dairies (Semi-load of Milk is 1-2 days)– This is the principal sector in terms of current and future

milk production in the United States - 400 cows

Most Dairy Farmers will double herd size 4 times.

• Pretty easy when 25 cows• Become 50-100-200 cows• But as we get to 200 cows• Becomes 400-800-1,600 cows• Now we are at 1,600 becoming 3,200 cows• 3,200 cows and now dairymen are just• Building more 3,000 milk cow dairies

12/7/2018

9

Dairy Herds in the U.S. (1,000s)

herd size / year 1-49 50-99 100-199 200-499 >=500 All

1982 204.7 53.3 14.6 277.8

1992 93.1 41.8 14.1 157.2

2000 52.910%

31.4

19%

12.9

17%

5.4

18%

2.8

36%

105.2100%

2010 18.23%

12.8

8%

7.2

10%

4.3

15%

3.3

63%

45.8100%

2020 2.81%

3.5

2%

2.7

4%

2.3

9%

3.4

85%

14.7100%

Taken from “Future Structure of the Dairy Industry”: LaDue, Gloy, Cuykendall 2003

http://agfinance.aem.cornell.edu/research.htm. historical data from USDA / NASS

approx. 5,000 >200

Blue #s are % of U.S. milk

approx. 8,000 >200

U.S. dairy cows and herds

• If the average herd size were 1,000 cows

• If the nation’s milk needs were produced by 9 million cows

• Then 9,000 herds would supply all of the milk needed– There are ~40,000 herds in the U.S. today

12/7/2018

10

Peters, Christian J., Jamie Picardy, Amelia F. Darrouzet-Nardi, Jennifer L. Wilkins, Timothy S. Griffin, Gary W. Fick. 2016.

Carrying capacity of U.S. agricultural land: Ten diet scenarios. Elementa: Science of the Anthropocene • 4: 000116 • doi:

10.12952/journal.elementa.000116

Dairy

Vegan

Egg

Om

niv

ore

Die

ts 2

0 to

100

2067: Dairy diets maximize carrying capacity of land resources

1

2

- 1,000 2,000 3,000 4,000 5,000 6,000

Asia

Africa

L. Am. &…

Europe

N. America

Oceana

Millions of People

10.4 Billion in 2067(7.4 Billion in 2017)

63

459

678

791

3,156

5,265

Demand for food!

Country MillionsIndia 1,754 China 1,299 Nigeria 519 USA 412 Pakistan 343 Indonesia 327 DR Congo 263 Brazil 233 Ethiopia 220 Bangladesh 200

Source: De Wulf, M. 2016. Population Pyramids of the World from 1950 to 2100. https://populationpyramid.net/world/2065/ based on United Nations,

Department of Economic and Social Affairs, Population Division. World Population Prospects: The 2015 Revision. (Medium variant)

2067: Africa & Asia will have 4 of 5 people; USA rank falls from 3rd

to 4th

81%1

2

3

12/7/2018

11

Water

• Climate Change

• Current Demands NOT sustainable

• Opportunity

• Midwest

1961 1971 1981

1991 2001 2011

Currently: USA temperature trending above average for 4

decades

Source: https://www.ncdc.noaa.gov/temp-and-precip/state-temps/

1

2

12/7/2018

12

Climate Change, Water, and Risk: Current Water Demands Are Not Sustainable

www.nrdc.org/globalWarming/watersustainability

2067: Lack of water will drive dairy relocation in North

America

Dairies will shift from

seven states that

produce 42% of milk today.

Longer Growing Seasons

& More Rain

Darker shades have

more severe water

shortages.1

2

Performance

• Welfare / Cow Comfort

• Nutrition / Rations

• Management / People

12/7/2018

13

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

192

41

92

81

93

21

93

61

94

01

94

41

94

81

95

21

95

61

96

01

96

41

96

81

97

21

97

61

98

01

98

41

98

81

99

21

99

62

00

02

00

42

00

82

01

22

01

62

02

02

02

42

02

82

03

22

03

62

04

02

04

42

04

82

05

22

05

62

06

02

06

4

kg

pe

r c

ow

pe

r ye

ar

lbs

pe

r c

ow

pe

r ye

ar

Actual Yields

Linear

Exponential

Herds of the future: Experts’ forecast of milk yield in USA in

2067

Top USA Cow

2017

Top USA Herds

2017

12 SD above national average

Trend after

Genomics

1

2

3

4

12/7/2018

14

Herds of the future: Integrated systems across farmsteads and

beyond

Soils

Crops

Silo/bales

Lagoon

Natural areas

Barns

Milking center

Personnel

Equipment

Commodities

Robots

Air

Waterways

Roads

Vehicles

*

*

*

*

*

*

*

*****

*

*

* *

*

*

Integrated sensors & robotics

*

*

Cow friendly

Reliable, Repeatable

Precision, Accuracy

Less labor

2

3

1

12/7/2018

15

Herds of the future: Lateral integration of

functions

Milk

Cows

Milk

Cows

Milk

Cows

Milk

Cows Milk

Cows

Milk

Cows

Milk

Cows

Milk

Cows

Milk

Cows

Milk

Cows

Milk

Cows

Shared

Dry

Shared

Heifers

Shared

Transitio

n

Feed

Center

Shared

Dairy Beef

Feed

Center

Shared

Calves

More Efficient Workforce

• Enhances labor

efficiency

• Common protocols

• Driverless feed vehicles

• Identical robotics &

barns

• Staff veterinarians

Milk

Cows

1

2

3

4

Herds of the future: Understanding the dairy herd as a

SUPERORGANISM

Gene Cell Organ Animal

We cannot learn about herds by studying these:

1

2

12/7/2018

16

Cow Comfort

Ration

Feed Bunk

ManagementReproduction

Milk Quality

Youngstock

Fresh Cow /

Dry Cow

Milk Production

Summary Conclusions• U.S. dairy industry is undergoing fundamental and

rapid reorganization• over next 10 years

– Cow numbers will stay steady @ 9.2 million– Herd numbers will drop to <30,000 herds– 50% of U.S. cows will be located in only about 4,000 herds– Cows will start to move East but dynamics will change

• West of Rockies will start to slow – competition for water, markets

• Growth expected in Eastern Slope of the Rockies (Kansas)• Northeast – Moderately stable: fluid milk markets• Upper Midwest / Corn Belt- ??: offers cheap feeds/water

– As the industry consolidates into fewer, larger farms, contractual arrangements will player a bigger role in the dairy industry (not just market price hedging)

• Largest dairies will have the market clout to begin to influence both their input and product prices and access to consulting services

12/7/2018

17

Dairy Farming

• Run as a business, is a Great Way of Life

• Run as a Way of Life, is a poor Business

Dairy Companies & Consultants

• Everyone wants to “Value Add” to my business• First I do not care “what” you know• Until I know that you care!• And I need you to have “ownership” • What ever solutions you have for my problems• You need to have a belief that they work• And that they fit my dairy or problem.

12/7/2018

18

Cow Comfort is Universal

• Cow Comfort is independent of size

12/7/2018

19

12/7/2018

20

Freestall PenHead to Tail

12/7/2018

21

12/7/2018

22

12/7/2018

23

3 things a Cow Should Do!

• Stand to MILK

• Stand to EAT & DRINK

• LAY DOWN

12/7/2018

24

Get it correct!!

And it looks like this!

Get it

wrong!!

And it

looks

like this!

12/7/2018

25

“ Milk is the Absence of stress!!!”

78,170# milk in 365 days (35,532Kg) 3.96 % Fat 3.06 % Prot

Selz-Pralle Aftershock 3918

12/7/2018

26

Questions? Thoughts?