U. S. Dairy Producer Survives Ups And Downs Of A Free Market – for Oct. 11, 2010

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staff |whiteland, indiana

Kelsay Dairy farm is big by Canadian standards, milking 450 or so cows, but in these parts it’s a model family farm.

There’s an old hip roof barn and a couple old-fashioned silver-sided silos, which urbanites can take pictures of each October when the Kelsays open up their farm to city folk from nearby Indianapolis. Visitors can also meander through the corn maze, go on hayrides and buy pumpkins.

Joe Kelsay and his brother Russ are the sixth generation of the family on the 173-year-old farm, which now has 2,200 acres in corn, soybeans and alfalfa. “We have a long history,” Kelsay tells a group of Canadian agricultural journalists here attending Dow AgroSciences’s “Innovations in Agriculture” media tour Sept. 22. “Being multi-generations here, this isn’t just land to us, it’s community. We have a lot of interest in maintaining the connection.”

With the big city getting closer (it’s just a half-hour drive to downtown Indianapolis), Kelsay wants to build some goodwill with his non-farmer neighbours and also says he feels a responsibility to explain agriculture to urban folks. There are so few farmers left that there’s a lack of understanding about what farmers do and how they do it, he says. During school and group tours, Kelsay explains modern agricultural practices, emphasizing that “there are choices and there are tradeoffs” and that because farmers are so efficient, most of the population can do other things than produce food.

This dairy farm expanded from 300 cows in 1999 to accommodate return of Joe and Russ to the operation. They had planned to expand again by 2004, but it was put off because of low table-milk prices in 2001-02.

Prices were even worse in 2009, dropping as low as $12 a hundredweight. They’ve rebounded to around $18.80, which for the Kelsays is close to their break-even.

“The dairy sector struggled quite a bit in ’09,” Joe Kelsay says. “We struggled as much as we ever have. It was a tough time.”

There is a formula governing milk prices in the U. S., but it’s tied to supply and demand and so, unlike Canada, can fall well below the cost of production.

Milk three times daily

Besides the two brothers, the farm has 10 full-time employees and some part-time staff. Salaries range from $7.50 an hour for students helping with tours to $24 for farmhands. Some receive salaries, others a wage plus housing and utilities. Health insurance isn’t offered but that could change because of President Obama’s new universal health insurance legislation. Kelsay says doesn’t know what that might cost or where he’ll find the money to insure his employees.

The Kelsays milk cows at 9 a. m., 5 p. m. and at 1 a. m. – each milking taking six hours plus an hour of clean-up. Each cow has a tran- sponder, and production ranges from 18,000 to 24,000 pounds of milk per cow per year.

The farm’s 1,200 acres of corn and 400 acres of alfalfa are enough to meet its needs, but it must purchase additional protein, such as brewer’s grain and distillers’ dried grains. Kelsay stopped feeding the latter last year because of high DON toxin (deoxynivalenol) levels. The Kelsays have 120 days of manure storage in a clay-lined, earthen lagoon – 60 short of the new requirement, but they’re grandfathered until they expand.


The Kelsays don’t use the rBST growth hormone (Posilac) because buyers don’t want it. The hormone treatment, never approved in Canada, is legal in the United States and Kelsay says he believes it’s safe. He profitably used the product several years ago, but suspects the economic benefit has diminished because productivity has since been boosted by improved herd management.

As in Canada, livestock manure restrictions go up with the number of animals. Farms with 250 or fewer animals face few restrictions, while those with 250 to 750 head must file a manure plan and follow state regulations. Farms with 750 or more animals must follow state and federal regulations, Kelsay says.

Meanwhile, Indiana is reviewing its manure regulations because of concern that phosphorus runoff is causing blue-green algae blooms in some waterways, which ultimately drain into the Mississippi and the Gulf of Mexico.

The brothers are thinking expanding as milking 750 cows a day would produce a trailer load of milk and give them more clout with buyers. But while their current acreage would support a herd of that size (both for feed and manure spreading), they worry about urban encroachment and rising property taxes. Land in the area sells for $4,500 to $5,500 an acre, while rents range from $150 to $225 an acre.

This year’s wet, cool spring was followed by a dry summer, with almost no rain between July and the journalists’ tour. The first corn Kelsay harvested this fall yielded a decent 200 bushels an acre, but the next field did just 125, dashing hopes of an above-average crop.

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