MPP Payments

An article in Dairy Herd Management.

A small number of U.S. dairy operations could receive Margin Protection Program for Dairy (MPP-Dairy)payments beginning this week, according to the USDA Farm Service Agency (FSA).

MPP-Dairy payments are triggered when the national average margin, the difference between the price of milk and the cost of feed, falls below a producer-selected margin trigger, ranging from $4 to $8/cwt., for a specified consecutive 2-month period. Final USDA prices for milk and feed components required to determine the national average margin for the January-February 2015 period were released on March 30.

January 2015 margin calculations:

  • Corn: $3.81/bushel
  • Soybean meal: $380.02/ton
  • Alfalfa hay: $174/ton
  • Final feed costs: $9.26/cwt.
  • All-milk price: $17.60/cwt.
  • Milk margin minus feed costs: $8.3356/cwt.

February 2015 margin calculations:

  • Corn: $3.79/bushel
  • Soybean meal: $370.38/ton
  • Alfalfa hay: $172/ton
  • Final feed costs: $9.14/cwt.
  • All-milk price: $16.80/cwt.
  • Milk margin minus feed costs: $7.655395/cwt.

Combined, the January-February MPP-Dairy pay period margin is $7.99554/cwt., resulting in an MPP payment rate of $0.004456/cwt. (just over four-tenths of 1¢/cwt.) for dairy operations selecting an $8/cwt. margin trigger coverage level for 2015.

According to data released by USDA on April 9, of nearly 24,748 dairy operations selecting MPP-Dairy coverage, just 261 selected the $8.00/cwt. margin coverage level for 2015, with a total maximum annual milk production history of just over 1 billion pounds. Production history was based on the highest annual production over a three-year period, 2011-2013.

Based on analysis by Marin Bozic, Assistant Professor, Department of Applied Economics with the University of Minnesota-Twin Cities 26% of expected 2015 milk production has MPP-Dairy coverage at $4.50/cwt. or higher, but only 10.3% has a coverage at $6.50/cwt. or higher.

In addition to margins, producers selected the percentage – between 25% and 90% – of their annual milk production history to be covered. Nationally, at the $8/cwt. coverage level, those dairy operators elected to cover about 58% of their annual milk production.

Under the MPP-Dairy program, the eligible milk production history for these producers (about 1 billion pounds X 58% = 583 million pounds) is divided equally over six 2-month pay periods, making 97.2 million pounds (972,000 hundredweights) eligible for the 0.45¢/cwt. payment for the January-February pay period. That adds up to about $43,300 in total payments.

Not only will MPP-Dairy payments be small, but they are also subject to federal budget sequestration, reduced by 7.3%, according to the FSA notice.

Qualifying producers paying the full margin insurance premium in-full will receive a payment based on the amount of covered production history elected by the dairy operation. If the premium has not been paid in-full, payments will apply to the outstanding premium balance remaining for buy-up coverage, thus reducing the premium needed to pay by June 1.

USDA issued payment processing instructions to state and county FSA offices on April 10. Those offices were to begin processing payments to eligible producers on April 13.

Of the 261 selecting the $8/cwt. margin coverage, about two-thirds (171) are in just five states: Wisconsin (69); Minnesota (35); New York (28); Pennsylvania (20); and Michigan (19).

Based on current projections, there’s a chance dairy producers covered at the $8/cwt. margin level may also see a small payment for the March-April payment period

However, while those electing the $8/cwt. margin level will be seeing small payments in 2015, the added protection appears costly. In addition to a $100 administration fee paid by all dairy operations participating in MPP-Dairy, buying any coverage above $4/cwt. included additional premium payments.

At the $8 level, insurance premiums were 47.5¢/cwt. on the first 4 million pounds of milk production per year; and $1.36/cwt. on any insured milk above 4 million pounds/year. Premiums were discounted 25% in 2014 and 2015 on covered annual farm production volumes up to 4 million pounds.

2015 MPP-Dairy, by coverage level







 selecting level

Milk production


Average milk



2015 milk





(Million pounds)


(Million pounds)



















































Source: USDA

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We don’t need labels on genetically modified foods

An article in the Washington Post

E IGHTY-EIGHT percent of scientists polled by the Pew Research Center in January said genetically modified food is generally safe to eat. Only 37 percent of the public shared that view. The movement to require genetically modified food products to be labeled both reflects and exploits this divergence between informed opinion and popular anxiety.

Mandated labeling would deter the purchase of genetically modified (GM) food when the evidence calls for no such caution. Congress is right to be moving toward a more sensible policy that allows companies to label products as free of GM ingredients but preempts states from requiring such labels.

Lawmakers and voters in some states have considered requiring GM labeling, but only a few have chosen to label, and none have yet started. That’s good: The GM-food debate is a classic example of activists overstating risk based on fear of what might be unknown and on a distrust of corporations. People have been inducing genetic mutations in crops all sorts of other ways for a long time — by, for example, bathing plants in chemicals or exposing them to radiation. There is also all sorts of genetic turbulence in traditional selective plant breeding and constant natural genetic variation.

Yet products that result from selective gene splicing — which get scrutinized before coming to market — are being singled out as high threats. If they were threatening, one would expect experts to have identified unique harms to human health in the past two decades of GM-crop consumption. They haven’t. Unsurprisingly, institutions such as the National Academy of Sciences and the World Health Organization have concluded that GM food is no riskier than other food.

Promoters of compulsory GM food labeling claim that consumers nevertheless deserve transparency about what they’re eating. But given the facts, mandatory labeling would be extremely misleading to consumers — who, the Pew polling shows, exaggerate the worries about “Frankenfood” — implying a strong government safety concern where one does not exist. Instead of demanding that food companies add an unnecessary label, people who distrust the assurances that GM food is safe can buy food voluntarily labeled as organic or non-GM.

This isn’t just a matter of saving consumers from a little unnecessary expense or anxiety. If GM food becomes an economic nonstarter for growers and food companies, the world’s poorest will pay the highest price. GM crops that flourish in challenging environments without the aid of expensive pesticides or equipment can play an important role in alleviating hunger and food stress in the developing world — if researchers in developed countries are allowed to continue advancing the field.

A House bill introduced last week would facilitate a voluntary labeling system and prevent states and localities from going any further to indulge the GM labeling crowd. It would also empower the Food and Drug Administration to require labels on GM products that materially differ from their non-GM cousins in ways that can affect human health. Yes, food industry interests back the bill. That doesn’t make it wrong.

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Avian Flu

WASHINGTON — While U.S. poultry producers enjoyed one of the most profitable years on record in 2014, averaging margins of 13 percent before interest and tax, concerns are mounting within the industry as Avian influenza (AI) continues to spread worldwide, including to a number of states in the U.S.

Though the current outbreak of AI in commercial flocks is unique to poultry producers, pork producers who have suffered problems related to porcine epidemic diarrhea (PED) virus, and cattle raisers who have confronted a number of animal disease problems including Bovine spongiform encephalopathy (BSE), hoof and mouth disease and Texas cattle fever, are reminders of how deadly pathogens can become a game spoiler if producers let their guard down or fail to respond to a potential animal health crisis.

In the very least, animal health issues should remain a real concern for agricultural producers as research indicates certain credible biosecurity threats could be near the top of the list of potential vulnerabilities to national and International security, especially given the current global climate of terrorists threats and problems related to domestic insurgency.

— Logan Hawkes

Southwest Farm Press
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NCC Crop Update Meeting

New Castle County Update Meeting

Date: Thursday, March 26, 2015
Time: 6:00-8:10 p.m.
Location: Hoober, Inc., 1130 Middletown Warwick Road, Middletown, DE
Registration: Please call Sharon Lucabaugh at (302) 831-2506 by 3/20

Credits: DE Nutrient Management (1), DE Pesticide (2)
Join local experts at Hooober, Inc. to discuss current issues and topics related to agronomic crops in New Castle County. Topics will include Nitrogen use in Soybeans, Potash Use, Weed Control and Insect Management Update for Corn and Soybeans. Light refreshments will be served. Please register by calling 831-2506 so we may have an accurate count for refreshments. Thanks

6:00-6:05 pm: Welcome and Introductions. Dan Severson, University of Delaware Extension.
6:05-6:25 pm: Nitrogen on Soybeans. Amy Shober, Extension Nutrient Management Specialist.
6:25-6:40 pm: Insect Management Update in Field Crops. Joanne Whalen, Extension IPM Specialist.
6:40-6:55 pm: Slug Management Update for Corn and Soybeans. Bill Cissell, University of Delaware Extension.
6:55-7:20 pm: Weed Control: Are We Doing the Best We Can?? Mark VanGessel, Extension Weed Specialist.
7:20-7:45 pm: How Potash is Taken Up and Supplied. Richard Taylor, Extension Agronomy Specialist.
7:45-8:05 pm: Update on Field Crop Diseases and Management. Nathan Kleczewski, Extension Plant Pathology Specialist.
8:05-8:10 pm: Questions and Evaluations

Dan Severson, Extension Agent – Agriculture, UD New Castle County

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Milk Residue Study

A veterinarian’s perspective: FDA’s milk residue study and our food safety

By Michael Payne, WIFSS March 06, 2015 | 2:39 pm EST

From Bovine Veterinarian

The new FDA report on drug residues in milk concludes that milk is safe, but if they found any drugs at all, how safe can it really be?

Today, after four years in the making, the Food and Drug Administration released the final report of its milk drug sampling assignment. The survey screened nearly 2,000 samples of farm milk for animal drugs residues using state-of-the-art technology that detects contamination in minuscule, parts-per-billion concentrations. Before jumping into the FDA’s results, however, the fascinating and complicated history of the project deserves some background and context.

Keeping livestock healthy is good for both the animal and a farmer’s economic bottom line. Sick animals don’t perform well and livestock medications and the associated labor to administer them, aren’t cheap. All this explains the regular visits by large animal veterinarians to manage the dairy’s herd-health program, conduct check-ups and schedule vaccinations. Dairy cows on commercial farms probably see veterinarians more often than our kids see doctors. Similarly, dairy nutritionists routinely develop feed rations that promote both good milk production and cow health. The standard dairy cow probably eats a more balanced diet than we do.

Contrary to popular belief, however, what these dairy nutritionists don’t include in the feed is antibiotics to increase production. Such drugs are inevitably excreted in the milk, rendering it unsalable for human consumption. Every milk tanker leaving the farm is tested for the most common types of antibiotics.

A typical 6,000-gallon tanker of unprocessed milk is worth in the neighborhood of $10,000. In the event of a contaminated load of milk, the farmer is on the hook for the entire value of that destroyed product. All of this translates into a powerful motivation to keep even trace levels of drugs out of farm’s bulk milk tank. It should come as no surprise that of the 3.2 million tanker loads that were tested in 2014, only 14 thousandths of one percent were found to contain drug residues. That milk of course was never allowed to enter the human food chain. Perhaps even more importantly, no drug residues were detected in milk actually sent to grocery stores in 2014, nor were any found in 2011, 2012 or 2013.

Even with excellent care, cows can and sometimes do become ill and need to be treated. Because of a farmer’s very real concerns about contaminated milk tankers, treated cows are removed from their milking string and put into the farm’s hospital pen where they can be monitored, finish their course of treatment and complete the appropriate drug withdrawal period. These withdrawal periods (intervals before the cow can be milked or slaughtered for beef) are established by the FDA, based on drug depletion data submitted by the pharmaceutical company bringing a new animal medication to market. The science going into such packages is highly regulated and scrutinized, using “best laboratory practices” that can drive the cost of a new animal drug application to more than $50 million.

In spite of these precautions, a small number of the three million dairy cows slaughtered each year are found to have drug residues in their tissues. A real estimate of the prevalence of such positive cows is difficult to glean from government data, but the rate can probably be measured in the hundredths of a percent of all slaughtered dairy cows. There are a variety of circumstances that may cause these infrequent violations, including mistakes in animal identification or medical records, prolonged withdrawal time in an individual sick animal or simply a farmer’s lack of understanding of how to use the medication.

All of which brings us finally to the recent release of the bulk milk sampling report. The FDA understandably was interested in knowing whether a farm associated with drug residues in slaughtered animals was also more likely to have drug residues in their milk. In short: Would management problems on the meat side predict management problems on the milk side? FDA originally intended to begin sampling in January of 2011 but delayed the process as it refined its protocol.

Ultimately the milk from 1,912 dairies was tested, roughly half from dairies that had experienced a recent finding of residues in slaughtered carcasses, and the other half coming from farms without that history. The milk was tested for 31 different medications using the most sensitive methodology available, an analysis which can measure contaminants down to the parts-per-billion (ppb) range. To put this in perspective, a ppb concentration is roughly the same order-of-magnitude dilution that is achieved by dissolving a sugar cube in an oil tanker.

The results? Out of 1,912 farms sampled, only 15 were found to have violative residues. In addition, there was no statistical difference between the numbers of milk residues found on target farms versus those found on the control farms. The FDA concluded: “These findings provide evidence that the nation’s milk safety system is effective in helping to prevent drug residues of concern in milk, even in those limited instances when medications are needed to maintain the health of dairy cattle.”

A reasonable consumer might ask, however, while 15 positives out of nearly 2,000 farms seems pretty low, how does the presence of any positive milk allow the agency to conclude milk is still safe? The basis for FDA’s confidence in the safety of our milk stems from the multiple safeguards built into milk safety regulations. The concentration of the drug compounds measured in the sampling assignment were in that parts-per-billion range, levels that are inconsequential to human health.

Tolerance levels in meat and milk are established by FDA and based on animal studies designed to show no harm to humans exposed daily to those concentrations for an entire lifetime. Importantly, even those calculated safe levels are further divided by an additional safety factor of either 10 or 100. The last important thing to remember is that the sampling protocol used by the FDA in this project can be considered a worst case scenario, since milk on the farm has been neither diluted in 50,000 or 100,000 gallon creamery silos, nor has it been exposed to processing activities like pasteurization temperature, which can further reduce activity of some drugs.

All of the above helps explain FDA’s confidence in the safety of our milk supply, and observations that support this judgment. In previous FDA testing in finished dairy product for drugs most likely to cause an allergic reaction, it didn’t detect any. In the last 50 years, there have been no reports of serious reactions or death associated with residue levels of livestock antibiotics in food. This tells us that the system is working as designed and food doesn’t get much safer than milk.

Still there is always room for improvement. In fact the FDA, state regulators and the dairy industry have already committed to work together to improve an already excellent history of product safety and that’s good news for everyone, farmers, regulators and consumers alike.

To read the full milk drug residue sampling survey report and to obtain additional related information, visit FDA’s Drug Residues webpage.

Michael Payne is a veterinarian at the Western Institute for Food Safety and Security (WIFSS), a center within the University of California’s School of Veterinary Medicine. In addition to being a DVM, Dr. Payne holds a PhD in livestock pharmacology and food safety.

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Penn State cost comparisons: Milk replacer vs. whole milk vs. waste milk

By Coleen Jones and Jud Heinrichs, Penn State University March 02, 2015 | 10:26 pm EST

We recently evaluated the costs of feeding pasteurized milk to calves in comparison to other feeding systems considering current market conditions. To do so, we utilized a spreadsheet tool we developed a few years ago with colleagues at Virginia Tech. The results may surprise you.

The spreadsheet, Calf Milk Pasteurization Evaluator, incorporates costs of feed, equipment ownership, labor, energy use, and cleaning. The table below is a summary of total cost per day using several feeding programs. This comparison was made with a batch pasteurizer available in three different sizes and capable of processing batches up to 10, 30, or 60 gallons. We assumed that the labor requirements for the various options were similar. All scenarios presented here assume that all calves are fed the same source of milk. The spreadsheet tool can be used to evaluate other options if waste milk supply is not adequate to provide feed for all calves.

The first two columns in the table provide estimated costs for feeding milk replacer; one program is a milk replacer with 20% protein and 20% fat fed at a rate of 1.25 pounds of powder per calf per day with a cost $75 per bag. The other program is a 26% protein, 20% fat product fed according to the manufacturer’s instructions in a step-up program. Over the course of 8 weeks the average amount of powder fed is 2.26 pounds per calf per day, and this product costs $98 per bag. The cost of the milk replacer programs includes the price of milk replacer, a charge for heating hot water to mix the feed, and a charge for soap and water used in cleaning equipment; we assumed mixing was done by hand and did not include any charge for a mixer.

The middle group of columns provides estimated costs for feeding pasteurized waste milk under three different scenarios. All of these scenarios assume that waste milk has a value of $3/cwt. The final column provides an estimate for feeding pasteurized whole milk (saleable milk drawn from the bulk tank), with an estimated value of $19/cwt. For most of the scenarios using a pasteurizer, the cost of pasteurization equipment was set at an estimated “base” price of $8,800 for the 10-gallon pasteurizer, $11,500 for the 30-gallon pasteurizer, and $13,500 for the 60-gallon pasteurizer; an additional $500 was assumed for installation costs for each model; and milk was fed at a rate of 1 gallon per calf per day.

Under the pasteurized waste milk heading, two alternative scenarios were included to help provide better understanding of the potential costs involved. First, the base price of each pasteurizer was approximately doubled, which represents a worst-case scenario of the amount of investment required to install a pasteurizer and any associated needs such as milk storage, cooling, transportation, or building modifications. Increasing the ownership cost of the equipment in this way provides a range for the cost of using a pasteurizer and increases the fixed cost of the feeding program. Another alternative scenario was estimated under the assumption that calves were fed 1.5 gallons per day, which increases the variable costs of the feeding program.

1For comparison to milk replacer, waste or whole milk often contains 26 to 28% protein and 28 to 30% fat on a dry matter basis.
2Base price set at $8,800 for the 10-gallon pasteurizer, $11,500 for the 30-gallon pasteurizer, and $13,500 for the 60-gallon pasteurizer; an additional $500 was assumed for installation costs for each model.
3Prices were increased to $16,000, $22,000, and $26,000 for the 10-, 30-, and 60-gallon models respectively; $500 installation was assumed for each model.
Pasteurizer and Number of Calves Fed Each Day Total Cost Per Day of Various Calf Feeding Programs
20:20 Milk Replacer, 1.25 lb/d 26:20 Milk Replacer, 2.26 lb/d Pasteurized Waste Milk1 Pasteurized Whole Milk, 1 gal/d1,2
Base Price, 1 gal/d2 ~2X Base Price, 1 gal/d3 Base Price, 1.5 gal/d2
10-gallon batch pasteurizer
20 calves $38.70 $89.91 $14.94 $19.07 $17.52 $42.46
10 calves $19.85 $45.45 $12.22 $16.35 $13.51 $25.98
5 calves $10.42 $23.23 $10.86 $15.00 $11.51 $17.74
30-gallon batch pasteurizer
60 calves $114.10 $267.72 $27.37 $33.40 $35.11 $109.93
30 calves $57.55 $134.36 $19.21 $25.24 $23.08 $60.49
15 calves $29.27 $67.68 $15.13 $21.16 $17.07 $35.77
60-gallon batch pasteurizer
120 calves $227.20 $534.44 $44.89 $52.07 $60.37 $210.01
60 calves $114.10 $267.72 $28.58 $35.76 $36.32 $111.14
30 calves $57.55 $134.36 $20.42 $27.60 $24.29 $61.70

If we use the rows of the table to compare feed costs for different programs, in almost every case feeding pasteurized waste milk at 1 gallon/day was the lowest cost option, followed by feeding pasteurized waste milk at 1.5 gallons/day. The one exception is when only 5 calves were being fed. With a small number of calves, the 20:20 milk replacer was the least expensive option, but by less than $0.50 per day. The third lowest cost in all rows is the scenario where the investment required in pasteurization equipment was doubled. When feeding 60 or more calves per day, feeding pasteurized milk from the bulk tank provided less expensive feed for calves than the 20:20 milk replacer. In all cases, the most expensive feeding program was the 26:20 milk replacer.

These comparisons do not take into account the differences in nutrition provided by the feeding programs or potential differences in the amount or cost of starter consumed by calves on the program. However, they provide good food for thought and may be a starting point for investigating the cost of your calf feeding program and evaluating potential alternatives. The Calf Milk Pasteurization Evaluator tool can be used to compare the amount of protein and energy provided by different feeding programs and to investigate feeding strategies for when the supply of waste milk is not enough to feed all calves.

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Women in Dairy

A mini video series just released by the National Young Farmers Coalition illustrates the challenges and joys of starting one’s own dairy farm.

The United States needs farmers more than ever, and yet the number of farmers is shrinking rapidly as more people move off the land and the cost of starting a farm continues to be prohibitively expensive. Agricultural land takes up nearly half the landmass of the U.S. – one billion acres – but 63 percent of the farmers who care for that land are 55 years of age or older. The next few decades could be a rocky time of transition as these farmers retire and there are not enough new farmers to take their place.

Of the young people who are interested in farming, the majority goes into farming vegetables or small livestock herds. Dairy, by contrast, is a tougher industry to enter because of the greater land requirements and higher cost of equipment. Dairy drives 70 percent of the economy in Vermont, as well as many other parts of the northeastern U.S., but it’s not growing fast enough.

“Today, farms have to get big or get out. There has been a massive die-off of dairy farms in the area,” says Sarah Lyons Chase, a dairy farmer in the Hudson Valley region.

The National Young Farmers Coalition (NYFC) has become involved, in hopes of averting a food security crisis down the road. It addresses obstructive policies on behalf of new farmers and is attempting to create a supportive community for dairy start-ups.

One of its projects, in partnership with Stonyfield Farm, has been the Bootstrap Blogger series, in which five young female dairy farmers were asked to write a monthly blog post for one year, chronicling their experiences with starting dairy farms. Three of them created short videos, which have just been released by the NYFC for public viewing – and inevitable inspiration! (Yes, it makes me want to become a farmer.)

These videos are particularly interesting because the world of U.S. farming has long been dominated by men, but these indomitable and impressive young women show that it doesn’t have to be that way. With perseverance, humor, and a great love for the land, these women are working hard to build viable, sustainable farms and preserve the future of U.S. dairy farming in the process.

Chaseholm Farm Creamery is located in Pine Plains, NY. Sarah Lyons Chase is a third-generation dairy farmer who never thought she’d actually do it herself. Now she’s in the process of transitioning her family’s herd to being fully grass-fed herd and makes wonderful artisanal cheeses with the milk.

The Golden Yoke is run by Laura Ginsburg and Connie Surber in St. Ignatius, MT. Montana is a state whose dairy farms are shrinking; there were only 68 left when these women founded theirs in 2013. The Golden Yoke was the first new farm in years, and the first-ever grass-fed, seasonal dairy farm.

Clover Mead Farm in Keeseville, NY, is where Ashlee Kleinhammer produces 100 percent grass-fed, non-GMO, and Animal Welfare Approved cheese, raw milk, and yogurt.

Katherine Martinko

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Dairy Day 2015

2015 Delmarva Dairy Day
Hartly Fire Hall
Hartly, DE
Thursday Feb 26, 2015

9:30 to 10:15 AM Visit with Exhibitors, Coffee and Donuts

10:15 to 10:30 AM Farm Bill Update
Farm Service Agency

10:30 to 10:45 Irrigation Update
James Adkins, UD Cooperative Extension

10:45 to 11:15 Intensive Cropping – What Forage Crops to Consider
Tom Kilcer, Advanced Ag Systems

11:15 to 12:00 PM New Innovations in Dairy Replacement Heifer Management
Pat Hoffman, UW Madison- Vita Pus Corporation

12:00 to 1:00 PM Lunch (with UD ice cream!) and visit with Exhibitors

1:00 to 1:30 PM New Crops: BMR Sorghum and Same Day Haylage from Red Clover
Tom Kilcer, Advanced Ag Systems

1:30 to 2:15 Benchmarking Starch Digestibility in Lactating Cow Diets
Pat Hoffman, UW Madison- Vita Pus Corporation

Contact Info: Dan Severson: (302) 831-2506 ( or Limin Kung, Jr. (302 831 2522 (

Cooperative Extension Education in Agriculture and Home Economics, University of Delaware, Delaware State University and the United States Department of Agriculture cooperating. Distributed in furtherance of Acts of Congress of May 8 and June 30, 1914. It is the policy of the Delaware Cooperative Extension System that no person shall be subjected to discrimination on the grounds of race, color, sex, disability, age, or national origin.

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