2010: Risk and Profit

January 13, 2010 09:20 AM
 


*Extended comments are highlighted in blue.


 

Ron Gibson
West Weber, Utah

Gibson's Green Acres, owned and operated by myself, my father, Wayne, and my brother Kerry, is a fifth-generation dairy farm that has been built upon by the sacrifice of each generation. My wife, Andrea, and I have four children. We both love farming and the lifestyle that comes with it. In order to become a sixth-generation farm, we are trying to make sound and progressive decisions now.

Our original farm has been in the family since 1869. Our current partnership started in 1996. My father and mother have always had the dream of having their sons work together on the farm. Dad has always encouraged growth, expansion and new ideas. He has always given us the support we needed to succeed in the dairy industry.
Since our LLC was formed in 1996, we have grown from 140 cows to our current herd size of 1,400.

Since 1975, we have been milking our herd in a double-10 herringbone parlor. Last spring, we moved into our dream parlor: a double-25 parallel. We can now milk 250 cows per hour with two men in the parlor, 3x a day. Our cows are housed in freestalls with sand for bedding.

We have 1,050 replacement heifers. We have an accelerated growth program for heifers. We started it six years ago. Our heifers enter our milking string between 20 and 22 months.

Our farming entity is vital to our success as dairy farmers.
We grow and harvest almost all of the corn silage and alfalfa hay used to feed our cattle. An important key to our profitability is the high yields and quality of crops that we produce in our fertile soil.

In 2009, we experimented with a significant amount of BMR [brown mid-rib] corn silage. We are excited about the prospect of what we think this will do for our operation.

We firmly believe that we need to take a proactive role in raising awareness of our products and farming lifestyle. As dairy farmers, we believe in promoting ourselves and our product. My father, brother and I have been actively involved in many aspects of the agricultural community. My brother Kerry is currently serving in the Utah State Legislature.

If I learned anything during the dairy crisis of 2009, it is that we have to be willing and ready to adapt to change. Change is a huge obstacle facing all of us in the dairy industry today. Change is also a great opportunity. Marketing of our products is one thing we can have control over. Through puts and calls, futures and options, we can minimize our risk and maximize our profit. 2010 is a great example of this.

We all need to have a profitable year this year. How can we guarantee that the bottom won't fall out of our market this year as it did in 2009 if we don't lock in a floor? I feel my job as manager of our dairy is to make sure that we never again receive $10 for our milk. I can control that.


Gibson's November Prices  
Milk (3.78 bf, 3.12% prt): $14.35cwt.
Cull cows: $40/cwt.
Springing heifers: $1,350/head
Alfalfa: $100/ton
Cottonseed: $298/ton (spot)
Corn:  $195/ton (spot)
   








 

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