Dairy Talk Good riddance 2009

December 2, 2009 06:00 PM
Jim Dickrell
"That which does not kill us makes us stronger.”
—Friedrich Nietzsche

It's safe to say that Nietzsche, the 19th century German philosopher, milked very few cows in his native Prussia.

But his quote has often been cited as dairy producers struggled through the abyss of 2009.

For everyone with a stake in this industry—producers, processors, suppliers, vets and consultants—2009 simply can't end soon enough. But unlike Nietzsche, just about all who survive 2009 will enter 2010 wiser, yet weaker.

Lenders tell us that dairy producer balance sheets shriveled to anywhere from $1,000/cow to upwards of $1,500/cow in 2009 (see "The Hurt of Holding On,” page 6). That's injurious to anyone's net worth.

2010 prospects certainly appear better. Yet it's also clear that we're not out of the woods yet.

Numerous policy changes have been proposed: supply management, Federal Orders reforms, new types of revenue insurance, country-of-origin labeling, import restrictions and on and on. If the past is prologue, we'll be debating the 2012 Farm Bill before we reach consensus.

So what can you do? Tim Swenson, a dairy business specialist with Lookout Ridge Consulting, urges producers to focus on what they actually can control:
  • Income over feed cost. Make forage production a priority for your operation, manage shrink and review all discretionary ingredients.
  • Replacement rate. Focus your attention on the first 60 days in milk, when most cows are culled.
  • Labor efficiency. Use employees where they are best suited by their talents.
  • Structure debt appropriately. "If you put a forage chopper on a 20-year note, it can put you in a real pickle when it wears out in five years,” Swenson says.

And here's one more: Carefully review your milk and feed marketing plans. The nastiest lesson of 2009 is that just because prices go down, they don't necessarily have to come back up.

Bonus content:

NMPF Testifies Before Senate Ag Committee Today

IDFA Warns Against Supply Management

Plans That Pay

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