Dollars and Sense: To Market--Or Not

November 25, 2015 02:45 AM
Dollars and Sense: To Market--Or Not


Gertie and Geert van den Goor
Marlette, Mich.

Transplants from the Netherlands, the Van den Goors milk 3,000 cows at their Goma Dairy and were named 2014 Dairy Farmers of the Year by Michigan State University.


When it comes to risk management on the feed side of the business, that has never been an issue. From the start we have always locked in some part of the corn, soybean meal, cottonseed or other commodity price if the opportunity was there. 

And if I say “we,” I mean Geert, who seems to have a great feeling of what the market is going to do. He tries to stay informed, goes with his gut feeling and is usually right. Does that mean we always made money on it?

No, we did not. But we never lost money, either. Sometimes, we missed the market low, but more importantly, we always missed the market high. 

Risk management on the milk side of the business is a different story. We have done some forward contracting milk with our co-op, but never enough for it to make an impact, one way or the other.

van_den_goor_pricesWe also participated in the Livestock Gross Margin-Dairy program for the first half of this year. We did well with that. For the last months, we signed up for the Margin Protection Program (MPP). For 2016, we signed up for MMP again. 

Fred Hinkley who has a lot of experience with Michigan State University Extension and as a grain broker, says most farmers would rather gamble to get a milk price that is lower than their cost of production rather than get 25¢ per cwt less than their neighbor. Translation: Greed gets in the way of making good milk marketing decisions. 

I have given this statement a lot of thought, and I’m still not sure if I agree with it. But I do know for me it is hard to take the emotion out of milk marketing and be consistent at it. 

Until I have figured out how to deal with it better, we just keep doing what we have been doing, crossing our fingers, saying a little prayer and hoping that at the end of the day things work out. 

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