By the end of 2011, the dairy industry thought it had taken a turn to better days, but instead it was just a “U-turn” to higher feed prices and dropping milk prices in 2012. Some operations still experiencing weak legs from the 2009 downturn might not be able to pick themselves up off the mat this time. If all of your options have been exhausted, including reorganization under Chapter 11, then you might decide it is time to throw in the towel. For those who go this route, it is very important to consult with your CPA on the tax implications of liquidation.

“You may not be interested in global macroeconomics, but global macroeconomics is interested in you, your business, your family and your personal lives,” Dr. David Kohl said recently at the Professional Dairy Producers of Wisconsin (PDPW) Business Financial Decision-Making Conference. A professor emeritus of agricultural and applied economics at Virginia Tech, Kohl explained the new normal is black swans, volatility and extremes. In order to play the game of volatility, it is important to understand the conditions that will have an impact. He went on to highlight six key game-changers to watch as we enter a new year.

Replacing key employees or hiring a new herdsman can cause turmoil for you and the rest of your workers. When necessary, promoting good workers from within your staff to key middle management positions works better than hiring an “unknown quantity” from another dairy. Not only do you know more about a potential candidate because he or she has a history with you, but you also have a person who is already familiar with you and the “culture” of your dairy. However, the adjustment required by both you and the employee is significant and the preparation to make the change should not be underestimated.

Engaged employees are more productive, safer, and more likely to stay longer at your dairy. Gallup, a research based management consulting firm, defines an engaged employee as “someone who works with passion and has profound connection to the company, driving results and moving the organization forward." In other words, engaged employees are those who show passion about their job and the dairy they work for, making them highly productive and efficient at work.

There is a long tradition behind the dairy industry. As I am sure you are aware, it’s a way of life for farmers. There is no doubt that dairy farmers care for their animals and have a strong commitment to them. However, the growing disconnect between food producers and food consumers has led to an increasing number of questions about how farmers care for their animals. It is important that milk producers take an active role in sharing with consumers how they rely on both tradition and modern technology to ensure animal care and proper handling.

Protecting a dairy’s milk income from soaring feed costs has never been more of a challenge. Historically, producers have turned to the futures and options market to hedge against milk price declines or increases in feed costs. Now, thanks to the federal government’s willingness to subsidize insurance premiums, there are some other interesting choices available.

With the uncertainty of today’s stock market, business owners would rather put their hard-earned money into assets they can physically see and feel, such as land, cows or diversified crops. As a result, the majority of business owners’ assets are tied up in their business. If this holds true to your situation, do you have a solid succession plan? All business owners leave their businesses eventually. Whether the plan is to transfer assets to the next generation of actively involved family members, sell your business to a group of key employees or you end up having to deal with the unexpected (death or disability, for example) that prevents you from running your company – you need to be prepared.

Ever since I was a little kid, I’ve liked politics, campaigns and elections. There was something magical about heading down to the old Town of Franklin voting “shack” that was heated by a wood-burning, potbelly stove. I couldn’t wait to go with my parents and stand in line with all the other people who were waiting to cast their ballot. Although I’m still fascinated by the political process, as a tax-paying adult who “works too much,” it seems that the reality of it isn’t as charming as I once thought it was. The truth is … I’m afraid my cynicism and sense of logic has replaced my naïveté and sense of emotion.