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Effective managers have a variety of ways of making good things happen through people. The specific style may vary by individual, but in general, there are a few important characteristics of successful dairy management.
First, successful dairy management should be based on biologically and economically sound principles that will take advantage of proven strategies.
One of the tricks of a great farm succession is the ability of the founder to let go of management and, ultimately, ownership.
There are many 60-something and 70-something farm dads on the bald prairie that just don’t know how to change from being the main manager to “the hired man.”
I know hired man is not the politically correct term, I should say “employee.” Employees make a wage, and I don’t know if dad is getting a paycheque!
Price volatility is an opportunity. Well-managed dairies are seeing long-term benefits from the current market volatility.
While price volatility may also be a threat requiring increased risk management focus, those that are able to manage the higher risk and cash flow challenges successfully are experiencing better margins overall.
Most farms look at large milk price swings between years as creating difficulties and promoting a stronger emphasis on financial management rather than production. Higher volatility, which we have seen in milk price, input costs and most other aspects of our economy, increases risk and is rewarded in the marketplace with increased profits.
2011 did a lot to rebuild the spirits and the balance sheets of dairy producers. It also featured a spirited debate about dairy price reform, margin protection and safety nets.
As of this writing, the Dairy Security Act seems destined for inclusion in the 2012 Farm Bill in some form.
No matter what happens with the public policy debate, the risk management approaches that are being talked about really are apple-and-orange comparisons. No comparative calculators will magically tell you which approach is best for you.
As we welcome in 2012, we remember the seasons of the year and how winter will become spring and then summer and so on.
In this well-understood annual cycle of seasons and the weather patterns and traditions that accompany each one, we know with some certainty that during winter we will probably need a coat, in the spring an umbrella, in the summer an air conditioner and in the fall a leaf rake.
In agriculture, we have traditionally had price cycles that could be compared to the cycle of seasons – but they tend to be less certain and predictable.
It is not unusual to receive phone calls from clients or prospective clients saying, “I need audited financial statements.”
I have learned over the years what this really means is, “I need some type of financial statements from a Certified Public Accountant (CPA).”
An audited financial statement may or may not really be required.
Dairy producers are always asking me to describe what I do. I am often contacted after a peer or trusted adviser has referred them.
More times than not, one of the first topics they want to discuss is: “Tell me what you do.” And also more times than not, my first reply will be: “I help people answer the question: ‘What next?’”
I truly enjoy helping people answer that question and have been blessed to have had so many ask for my help. Several clients, however, have gotten a little frustrated when they discover how much time I ask them to invest with me to discuss what they’re doing now before we actually begin answering questions about what they should do next.
A classic nursery rhyme starts like this:
Little Miss Muffet Sat on a tuffet, Eating her curds and whey;
The poem’s main character loved every bit of dairy. But what if this Mother Goose character became a modern, more selective dairy consumer?
What would happen if she only wanted cheese curds and not the whey?
When I lived in Chihuahua nearly 15 years ago, a friend of mine told me there’s a saying in Mexico that goes, “The only people who tell the truth are drunks and little kids.”
Actually, I’m not 100 percent sure if that’s the exact saying or if it’s even a Mexican saying at all. Ironically, this conversation occurred over a couple of tortas after hanging out at a cantina all night.
Nonetheless, I’m sure you can recall a time when someone you know was guilty of “drinking and talking” or when little kids proved that you have to watch what you say in front of them.
So what is it that makes the truth so painful at times?
Imagine, if you will, what it would be like if roughly 40 percent of a nation’s primary rule-making body were comprised of HR professionals. Or retired Air Force generals. Or any profession, such as dairy producers, for that matter. Just let your mind run with that for a second.
Now ask yourself why we in the U.S. (and other places) should expect better than we’re getting from our legislatures and Congress when it’s dominated by lawyers – people, according to Thomas Jefferson, “whose trade it is to question everything, yield nothing and talk by the hour.”
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