Most family businesses – farms, local agribusinesses, restaurants, etc. – are started by an individual owner. As they grow, the businesses (farms) often transition to multiple owners. The new owners (partners) are often, but not always, family members. This change, like all business transitions, is crucial to farm business success. The decision to enter into a partnership should be made with great care and planning. The implementation of the change should involve strategic and tactical planning to ensure the partnership succeeds. The goal of the partnership should be financial, business and personal synergy (one plus one is much greater than two).

You are in the business of dairying to make money, not to lose it. We know it doesn’t always happen that way. As you know, milk and feed prices are volatile at best these days, and it takes more and more financial planning to stay in the business. In our article this past September, we briefly discussed our philosophy as it relates to creating a “dairy team” of financial advisers. In today’s market, it is critical that a team of advisers is available to you to help navigate through the ups and downs and more importantly, maximize the ups and minimize the downs. This dairy team consists of some or all of the following: your accountant, banker, attorney, consultant, investment adviser, and any other stakeholders that can add value by having a seat at the table.

You might want to buckle your seat belt. The folks who are the customers of agriculture and who pay the freight for maintaining farm programs have spoken. And what they say may not necessarily be sweet music to the ears of Cornbelt agriculture. Do you remember back in grade school when a new stick of chalk hit the blackboard and produced that awful piercing noise? That may be more indicative of public opinion. If you could shift the funding in the USDA budget, where would your priorities be? Farm programs? Research? Food assistance programs? Conservation? Rural development?

At this time of the year, I wish I could bring you some good news. I am afraid, however, that what has been a modest recovery for our dairy farms starting in late spring is about to end. Most dairy farms, still under the shock of the 2009 financial disaster, now barely hold their heads above water. What’s next? Feed prices have gone through the roof, and the November decline in milk prices can be the initial signal for further price declines despite the recent surge of dairy product prices on the cash and futures markets. Tight financial management will be the norm for the first half of 2011. First, let us look at feed prices. I used the software SESAME™ that we developed at Ohio State to price the important nutrients in dairy rations to estimate breakeven prices of major commodities and to identify feedstuffs that currently are significantly underpriced.

With a low economy affecting interest rates and farm values, now is a good time to take care of planning the future of your business. Dan Rupar of Ruder Ware LLSC out of Wausau, Wisconsin, specializes in estate planning and business succession planning. These plans are not only integral for intrafamily farm transfers, but also for two or more farmers establishing a joint operation, he says. Only about 30 to 35 percent of family businesses make it to the second generation, and just 10 percent make it to the third generation. He adds that while 78 percent of families intend to pass their business to their children, only 34 percent have created a succession plan.

The primary objective of a job description is to help employees and supervisors reach a mutual understanding about important details of a job in order to avoid future problems. This article discusses the need for job descriptions, how to prepare them, and how to make use of them for more effective human resource management. In addition, some examples of job descriptions for positions in the milking center are included. Job descriptions should never be considered final; they should be open to changes and should be reviewed at least once per year by both employee and supervisor.

One of the greatest challenges facing farmers is the management of a labor force. Effective management of hired labor can have a profound effect on the overall profitability of a farming operation. University of Minnesota Extension will offer three Labor Management Programs. The programs are titled, “Employment Skills for Today: Planning for Success.” Farm owners and managers who oversee family and non-family labor should consider attending. There is no cost for these programs; however, to plan for program materials as well as noon meal arrangements, pre-registration is required.

Management guru Peter Drucker, who helped launch the field of management in 1945 and who died in 2005, is credited with coining the phrase “If you can’t measure it, you can’t manage it.” Managers make lots of decisions every day, maybe as many as a hundred or more. Some of these are very important, others may be less so. Robert Lewis, a business consultant who spoke of Drucker at the 17th American Dairy Science Association Discover Conference on Dairy Herd Analytics, made the case in his opening presentation to the group that you shouldn’t “trust trusting your gut” when making decisions.