Managing a dairy herd is a complex, 24-hour-a-day, 365-day-a-year job.

Significant increases in dairy herd size have resulted in the need for hired labor to provide primary care and management to the cows.

Editor’s note: This is the second of two articles discussing milk pricing. In the last issue, we explained how processors in Federal Milk Marketing Orders (FMMO) pay different amounts into the pool based on whether their milk will be used to produce fluid milk products (Class I) or manufactured products (Class II, Class III or Class IV).

Dairy farming is a complex business which demands accurate records and careful financial management. Both financial and production records are required in order to provide the information on which the farm manager can make critical decisions. Unfortunately, since farming is widely viewed as “a way of life” rather than a business, the financial management tools long available in other industries have not been universally embraced by producers.

Bruce and Brad Scott of Scott Brothers Dairy located in San Jacinto, California, have big plans this fall.

The Federal Milk Marketing Orders are a collective enterprise designed to work for the benefit of the whole, not a few.

Editor’s note: This is the first in a two-part series of articles that discuss milk pricing.

You have most likely heard the expression that bigger isn’t always better. In my conversations, I find that many dairymen tend to disagree with that statement. Economies of scale spread over sound management have allowed producers over the past five years to not only expand their herd size, but also their productivity (see Chart 1). And despite efforts to keep cow numbers at bay, growth has continued among varying geographies and herd sizes.

One year ago in the May 2007 issue of Progressive Dairyman, I was asked to write an article on feed price direction. By using basic fundamental analysis, a dose of futuristic forward thinking and some technical analysis on historical price patterns in commodity markets, I forecasted that the next bull market would likely give us upper $6 to lower $7 corn prices. Well, $7 corn is here, and everyone is now wondering, “What’s next?”

Maurie and Rita Young, owners of Emerald Spring Dairy in Plainview, Minnesota, saw an opportunity in November 2005 to expand their 500-cow operation. Heijwood Dairy, a neighboring farm located directly across the highway from their farm, went up for sale. Although the Youngs believed purchasing the farm would be advantageous, they also knew it would tighten their equity position and decided it was more of a “squeeze” than they were comfortable with taking.