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I have been listening to all the discussions about the need for dairy producers to “market for a margin.” This approach to risk management was born out of the pain of 2009 and the desire to find some way to lock in a reasonable margin in the midst of volatile commodity markets.
While I understand the approach and why it has become a rallying cry, I believe that it sells producers short in the opportunity department. I believe our dairy producers are better than that. Or at least they deserve to hear the argument for how they could be better than that.
I’m here to suggest that, in order to achieve continuing success under today’s financial pressures, a necessary mindset shift is in order: stop thinking about “marketing for a margin” and start thinking about “maximizing opportunity.”
Dairy producers and industry professionals gathered in Amarillo, Texas, for the 2012 High Plains Dairy Conference on March 7-8. The conference was held at the Ambassador Hotel.
Todd Bilby, associate professor and extension dairy specialist, said that this year’s conference reached 275 attendees, a 10 percent increase from last time the conference was held.
“We had a phenomenal conference,” Bilby says. “A lot of the presentations were on how we can improve different efficiencies on our dairies and adapting new technologies to become more efficient in a global market.”
The cattle market, including dairy culls, is expected to see continued strength in 2012, with the potential for double-digit gains again this year – which is good news for dairy operators. The dairy industry will continue to see strong prices for its culled cows through 2012, with more upside potential than in 2011.
This rise in prices has been driven by severe weather in Texas, meat supplies lagging global income growth, a depreciation of the U.S. dollar, which encouraged beef exports and discouraged imports, and expanded export opportunities. This secondary income stream offers some reprieve to dairymen, as margins for milk have again tightened.
Most people who know me, know that I really like to plan things. In fact, most days I can get so caught up in what I’m going to do next that I forget what I am doing in the moment.
However, even with all those plans, I find the secret to successful planning is to be able to throw said plan out the window at a moment’s notice.
Do you have a business plan, a marketing plan or a liquidation plan? In general, agriculture has always been a price taker (in both inputs and outputs), and dairy is no exception, perhaps even the leader.
When milk price volatility brings negative margins, the typical producer seems to focus on cost cutting, as opposed to revenue generation. The cost cutting is then usually done without a plan and is more of a knee-jerk reaction.
Organic trade: U.S. and Canada take step toward full equivalency
Canada and U.S. organic dairy, beef, sheep, goat and bison producers exporting products can now benefit from more streamlined trade.
In the U.S., these animals, referred to as ruminants, must receive 30 percent of their feed during the grazing season from organic pasture and must be out on pasture at least 120 days per year.
The Professional Dairy Producers of Wisconsin has put together a jam-packed, informative two-day tour featuring some of Pennyslvania's most progressive dairies. Consider attending the April 11-12 trip through Harrisburg and Lancaster to learn why this area continues to remain in the top 50 counties for U.S. milk production.
Click here or on the image at right to see an e-newsletter from PDPW with more details.
Planning for the year ahead with cash flow projections is a powerful business tool when done correctly. It is management’s blueprint on how to operate the business in the coming year based on what is known today. It is an opportunity to plan for improvements on operating efficiencies and methods due to new technology, new knowledge and the impact of different price and cost.
Furthermore, with more dairy producers using price risk strategies such as forward contracting or pricing, it is even more important to not guess at your breakeven milk price. Guessing a dollar too low on your breakeven price and then locking in that price is a good way to invite a cash flow disaster.
Senator Debbie Stabenow, chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, announced the committee will host four Farm Bill hearings in before April. The hearings will allow the committee to continue examining Farm Bill principles and evaluating policy solutions to develop a 2012 bill.
The first hearing, titled Energy and Economic Growth for Rural America, was held on Feb. 15.
The purpose of this hearing was to evaluate policies that make investments in jobs and opportunities for farmers and rural businesses through new markets, entrepreneurship, regional strategies and energy innovation.
Here are excerpts of testimony presented during and the hearing:
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