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.

With milk prices higher than they have been since 2008, many producers are finding they have more money left over each month after paying operating expenses and normal principal and interest payments. Many have paid off or drastically reduced operating debts incurred in 2009. Taking advantage of their increased cash positions to evaluate various options which include paying down debt, these operators are generally prioritizing debt reduction as follows: 1. Accounts payable 2. Operating lines/feed lines 3. Intermediate-term cow lines/equipment loans 4. Long-term facility/real estate loans