I Had the Blues
When I was in college, I took a Dale Carnegie Human Relations Course through our local Penn State Extension program. Dale Carnegie, an early 1900s writer and lecturer, founded a well-known professional skills program still sought by top level executives in Fortune 500 companies. He was born into poverty on a farm in Missouri, where he milked cows every morning through his teenage years. From there, he moved into peddling products to ranchers and farmers throughout the Midwest and eventually into the role for which he is best known.
Quotes from Carnegie’s writings were scattered throughout the course. One I remember well was, “I had the blues because I had no shoes until, upon the street, I met a man with no feet.” As corny as it sounds, it’s true that all it can take is a chance meeting with someone less fortunate to remind us how we are truly blessed.
In my early 20s, I was representing the checkoff program at a local cooperative meeting during a time much like today when milk prices were very low. During that meeting, a woman in the audience raised her hand and emphatically said milk prices were so low that she couldn’t afford to put shoes on her kids’ feet. Almost twenty years later, I still haven’t forgotten that statement.
It’s All about Perspective
Right now, many dairy farmers may be feeling like they’re in a “no shoes” situation. We are sitting in a dip on the roller coaster right now, with milk prices more than 50 percent under where they were two years ago. Drought weather conditions have further stressed farm finances, with tight feed supplies and little to no excess cash crop to sell. In times like these, it can be extremely difficult to see the forest through the trees.
Staying focused on what matters most and why you are in the dairy business is more important now than ever. Business planners know one of the first steps in the process is to create a vision for your organization. That vision becomes the guide that helps the business navigate through both good times and bad.
According to an article published in Hoard’s in 2013, a vision statement should remind you what you’re trying to build and be your inspiration. It should capture your passion.
Recently, someone told me that the true art of having a vision is being able to see the invisible. For most dairies, it can be something that reminds you why you are doing what you’re doing and what you are working toward in times of weak milk prices, weather woes and other struggles.
So, ask yourself, your family members and your partners, “Why are we farming and what do we want to build?” Have everyone share their thoughts and pull together a final version of your vision statement from those ideas. Then, hang it up on your farm so everyone can see it as a daily reminder.
Recently, the center hosted the annual Dairy Financial and Risk Management Conference where lenders and financial consultants learn about the world dairy marketplace, the economics of the dairy business and what can be expected for the next 12 months.
Matt Gould, an analyst with Dairy Food and Market Analyst, Inc., told the audience the international dairy market is just starting to recover from an imbalance in supply and demand. However, domestically, our production is still growing and product stocks are building. He sees the recovering continuing through 2017, as export demand grows, supplies decrease and inventories normalize. Though it could take potentially another 12 – 18 months for prices to return to levels above $18 per hundredweight.
Eventually, milk prices will rebound. If your vision is to have a long-term profitable dairy business for the next generation, it is important that you stay focused on working through this downturn to be prepared to take advantage of the higher prices once they return. Knowing your cost of production and making sure you are maximizing revenues through quality incentives and component levels is essential. Don’t cut corners to save dollars and sacrifice in cow comfort, herd health or other key areas of your herd management. Looking at diversifying or at new income streams may also present options to consider.
Penn State Extension Dairy Team did a study of dairy farms’ anticipated cost of production for 2016 and showed an average per-cow production cost of $19.10 per hundredweight. However, farms ranged from a low of under $14 to a high of above $28. As you look at your dairy business, be mindful of how your cost of production compares to your neighbor’s and to other dairy farms in your region.
Remember Your Passion
Most dairy producers, no matter the size or scale of their operation, will tell you they are in the dairy business because they are passionate about their role in taking good care of animals and the land to produce a quality product for the world around them. There is a lot to love about what we do as farmers, even in times of low milk prices. Being able to work outside with great people and animals, care for the land, and be your own boss are all great reasons to love working in this industry.
This industry and your dairy farm are also vital to the local community and to Pennsylvania’s rural economy. We provide a local source of high quality dairy proteins to our hungry communities and that is something in which to take pride. Nowhere is that more evident than in the food bank system across Pennsylvania, where dairy industry organizations have stepped up recently to ensure hungry Pennsylvanians are regularly receiving fresh, wholesome milk.
As we work through this downturn, remember that milk prices will rebound and those dairies with focus and vision will come out on the other side. Make sure you are doing everything you can to be certain your dairy is one of them. The center has resources to help.
The center’s Dairy Decisions Consultant Program may be a good first step if you are looking for guidance in working through the current downturn and developing a plan for future farm viability. We offer $2,000 in funding for dairy producers to work with a dairy consultant to review the farm’s operation and farm financials to identify options for future farm viability. For more information about that program, visit the “Business Tools” tab on centerfordairyexcellence.org and select the “Dairy Decisions Consultants” on the left sidebar or call the center at 717-346-0849.
Editor’s Note: This is a monthly column written by Jayne Sebright, executive director of the Center for Dairy Excellence.