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0809 PD: Capture dairy's opportunities

Published on 18 May 2009

Have cows and youngstock ready to go

If I was a dairyman right now, I’d be thinking about:

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– Not making any changes in the way I feed, vaccinate, treat or manage my cows. As always, this cycle will turn, and in today’s speculative, crazy, economic world, where fuel can go from $2 to $6 back to $2 in just a few months, having my cows ready to go when it does will be key.

– Watching local commodity markets closer than ever; look for good local deals.

– Use the negotiating skills I learned at PDPW’s Managers Academy. If I didn’t go to that, get some formal training in negotiating.

– See if there’s a way to partner with anyone around me that might buy the inputs I do to see if we could collectively negotiate a better price – not necessarily another dairyman, either. Anyone who buys fuel, fertilizer, seed, feed waste streams, etc.

– Have a lawyer review any contracts I might have in place (especially if they are bad ones) to see if there are any hidden loopholes benefiting me. But also watch out for any fine print that might benefit them.

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– Take care of my youngstock. When this does cycle back around, those yearling calves and younger are going to be my replacements. They need to be big, strong and ready to go. That includes using a proper vaccination program.

Scott Morey
Senior Marketing Manager
Novartis Animal Health U.S., Inc.

Remember your lender
The following are some strategies presented by our credit staff.

• Limit or suspend capital spending.If existing equipment will be adequate for another year, nowis probably not the best time to use cash or incur additional debt for capital items.

• Closely monitor the production of individual cows and cull low producers.(Theremay also be an opportunity now to replace marginal cows withrelatively inexpensive heifers.)

• Work with nutritionists to regularly analyze feed rations and to possibly make adjustments to control costs.Look closely at the incremental costs required to generate the last one ortwo pounds of daily production per cow.

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• Look for ways to save on labor expense and to reduce the amounts drawn from the dairy for living expenses.

• Consider selling non-essential, less productive, or surplus assets.

• Keep financial information up-to-date, know what your breakevens are, know where you stand with payables and with finance charges relative to trade accounts payable.

• Keep open lines of communication with your lender, your nutritionist, your veterinarian, your employees and everyone else on your team to identify opportunities,manage costs and avoid surprises.

LaMar Barrington
Western AgCredit

PD

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