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How not to learn milk marketing

Ashley Messing-Kennedy for Progressive Dairy Published on 17 August 2020

My husband and I officially bought the cows three years ago. We’ve been learning together, working together and making the farm ours, slowly but surely. We took over the farm in the middle of a long downturn of the industry, and Michigan (where we live) was hit especially hard. We joked about why would we want to start farming in good times? Our mantra has been, “If we can make it through this, we can make it through anything.”

We all know what a dumpster fire 2020 has been. Or, if you’re an older Michigan State University fan (Go Green), you might say a riot couch fire. (Sorry to all of the young’ins that will never know what a good post-win riot is.)

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In 2019, my husband and I decided to take on price protecting milk. We knew there was a lot to learn and figured it would take a while.

Being grown adults, we lined up conversations with professionals to learn about all of our options. Although all the options turned out to be less than ideal for what we are managing now, I still believe having people with expertise in commodities and price protecting is essential. The more information you have, the better decisions you can make. But, again, dumpster fire. Markets are unpredictable and options that leave more opportunity to take advantage of sudden changes are unaffordable by traditional standards.

As I talk to many marketing professionals, I have been told this is something they have never seen before. They truly can’t predict or guess what’s going to happen. My favorite is, “This is a really hard time to learn to market milk.” My best advice is to not learn this skill during a global pandemic. Just wait until all of the factors are perfectly lined up and predictable. That way you know you can have 100% success. Did you sense my sarcasm?

In all seriousness, I believe the only way to understand milk marketing is to talk to people who do it daily. People who watch for anomalies and know what signals to watch for. These people are truly your best source of knowledge, and knowledge is power. I regularly talk with two people but have a list of six or seven whom I can call and ask questions. If we didn’t have them, we probably would have quit trying to learn this months ago.

You need to know all of your options. From DRP (Dairy Revenue Protection) to DMC (Dairy Margin Coverage), futures contracts, options – the list goes on and on. Having so many options can make your head spin. But, having these options are good; you can use different programs depending on your needs or budget. Don’t forget to check with your milk cooperative or processor. You might be surprised by the programs they have. I can’t tell you how many of my fellow cooperative members have no idea what they can use through the cooperative.

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In the end, we can only control so much. By locking in as much of our prices as possible, we are better able to predict what our costs and income will be. But, throw in rapidly changing markets, an unprecedented pandemic and record breaking PPDs (producer price differentials), and you will want to gouge your eyes out and curl up in the fetal position. Give yourself some grace. Remember, you’re trying to make the best decision possible; make sure you have a strong group of professionals to refer to and always do your research.  end mark

Ashley Messing-Kennedy

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