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1608 PD: Stick with your team through thick and thin

Norm Schuring Published on 06 November 2008

The milk-to-feed ratio continues to decline as producers see less money remain after feed has been purchased. In August 2008, the ratio fell to 1.89 compared to 3.19 only one year earlier. With the lowering milk price and sustained high feed costs, margins are expected to remain tight for the balance of the year.

Tight margins bring out the best and worst among dairy producers. Historically, dairy producers are adept at making adjustments and sacrifices to make ends meet, but sometimes those decisions save a dime only to cost a quarter. When tough decisions need to be made, it’s often best to work with an assessment team from outside the dairy.

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A traditional assessment team should consist of those consultants with the greatest impact on the dairy’s profitability – the veterinarian, nutritionist, financial adviser, milk quality consultant and your milking equipment dealer. Unfortunately, during times of tight margins the equipment dealer is often the first one left off the team.

The reason for this oversight is usually that the producer has started to move away from a one-stop equipment, hygiene and service package in search of alleged deals and savings from individual vendors. The producer might opt to go with a company that just offers liners, or a cheaper generic teat dip, or cheaper replacement parts that aren’t from the manufacturer. As the dealer becomes less and less involved, service falls off as well, so equipment doesn’t operate at peak performance and the money-saving effort actually ends up costing more than the savings.

Cheaper products are usually a result of companies having less overhead behind the product. There may be a smaller investment in research and development, or less expensive – and often inferior – raw materials. The result is products that will not perform over time.

While the effort to decouple product and services may pay off in short-term cost savings, the long-term risk to profitability becomes apparent once there is a problem. When there is a milk quality issue, if the veterinarian has not worked with the dealer the solution may not be readily apparent. Had they been provided the opportunity to work together on an ongoing basis, their collaboration may have resulted in a quicker solution.

It’s easier to make mistakes when buying decisions are made only to save costs. Buying on price causes other facets of the operation to become less productive. And when a problem happens, because there are a lot more responsible people involved in the operation, the finger gets pointed in a variety of directions before someone takes ownership and develops a solution.

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When decisions are made based on the desire to improve profitability, it’s easier to build and reap the benefits of an assessment team. Here are a few suggestions on how to get the most from a dairy assessment team:

1. Make sure all of the management areas of the dairy are covered.
Priority areas should be animal health, reproduction, nutrition, milk quality/equipment and financial performance. Additional areas could include crops, environmental management and human resources, among others. Understand that having more people at the table has its benefits and drawbacks. While more of the management areas of the dairy are covered, it may be more difficult to arrive at a consensus with a larger group having input.

2. Get the assessment team together at least on a monthly basis.
While you will see them individually on the dairy or in informal settings, it’s important to get the team together on a regular basis to share thoughts and ideas and plan for future developments.

3. Go beyond the consultant.
There are several companies within the dairy industry that support the consultants you’ve tapped to be a part of your assessment team. Animal health, nutrition and, yes, milking equipment companies have developed programs that are designed to provide consultants with a multitude of tools to help them better serve producers. Don’t hesitate to get involved in these programs with the help of your assessment team members.

4. Don’t forget that it’s your business.
No matter what happens, the dairy owner has the final say on all decisions. You also have the responsibility to make changes to the assessment team when the need arises. After all, it’s your business.

5. Do what they say.
While the final decision is yours, remember that the members of your assessment team are there because they are experts. They visit several other dairy operations, in some cases in other states or countries. They see a lot more cows, experience a variety of situations and achieve results at other dairies, too. So take their suggestions to heart, and trust that what they are telling you is in your best interest and will make a positive impact on your operation.

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6. Celebrate progress.
Once goals have been set on your dairy, take the time to meet with your assessment team on a frequent basis to review the progress that’s being made. Once you’ve reviewed previously set goals, make adjustments and improvements as necessary. This may also be a time to celebrate when exceptional progress is made and initial goals are met.

7. Stick with it.
As important as it is to have a team, it’s even more important to rely on their expertise when times are difficult. The old saying goes that when the going gets tough, the tough get going. It’s easy to make decisions based on a cheaper product or service – those pay dividends right away. It’s more difficult to stay the course and rely on the team – including your dealer – that brought you success in the past. Have the confidence not to abandon this team concept when times get bad. PD

Norm Schuring
Vice President for
GEA WestfaliaSurge

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