Archive for October, 2009

People Power: CFO, CEO, COO

Business leadership critical as turbulent times continue

By Bob Milligan

I first wrote about business leadership responses to challenges in the general and dairy economies a year ago. Unfortunately, neither shows signs of an imminent turnaround, leaving us in what I call a state of “Turbulence X Turbulence.”

Being an owner and business leader of a dairy in these trying times is difficult and challenging, but also incredibly important. Give your management responsibilities more priority and time, paying attention to both long-term direction and day-to-day business operations.

Business direction and strategy

Three responsibilities of chief strategist, chief financial officer (CFO) and chief executive (CEO) are especially critical:

1. Regularly – at least quarterly – assess the business’s financial status and liquidity, given your best estimate (and worst case) of future trends. Is continuing to operate the dairy at a loss still the best strategy? Can the business survive until profitable conditions return? Continuing communication with lenders and financial advisors is especially important.

2. Keep abreast of economic conditions and trends, using this knowledge to refine current strategies and put the business in the best possible position when recovery occurs.

3. Look for strategic opportunities. Many companies have expanded and/or made significant strategic changes to capitalize on opportunities created by the recession. Dairy owners must also seek opportunities that are financially feasible and will enhance business success – now and in the future.

Day-to-day operations

Most dairy owners are also chief operating officers (COO). Again, address three areas:

1. Making profitable day-to-day decisions is always important. A dollar less loss is at least as important as a dollar more profit, enabling you to return to your former financial position sooner.

2. Improving every part of your dairy is even more paramount. Look for ways to: a) improve crop and animal efficiency and performance; b) enhance the cost effectiveness of purchases and home grown feeds; and c) increase workforce performance.

3. Relentlessly seek cost-control opportunities. Cost-control opportunities abound in almost every business. Possibilities include: a) reducing input losses (feed storage and feeding losses, misplaced items, damaged inputs); b) consolidating trips to town or around the farm; c) repairing instead of replacing; and d) increasing employee efficiency and reducing overtime.

A final note

Most dairy owners prefer “doing” to “managing,” even in the best of times. Giving the needed priority and time to management is even more of a challenge in difficult times. Consider these ideas:

1. Structure your time to ensure these responsibilities have the appropriate priority. Establish a daily or weekly time when you address operational and strategic issues.

2. Get in the habit of writing down your good (even crazy) ideas, or they may be forgotten.

3. Ask family members, partners and co-workers to encourage you to meet your management commitments. This has two advantages: a) just talking to them will increase your commitment; and b) they can give you that little extra push you need.

4. Seek advice from others, including trusted advisors. Now is not the time to let your independent nature get in the way of the success of your business.

FYI

• Robert  Milligan, senior consultant with Dairy Strategies LLC, can be reached via phone: 888-249-3244, ext. 255, e-mail: rmilligan@trsmith.com, or web site: www.dairystrategies.com.


Pro-Dairy: Train for peak performance

By Jerry Bertoldo

Competent training and meeting facilitation can make all the difference in the performance of Spanish-speaking employees

Foreign-born labor, undocumented immigrants, Hispanic workers – these are some labels used to describe the thousands of migrant men and women from Mexico and Central America who work on U.S. dairy farms. For more than a decade, local labor has been steadily replaced by these Latinos on Northeast operations.

How important is a Hispanic workforce to the dairy industry? A recent National Milk Producers Federation- (NMPF) sponsored survey estimated that Hispanics represent 40% of the dairy workforce and two-thirds of the milk produced in this country.

Whatever the label tacked onto this group of workers, a dairy’s Hispanic workforce is anything but homogenous. Native country, cultural variations and a mix of languages make for a diverse group of employees. Most Hispanic employees may trace their language and part of their lineage to European roots, but some are indigenous people with Spanish as a second language, often not well mastered.

Employers and managers with limited Spanish language skills and little previous contact with Latinos may not expect this diversity. This is just one challenge accompanying a Hispanic workforce. Another is a limited pool of qualified people to conduct training and meeting facilitation for Hispanic employees.

Bilingual people who are unfamiliar with the culture, farm lingo or dairy farming don’t offer the level of training and meeting facilitation needed for dairies.

As Hispanic workers acclimate to American culture, their English-speaking skills improve. As do their sense of self-worth and ability to perform tasks successfully. With a growing track record of accomplishment, many Spanish-speaking employees are becoming upwardly mobile on dairies. As astute managers recognize talent and achievement, the ranks of Hispanic feeders, calf managers, herdsmen, breeders and hoof trimmers have grown.

Along with these accomplishments has come an entitlement mindset for some Hispanic employees. In other words, some expect reward or favor regardless of performance. This has opened a new chapter in employee relationships and in conflict resolution requiring skilled bilingual specialists.

Who has had the most success with a Hispanic workforce? Usually the same dairy producers who are successful with English speakers. Successful employee management requires language skills and  an understanding of culture and customs.

Proper training and meeting facilitation can make a big difference in employee performance and your satisfaction with Hispanic employees. This issue of The Manager helps you evaluate your training programs and provides examples of successful efforts on three dairies.

FYI

Jerry Bertoldo, a veterinarian, is a dairy management specialist with the Northwest New York Dairy, Livestock and Field Crops Cooperative Extension team. Contact him in Batavia, N.Y., at 585.343.3040. Ext. 133.
Email: grb23@cornell.edu


Pro-Dairy: Train, train and train some more

By Greg Coffta

These three dairies learned that employee success depends upon effective Spanish-speaking training and meeting facilitation

Wallace Farms, a 400-cow dairy in Chautauqua County, N.Y., has been feeling the pressure of plummeting milk prices and fixed input costs like most dairies across the country. To complicate matters, the dairy had trouble keeping Spanish-speaking employees. That led to problems in the parlor.

“At its worst, we seriously had been turning over an employee per month,” says Scott Wallace who owns and operates the dairy with his wife, Sharon. “It was easy to see that it had an effect on our milk quality; we crept slowly to almost 400,000 somatic cell count.”

The Wallaces knew their problem was the result of poor language and training services for their Spanish-speaking employees. A local employment agency had promised not only to provide the dairy with quality Spanish-speaking employees but also to train them. In reality, the agency barely provided any training.

The dairy’s milking routine was nonexistent, and every milker had a different set of procedures. Milk quality fell by the wayside. To improve productivity and milk quality, the dairy needed training and meeting facilitation.

The Wallaces’ local Cornell Cooperative Extension educator referred them to the Extension program I operate. Funded by the New York Farm Viability Institute, my program provides educational and management assistance for dairies that employ Hispanic employees.

I worked with the Wallaces to meet their dairy’s needs. My training with their Spanish-speaking employees targeted the whys: why employees must consistently follow a milking routine, why cows get mastitis and why quality milk matters.

During meetings, the employees learned about the dairy industry’s current financial difficulties. We also covered what somatic cell count (SCC) means and how high counts negatively impact a dairy’s bottom line. We discussed how employees can work as a team to improve milk quality.

In the seven months of holding training at Wallace Farms, its SCC has dropped by as much as 150,000. That’s put more money in the Wallaces’ milk check. What’s more, the parlor throughput has improved because of better stimulation and let-down.

The Wallaces’ employees are gratified to know they have helped to make the dairy more profitable and their bosses happy.

The transition to excellence

Chucho was one of the best, most reliable and longest tenured employees on Jeff Mulligan’s 800-cow dairy in Livingston County, N.Y. He was an excellent milker, and Mulligan counted on him to help train and lead the milking team.

This leadership, dedication and responsibility made Chucho the optimal choice for filling an assistant herd manager position on the dairy. In his new role, Chucho was given more independence to work at his own pace and set his own priorities.

Having been in the parlor for years and accustomed to the rote nature of a milking shift, Chucho wasn’t used to the independence. He became frustrated when sent to the barn without the direction and education that made him feel confident in his new job. It wasn’t long before Chucho’s performance began to slip.

With regret, Mulligan had to fire him. “I know Chucho would have been great out in the barns,” he says. “Maybe some of the responsibility is on us for not helping him out.”

With Chucho gone, Mulligan had to refill the assistant herd manager position. But he clearly didn’t want to repeat any mistakes he made with Chucho.

I met with Mulligan to discuss training possibilities. Then the two of us worked with Rufino and Eron, two Spanish-speaking employees who took on assistant herd managers’ jobs, to develop a series of educational meetings that gave them the knowledge and confidence to perform their jobs well.

Rufino and Eron learned about calving assistance, fresh cow health disorders and herd treatment protocols, among other topics. Most importantly, Mulligan and his new employees discussed their new roles and expectations with my help as a trainer and translator.

Rufino and Eron have been working as assistant herd managers for about seven months, and Mulligan couldn’t be happier.

“They surprise me sometimes with an ability to think for themselves and make good decisions for the herd,” Mulligan says. “The training really helped; it gave them a good foundation for future learning.”

A job never done

An effective training program demands continual support and follow-up. We need to review procedures and protocols that we want employees to follow, particularly for jobs they don’t do every day.

Ron Eickler, head herd manager at Ransom Rail Farm in Wyoming County, N.Y., understands this concept. Though he was generally satisfied with the dairy’s Hispanic employees, Eickler thought their performance could be even better. But more training didn’t seem like the way to boost performance. I have provided training and education services at the dairy since 2007, and employees had run the gamut of my training topics. They already had a good knowledge base.

Eickler thought regular staff meetings might be the method for keeping employees motivated and aware of current issues such as milk quality status and routine and shift changes. He was right. Since early this year, I have facilitated monthly staff meetings at the dairy. We combine house-keeping matters such as protocol or policy changes with new training and a review of past training.

The first meeting was the least productive. Employees may have thought they were going to be disciplined and hesitated to participate. Once I assured them that their meetings are about continuing education, not reprimands, the employees opened up. Now they arrive early to make sure they get the chance to talk with me. Generally, employees have questions about their job responsibilities, but sometimes we cover things such as scheduling, housing arrangements and returning home.

The meetings have helped employees understand they can talk openly with Eickler and that doing so can improve their jobs and the dairy. They’re better trained and informed about their responsibilities, improving their problem-solving abilities.

Now that his team of employees is eager, and not apprehensive, to talk about areas for improvement on the dairy, Eickler better understands his employees’ concerns and has more tools to help resolve those problems.

On this dairy, the effort to improve employee performance had less to do with training and education, but more to do with team building and communication.

FYI

Greg Coffta provides educational and management assistance to dairies that hire Spanish-speaking employees. Reach him 585.208.8546. Email: gjc53@cornell.edu


California conditions lead to DFA base increase call

By Dave Natzke

A Dairy Farmers of America (DFA) request earlier this fall for increased milk production bases in the co-op’s Western Marketing Area drew angry reactions from dairy farmers suffering through a period of prolonged low milk prices.

Western DairyBusiness talked with DFA’s Glenn Wallace, Western area chief operating officer, and John Wilson, DFA’s senior vice president, marketing and industry affairs, to discuss the rationale behind the request.

Wallace admitted the letter struck a nerve at a period of severe economic stress in the dairy industry. At the same time, changing marketing conditions – and the anticipation of improved prices – warrants the call for more milk in California, he said.

DFA, like other California dairy co-ops, established production bases in late 2007 and early 2008 to address state milk production levels that were far exceeding processing and marketing capacity. More recently, DFA established a base program in Colorado (Mountain Area).

According to George Mertens, Sonoma, Calif. dairy producer, head of the Western Area Council (WAC) board and a member of the DFA executive board, California milk production levels began increasing dramatically in early 2008. Between Jan. 1-31, 2008, loads of milk coming into DFA were increasing at a rate of four to five loads per day, with no home for much of the new milk. In Mertens’ first meeting as WAC board chair in February 2007, a base plan was voted in. An effort to repeal it a month later failed.

Bases were established on existing market needs, not plant capacity, Mertens said. DFA member 2007 historical milk production levels were closest to those market needs at the time. Like most base programs, DFA’s plan didn’t place a hard cap on milk production. Instead, it placed the burden of marketing excess milk on the farmers who produced it.

“We felt that was fair, because if producers wanted to grow beyond the base, we felt they should bear the added cost of marketing that milk,” Wallace said. “DFA, California Dairies Inc. (CDI), Land O’Lakes and Security Milk Producers established base programs for their California producers, capping how much milk they can produce individually without being subjected to costs associated with marketing excess milk. Production was so extremely high in California, there wasn’t a home for the milk. It was going on the ground, to calf ranches, and being condensed and shipped all over the country.”

In early 2008, California all-milk and mailbox prices averaged $17-$18/cwt. In those first months after the base was established, prices for “overbase” milk were being deducted by up to $13/cwt., Mertens said.

Since then, DFA’s milk and dairy product demand and sales have grown, without an adjustment in base.

“We now have more market than we have base,” Wallace said. “DFA’s Western Area is very short of milk to meet the commitments we have on a daily basis.”

As a result, DFA has been purchasing milk from other co-ops – including CDI – to meet demand. However, CDI has a new 5 million pound-capacity plant coming on line by the end of January 2010, Wallace said, and DFA expects CDI to redirect milk currently supplied to DFA to its own plant, resulting in further DFA milk shortfalls.

Other conditions have also changed, the DFA leaders said.

Wallace said demand for Class 1, cheese and other value-added products is improving in California. At the same time, the decline in California milk production in areas where plant capacity is located has created an imbalance in demand and supply.

Wilson said DFA’s creation of an Ingredients Division means the co-op will resign from DairyAmerica – a nine-member federated company marketing nonfat dry milk powder – at the end of September. DFA will then begin marketing its own nonfat dry milk in an effort to provide a full line of dairy products to customers.

In response, a Sept. 3, 2009 letter to DFA’s 350 Western Area members asked them if they were interested in increasing individual milk bases. Members had until Sept. 18 to respond. Wallace said several members were caught in the middle of expansion plans when bases were established in early 2008, and some have expressed interest in higher bases. If producers request a base increase, they will have until June 2010 to meet that commitment. If they do, the adjusted base becomes permanent.

Bases were in the news earlier this year, in a different context. As recently as early June, CDI had proposed reducing California milk production by 5%, asking DFA, Land O’Lakes and Security Milk Producers to join in that effort. Collectively, the dairy organizations agreed California production would decline at least 5%, without base reductions.

California milk production was down 3.5% from year-earlier levels in the first quarter of 2009, and down about 3% in the second quarter. Compared to a year earlier, USDA estimated July 2009 production was down 4.9%, and preliminary August estimates showed California milk production was down 4.5%. DFA Western area member milk production was down 6.5% in August, Wallace said. Add it all up, and January-August 2009 California milk production is down about 973 million lbs. from the same period a year earlier.

Wilson realizes a request for increased base might have sent mixed messages to U.S. dairy producers. He doesn’t, however, expect the request for more base to have a negative psychological impact on dairy prices.

“We don’t want to confuse the dairy situation today with the forward-looking plans for our members in California,” Wilson said. “We need better prices, and if we don’t get them soon, it will be a disaster. It already is a disaster. We’re looking for milk when prices improve into the future.

“Today’s milk supply and consumption is pretty much in balance nationally,” Wilson continued. “The problem is in inventories of American-style cheese and powder. If we got rid of 100 million pounds of cheese and 100 million pounds of powder, the price situation would be greatly different. Part of it is also the fact milk production per cow has been resilient. Summer temperatures in the middle part of the country were extremely mild.”

Given economic conditions, Wallace doesn’t anticipate an enormous rise in base, and expects the need to buy milk from other sources to continue.

“It’s all dependent on price,” Wallace said. “I don’t expect to get more milk if prices don’t improve. If we go another 90 days where we’re at today, in my opinion we’ll have dramatic fallout in California. I’m talking to dairy producers on a daily basis who have lost $4 million to $10 million this year so far in cash flow. They’ve also lost a lot in equity. We’re approaching a point of no return for many producers.”

Mertens warned that dairy economics must change quickly and dramatically, or California’s dairy industry is on the verge of collapse. “Even if prices go up, they have to really go up, and it can’t be gradual,” he said.

“In the future, we anticipate the milk price will improve,” Wallace added. “If it doesn’t, we won’t have any milk. We do not have any expectations producers will continue to produce at $10/cwt. But I have to give our members the opportunity to grow first.”

Special section: Forage/seed selection

Agronomic technology

Mycogen offers 2 new BMR hybrids

Mycogen Seeds is adding two new BMR hybrids adapted for the West to its portfolio of SILAGE-SPECIFIC corn hybrids for 2010. The new hybrids offer high digestibility to help growers optimize feed intake and produce more milk.

“The new silage hybrids offer the latest improvements in nutritional value and agronomic technology,” says Greg Cannon, forage products marketing specialist, Mycogen Seeds. “We have continued our commitment to research and testing to make sure only elite silage hybrids make it to our growers.”

The two new BMR varieties are:

• F2F665 is a solid agronomic hybrid that delivers added tonnage and a better disease package. F2F665 has very good whole-plant and NDF digestibility, and good drought-stress tolerance. This new 109-day QUAD-STACK comes with HERCULEX XTRA Insect Protection, LibertyLink® and Roundup Ready®.

• F2F622 is a new 109-day BMR hybrid that offers solid agronomics with a taller plant type. With very good whole-plant and NDF digestibility, F2F622 also has good drought-stress tolerance. F2F622 features HERCULEX I Insect Protection, LibertyLink and Roundup Ready traits.

Other MYCOGEN® hybrids adapted for Western silage production are:

• F2F797 is a 115-day hybrid with the highest tonnage potential of any MYCOGEN brand BMR corn hybrid.

• TMF2H918 is a traited version of TMF2H917, a tall, full-season 123-day TMF hybrid that is especially well-adapted to the California and Southwest silage markets.

• TMF2L844 is a full-season TMF hybrid also adapted to California and Southwest silage markets.

• TMF2N804 offers excellent tonnage potential when planted at moderate to moderately high populations. This 116-day TMF hybrid has good drought tolerance and very good plant health throughout the chopping season. Moves south into fuller-season environments.

“As the marketing leader in SILAGE-SPECIFIC BMR corn, we have utilized our resources to produce an even stronger offering of SILAGE-SPECIFIC hybrids,” Cannon says. “We look forward to helping growers optimize milk production and yield.”

For more information about these new silage hybrids or other MYCOGEN brand products, contact your local Mycogen Seeds dealer or sales representative, or visit www.mycogen.com.

Grass fiber technology, 11GFT

Pioneer Hi-Bred’s announces new inoculation platform

Pioneer Hi-Bred, a DuPont business, today unveiled Pioneer® brand 11GFT inoculant, the second in a series of products in the revolutionary Pioneer fiber technology platform. This product offers dairy producers an additional avenue to enhance forage digestibility for reduced feed cost.

“The fiber technology platform was launched in 2008 with 11CFT developed for corn silage. We now have expanded our offering to include this product developed exclusively for grass and cereal silage, the first of its kind,” says Kyle Whitaker, Pioneer marketing manager for forage additives. “Additional fiber technology products are currently under development.”

11GFT inoculant stimulates “front-end” fermentation efficiency by rapidly dropping silage pH while helping to retain valuable nutrients. Another key benefit is increased aerobic stability for conservation of nutrients on the back end during feedout. 11GFT improves fiber digestibility and dry matter intake which facilitates higher silage inclusion rates.

Through testing, 11GFT has shown an increase in milk production with a decrease in feed cost when compared to untreated forages related to increased NDF (neutral detergent fiber) digestibility. The increased cell wall availability leads to a higher intake, rate of passage and overall higher performance.

“The grass and cereal fiber technology product enhances Pioneer’s already extensive lineup of crop-specific inoculants, such as 11CFT and 11C33 for corn silage, 11H50 for alfalfa silage and 11B91 for high-moisture corn or earlage,” says Whitaker. “Pioneer products are unique because of the research effort to offer crop-specific bacterial strains to enhance feeding values. Pioneer’s research with crop-specific inoculants continues with the fiber technology platform.”

To learn more about Pioneer inoculants, contact your local Pioneer nutritionist or dairy expert or visit www.pioneer.com/
forages.  p

What to do with moldy hay?

Weather conditions prior to, during first cutting, and while making hay have been very moist. Many areas have two or more inches of above normal precipitation. Much hay has been rained on or left lying in the field for prolonged time periods due to cool and humid conditions which reduced drying rates. The long drying periods with high humidity allowed field growth of mold on the hay. We will try to state some facts and offer some recommendations for hay producers and livestock producers.

What is the “black dust” that covers my mower or swather? The black dust is most likely spores produced by fungal organisms. Spores are how the fungi reproduce and are always present but usually at lower concentration. The black dust on a mower or swather indicates that fungal growth was present prior to cutting.

What is the “black dust” on the hay in the windrow, and coming out of my baler or forage harvester? The dust is partially fungal spores which have been produced at any point prior to harvest; but most likely, spores were produced after mowing in the windrow, under high moisture levels. Another source of the dust is pulverized and decomposed plant material after drying.

What can I do to prevent fungal growth in the crop prior to mowing? There are few options to prevent fungal growth in uncut forage. There are no current registered fungicides for alfalfa forage use, other than ApronTM for seed treatment at planting. Furthermore, it is probably not economic to treat even if you could forecast long term weather problems. For periods with high precipitations, adjust your watering schedule, prevent over irrigation, and allow plants to dry up faster.

You can prevent further mold growth in harvested hay and silage. To improve drying and solar radiation on forage: 1) make a wide windrow, 2) mow in sunny weather, 3) rake or invert the windrow at about 40% moisture.

Hay preservatives such as proprionic acid products and other mold inhibitors can reduce or stop further mold growth in hay and silage, at least temporarily, when applied at baling or chopping. These products will not reduce the damage done before harvest, they merely stop new growth.

What effects do molds have on animals? The spores can produce undesirable physical responses from humans and livestock from the physical dust and an allergic response of animals. Feed intake is reduced. The spores indicate a possibility of mycotoxin producing organisms. A mycotoxin is a toxic secondary metabolite produced by an organism of the fungus kingdom, including mushrooms, molds, and yeasts.

Bunker management key to quality

Bunker management is key to achieving the highest quality silage, according to livestock nutrition experts with Pioneer Hi-Bred, a DuPont business. Producers should pack bunkers densely, cover with plastic and use inoculants to maintain and enhance the quality of silages in storage. Fill as fast as possible while maintaining adequate packing, say Pioneer experts.

“The more oxygen excluded, the better,” says Dann Bolinger, Pioneer dairy specialist in Michigan. “Producers should get about 800 to 1,000 pounds of tractor weight per ton per hour on the bunker to keep oxygen out.” _

Bolinger suggests packing continuously, not waiting for the next load. When it gets difficult to keep up with the speed of harvest, try slowing down or have more bunkers available.

“With custom harvesters and the increased size of equipment, it can become a challenge to get the bunker packed densely,” Bolinger says. “It isn’t ideal, but producers can try either slowing harvest or filling more than one bunker at a time. Make sure the bunker is packed well. Poor packing density slows the ensiling process and increases the potential for spoilage.”

Another important consideration is covering the bunker. Cover the bunker with plastic and a weight system, such as tire sidewalls.

“If producers don’t cover the bunker with plastic, the top 3 feet of forage will act as the covering,” Bolinger says. “At least 50 percent of forage dry matter can be lost in those top 3 feet, so consider covering to avoid potential spoilage.”

Inoculants are the best way to help preserve nutrients and improve the value of every bite. Pioneer offers inoculants for corn, alfalfa, grass silage and high-moisture grain. With a library of more than 25,000 strains of bacteria, Pioneer microbial researchers develop inoculants with carefully selected, unique, proprietary strains of bacteria to help producers get more from every acre fed to animals.

Ways to monitor the bunker after packing include utilizing infrared photography and density probes. These two tools provide practical, convenient and quick methods to determine density levels. Pioneer forage specialists can use infrared cameras to depict hot spots in the bunker feedout face. This offers insight into pockets of aerobically unstable feed that often are the result of inadequately compacted forage.

The Pioneer density probe is a tool for measuring actual silage density from the feedout face of a bunker, pile or bag. The probe is used to drill and sample a core of silage of known volume. The weight and dry matter content of the silage translate into pounds of dry matter per cubic foot within the storage. The minimum desired density for hay crop silages should be 14 to 15 pounds of dry matter per cubic foot. A goal for corn silage is 17 to 18 pounds. The denser a bunker, the less dry matter loss should occur.

“There isn’t much a producer can do to change the density once it’s been packed, but measuring provides a way to plan for next season’s packing,” Bolinger says. “Contact your local Pioneer sales professional for more information on density probes.

Southwest Pulse: Amarillo Farm & Ranch Show is now 25

AMARILLO, Texas – The first week of December, farmers, ranchers and dairy producers will converge on the Amarillo Civic Center for one of the biggest events of the year.

The Amarillo Farm & Ranch Show runs from Tuesday, Dec. 1 through Thursday, Dec. 3. The show opens every day at 9 a.m. and closes at 5 p.m. Tuesday and Wednesday and 4 p.m. on Thursday.

The AF&RS – celebrating its Silver Anniversary – is expected to draw more than 30,000 attendees from the Texas and Oklahoma Panhandles, as well as New Mexico, Colorado and Kansas. The AF&RS is a good way to reach producers in these regions, according to show officials.

Now in its 25th year, the event encompasses most every aspect of farming and ranching. With more than 500 companies exhibiting each year to showcase the latest products and services, the Amarillo Civic Center is historically packed to capacity with no exhibit spaces left to sell. The show provides the venue to debut a new product, demonstrate service capabilities and give vendors opportunity to interact with numerous qualified producers.

Attendees can interact with manufactures, obtain necessary continuing education unit credits and network with other producers in the region.

Added attractions

During the annual AF&RS, visitors can also attend special educational sessions.

• The 9th annual Texas Commodity Symposium will be held Wednesday, Dec. 2 from 8:30 a.m. to 12:45 p.m. in the Grand Plaza Room. This jointly organized symposium provides producers and business people alike with essential agriculture information and programs that affect Texas commodity producers.

• Texas A&M University will host the 25th annual Panhandle Farm and Ranch Management Symposium, Wednesday, Dec. 2 from 1:30 p.m. to 5:15 p.m. in the Grand Plaza Room.

• Also on Wednesday, Dec. 2 from 9 a.m. to 4:30 p.m. will be the 10th annual West Texas A&M University (WTAMU) Health Fair in the Glass Room Annex.

The department of nursing and Partners Clinic will offer flu shots, hearing screenings, cholesterol and glucose screenings, tetanus and West Nile Virus shots and much more.

Amarillo F&RS has been named one of Tradeshow Week’s 50 fastest growing shows.

Show officials announced that after a record-breaking number of nominations, the Amarillo Farm & Ranch Show was selected by TSW’s, which honors the fastest growing trade shows in North America. The honor is based on the total net square footage grown, and the overall percentage of growth reported between 2005 and 2007.

The show is produced by Cygnus Expositions headquartered in Burnsville, Minn. Those interested in exhibiting at the Amarillo show may go online at www.farmshows.com/afrs or may call 800-827-8007 for more information.


Opinions & sacred cows: The passing of a real American hero

His genius was not always apparent…He was told his high school education had not prepared him properly in science and math…the man whose work saved millions of lives…from starvation.

By Ron Goble

The nation and the world lost a real icon, a national treasure, with the passing recently of Norman E. Borlaug. It will be a long time before we see any one individual that impacts the world for good like he did during his lifetime.

In 2007, Borlaug received the Congressional Gold Medal, the highest civilian honor of the United States. This capped a string of major awards and honors throughout his scientific and humanitarian career.

“We all eat at least three times a day in privileged nations, and yet we take food for granted,” Borlaug said in a recent interview.

Until recently, Borlaug still traveled internationally working tirelessly for improvements in agricultural science and food policy. He regularly could be found in his office on Texas A&M campus in College Station advising students and providing counsel to fellow faculty members on research and scholarship.

His genius was not always apparent. His childhood days were spent on an Iowa farm, influenced by his Norwegian grandfather’s lessons on common sense. At the University of Minnesota, where he began his college education during the Depression of the 1930s, he was told his high school education had not prepared him properly in science and math. He failed an entrance exam and was placed in the General College. That motivated Borlaug to study hard and he eventually received his master’s and doctorate degrees in plant pathology from the university.

During World War II, Borlaug was in charge of industrial and agricultural chemical research for a DuPont laboratory. In 1944, after his release from the War Manpower Commission, he became a scientist for the Cooperative Wheat Research and Production Program – a joint venture between the Rockefeller Foundation and the Mexican government which began his life-long passion for international agriculture. His research and food aid efforts in India and Pakistan made this modest man famous and led to his Nobel Peace Prize in 1970.

In 1986, he initiated the World Food Prize. Today it’s held in Des Moines, Iowa, supported by local businessman and philanthropist John Ruan. The two Iowans worked together to become powerful proponents of research and food aid efforts. The World Food Prize includes a symposium of top researchers and policy officials from around the globe, as well as a Youth Institute for high school students from Iowa and other states. The Youth Institute, Borlaug confided, was his favorite part of the event and he reveled in talking to students about world hunger issues.

At Texas A&M in 2006, the Norman Borlaug Institute for International Agriculture was named in his honor. The institute strives to continue Borlaug’s legacy by promoting science-based solutions for the world’s agriculture and food challenges. The institute is currently working in some of the world’s most challenging agricultural development environments such as Afghanistan, Guatemala, Ethiopia and Iraq.

A star athlete on the University of Minnesota wrestling team, Borlaug, occasionally lamented his real dream was to play second base for the Chicago Cubs. In these times when pro athletes are so readily given hero status, I’m confident that most would willingly relinquish the title of American Hero to the man whose work saved countless millions of lives from starvation around the world  – Mr. Norman E. Borlaug.

Have an opinion or response? E-mail Ron Goble, Associate publisher/editor, Western DairyBusiness at: rgoble@dairybusiness.com

Milk Matters: Nutrition counts in calculating carbon footprint for food

“By fine-tuning the delivery of dairy nutrition so that the maximum benefit is gained using the lowest number of resources possible, we are able to achieve true sustainability. For importing cultures that rely on local but nutritionally unbalanced foods supplemented by nutrient dense foods like dairy that have a higher carbon footprint, the result is a modest footprint backed by excellent nutritional health.”

By Joseph O’Donnell

How does a dairy producer expand markets for milk? By looking beyond it.

Let me explain. Milk is wonderfully constructed to deliver complete nutrition as well as signals to our body’s internal receptors that influence our ability to resist pathogenic bacteria, control appetite, etc. And it does all this with great efficiency.

Looking at the footprint

If you were to look at the carbon footprint for a gallon of milk vs. the nutrients delivered – both quality and quantity –nothing can compare. While some plant sources that offer limited and relatively inferior nutrients like protein can tout a better carbon footprint on paper – what you get is completely different.

It is possible to put a diet together of mixed vegetable-based foods that deliver adequate amounts of protein, minerals, vitamins, fats and carbohydrates to keep the engine running but I can guarantee that the addition of milk will make that diet and person a great deal healthier. My point is that using all of the traditional tools to calculate carbon footprints for food sources is moot if nutrition/health isn’t part of the equation. It does our population no good to drive towards a carbon neutral society if we compromise our health in the process.

Milk a ‘survivor’

Milk and dairy products are as healthy as they are right now because milk survived millions of years of selective pressure to get the system right. Talk about sustainability! Milk was required to be efficient or it would not have survived.

Huge untapped reservoirs

So here we have a product that contains huge untapped reservoirs of health promoting components – the challenge now is how to fine tune the products made from milk to blend with other foods to come up with a diet that is as healthy as can be and have a low carbon footprint.

That is precisely what dairy scientists are working on today. Using milk genomics and metabolomics (a fancy way of saying composition and function of milk), new dairy products – mostly ingredients – are being developed so that the benefits of milk can be included in a variety of diets while keeping sustainability front and center.

Fit formula

Once you’ve determined the type of food product formulation that needs to be done the next challenge is to come up with tasty dairy ingredients that fit within that formulation. Not everyone needs all the components of milk to maximize health. Products need to be tailored for the different needs of different cultures. This includes dietary habits of populations in both the domestic and overseas markets. This may mean reducing the amount of a dairy product in a final food formulation but increasing the number of food formulations that contain dairy ingredients.

Consider the overseas market where the carbon footprint for dairy goes up simply due to transportation costs.

Fine-tuning

By fine-tuning the delivery of dairy nutrition and health so that the maximum benefit is gained using the lowest number of resources possible, we are able to achieve true sustainability. For importing cultures that rely on local but nutritionally unbalanced foods supplemented by nutrient dense foods like dairy that have a higher carbon footprint, the result is a modest footprint backed by excellent nutritional health. We must, after all, be able to sustain life as well. Isn’t that everyone’s goal? Including the delivery of health in the carbon footprint discussion makes for a better business model and builds the road for expanded dairy markets.

FYI

Dr. Joseph O’Donnell is executive director of the California Dairy Research Foundation. He can be reached at 530-753-0681.

Information on the California Dairy Research Foundation can be obtained from the organization’s web site at www.cdrf.org.

Success Strategies: The world has changed

“No matter how bad things are at times, Americans believe all difficulties can be overcome. As a result, pessimists and predictors of gloom and doom eventually are ridiculed as alarmists, cranks, frauds and fools… Americans love a winner in every area of life, big or small.”

By John Ellsworth

Wow! The world as we know it has certainly changed since the economic meltdown in October 2008! Not only are producers receiving less of the retail milk dollar as a percentage of store sales compared with a year ago, they are now supposed to cash flow when they are getting less than $10/cwt for their milk…

Not long ago

This truly is a different world. It was not that long ago when it was sufficient to remain at Loan-to-Value (LTV) levels of 65% or less on your herd loan, 100% or less on your feed line and no higher than 65-70% on your real estate LTV. Apparently, that has changed, too.

Please allow me to provide you with two examples. A client of mine achieved a net income of more than $400,000 in 2008. Not bad for a year with very high feed prices. We were refinancing their real estate loan. After that, their LTV’s would be 14% on their dairy herd, 80% on their feed, and 70% on their real estate.

Their lender did complete the loan process, but it took five months… The first two months were for the real estate appraisal, which is understandable, but three months to document this deal? As I said earlier, it is clearly a different world, with no clear explanation from the lender for this delay.

Cash flow issues

My second example is from a client who was having some cash flow issues in 2009. Imagine that?

We presented a proposal to their lender that would put them at 65% LTV on their herd loan and 75% LTV on their feed line (48% when their new corn silage is all harvested by October). It would also allow them to cash flow at $12.96 per cwt. With the amount of pool quota that they own, they will be close to that level by Sept. 15.

Is this proposal a solid risk? Yes, I believe it is, but it is still pending approval after seven months. As I stated, this is clearly a different world.

Contrast that with a third client who has been approved for a herd expansion, an increase in his feed line, and a new real estate loan, all in about two months. He, like the other two clients, had a well thought out plan that would guide them to continued positive results. What has changed? Perhaps our expectations, or at least those of the bank? Is it at all reasonable to expect to cash flow when you are getting $9.50/cwt? Probably not. Should they have fixed milk prices? Perhaps, but at the same time, they did not get trapped with any high fixed price feed contracts for 2009.

What is the solution?

Perhaps a slight degree of optimism would help. While things have looked bleak these past nine months, I don’t think consumers will stop buying dairy products. As a producer, I suggest you keep doing those things that still make economic sense. Produce an excellent product for your market, and take advantage of any quality bonuses available to you.

Maintain your financial information for future use, especially keeping your CPA prepared financial statements up to date. These provide you with so many more options for future financing. Is it reasonable to expect to cash flow in 2009? Not yet. However, you should be determining what changes you need to make to cash flow in 2010, whether you receive $12/cwt or $18/cwt. Plan for a more positive future.

My advice for the lenders would include one thought. Many of these producers have been successfully running their businesses for more than 50 years. They have been facing various challenges when their loan officers and I were still in high school. They have done this before, and I am confident that they will, once again, find a way. Yes, I know that 2009 has been less than favorable. However, as Dan Sullivan, president and founder of “The Strategic Coach” said, “No matter how bad things are at times, Americans believe all difficulties can be overcome. As a result, pessimists and predictors of gloom and doom eventually are ridiculed as alarmists, cranks, frauds and fools… Americans love a winner in every area of life, big or small. The country’s incessant entrepreneurism creates countless new arenas for striving, competing, and winning. If you create new value, you are seen as a winner.”

Time will tell how this financial picture develops as we complete this year, but my money will be on the dairyman overcoming the present challenges and succeeding. Be sure to review where your operation is at present. As you go through this process, be open to new ideas and making changes in the way you run your business. To conclude, I thought you might find the following quote fitting.


FYI

John Ellsworth of Modesto, Calif., is a consultant with the financial and strategic consulting firm Success Strategies. He can be reached at 209-988-8960, or by e-mail: je4success@msn.com.


Accounting for Profits: What can I do in times like these?

By Ralph C. Lizardo

As we all know, the dairy industry is currently suffering from its worst financial crisis in decades and dairymen are searching for various ways to stay afloat.

Many factors contribute to the crisis the dairy industry is currently in. Experts believe that the main culprits are oversupply of milk, sudden slow down of dairy exports, increasing feed costs, the current economic downturn and milk pricing systems.

Dairymen have looked to the government for assistance. The federal government acknowledges the struggle that the dairy industry is in. According to the recent statement from U.S. Secretary of Agriculture Tom Vilsack during his visit to California in August 2009, “the dairy situation is high on the list of priorities at the U.S. Department of Agriculture…” The dairymen are still waiting for promised assistance.

Dairymen are anxiously awaiting the time when the sales price to sell a pound of milk is higher than the cost of producing it. In the meantime, dairymen are searching for other ways to increase income and decrease costs.  Below are examples of what some dairymen are doing.

MILC program

Dairymen are signing up for the MILC (Milk Income Loss Contract) program. According to the payment rate posted in National Milk Producers Federation’s website, the payment rate between October 2009 to January 2010 ranges from 10¢-69¢ per hundredweight. This could translate to approximately $2,000 – $20,500 of additional cash inflow to your operation.

Selling assets

Some dairies are looking to sell either non-dairy assets such as real estate or some assets in the dairy not deemed necessary such as excess heifers or extra pool quota or shipping base.  The heifers, pool quota and base still have a pretty strong market value and sell pretty quickly.  This allows an infusion of cash into the operation.

Feed expense

Feed accounts for 50% – 60% of total expenses.  As such, dairymen, with the help of its nutritionists and veterinarians, are looking at their feed costs closely.  Many dairymen are looking into the type of feed that are being fed to their animals.  They look at price, quality, feed alternatives and daily rations.  Although the changes in the animal’s diet will most likely decrease production, some dairymen believe that the savings from substituting feed for a less expensive one will outweigh the income that could have been produced.

During the peak of the feed cost hike, many dairymen entered into purchase contracts with feed dealers at the current market price at that time.  When feed prices started to decline, dairymen are still obligated to purchase feed at a much higher price than the current market.  Some have contacted these feed dealers to work out a deal without breaching the contract such as receiving the higher contracted feed over a longer period of time and buying lower priced feed on the spot market to blend their feed price downward.

Labor

Dairymen are looking at their workforce for potential cost cutting areas.  Dairymen are evaluating the number of employees they have and their necessities.  Decrease in labor force will also decrease payroll related expenses such as employee benefits and payroll taxes.  Jobs that are not essential or can be performed by management are being eliminated.

Operating expense

Dairymen are also looking at various operating expenses.  Most dairymen are evaluating their needs and wants.  For example, some dairymen are holding off certain repairs to their facility or equipment for as long as they can.  Some dairymen have cut back on their purchases of supplies.  Some dairymen have changed vendors to a less costly vendor.

Dairymen are also looking into their professional fees such as accounting expenses.  Accounting costs can be lowered if more of the accounting work is done by the dairymen rather than having your outside accountant do it.

Some dairymen are doing their own breeding and thereby reducing their vet bills.  If there is room on the dairy, some are bringing home their heifers that are normally raised by others at earlier ages especially if they can be put on pasture ground or if they don’t need additional labor to feed or care for them.

Each dairy operation is different and you should look closely into your own financial situation to determine areas to increase revenue and decrease costs.

Dairymen have looked to the government for assistance. The federal government acknowledges the struggle that the dairy industry is in. U.S. Secretary of Ag Tom Vilsack says the dairy situation is high on his list of priorities…dairymen are still waiting for promised assistance.

FYI

Ralph Lizardo, CPA, Senior Manager, with Moore Stephens Wurth Frazer and Torbet, LLP,  in Brea, Calif. Contact him by e-mail at: rlizardo@mswft.com or call, 714-990-1040 Ext. 178.

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