Archive for November, 2009

PRO-DAIRY: Take the financial pulse of your business

Editor’s note: The PRO-DAIRY section of the November 2009 edition of Eastern DairyBusiness deals with Farm Transfers. To read the four-part section, visit:

• Transferring a dairy…Getting started

• Information you need for farm transfers

• Take the financial pulse of your business

• Success isn’t guaranteed, but it is possible

Before you begin the transfer process, determine whether your dairy business is sound enough for the future of both generations

By Jason Karszes

Just because both generations on a dairy want to transfer the business doesn’t guarantee success. The dairy business may not be able to provide for the senior generation’s retirement and also support the next generation’s desired lifestyle.

When a family considers transferring its dairy business to the next generation, the first question to ask is, Should this farm be transferred? To answer that question, consider the following three areas. Answer the questions in each section to help with your decision making.

1. Current business situation. If your dairy isn’t generating sufficient returns today to support one generation, it’s unlikely it will be able to support both generations, at least without changes.

To access your business’ ability to generate a profit, answer these questions:

Do we have consolidated financial statements and analysis performed annually to determine profits and track changes?

Is net farm income increasing over time?

Is labor and management income per operator increasing over time?

Are cash withdrawals for family living and off-farm retirement increasing over time?

During this period of low milk prices, how have losses been absorbed? Has this impacted your business’ ability to perform in the future? (Consider multiple year trends.)

2. Business potential. Inflation, the general decrease in the dollar’s purchasing power, requires a business to increase its profit continually to maintain the owners’ desired lifestyle. If a business is relatively stagnate and has little potential to increase profits over time, what is its future?

Access your dairy’s business potential by answering these questions:

What changes can be made to increase revenue?

What new management, inputs or technology could be adopted to increase profits?

Can more land be acquired?

Does current and future management enjoy working with and developing coworkers and resource people associated with the business?

3. Family expectations. Family members, individually and together, must know what they expect from the dairy business. Whether its cash for family living or the amount of time off, both generations must discuss what they need, want and expect. If expectations can’t be – or are not – met, it may be impossible to transfer their business successfully.

As the owner moving towards retirement, what are your expectations for:

Retirement income from the dairy?

Time away from the dairy?

Day-to-day dairy activities and management?

As the incoming generation, what are your expectations for:

Family life, or balancing work and family time?

Cash for family living?

Day-to-day farm activities and management?

Time off?

To help you work through all these questions,  work with a team of people that may include an estate planner, Extension agent, business consultant, banker and accountant. Their input can help you see your situation more clearly.

Based on everyone’s expectations, does the dairy offer challenges and opportunities? And does it generate adequate cash and earnings to support what both parties want? If not, a family may decide not to transfer its business.


Jason Karszes is a dairy farm business management specialist with the PRO-DAIRY program. Reach him at 607.255.3809. Email:

PRO-DAIRY: Information you need for transfers

Editor’s note: The PRO-DAIRY section of the November 2009 edition of Eastern DairyBusiness deals with Farm Transfers. To read the four-part section, visit:

• Transferring a dairy…Getting started

• Information you need for farm transfers

• Take the financial pulse of your business

• Success isn’t guaranteed, but it is possible

Before you begin the farm transfer process, gather all the personal and financial data necessary to make thoughtful decisions about your business’ future

By Lee Telega

One of the first tasks in developing a farm transfer plan is compiling the necessary information your family and advisers will need for productive discussions and sound decision-making. This information falls into four categories: property, financials, business management and important documents.

You can pull the information together electronically for easy updating. But paper files will work.

Property File

List all real and personal property owned, identifying whose name each item is under, whether joint or individually owned. Include the current market value of each item and its depreciation schedule. If available, include the latest written appraisals.

Financials File

Start with a current balance sheet. Add other financial information including income-expense statements for the past five years; a list of debts owed by whom, including credit card debt; and gifts made by the older generation – the amounts, when given and to whom. Also prepare an accounting of the older generation’s expected retirement program benefits and a list of anticipated major expenses for the next 10 to15 years.

Business Management File

Because this file contains more personal information about the business and people involved, it might be more difficult to bring together. Include the farm business mission statement and major long-term (5- to 10-year) business goals. Also put in writing a summary of the present estate situation and the objectives of the farm transfer plan.

Now for the tough part. The family needs to include vital statistics of all members of the family and a self-assessment of the talents each person brings to the business. Finally, each family member should write a brief paragraph expressing his or her concerns about the transfer process and the expected outcomes. (See sidebar.)

Documents File

Include wills, deeds, income tax records, mortgages, promissory notes, insurance binders and information about nonfarm investments, retirement income and trust accounts.

Make a list of current farm business advisers, both financial and production advisers, and their contact information. These advisers might include your loan officer, farm accountant, Extension agent, pastor, trusted family friends, attorney and farm business consultant.

Engaging advisers from start to finish provides a family with expertise and outside points of view that are so necessary to success. They help analyze options and ensure the difficult decisions truly reflect the common interests of family members.

Put thoughts on paper

Have all family members answer these questions about themselves and what they believe of the other family members. The answers will help identify the personal factors that will guide discussions and impact decisions:

What talents and abilities do you (and others) bring to this business arrangement?

What financial assets do you (and others) bring to this business arrangement?

What are liabilities you (and others) bring to this business arrangement?

What do you (what do you believe others) want from this farm transfer process?


Lee Telega is a PRO-DAIRY educator who specializes in a range of areas including farm business and environmental management and policy. Reach him at 518.496.8686. Email:

PRO-DAIRY: Transferring a dairy … Getting started

Editor’s note: The PRO-DAIRY section of the November 2009 edition of Eastern DairyBusiness deals with Farm Transfers. To read the four-part section, visit:

• Transferring a dairy…Getting started

• Information you need for farm transfers

• Take the financial pulse of your business

• Success isn’t guaranteed, but it is possible

As tough as it is to wade through the business transfer process, wise families start sooner rather than later

By Lee Telega

The transfer of family assets to the next generation is a sensitive and emotional subject. And when a family farm business is involved, decisions about asset transfer become complicated by the physical, operational and economic realities of farming.

Most Extension educators and farm business consultants have stories of farm families who delayed planning the transfer of their farm business for too long. These stories rarely have happy endings.

Delays severely reduce a family’s options on how assets are transferred. It also reduces the next generation’s readiness to take over the farm business. Many times a poorly planned transfer leads to feelings of resentment, rivalry, insecurity, inequity and unfairness that tarnish family relationships for years.

There is lots of research that says success in transferring a farm business is a function of the age of the younger, not the older, generation.

“The younger generation needs to take over when they are in their prime,” says Pat Firshkoff, an Oregon-based family business consultant. “Now they’re not in their prime in their early 20s, even though they sometimes think they might be. But by the time they’re in their late 30s and early 40s, they are ripe.”

A family’s reluctance to having the discussions about farm transfers isn’t the only obstacle. Often families don’t know where to start, the stages of the transfer process and who can help.

Developing a farm transfer plan is a huge task that takes many meetings, many decisions, many people and much time to accomplish. We hope the articles in this month’s The Manager by PRO-DAIRY will help families, whether they’re just starting to think about farm transfer or are along the road to developing a plan for the successful continuation of the farm business into the next generation. Good luck!

16 keys to success

These requirements for successful farming together and farm transfer arrangements stem from interviews with 46 New York dairy farm families. They were in the midst of or had completed their farm transfer arrangements. Check ones that apply to you.

1. Good communication

2. Good consultants

3. Openness

4. Decisions in writing

5. Willingness to compromise

6. Profitable business

7. Senior generation giving up some control

8. Agreements equitable to all parties

9. Gradual process, taking many years

10. A dissolution plan

11. Mutual respect

12. Keeping arrangements simple

13. Junior parties work off the farm for a while

14. Junior parties work on the farm for wages for a while

15. Junior parties who are competent to manage

16. Seniors provide management training for junior parties.


Lee Telega is a PRO-DAIRY educator who specializes in a range of areas including farm business and environmental management and policy. Reach him at 518.496.8686. Email:

Pat Firshkoff founded the Family Business Program at Oregon State. To read e-clips on her presentations on farm transition planning see Under EXPLORE, search Firshkoff. View Importance of Transition Planning, Problems in Equitable Distribution of Assets and Estate Planning Helps Equity Issues.

Financial Checkup: Break out of the financial mold

By John Ellsworth

As I stated in my last article, the world as we know it has certainly changed since the economic meltdown of October 2008! And 2009 has been the most trying time ever for the dairy industry as a whole.

We started the year with continuing high feed prices from 2008 and a general uncertainty about whether sufficient financing would even be available for most producers to endure this downturn. Milk prices plummeted before 2009 began, compounding an already difficult situation.

Some improvement seen

With two CWT herd reduction programs behind us already and another one in the works as I write this article, we are just now starting to see some improvement in milk prices. Hopefully, by the time you read this, we will be at a much higher price level.

Regardless of numerous government intervention programs that have been instilled this year, our economy remains anemic at this point. Funding provided to the banks in late 2008 was intended to stimulate their lending and keep businesses going forward. Thus far, I’m assuming that this must be set up on a “delayed reaction” basis since I observe a great deal of anxiety on the part of most bankers about lending additional funds.

Recently, I was waiting to meet with a client’s loan officer and one of the bank’s credit administrators, regarding a possible restructure of their loans. The loan officer informed me that his credit administrator was in no mood for “negotiations.” I won’t share with you what I was thinking in response to his comments, but I sort of felt like the guy who, along with another gentleman, was being escorted to the “firing squad.” When the guard escorting them asked if they would like to be blindfolded before being shot, the more feisty one replied, “No, I’m going to stick my tongue out at them when they lift their rifles to execute us,” to which the other prisoner replied, “Shhh! Don’t make trouble…”

Many vendors impacted

Of course, the challenges in the dairy industry have carried over to many vendors, such as feed companies, who are also under pressure from their lenders to remain profitable and keep their accounts receivable as close to current as possible. Yet, producers are being asked to cash flow when they are getting less than $10/cwt for their milk.

What can we do?

I’m not sure that anyone knows with absolute certainty, but listed below are my “Top 10” steps that have worked very well in practice. Producers who have adhered closely to these steps have been positioned to handle this downturn relatively well, several with a positive cash flow year-to-date.

Please keep in mind that positive results do not necessarily come from any one or two of these steps, but rather are a direct result of each and every step contributing to the others to have both a positive and compounding effect.

Additionally, as a foundation, I believe it is important that we establish a positive attitude. Believe me; this year has tested mine, too. Periodically, I have had to check my own outlook, because it is so easy to become negative in this financial environment. However, these are the times when people are looking for positive leadership, whether in your business, your community or your family. So keep it positive and take full advantage of these “Top 10” steps:

1.) Setting Annual Goals – The beauty of this process is that it forces us to really think. I am not suggesting that you haven’t been thinking, but the goal-setting process changes our focus from “problem solving,” which we all have been doing during 2009, to process improvement and overall achievement of our objectives. As author Lee Brower stated in his book, The Brower Quadrant – Live Life Deliberately, “Goals exist to get us in motion. They serve no other purpose.” As he goes on to explain, breaking through the inertia of standing still and get started is what separates achievers from dreamers. This is further reinforced by management guru Peter Drucker who said, “The best way to predict the future is to create it.”

2.) Development of a Disaster Agenda – This leads us to think about the three worst items that could happen to our business. Then, in response to those, we outline what the best response would be. Even if those items don’t occur, but something similar happens, we will be better prepared to respond successfully. This process can really stimulate great business thinking, which leads to greater success.

3.) Regular Management Team Meetings – These sessions are centered on dairy herd management issues, nutrition, reproduction and other challenges being faced. As a result, they should involve your nutritionist, veterinarian and key management personnel. Of course, we also focus on making managerial changes that fit well with the goals we set in No. 1 above.

4.) Regular Finance Team Meetings – During these sessions, I discuss with clients multiple issues that are forthcoming such as capital expenditures, monthly and annual budgets, financing needs, and other items that can impact our ongoing cash flow and profitability.

5.) Cash Flow Comparisons – These are completed every month to monitor how we are doing in terms of ongoing cash flow vs. our annual budget. Then, of course, we can make adjustments as we proceed through the year. These comparisons are the quickest method to catch costs that are getting out of line vs. our plan.

6.) CPA Prepared Financial Statements – These are an absolute must for two reasons. First, they are an excellent tool to have for the ongoing financial management of your dairy operation. Additionally, they assist both you and your lender to truly understand what is going on in your business, because these accrual financial statements account for the changes in inventories, prepaid amounts and accounts payable within your business, not just the cash inflows and outflows that we watch monthly.

7.) Bank Meetings 2X per year – This can be critical to your operation since you need your banker to be involved as part of your overall team. He or she needs to understand what your business’ strengths are and what items are areas for future improvement. They also appreciate being kept up to date on challenges you are facing and any plans you may have in mind for expansion, managerial changes, and incorporation of the next generation into your business. This is particularly true if the proposed changes will require added financing.

8.) Milk Marketing Plan – This is an absolute must today, particularly with the increasing amount of volatility and fluctuation in milk prices. Understanding your break-even price level and knowing how to position your business to achieve that price will continue to be essential to your financial future. Get involved in your own marketing plan by working with an options broker that you trust. He or she can be invaluable to your business.

9.) Nutritionists – While my personal preference is to use an independent nutritionist to develop feed rations for your herd, the most important item is to get advice from someone you trust. Not only is this beneficial from a nutrition perspective. It can also be helpful in keeping up to date on what commodities are doing in terms of price and availability, as well as the outlook for current and projected costs of hay and silages.

10.) Quarterly Inventories – These are valuable for your accountant to measure changes in your feed supply (remember the cash to accrual basis adjustments), and they are also crucial to your overall feed management. As you know, there is nothing worse than running out of a feed item that is not readily available or that has skyrocketed in price. It is difficult to buy corn silage in December. Additionally, bank auditors are really zeroing in on feed lines that are out of compliance, in other words where there is more feed loan than there is inventory to support it. Keeping close track of your inventories will help to keep you out of this painful situation.

I hope you find these “Top 10” steps helpful as you move forward in the coming year. Remember that now is the best time to plan for your success in 2010. As a help in getting started, be sure to utilize the “Gratitude Principle,” as defined by Dan Sullivan, president and co-founder of The Strategic Coach organization. In spite of the industry downturn in 2009, we all still have a great deal to be thankful for. Thus, Dan suggests that we ask ourselves, “What can I be grateful for?” Try it. I think you’ll be glad you did!

“Just remember – when you think all is lost, the future remains.” –Bob Goddard

It’s your money: Planning for college

By Verlyn de Wit

The American dream of sending your child to college is getting expensive. Tuition at private colleges begins in the $25,000 per-year range and goes up from there.  Add room and board, books, fees and other expenses and you’ve got a real challenge on your hands!

“You can’t start planning too early to avoid headaches and unnecessary debt,” relates Mike Epema, Director of Financial Aid at Dordt College in Sioux Center, Iowa. “The best thing students can do is take college preparatory classes and get good grades. Parents should talk to their accountants. Income tax issues generally overrule college aid issues.”

There are many tools and strategies to consider, but I’d like to focus on the 529 Plan. The name is taken from the section of the Internal Revenue Code (529) that allows states to adopt tax-exempt, prepaid tuition savings plans.

My wife and I established a 529 plan for our first grandchild 10 years ago. Our perceptive children, all of whom have had post-high school education, saw this as an incentive. We set up our 12th plan last year.  The primary benefits of the plan are:

• Federal tax benefits

Although contributions are not deductible on your income tax return, your investment grows tax-deferred, and distributions to pay for the beneficiary’s qualified educational expenses (tuition, room and board, books, fees and supplies) are distributed tax-free.

• State tax benefits

Some states such as Oregon and Iowa allow a limited income tax deduction for contributions to a 529 plan.  Others, like California, don’t allow a deduction for the contribution but do mirror the federal plan in terms of tax-free withdrawals for qualified expenses.

• Flexible

You can choose any state’s plan, select investment options, and even change the beneficiary of the account.  Beneficiaries can attend any institution of higher education (public or private) in the United States that qualifies under federal guidelines.  Certain community colleges and trade or vocational schools may also qualify.

• Control

The named beneficiary has no rights to the funds.  You decide when withdrawals are taken and for what purpose.  Many plans even allow you to reclaim the funds, although you may be subject to income tax and an additional 10% penalty tax.

Note that if a withdrawal from a 529 Plan is not used to pay qualified higher education expenses, income tax is due on the growth in addition to a 10% penalty.

Grandparents arise!

The 529 Plan may be the ideal way for grandparents to help their grandchildren pursue higher education. It also decreases Grandpa and Grandma’s estate.  Donors may contribute up to $13,000 per year per recipient. A special 529 provision allows gifts up to $65,000 for a beneficiary in a single year and to treat the gift as having been made over a 5-year period.  If you have 16 grandchildren, you can make more than $1 million vanish from your taxable estate in one sitting. Maybe the best part is that the grandkids can’t spend the money!  It is ear-marked for their education, and you still have the power to change the beneficiary. If your death occurs within the 5-year period, a portion of the transferred amount will be included in your estate for tax purposes.

Let’s take this estate reduction strategy one step further. If you’ve done your homework you already have designated someone as your power of attorney and/or successive trustee of your living revocable trust. This person has the power to conduct your financial affairs in the event of your incapacity. Ask your attorney if your documents would allow this person to maximize 529 Plan gifts to your heirs in the event your death becomes imminent. A chunk could be removed from your estate and you would have left a very attractive legacy for grandchildren or great-grandchildren.

Where do I sign?

For more information concerning your state, go to  Simply click on your state and you will receive far more information than this article contains. You will also be directed to state-specific websites and toll-free numbers that can give you all the forms you need to begin a 529 Plan. If you’re not the dot-com type, call the financial aid director at the college of your choice or your investment advisor.


Verlyn De Wit helps successful dairy producers make smart decisions about their money.  He can be reached toll at 888-468-1728 by e-mail at

Neither Western DairyBusiness nor Verlyn De Wit is qualified to offer legal or tax advice. Consult your attorney and/or tax professional for a qualified opinion regarding your personal situation.

Dairy Financial Times: Pushed aside by foreign imports!

By Michael Converse

At every dairy conclave this year, the matter of Milk Protein Concentrates (called MPC’s) has become a major talking point. Milk Protein Concentrates are any type of concentrated milk that contains 40-90% milk protein. In simple terms, they are manufactured by extracting and drying the protein from raw milk, and have been used in the manufacture of numerous products, both dairy and non dairy.

Currently most MPCs used in the manufacture of food products are imported into the United States, and this importation has contributed to an environment of constant milk price volatility. Over the last few months, many producers and their advocates have pointed to the inequities of the MPC situation… it is now time to see action on this.

Historically, in an effort to protect the domestic dairy industry, the United States government has imposed tariffs and quota limits on the importation of dairy products. Obviously, these limitations’ primary purpose is to insure that our domestic production is not displaced by imports. We will not be a nation without a food supply. For all the good intentions of these tariffs, manufacturers of dairy products have found a clever way around such quotas and tariffs. They found a product that acts as a replacement for dry powder that doesn’t fall under the current quota limitations.

Imported dry milk powder is currently limited to 5,261,000 kilograms (about 5,800 tons), and the existing tariff is 3.30 cents/kg. Over the last decade, manufacturers’ of dairy foods have discovered that using milk protein concentrates in lieu of dry milk powder, has resulted in increased yields of those foods. However, no limitation exists for the importation of Milk Protein Concentrates, and tariffs are .37 cents/kg (10 times cheaper than dry milk powder). The same domestically produced dry milk powder we had been using in the production of our dairy foods is finding itself displaced by foreign imports that skirt the spirit of the existing tariff rules. Why are domestic dairy food manufacturers trading out your cow’s milk for protein extracts from foreign sources?  Answer: it makes them more money.

The other disconcerting part about the use of Milk Protein Concentrates is their lack of FDA approval for their use as a food additive. In 1958, the Food and Drug Act forbade the use of any food additive not approved by the Food and Drug Administration. The FDA may only approve additives shown to be safe. Two groups of substances are exempt from requiring FDA approval, those additives sanctioned for use in food prior to 1958 (which MPC’s are not) and any substance generally regarded as safe.

So what does it take to make an ingredient for food “generally recognized as safe?” In 1997, the FDA instituted a system requiring manufacturers to notify the FDA of their “generally regarded as safe” determination, and provide evidence supporting their decision.  After evaluating the notification, the FDA has a flexible 90-day time period to respond. Once the manufacturer makes a self-determined GRAS declaration, they are free to use the ingredient until the FDA rules otherwise. To date, there has been no self determined GRAS submission for the use of MPC’s reported, yet their use in manufactured dairy products continues unabated.

Should the FDA rule in favor of the use of Milk Protein Concentrates, or a proper scientific study of the safety of MPCs and the process of their production, be submitted, these dairy products need to be treated consistently with those products they have displaced.  As of July 30, 2009, Senator Charles Schumer introduced a bill before Congress which would modify the existing Harmonized Tariff Schedule.  This bill would place a quantitative limit on the importation of Milk Protein Concentrates for both types of MPCs, those for industrial use, and those used as a food additive.  Those MPCs defined under Chapter 35 of the Harmonized Tariff Schedule of the United States would be limited to 55,477,000 kilograms per calendar year, and would be deemed suitable for industrial uses other than food. The MPCs defined under Chapter 4 of the schedule which would compete with dry milk powder, would now be limited to 18,488,000 kilograms a year. The only concern with this new legislation is whether it is going to result in substantial change. This newly proposed limit for Chapter 4 MPCs is still three and a half times the existing limit on dry milk powder, and offers no guidance regarding an increase in the tariff imposed on such imports.

So here we are, 11 months deep into the worst economic downturn for dairymen since the Great Depression, and a heavily contributing factor is simply a failure in government oversight. It is now time for the Food and Drug Administration to issue a clear and unambiguous yeah or nay on the subject of MPCs… and it is time for the House of Representatives and the United States Senate to tell the cheesemakers …“You want MPCs? make them yourself with milk produced in this country!”


Michael Converse, CPA with Genske, Mulder & Co., LLP, a certified public accounting firm representing clients who produce 12% of the nation’s milk in 28 states. Mike works primarily with dairy and ag clients in the Southwest. He can be reached at 949-650-9580 or e-mail him at mike@genskemulder. com

Opinions & sacred cows: Whom do you believe?

By Ron Goble

Dairy producers have been battered financially over the past year by low milk prices and high production costs. Hundreds of dairies have gone out of business via the Cooperatives Working Together program and many others filed for bankruptcy.

At the same time, some industry analysts are beginning to use the “R” word, something that producers nationwide have been seeking for months. Yes, some say we may be in the early stages of economic “recovery.” The hope is that it’s right around the corner for the dairyman and those in related businesses serving the dairy industry.

It cannot come fast enough for everyone concerned and it needs to last long enough to help all in dairying to dig their way out of debt, caused by the worst downturn in the dairy economy in memory.

I pray it is true. It’s hard to know who to believe these days.

Our nation – not just dairy – is in turmoil. Government is taking over our banking industry, automotive manufacturing companies, nationalizing student loan programs and is expanding its size and reach at a blinding pace. The national debt – the last time I looked – was $11.9 trillion and the trend for continued deficit spending  is not looking very good.

No one in Washington, D.C. is thinking like a taxpayer.On their docket – if not already passed by the time you get this magazine – are President Obama’s government health initiative and cap and trade energy taxation legislation. Dairyman Al Squire, president of Dairy Producers of New Mexico, warned recently in his monthly newsletter that both of these measures have the potential to devastate our businesses and the overall economy to an extent that we can’t even yet comprehend. Passage of either and/or both will not only burden the dairy industry, but every other small business in the country. It’s called redistribution of our wealth.

A big part of the cap and trade legislation is focused on determining our carbon footprint and taxing us accordingly.  Dairymen have done a lot to reduce their carbon footprints over the last 50 years, but let’s cut to the chase. It really won’t matter. The whole idea of cap and trade legislation is to find ways to generate revenue from our carbon emissions under the guise of saving the planet from global warming, which I believe is the biggest hoax ever perpetrated on the American people. The bottom line is that proponents of the climate change myth want to do away with all forms of animal agriculture and turn everyone into vegetarians.

These radicals want to regulate every area of our lives: what size television screens we can have; when we can use our heaters/air conditioners; how far we are allowed to drive our cars; and what we are allowed to eat at restaurants if weight is an issue.

And if you think that is far-fetched, consider this: A group from New Zealand have calculated that your pet dog has a carbon footprint twice that of an SUV. “Time to Eat the Dog” is the title of a new book by two architects from New Zealand. Robert and Brenda Vale have calculated that a medium-sized dog has twice the environmental impact of a large four-wheel drive vehicle, when all factors are considered. These people are insane.

But this is only the beginning of the wackiness of an out-of-control environmental movement that is looking to one-world global government to enforce regulations that will drive our nation back into the 1800s. These lunatics would that everyone be converted to vegetarians and live on rice, beans and tofu.

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

Ohio voters approve creation of Livestock Care Standards Board

Ohio voters  approved a constitutional amendment creating an Ohio Livestock Care Standards Board, establishing what many believe will be a model for other states. “Issue 2” was approved by a vote of 64% to 36%.

Livestock farmers and industry representatives hailed the vote as a victory, saying it recognized the role farmers play in caring for farm animals and providing a safe and quality food supply. It also creates roadblocks for animal activist attempts to establish animal care regulations similar to those in Arizona, California, Colorado, Florida, Maine and Oregon, via ballot initiative.

“Clearly, Ohio has blazed a bold new trail for other states to follow on the issue of livestock care and well-being,” according to Bob Stallman, president of the American Farm Bureau Federation. “It is clear that voters in that state know farmers and ranchers share their values regarding the care of farm animals.”

The amendment had support from hunger advocates, as well as food manufacturers and restaurant industry representatives.

In a statement following the vote, John Lumpe, president of the Ohioans for Livestock Care Political Action Committee, said,  “Ohioans have spoken and clearly understand that a board of experts is the appropriate entity to make decisions on behalf of animal agriculture and food production in our state. Passage of Issue 2 is a win for everyone who acknowledges the essential relationship between excellent farm animal care and a safe, affordable, locally grown food supply. Voters agree with Ohio’s farm community and our diverse base of supporters – decisions about food and farming should be made in Ohio, by Ohioans.”

Wayne Pacelle, president and CEO of the Humane Society of the United States, said the vote was a victory for agribusinesses and large livestock operations.

“By packaging Issue 2 as pro-animal welfare and pro-food safety, the architects of the ballot measure went a long way to assure its passage,” he said. “We have not viewed Issue 2 as a poisonous package, but rather an empty one.  The Ohio Farm Bureau and other agribusiness lobby groups cooked it up in an effort to block real reform.”

Pacelle vowed to move on to reform livestock confinement practices.

Food & Water Watch executive director Wenonah Hauter call the vote a loss for small family farmers and neighbors of large farms, charging Issue 2 proponents lied to voters. “Most Ohioans who voted in favor of Issue 2 would be shocked to know that the newly created entity, the Livestock Care Standards Board, clears the way for factory-style animal operations to self-regulate,” he said. “The whole country is now watching Ohio to see what the new Livestock Care Standards Board will do with its power. Food & Water Watch and allies will closely monitor this board, redoubling our efforts to get the state legislature and governor to rein in large corporate agribusiness.”

The Ohio General Assembly must now write legislation implementing the board. The 13-member board will include farmers and farm organization representatives, veterinarians, academia, a food safety specialist, a representative of a local humane society and consumer representatives.

Marketing: Work your strengths, delegate your weaknesses

By Matt Mattke

Every market has its peaks and its valleys, and it’s at these extremes when emotions run highest. It’s at these extremes where fear has the potential to take full control of marketing decisions.

At the peaks, it’s the fear of selling and prices continuing to go higher. At the valleys it’s the fear of not selling and prices continuing to go lower.

Managing these emotions and fears is crucial to making rational and objective marketing decisions. When a producer is making rational risk management decisions, he or she is taking action because the market said to do so. Perhaps a major price support point broke, which opens the door for the risk of further price declines; milk needs to be sold. Or maybe prices rallied through a major previous high price, which opens up the opportunity for further price advances; previously sold milk needs to be reowned.  These are market-driven decisions based on predetermined trigger points, not spontaneous spur-of-the-moment decisions based on fear.

If a dairy producer believes that their marketing decisions have largely been driven by fear and emotion, how can he or she prevent fear and emotion from dictating future marketing decisions?

Overcoming this obstacle is no easy task. By nature, dairy producers are emotionally tied to their milk production; it is their livelihood and the product of their tremendous hard work. Dairy farming is a lifestyle that every producer hopes to pass along to their next generation. Any major marketing blunder(s) that are made have the potential to derail or set back this longer term goal.

While fear and emotion may never fully be removed from a producer’s marketing, the first step to mitigating its impact is to identify where fear and emotion come into play. Is it coming into play while developing the marketing strategy? In this case a producer may not be able to make a decision on what the actionable trigger points should be for fear of being wrong? Or, is fear and emotion coming into the equation while attempting to execute on the marketing strategy that is already in place? In this case are triggers to sell milk or triggers to reown sold milk in place, but being ignored out of fear these triggers will be wrong? Or perhaps these triggers are being ignored because they tell a producer to take a marketing action that does not jive with their own personal bias on price direction? Whether the problem is in developing or in executing a marketing strategy, once that problem component is identified that task should be delegated to someone that has the discipline and expertise to follow through.

Thus, if a producer’s strength is developing a marketing strategy, but the weakness is executing that strategy, then the execution component should be delegated to someone else. If a producer’s strength is executing on a marketing strategy, but their weakness is developing a strategy, then that component should be delegated to someone else.

Sometimes successful marketing requires not just one person be involved, but a team of people be involved. A team comprised of the necessary experts has the potential to fill in those missing or weak marketing components.


Matt Mattke

Stewart-Peterson Market360® Adviser


Phone: 800-334-9779

Web site: