3/09 SUCCESS STRATEGIES: Prepare for better times

By John Ellsworth

We face some difficult times in the dairy industry. As I write this article, dairy producers are facing the lowest milk prices they’ve seen in five and a half years, and feed prices have decreased only slightly from last year’s high levels. These are the times when I like to reflect on the wisdom of others, such as former Notre Dame football coach Lou Holtz who said, “Nothing’s as good as it seems. Nothing’s as bad as it seems. Reality always lies somewhere in between the two extremes.”

While he was referring to the success levels of football teams, the same applies to our current industry situation. There is one thing we know with certainty – industry conditions will improve at some point. The most important question you should be asking yourself is, “Will I be ready?” 

Yes, I know all of us will welcome higher milk prices when they come, but will you be prepared to truly take advantage of the next upturn? Will your herd be producing at peak efficiency and be at its best in terms of herd health and reproductive status? These factors will be critical to your success.

So, how can you prepare? Here are a few points to focus on:

1. Review your costs of production. Are they in line with your regional industry? If not, what can you change?

2. Capitalize on the benefits of holding regular management team meetings. I do these with my clients to ensure that we stay on track, both on herd management and financial issues. Include your regular advisors: veterinarian, nutritionist, financial advisor and possibly your accountant or banker. During these meetings, we discuss challenges the client is facing, how we might improve breeding and feeding problems and other items that are important. They assist the producer, and build accountability and communication between the participants, all to the benefit of the dairy producer.

3. Is your lender on board with your plans? Most bankers know how tough it is at present. They also know it will change and that you can survive this downturn. Have you provided your banker with an updated cash flow projection for your operation? This will help him or her know where you will need assistance.

4. Continue to talk with your suppliers. Every vendor knows that this is a tough financial climate for producers. Communication is critical at this point. If you keep them informed, most will work with you because they also want your business in the good times.

5. Keep a positive attitude. Legendary coach Vince Lombardi said, “Winning isn’t a sometimes thing. It’s an all the time thing.” Having a good attitude will help you to see the positive changes that are coming sooner when they do arrive. Part of being a leader in your business is helping to keep your team’s morale level high.

Remember, as Booker T. Washington said:

“You measure the size of your accomplishment by the obstacles you had to overcome to reach your goals.” q


•  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.