Prepare now for better times
Dairy Herd news source  |  Tuesday, June 30, 2009

Everyone, regardless of what industry you are in, feels the effects of the current economy. Right now the dairy industry is struggling more than ever with low milk prices and high operating expenses. It feels like this scenario has been persisting for a long time and you are still waiting for things to improve.

The frustration for those of us in consulting and education is there is very little we can do to compensate for these outside forces, says Virginia Ishler, Penn State Dairy Alliance nutrient management specialist. “So other than taking one day at a time what can be done?”
 
It is hard to rely on historical data related to the markets in light of the volatility of the past few years. “We seem to have really good times and really bad times,” she says.

How does a dairy operation deal with these extremes? The answer: Start now to prepare for the good times ahead so the operation can maximize profitability and prepare for the bad times.
 
In order to succeed, you need to develop a plan, monitor a key performance indicator or indicators and make adjustments if something is moving off track.

Income over feed cost (IOFC) is one such indicator. This number monitored monthly over time gives great insight on where things may need to be improved. Some areas to investigate when IOFC is too low are dry matter intake efficiency, use of excessive feed additives, level of concentrate feeding for production, or poor feeding management practices.
 
The solution to almost all of the nutrition and feeding management practices requires time commitment from the owner or manager and the willingness to make changes, if necessary. Both of these can be very difficult when time is already our greatest enemy.

For that reason the Penn State Dairy Alliance, a Cooperative Extension initiative, has developed a Risk Management Team with the focus of working with producers during these tough times and preparing them to take advantages of opportunities in the good times ahead, says Ishler.

Currently, Penn State University is working with numerous producers on developing cash flows and calculating IOFC. Monitoring this information over time will help them make smart decisions regarding management strategies. 

The Risk Management Team is offering assistance to dairies in various formats:

• Start measuring IOFC: Click here for more. Contact Erica Cowan, senior project associate, at ecowan@psu.edu or call her at (814) 863-3917 for assistance in getting started using this tool.
• Start developing cash flow:  Contact Tim Beck, Cumberland County extension educator, at: tbeck@psu.edu Or call him at (717) 240-6500 for assistance.
• Start a dairy discussion group on the topic “Making Smart Decisions Based on IOFC:” Contact Dave Hileman, discussion group facilitator, at: hilecrest@keyconn.net or call (888) 373-7232. 
• Several workshops will be offered this fall and winter to further address the topics listed above. Contact Ishler at: vishler@psu.edu with any questions. You can also reach her at (814) 863-3912.