The dairy industry will most likely remember 1999 as a year of high profits and increased expansion. However, for many producers, this year of good times also has brought a sense of complacency when it comes to financial planning, herd and employee management.

I have heard producers give a multitude of excuses why they have herd problems, but high milk prices have allowed them to operate profitably anyway. With the November BFP dropping below $10, this type of complacency about management issues can now lead to an increased cost of production or financial losses.

It has been my experience that good times are generally followed by periods of transition where dairy producers struggle to cope with falling milk prices and month-to-month expenses. Too much complacency, or feelings of contentment and satisfaction, can plague your dairy farm and impair profitability.

If you sense complacency on your dairy, consider the following areas to make management changes:

1. Culling rates

Review with your veterinarian the reasons cattle have left the herd in the last 12 months. Look at the number of voluntary culls versus involuntary culls.

Then, focus your energy on the areas where you have the greatest influence. For example, if too many cows have been culled due to reproductive failure, monitor your breeding program for heat detection, conception rate, and postpartum reproductive problems. This may spur you to try a controlled breeding program or improve your fresh-cow protocols.

Or, if culling points to health problems, review treatment regimes and herd records, and focus on opportunities to improve herd management.

2. Labor expenses

Take the time to evaluate your employees as a resource. Dairy producers often view labor management as one of their greatest challenges. But remember: your employees are the conduit between your cows and profits.

Could you motivate your employees more? Review compensation packages, vacation time, and profit-sharing. Consider conducting an anonymous survey of your employees to get their views on your management and the benefits offered.

Establish productivity benchmarks and reward employees for making you money when they accomplish or meet productivity goals. Also, consider appreciation packages other than money. I have seen owners or managers reward employees with cable TV or satellite dishes, prepaid telephone cards, extra days off, employee dinners, or gift certificates.

3. Operational expenses

How did you spend your money in 1999? With high milk prices, it’s easy to become complacent when managing day-to-day operational cost. Look at your repair bills, dairy supplies, and medicine cost. Do you explore competitive bidding on supply purchases? Do not purchase dairy farm supplies and equipment impulsively — it’s like grocery shopping on an empty stomach! Establish inventory controls, competitive bid prices, and a capital budget for equipment purchases.

4. Feed management

It is easy to justify increased feed cost while milk prices are high, but with a reduced milk price, one must fully evaluate all aspects of the feeding program. Because feed is the largest expense, it offers the greatest opportunity for cost reduction.

Evaluate opportunities to use more profitable feeds. Discuss all aspects of your feeding program with your nutritionist. Re-evaluate feed ingredients, feed additives, feed and forage shrinkage. Establish cost-per-hundredweight benchmarks and target growth rates for replacements. Explore all opportunities for making the feeding program more profitable.

Complacency can invade the dairy if your defenses are down. You must be keenly aware of your business’ strengths and weaknesses. Ask your professional advisers what they think will increase profitability in times of reduced milk prices.

The source of complacency starts with you, as the owner or manager, and can be infectious to others on the farm. Preventing complacency starts by reinvigorating your attitude toward your business.

Paul Johnson is a veterinarian and consultant in Enterprise, Ala.