Despite recent rains, some parts of
Ellen Jordan, Texas Cooperative Extension dairy specialist, offers these tips to help dairy producers survive the drought.
1. Feed a balanced, least-cost ration.
"Do not over-feed cows but do feed to maximize net returns or minimize costs,"
2. Cull the herd to get rid of unprofitable cows.
3. Control replacement levels and, if necessary, sell off some heifers to control feed expenses.
4. Substitute commodities if necessary. Consult extension agents for help in commodity location and ration formulation.
5. Book hay, silage or commodities for future delivery at a negotiated price.
6. Learn about the options in futures contracts traded on the Chicago Board of Trade and New York Exchange, which offer dairy producers the opportunity to lock in prices for commodities needed in three, six or nine months. "Dairy producers interested in using this strategy should seek advice from someone familiar with the futures market and the process of hedging through options contracts,"
7. Control other expenses as much as possible.
The first seven tips are aimed at preventing a worst-case scenario,
"There are some producers who will find dealing with drought creates enough financial stress that they may consider exiting the business, particularly since cattle prices are high," she said. "But I don't expect to have a huge number of producers finding themselves in this position."
For those who do, the last tip is:
8. If the operation does not cash flow, consider cutting losses by selling out.
"Consider this option only after it is discussed by the family unit,"
For that outside council,
For additional information on drought strategies visit the Web site: http://texasdairymatters.org