Three of the largest agricultural bankers in California were asked last week what surviving dairies look like? What sets them apart from everyone else?
The biggest thing is risk-management, agreed all three bankers. “You’ve got to hedge your milk, hedge your feed, and hedge your interest rates,” said Sean Haynes of Rabobank, who appeared at a World Ag Expo event in Tulare, Calif.
Going forward, it’s not so much about making money on the upside, but what can you protect on the downside, said Marc Ehlers, regional vice president at Bank of the West.
In addition, they advised that dairies maintain a margin that includes the cost of production, servicing debt and living expenses.
Haynes also suggested that dairies look for ways to integrate their operation, such as growing their own feed, hauling their own milk, raising their own calves and direct marketing/selling to consumers.