Gutsy decision pays off

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At the Professional Dairy Producers of Wisconsin Managers Academy in Albuquerque, N.M., Andy Young, a dairy producer and strategist with Pennfield Dairy Profitability Team, a feed mill and dairy solutions provider on the east coast, shared a gutsy decision that his family made. The decision made at the end of 2008 has paid off for the family dairy.

In December of 2008, Keystone Dairy Ventures had a meeting of the family farm board where Young made his economic projections for the coming year. His outlook for dairy margins in 2009 and even 2010 didn’t look good. Young recommended for the farm to sell all of its cows and pregnant heifers and sit out 2009. The family agreed and, within four weeks, all the cows were gone. The dairy kept 900 young-stock.

The dairy settled accounts with all vendors and helped all 20 employees find new jobs and also provided severance packages. “Every employee had a new job within a few weeks,” recalled Young. The dairy used the empty stall space as a chance to make facility improvements, started milking cows again in 2010, and are back to over 600-head. All of the key employees now working at the dairy have returned from the original team.

This gutsy decision allowed this family to skip many of the devastating effects that 2009 had on the dairy industry. “This would not have been the right decision for every farm because, to respond that quickly, you have to be in the right equity and liquidity position and have good family leadership with prior agreement on a flexible business plan,” noted Young. But this decision has allowed this particular dairy to preserve much of their equity and be better positioned for the future. “2010 was good year for the dairy,” observed Young.

“One of the four core value of the family business is that ‘We plant and water but God makes it grow.’ That just means that we must work hard to be good stewards of all that is under our care but acknowledge that the final outcomes are not up to us. Our family is just thankful that this novel risk management response turned out pretty well in the end,” concluded Young.



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