It wasn’t that long ago that we considered ourselves fortunate to receive $35 for a Jersey bull calf and $150 for a crossbred. Times have certainly shifted since then. As the one keeping the books on our farm, I decided to remove the bull calf line item from our records four years ago, dismissing it as mere pocket change. But last year, with the earnings from these calves surpassing six digits, I realized it needed to make a comeback. And now, we’re grateful for the appealing price tags attached to those bull calves, as I’m sure many of you are too.
My late father had a tradition of keeping a little pocketbook where he documented his daily activities, both the highlights and challenges, whether personal or dairy related. He even tracked the Class III milk price, which used to hover around $15. One thing to keep in mind is my father’s dairy herd was sold off with the 2005 CWT program.
Navigating Declining Milk Prices with Strategic Diversification
Opening December’s milk check was a far cry from stellar. A lot can change within a year. What seemed an okay milk price last year now calls for some strategic maneuvering with our checkbook. Thankfully, the beef-on-dairy calves continue to generate income, offering some relief against the declining milk prices. Adding in the cull cow checks doesn’t completely fix the low milk price issue, but it does prompt the thought: What would we do without this beef-on-dairy profit source in our balance sheet? Dairy financial consultant Gary Sipiorski says beef income is adding $3 to $5 per cwt for many dairies. The truth is beef-on-dairy isn’t merely a side hustle any longer; it’s about integrating a robust beef enterprise directly into the dairy’s genetic and management strategy, fundamentally altering the balance sheet and the very definition of farm profitability. This added revenue stream has been a saving grace for many dairy producers this past year.
Now, with the increasing reliance on diverse income streams, the planning horizon broadens, and the skill set required also expands. It demands a keener eye on beef markets, genetic selection for dual-purpose traits and a more complex understanding of overall farm cash flow. This evolution challenges traditional mindsets, pushing producers to think more like diversified agricultural entrepreneurs rather than solely milk producers, a necessary adaptation for survival in a volatile market.
Adapting to Volatility
As we step into the New Year, communication is going to be crucial with all partners that gather around the table. While we generally like to plan a year ahead, we might now need to reassess and project just a month or two at a time until we see some light with the milk checks. Sipiorski also mentions both land and cattle prices are on the rise. His advice was clear: “Be careful when you think that we now have more collateral to borrow from. But, borrowing may become part of the strategy, depending on how long this situation lasts.”
In these rapidly changing times, adaptability and sound planning are more important than ever as we navigate the financial ebbs and flows of the dairy industry. Here’s to a year of resilience and strategic growth in farming.
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