Dollars and Sense: Managing Risk Across the Board

Shelly Dickinson
Loveland, Colo.

Mountain View Farm is a fourth-generation dairy farm, milking 2,500 cows with a beautiful view of the Rocky Mountains.

All dairy farmers know 2015 isn’t nearly as good a year as 2014. But we also know how to hunker down, cut costs, hold on to older equipment and all sorts of other things to manage risk.

At Mountain View Farm, we’ve decided to contract milk for the first time in many years. I was fortunate to contract a decent price early this summer. I wish I did more. I also negotiated a contract that locks in my Class IV Producer Price Differential, and time will tell how that works out. 

As for the Dairy Margin Protection Program, we’ve just taken the $4 per cwt option for the past couple of years. This program has potential, even though like many things, it could use a few tweaks. 

We’ve also tried to achieve some cost certainty and stability with feed. I work with a broker—we’ve locked in more feed, further out, than we have in quite a while. Our feeds we contract are mostly corn, canola, cottonseed and soybean. On-site, we have increased inventories of both alfalfa and straw.

We work very closely with our nutritionist. We look for any and all options to cut costs while maintaining milk and components.

Of course, we are also looking closely at our herd and how much each cow is producing relative to what she’s eating. We look at veterinary and treatment costs, reproduction and semen costs, and anything else we can think of to maximize value.

Risk management may be somewhat different on every farm, but we are all trying to find new ways to save and survive these harder years.