March Articles:        

• Plain Talk

• Quality Watch

• Market Outlook

• Dairy News

• Walt Wosje Reflects on His Career at MMPA

• Managing Your Dairy on Fewer Profits

• Increasing Farm Profits:   What You Can Do

Management Changes at MMPA By Elwood Kirkpatrick President

Over our 87-year history, MMPA has had only a handful of general managers. Each has displayed his own unique management style while keeping the cooperative on track with our mission: to market our members’ milk to the greatest advantage possible.

Our current general manager, Walt Wosje, will retire this month following our Annual Delegate Meeting on March 18. After receiving Walt’s notice of retirement late last year, the MMPA board of directors took action to designate John Dilland as our new general manager.

The rest of the MMPA board and I believe our decision to name John as general manager will enable the cooperative to function at the same high caliber we have experienced under Walt’s supervision.

In the 18-plus years Walt has served as our manager, he has performed his job well and has been an excellent leader of our management team, moving our organization forward in a very determined manner. During his time with MMPA, Walt was fiercely dedicated to all MMPA members and the organization as a whole. He has made a lasting impression on our association. Every MMPA producer, board member and employee appreciates Walt’s outstanding contribution to our cooperative.

The board’s selection of John as MMPA’s new General Manager will allow for a smooth transition in leadership. Every one of us is confident that his management style will help MMPA meet the challenges of today and the future.

During his 28 years of employment with MMPA, John has proven his management abilities as he worked his way up through the cooperative. He possesses a tremendous knowledge about the cooperative that can only be gained through day-to-day experience.

As our director of finance, John’s financial decisions and recommendations have helped MMPA to eliminate our equity capital retain in addition to keeping our cooperative profitable. His extensive background with the financial side of the association will prove invaluable in the coming years.

MMPA’s change in general managers does not change the direction or philosophy of our cooperative. Our mission remains to market our members’ milk to the greatest advantage possible.

I look forward to working with John toward continued achievement of that goal.

Direct Pay Your Bills Through Milk Check Assignments  By Gary Trimner Director, Member Services/Quality Control

One of the services MMPA offers to all members is the payment of members’ creditors through milk check deductions. The process, known as “assignments,” designates a portion of the member’s milk check to pay their bills. MMPA’s assignment service is used by a large number of MMPA members.

Assignments may be initiated by the member, “assignor” or creditors, “assignees,” (insurance companies, lending institutions, etc.). All assignments must be submitted in writing via fax or mail, MMPA cannot accept verbal requests for assignments. MMPA has assignment forms available, although almost any form can be used. Most lending institutions prefer to use their own forms or contracts for assignments.

MMPA offers two types of assignments, long term and one time only. One time only assignments must be specified on the assignment form. For all other assignments, it is not necessary to specify the length of the assignment. 

Assignment Requirements

For MMPA to accept an assignment, specific requirements need to be met. The assignment form must contain the following information:

1.         Assignee’s name and address.

2.         Assignor’s name, address and phone number.

3.         Monthly assignment amount.

4.         Assignment must indicate if it is to be a bimonthly payment. Otherwise, all payments are made monthly.

5.         Effective date of assignment.    

If the assignment is effective the first of the month ( i.e. January 1) and the assignment is received after the January 26 milk check is issued, then the full monthly assignment amount will be deducted from the February 17 milk check for the first month only. After that, half the assignment value will be deducted from the 26th milk check and half from the 17th milk check. Only the final milk check (17th) will show the itemized monthly assignment   deductions. Deductions are not listed on the advance check (26th) unless they are paid bimonthly.

6.         Signature of the member.

A member listed on MMPA’s marketing agreement (contract) must sign the assignment form. Often, we receive assignments signed by someone else, such as an individual whose name is on the milk check but is not listed on the marketing agreement (contract).

If the required information is missing from the assignment form, the form is returned to the originator of the assignment with a letter of explanation. Once an assignment is received and executed, MMPA will send the assignee and assignor an acceptance letter along with a copy of the assignment.

New assignments are paid out in the order received “first one in, first one paid out.” The exception is insurance assignments, which are a last payment priority. There is an assignment fee at the rate of $1.00 per assignment per month after the first two assignments. No assignment fee is charged for insurance and MMPA assignments.

Canceling Assignments

MMPA must be notified in writing when the assignment is to be canceled either by the assignee or assignor unless the assignment document specifies that the assignor or assignee can only cancel it. Many lending institutions specify in their contract that only they can cancel the assignments.

Executing member assignments is one of the many services MMPA provides for our members. For more information contact the Member Services department. We have an excellent staff ready to assist members with questions or concerns regarding assignments.

Dairy farm profit-margins are currently the tightest in many years due to dismal milk prices combined with feed prices that climbed following summer droughts. The result is the lowest milk/feed price ratio in a decade. Perhaps the only saving grace of the past year was the Milk Income Loss Contract (MILC) payments courtesy of the 2002 Farm Bill. Low milk prices lead to large MILC payments. With higher feed prices tightening margins, the MILC payments may make the cash flow difference some producers require. 

National milk production momentum combined with floundering dairy product consumption, due to the continued economic doldrums, leads to pessimism about a significant price recovery before late summer 2003. Even then, price recovery may require a weather event or other supply shock to result in a significant price increase.  

Following high milk prices in three of the previous four years (1998, 1999 and 2001) coupled with several years of low feed prices, there was a great deal of supply momentum in 2002. Milk cow numbers averaged 9.139 million head for 2002, an increase of 0.3 percent from 2001. The increased milk cow numbers were largely in Western states—up 7.3 percent in New Mexico, 3.6 percent in California, and 3.4 percent in Idaho from December 2001 levels. In the Upper Midwest and Northeast the cow numbers were mostly unchanged to down slightly (with a 4 percent decline in Minnesota as the exception). 

The long-term trend, prior to the higher milk prices in recent years, was a steady decline in milk cows (Figure 1). This trend turned up at the end of 1998 and beginning of 1999 and the national cow herd built numbers in 1999 (+0.3 percent) and 2000 (+0.9 percent) as well as 2002. Meanwhile, milk production per cow has steadily increased at about 2 percent annually.

The 2002 Farm Bill, passed and signed into law in May, removed most of the policy uncertainty that was over-hanging the dairy markets a year ago. For the first time, milk production is subsidized by deficiency payments. The MILC program pays farmers a deficiency payment equal to 45 percent of the amount the Boston Class I minimum price is below $16.94 per hundredweight.  The payments  are displayed below in Figure 1. For 2002, the MILC payment averaged $1.206 per hundredweight (assuming that milk marketed totaled less than the 2.4 million pound annual limit).

Large non-fat dry milk surpluses prompted a post-election November support price tilt. This tilt lowered the support price for non-fat dry milk and increased the butter support price. A major surplus remains but will be partially removed using the Dairy Export Incentive Program. With the production incentives provided by the MILC payments, the continued existence of the Price Support and Dairy Export Incentive Programs were crucial to maintain a floor under milk prices.

U.S. milk production has been increasing steadily since October 2001. For 2002, total milk production was 2.6 percent higher than 2001. Milk production has increased that much or more in only five of the last 20 years. Stocks, especially those of non-fat dry milk, are high to start 2003.

Any significant change from the current supply momentum is likely to come from a decline in cow numbers. The long-term trend has been about a 0.5 percent annual decline in total cow numbers in the past three decades. All of the market signals indicate a slow-down should be on the horizon but the timing is uncertain. 

Perhaps the only signal encouraging milk production at the current time is the MILC payment. The MILC pay rate may average $1.20/cwt. for 2003 depending on the timing and magnitude of the price recovery. These payments are aiding farm cash-flow situations and are likely helping some farms stay in business that might otherwise exit. 

A sluggish economy contributed to a small increase in commercial milk sales — up only one percent for 2002 compared to 2001.  Commercial use for January through November 2002 was up 0.7 percent over the previous year. Per capita consumption has been flat and the increase has largely come from population increases. Total consumption will increase in 2003, the question is, will it catch up with supply? If the economy recovers, as some analysts are predicting by the third quarter of 2003, then the consumption may increase at a significant enough level to aid milk prices.

Market signals are encouraging a slow-down in total milk production: the milk price is low while feed prices are relatively high. However, until total U.S. milk cow numbers start declining a significant price recovery is unlikely. The prediction here is for milk prices to remain low through spring and into summer. However, the low to negative profit margins will dictate a slow-down in supply by summer, which should coincide with an economy that is heating up. If this scenario evolves, the Class III milk price may reach $12 in summer and be above $13/cwt. for September. We cannot rule out a great price year, as the milk market often holds surprises, but higher prices are not apparent on the horizon at this time.

The January Class III price is $9.78 per cwt., up 4 cents from the December price but $2.09 per cwt. less than the January 2002 price of $11.87 per cwt. The current Class III price is the lowest Class III price for January in more than a decade. The January Class IV price is $10.07 per cwt., down 42 cents from December and $1.86 per cwt. less than the prior year.

This year starts out like last year – with milk production in positive territory and supplies weighing heavy on the market. Milk production in January in the 20 selected states was 12.5 billion lbs., up 1.8 percent vs. a year ago, according to USDA’s “Milk Production” report. This is the 15th straight month of production growth. Cow numbers expanded for the fourth straight month, growing 4,000 head to 7.805 million. Production per cow was 22 lbs. over a year ago.

MMPA members received $1.9 million in cash patronage refunds in February. This cash allocation represents approximately 28 percent of the $6.8 million allocated taxable net earnings generated by the cooperative in fiscal year 2001-2002. The cash patronage return includes 100 percent of the farm supply earnings and 25 percent of the milk marketing earnings. All members who marketed milk through MMPA during the past fiscal year will be receiving a portion of the $1.9 million.

Congress Approves Disaster Aid for Agriculture

On February 13, Congress sent a $397 billion omnibus appropriations bill to the White House that includes $3.1 billion in disaster aid for farmers who experienced severe weather-related losses in 2001 or 2002. At press time, President Bush was expected to sign the bill.

The bill contains $100 million for the Livestock Compensation Program, providing a flat payment by number and type of livestock to all livestock producers in a qualifying disaster county. As well, $250 million is targeted for the Livestock Assistance Program, providing payments to livestock producers for grazing losses in a primary disaster county.

About $2.1 billion is earmarked for quality and quantity loss disaster payments. To qualify for quantity losses, growers will have to prove losses greater than 35 percent of their normal yield. A payment rate of 50 percent will be applied in cases where crops were covered by crop insurance or Catastrophic Coverage (CAT) or no crop insurance was available for the commodity. A payment rate of 45 percent will be applied in cases where producers could have purchased crop insurance or CAT but chose not to. Payments will be capped so that disaster payments, Federal Crop Insurance Corp. indemnities, and actual crop value do not exceed 95 percent of the total expected crop value.

Funding will come from the farm bill’s Conservation Security Program, which provides incentives to producers who conduct good environmental conservation practices on their farms.        

Assistance is only available for one of the two disaster years; producers must choose to be covered for losses either in 2001 or 2002 but not both.

National Agriculture Day Celebrates 30 Years

National Agriculture Day will celebrate 30 years on March 21, 2003, the first day of spring. That day, producers, agricultural associations, corporations, universities, government agencies and countless others across America will gather to celebrate the abundance provided by agriculture.

In its 30th year, the National Ag Day program is committed to increasing public awareness about American agriculture. As the world population soars, there is even greater demand for the food and fiber that the United States produces.

American agriculture celebrated its first National Agriculture Day in 1973. Since the beginning, Ag Day has been a chance for the general public to say “thanks” to the hard-working men and women of agriculture.

The National Agriculture Day program believes that every American should understand how food and fiber products are produced and should value the essential role of agriculture in maintaining a strong economy. They should appreciate the role agriculture plays in providing safe, abundant and affordable products. National Agriculture Day focuses on educating Americans about the industry, so they may also acknowledge and consider career opportunities in the agriculture, food and fiber industry.

Each year the National Agriculture Day program gathers members of the agricultural industry together in an effort to promote American agriculture. Focused on sharing how agriculture provides almost everything we eat, use and wear on a daily basis, the Ag Day program helps educate millions of consumers each year.

Join this effort to promote American agriculture to everyone during National Agriculture Week, March 16-22, 2003. For more information, visit www.agday.org or call the Agriculture Council of America at (913) 491-1895.

National Ag Day and National Ag Week are organized by the Agriculture Council of America (ACA). ACA is a non-profit organization composed of leaders in the agricultural, food and fiber community, dedicating its efforts to increasing ag literacy.

USDA Announces Conservation Rule

On January 30, 2003 the USDA released its final rule on the Environmental Quality Incentive Program (EQIP). EQIP received a substantial funding boost in the 2002 Farm Bill, and was a priority issue for NMPF during the effort to pass the farm bill last year.

The rule takes advantage of some other policy changes, including the Technical Service Provider provision, which allows producers to use non-USDA technical service professionals to deliver USDA programs. USDA leadership stated that producers should consider their resource or environmental concern more than trying to apply the program to it.

Walt Wosje Reflects 

on His Career at MMPA

As his career with MMPA comes to a close, General Manager Walt Wosje takes time out from his busy schedule to talk about the cooperative and his future plans.

Messenger:  What has been most rewarding to you during your time as MMPA’s General Manager?

Walt Wosje:  The most rewarding aspect during the years has been the cohesiveness of MMPA members and the development of a strong management team to run the day-to-day business of the cooperative. We have an extremely dedicated and talented group of employees who are not satisfied with average performance. We have developed an attitude that if something is possible, we can accomplish it.

Messenger:  In what ways has MMPA changed since you first became General Manager?

Walt:  MMPA has undergone a major transition over the years. In 1985 the board of directors made it very clear to me that they expected positive results and were willing to “step up to the plate” to support proposals that would strengthen the cooperative and make it into an organization which dairy farmers wanted to be associated with.

I must say that some of the decisions were difficult and in some instances they were controversial. We redefined our strategy and clearly established our goals and objectives. Once the road map was defined, our employees “buckled up” and each person proceeded to assume responsibility for their portion of the overall job that we needed to accomplish.

Messenger:  What are your proudest accomplishments as MMPA’s General Manager?

Walt:  I think it would be wrong and misleading to speak in terms of “my accomplishments.” We have always had a team approach in attacking problems and finding the correct solutions. 

The success we have attained started with a competent board of directors. They expected results and they never wavered from holding our feet to the fire. At the same time, they provided encouragement and displayed confidence in our efforts.

I have always been a results-oriented person and I have expected maximum effort from employees. I must say – they have delivered.  We have extremely dedicated employees who have a strong desire to see the business succeed. I am indebted to many of our employees who do not get public credit for their efforts and I am proud of them.

As far as accomplishments are concerned, I would mention the financial strength of the cooperative. We borrow a relatively small amount of capital over the course of a year. Many weeks we have zero borrowed capital. We operate the business without any infusion of capital from the members by way of a capital retain. We discontinued the member capital retain in 1987. Also, we have shortened the period of revolving member equity – this year we will pay out all the equity for 1993. 

Messenger:  What suggestions would you give to young dairy farmers regarding their role in the cooperative?

Walt:  I would say that they should learn everything they can about their cooperative and become familiar with their board member and field representative. They should also take advantage of opportunities to attend young farmer meetings and attend their local meeting. I would encourage them to make it known that they would like to become a delegate or local officer. I recognize that young farmers may have their hands full operating their farm and handling the milking herd, but they should at least become familiar with the organizational aspects of the cooperative. 

Messenger:  What will you miss most about MMPA?

Walt:  The favorite part of my job is attending local meetings and talking to the folks who own this business – I will miss those opportunities. 

I will also miss the close association and warm relationship with my management staff and employees of the cooperative. We have developed a position of trust and respect amongst our employees and I fully expect they will continue to perform in an exemplary manner.

I will miss the relationship and contact with our field department.  I think we have as qualified a set of fieldmen as there is in the dairy business today. I am proud of their effectiveness and response to the needs of our members. 

Messenger:  Who was “Uncle Leroy?”

Walt:  Uncle Leroy was my mother’s brother. He was a bachelor who helped me “grow-up.”

I spent a lot of time with Uncle Leroy in the summer months on his farm in South Dakota. He was like a second dad to me. Many summers I mowed hay with a 5-ft. sickle – horse drawn mower.  I raked the hay into winrows with a dump rake. I shocked wheat and helped thresh the grain with a belt driven McCormick threshing rig. I fed the calves and sheep and occasionally herded the cows in the road ditches when the pasture was short.

Leroy was greatly respected in his community and I was always proud to be seen with him in church or at the implement dealer in town. He was kind of old fashioned and generally bought used equipment. He rigged up a long steering rod from the grain binder to his old tractor’s steering wheel as well as a connection to the clutch.  He rode on the binder seat and operated the tractor from that location. He always knew how to fix things (and there was a lot of fixing to do on his old equipment).

Leroy was also a horse trader. He always had 10-12 horses that he bought and sold. He loved to harness up a team of horses.

My grandma was a great cook, so we ate well when she was still living. It wasn’t so great after she passed away (we ate a lot of baloney sandwiches).

Leroy had a very philosophical approach to life. He didn’t believe in worrying. He said,  “Half of the things people worry about never happen and the other half will happen anyway – so why worry?”

I was hoping to spend time with Uncle Leroy when I retired.  However, he passed away in 2001 – he was 99 years old. 

Messenger:  What are you planning to do when you retire and where do you plan to live?

Walt: 

 We are building a home where the buffalo roam, Where the deer and the antelope play, Where seldom is heard a discouraging word – And the skies are not cloudy all day.

Our home is on the outskirts of Brookings, South Dakota – about eight miles from where I was born and raised. It is also the home of South Dakota State University where I attended college.

Our son, Kyle, manages a large cow/calf operation on a ranch about 15 miles from Brookings, so I plan to spend a lot of time with him.  My small cow herd has been transported out to the South Dakota ranch.  The calves are due in April, so I expect to be there when the new calf crop arrives. Kyle will be calving over 400 head of beef cows this spring.

My wife, Yvonne, will look for volunteer work in the same manner she has been doing here in Michigan. She is a great lady who has spent many hours bringing joy and peace into other people’s lives.  She tells me that we are not going to be “tied down” and that I should be prepared to travel in the months and years ahead.

My years at MMPA have been very rewarding and satisfying to me. I will not forget the many friends and acquaintances I have made over the past 18 1/2 years. I have great admiration for dairy farmers and a strong kinship with MMPA members. I wish you the best in the years ahead.

Managing Your Dairy 

on Fewer Profits

By Mindy Pratt

With decreasing milk prices, many MMPA members are finding it harder to make a profit. The current cost-price squeeze has producers searching for ways to lower costs without negatively affecting daily operations or income.

“Every 4-5 years, the milk price seems to have these big dips,” MMPA member Eric Frahm says.

Eric began dairying on his Frankenmuth, Mich. farm in September 1990. Just a few months later, in 1991, milk prices reached record lows.

Milk Quality

Instead of worrying about things he can’t control, Eric focuses on what he does have control over – quality premiums. During tough times, quality milk and steady production can carry producers through.

“The only part of the milk price you have control over, on an individual basis, are your premiums,” Eric says. “To increase your quality premiums, it’s really a matter of sound management and hard work, without much financial investment.”

For producers who think quality premiums don’t add that much to their milk check, Eric suggests looking at it in a different light. “If you’re only making 10 cents profit right now and you pick up 10 cents in quality premiums, you just doubled your profits.”

MMPA members can maximize their income by producing high quality milk, earning top dollar through the MMPA Quality Premium Program.

“MMPA has a well-trained field staff and lab technicians to help you analyze what your problems are and make recommendations if you are interested in improving milk quality,” Eric says. 

Feed and Rations

Harvesting forages at their optimum levels can help producers cut down on feed costs. A Predictive Equation for Alfalfa Quality (PEAQ) stick helps Eric get proper protein, fiber and energy content to maximize forage quality. Even with a substantial amount of rain in his area this year, Eric was able to get 20-21 percent protein in the haylage he harvested. That really makes a difference in feed costs – especially during a year like this one.

Eric specifies varieties of corn to be used as corn silage for the cows, not always using the same variety he plants as cash crops.

“I look at digestibility, energy and protein content of the corn varieties we use for silage,” Eric says. He also inoculates the silage to keep it consistent, improve bunk stability and reduce dry matter loss. 

Herd Health

When looking for ways to cut costs, there is a great temptation to cut back on rations for dry and pre-fresh cows, but improper diets can lead to more costly problems later. In the long run, a well-balanced diet for non-production cows saves money on treatment and gets the cows off to a faster start for milk production.

“A nutritionist once taught me the dry cows are the most important,” Eric says. “I have been able to prevent most milk fever, retained placentas and displaced abomasums by having the correct dry cow diet.”

Eric’s nutritionist, Matt Wood, agrees, explaining that dry cows should be kept on a low potassium diet. Potassium can hurt the absorption of calcium and magnesium in a cow’s system. Calcium is essential for smooth muscle movement, which affects how well the rumen and uterus function.

“This is a key issue in dry can close-up cow’s diets,” Matt says. “When there is too much potassium in the cow’s diet, you will see increases in metritis, milk fever, metabolic disorders, ketosis and displaced abomasums. Subclinical milk fever costs a cow about 2,000 pounds of milk over a lactation period.” 

Scrutinize Everything

Make everything on the farm count. Look at ways to make your operation as efficient as possible and analyze everything. Do you need the extra tractor, extra full-time employee or could you use a part-time person?

MMPA producer Hank Choate collects multiple bids for services his farm uses before choosing a vendor. Hank farms in partnership with his brother, Randy, in Cement City, Mich.

“We are currently producing four percent more milk than last year but have lost $184,000 in revenue,” Hank says. “We try to cut costs anyplace we can, so we bid out and analyze any purchases we have. Every six months, we ask various feed companies to bid out the feed mixture we use.”

The Choates’ have cut back on hours for their five full-time employees during the winter.

“In a normal year, we would have them working on projects around the farm,” Hank says. “We aren’t doing as many projects this year.”

Increasing Farm Profits: 

What You Can Do

By Ben Bartlett

DVM MSU Extension, Upper Peninsula

The low milk and beef prices compounded with the various feeder cattle marketing challenges has sure made this a challenging time. All the service people I contacted have noted decreased sales and growing accounts due columns. The various government payments will help but may not always balance out the cash-in and cash-out situation. Every farmer has had to adjust their operations due to the lower prices. If you are feeling pinched, you are not alone!

Given that a quick rise in milk or beef prices is not on the horizon, it’s critical that you take action to adapt to the decrease in income. Taking action and having a plan is crucial. Being mad, waiting for someone else to fix things, or just ignoring reality will only make the situation worse.

What can you do when the cash-in does not balance the cash-out? 

Do Something

Talk to your lenders and suppliers if you are or will get behind in payments. They know things are tight and are interested in working things out to everyone’s mutual benefit. Don’t make them call you, they will assume that you are not interested in living up to your part of the deal.

Get your family and employees together to explain the economic crunch. Your employees may be worrying about their jobs. They probably have some ideas on ways you can improve the situation. Your family HAS to know what the books look like. Lying to your family is only lying to yourself.

Get your farm business “team” together: veterinarian, feed dealer, lender, accountant, consultant and extension agent, to help you put a “plan” together. There will not be a quick fix, you will have to make changes and you may have to sacrifice some of your “sacred cows. ” 

Increase Income

Timber sales: Have your timber cruised to see if some of it is ready to harvest.

Land sales: You may not want to part with that swamp 40 but this may be the time to decide if you are a farmer, a deer hunter, or a land speculator.

Consider other use of your time and feed resources after you take care of your core business (milk or feeder calf production). This could be keeping your dairy steers, feeding your heifer or steer beef calves longer, selling some of your extra feed, or selling other products or services utilizing you and your farm’s resources.

Make sure your milk production is at the optimum level given the quality of your forage, your management skills, the genetics of your cowherd, and the level of purchased feed costs.

Milk more cows within existing facilities: Make sure your barn is full. Do everything possible to keep cows in production. If you are losing cows, having feet and leg problems, have too many open or long lactation cows, do something about it. Herds that are 50 percent heifers are losing too many cows.

Get the best milk price possible: You cannot afford over 200,000 SSC, get your mastitis under control. 

Decrease Expenses

CAUTION: Only cut expenses after examining short term and long term impact on income. 

Feed: $10.00 milk and $3.00 corn may lower your optimum level of milk production. Sometimes, less is more. You need to examine the expensive extras you have in your ration to see if they are still cost effective. Get your nutritionist to help you get the right feed into the right cows. If you cheat, do it on your late lactation cows, don’t cut corners on your steam up and early lactation cow rations. Make sure your best forage is going into the cows with the most potential to make milk.

Fertilizer: This is the year to use manure to the maximum and cut back on purchased fertilizer. Your alfalfa yields may be down next year but if you compare dollars out of your pocket today with “maybe slightly lower feed supply next winter,” consider the compromise.

Machinery payment and repair: Look very hard at cutting back, doing with less, and / or going with custom services. You need reliable equipment for feeding and manure handling, everything else is optional and should pass a profitability test.

Misc: Semen, DHIA, family nights out, and fixing the wash machine should be downscaled but don’t cut them out. These are invaluable long-term investments. 

Hit the Books

The old question: Will I get a return on this investment? The new question:  Is this the best use of this dollar today? The conservative, productive, managers who know their costs and sources of revenue will get through this squeeze. The margins are tight and you have to spend time at the office desk looking at costs, income, and returns on expenses and returns on investments. You will have to consider benchmarking to identify how to do both “things right” and more importantly, do the “right things.”

Hitting the books is like exercising and eating right, not fun in the short term but very rewarding over the long haul. 

Conclusion

In some ways, things are easier when a person is broke; you don’t have a lot to spend, you have less decisions to make, and you can focus on doing the important things in your operation. When things turn around, which will be sooner than you think, you want to be in better shape not all wore out from trying to fight needed changes. Review your operation, make the changes necessary, and remember these lessons when times get better.