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ROCHESTER, Minn. - Many farmers and representatives from the agricultural industry gathered on Nov. 15 for a day-long seminar in Rochester, Minn.
The workshop, put together by the Southeast Minnesota Ag Alliance, focused on "Managing our Farms Through Turbulent Times." Gary Sipiorski, Dairy Development Manager for Vita Plus, gave the keynote address with his presentation, "Farming Business Decisions for 2012 and Beyond."
"It's times like these you need to get together," Sipiorski said, taking into account that farmers, lenders and other industry people were present.
Sipiorski demonstrated that there is a need for agriculture beyond the U.S. borders and that we must remember that 95 percent of the people in the world live outside the United States. He also mentioned that over one billion people in the world only get a handful of rice to eat every day, and over 25,000 people die of hunger every 24 hours.
"However you are involved in agriculture, do you think you're important yet?" Sipiorski said. "There's a big job out there and we are very productive in the United States.
Part of what has helped the nation be productive is knowing the difference between invention and innovation. The basic beginnings of farming are the invention, while the technology and management practices we use now are innovation. Sipiorski said it's this innovation that will help grow the agricultural industry and be ready for the future.
But he also said agriculture is about more than invention or innovation.
"It's about the people - our family," Sipiorski said. "What kind of business are you building for the next generation and the ones to come. That's what it's all about."
Since many agricultural industries have been going through challenges, Sipiorski said it can be a stressful time that requires people to adapt to change. He mentioned the six steps in the process of change.
"This happens in our lives every day," he said.
The first is denial with the second being anger. The third step is realization, while the fourth is depression. Acceptance is the fifth step and the final one is growth.
"Some see this process as a big mountain to climb every time, while others see it as a speed bump and move on. The less time spent on this process, the less stress it will be," Sipiorski said.
As an example, Sipiorski mentioned the drought and how many years ago we did not have the same type of corn that could withstand it as well.
"Look at the corn varieties we have now," he said.
This year's drought may mean room for growth in the future.
Agriculture is becoming more dependent on the world. Sipiorski said 50 percent of Japan's food is imported.
"Do you see this as an opportunity?" Sipiorski said. "These folks like pork."
In Japan, people are paying nearly $40 for one pound of pork and $60 for one pound of beef, Sipiorski said.
"That's opportunity," he said.
We must also be aware of what other countries are doing. For example, China has 22 percent of the world population with 1.4 billion people, Sipiorski said. It also has seven percent of the world's tillable cropland and three percent of the water. The country also owns 12 dairies in New Zealand, and land in Argentina and Africa. Sipiorski said China also owns 36 percent of the world's rare elements, which supply 90 percent of the world demands. They have five-, 20- and 50-year plans.
"In the United States, most businesses look from quarter to quarter. On the dairy farm we look from year to year. What can we learn from this?" Sipiorski said.
Although knowing the position of other countries in the world is key, it's also important to know how each agricultural sector is connected in the United States. Fifteen percent of dairy products are being exported and grain prices are high, which affects dairy farmers who buy their feed. Sipiorski said California dairy farmers are suffering since the large majority of them purchase their herds' feed needs.
"In California they're losing dairy farmers because of feed cost and they're moving a lot of dairy cattle," Sipiorski said.
The number of dairy slaughter cows is up 15 percent and the National Cattle Association is talking about rationing beef next summer, Sipiorski said.
Finances for our country are also a challenge, with our nation being trillions of dollars in debt, he said. The Feds, which is not government run, are in charge of the currency. They are trying to keep interest rates low so people use more loans. This will cause inflation, Sipiorski said.
"Get yourself up the ladder by not borrowing money and trying to do things a little bit better by paying off debt. Cut expenses and drive income," he said. "It takes awhile to go back up."
Sipiorski said borrowing money is not a bad thing, but people need to do it within reason.
"People get into the most trouble during the good years," he said. "They go out and buy rather than pay down debt."
Another element to be conscious of is the price of land. Right now, land prices have been going up, Sipiorski said. This is partly because grain prices are high, interest rates are low and animal producers need a place for manure, he said. There have also been more non-farmers buying land, which could also drive up the cost. Sipiorski said these land prices are getting high for farmers.
"When buying, you've got to know your numbers," Sipiorski said.
The same applies to many other financial aspects to the farm.
"Don't even think about contracting milk unless you know what your cost is," he said.
Crunch numbers before making a big change. For example, many dairy farmers have been thinking about quitting dairy and going to grain because of the high grain prices. Sometimes, after thoroughly going through the financial end, dairying would make them more profit. He also said in these cases that farmers should look at potential future markets. Sipiorski said he wonders how long this high grain price will last.
No matter what the situation, Sipiorski said people need to keep a positive attitude.
"Attitude is a big influence," he said.
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