One of my responsibilities on the farm is keeping track of our finances. I go through bills each week, print off checks and record the transactions in our Quickbooks account. Taking on the finances gives me a better understanding of all that is taking place on the farm. It’s no secret that opening our milk checks makes me cringe, as the current price is well below what we need to break even. Like many other farmers, I’m finding it hard to remain hopeful that prices will rebound in time for us to continue to make payments on time.
    Dr. David Kohl spoke at an ag symposium I attended in January. As I listened to him speak, I was amazed by his vast insight of agriculture. He described the current cycle as defensive, detailing a widening gap in economic performance, and the top 40 percent of producers will grow their business. I sat there thinking, “Wow, we can barely keep up with our bills the way it is, and we’re supposed to grow if we want to stay above the average?” Next, Dr. Kohl said, “It is your choice to take your business to the next level or deal with lawyers and Uncle Sam.” I’ll take the first option now to decide how we will grow and construct a strategy.
    How do I take our business to the next level? Dr. Kohl advised The 5 Percent Rule. Find three ways to be 5 percent better. He listed decreasing rent, decreasing inputs, modest living expenses, a sound financial system and a system approach as options of which to choose three. Next, he listed five characteristics of top producers: know cost of living; accrual finances; trend analysis; benchmark themselves; and safe, secure financial information. I feel as though I’ve gone through all of these areas time after time, but he made it clear I need to review them if I want to stay ahead.
    Decreasing inputs, benchmarking, knowing our costs and analyzing trends are areas I focus on. In recent weeks, I’ve spoken with three calf experts, who analyzed my current protocols and helped me develop new ones. I’m now increasing the amount of balancer added to our pasteurized waste milk, as well as increasing the amount of milk fed to get a higher and more efficient gain, which will lead to being ready to breed at a younger age and decreasing my calving age from 24 months to 22-23 months. Besides this, I’ve used farm business management to determine our breakeven numbers. Knowing the exact dollar amount I need to receive for a springing heifer has changed my management decisions. Because we haven’t met our breakeven price when selling springers, we have been calving in more heifers and instead culling more mature cows. This works well as the cull cow prices have increased, and I’ve eliminated annoying cows, such as those with chronic mastitis or low-end producers.
    I understand our milk price will likely stay below our breakeven for awhile, but the futures for our corn and soybeans has a better outlook. We have been contracting to lock in acceptable prices. I spend a great deal of time reading articles about consumer trends and attending seminars to learn about and prepare myself for the future. I’m grateful I quit docking tails well before our creamery required it. I certainly miss having rBST as a tool, but I realize we need to give the consumers what they want, and I’m learning to manage without it. I’ve started using dehorning paste and giving pain medication to calves when using the paste, as I am aware that is a hot issue with consumers, and I need to keep up with their demands.
    While I don’t know how long this downturn will last, I do know we were given warning that prices would decline. Besides this, my inbox is filled with flyers for seminars, workshops and conferences to attend, all headlining industry experts focusing on how to help dairy farmers increase our efficiency and improve our financial positions. As a dairy farmer, we cannot control the milk price, but we can control our inputs. It is our responsibility to take time to educate ourselves on the futures markets and prepare accordingly. “If you fail to plan, you are planning to fail,” Benjamin Franklin.
    Laura Scholtz farms with her father, John Rosenhammer, and uncle, Greg, on Roseview Dairy near Sleepy Eye, Minn. They milk 200 Holsteins and run 580 acres of cropland.