It is a busy time of the year, but then, when is it not busy on a dairy farm? Summer through fall, cropping seems to take its share of time in addition to the day-to-day dairy cow functions. Now is tax preparation, balance sheet completion, farm analysis and of course, cash flow projections for 2022. Hopefully behind all of this is the contemplation of, “What can be changed in the future?” For some it is the decision of how to transition the farm to the next generation. Or perhaps how to retire and reduce the tax implications and have enough to life for the next stage. These are huge implications for your future and need a great deal of thought and discussion with family members, bankers, lawyers and, hopefully, your farm-management person. Outside input is an extremely important part of the decision-making process. We all need to realize these are not one-time events but a process that can take months and likely, many years to complete. Transition especially is a process that may take 10 years or more as you transition the business assets and management duties
I would like us to consider the question that all dairy farms (in fact any business) need to evaluate on an on-going basis. How do we get to the next level? How do we get better? How do we stay competitive?
I know of some Holstein dairy herds at 30,000 pounds of milk with 4.3% butterfat and 3.3% protein and less than 100,000 somatic cell count with a pregnancy rate of 28%. These are great herds. The problem is we live in a competitive world where the neighboring farm or one across the county or the other side of the nation is at 32,000 pounds of milk with 4.5% butterfat and 3.4% protein and an 80,000 SCC with a pregnancy rate of 33%. That is our competition, whether we like it or not. We are in a changing world that never stands still, and surely, the past couple of years has seen more changes than ever before. Some of these we may like and others not so much. Nonetheless, it is reality, and we will need to compete in a global market.
I had an amazing text this week from a producer who harvested an annual average of 6,113 pounds of milk per robot per day ranking him 15th in North America for pounds per robot per day and 23rd in the world for fat-and-protein-corrected milk. Amazing. That is our competition, and I can assure you that it will only get more and more competitive.
The question remains, “How do I get to the next level and stay competitive in this global market?” In my opinion, we can’t change something if we don’t know what it is today. So first, determine what we need to measure, measure it, and then finally set a goal of where we want to be by a selected date in the future. As an example: A few years ago, we seldom, if ever, talked about energy-corrected milk or pounds of components produced per cow per day. A lofty goal two-to-three years ago was 6 pounds of butterfat and protein per cow per day. Now, the goal is likely more than 7 pounds per day. A cow producing 90 pounds at a 4.0% butterfat (3.6 pounds) and 3.3% protein (2.97 pounds) has a total of 6.57 pounds of components. With the current component pricing of your milk, it may well be worthwhile to look deeper into the cost and benefit to increasing your components.  
My recommendation is to gather your team of individuals to begin to identify areas where you can improve. These may be production related, revenue generation, cost efficiencies or other areas that can improve your financials. Welcome the critic to your group, and don’t hold a grudge or harbor ill feelings against those who you feel are being critical. The honest and open communication will be beneficial to your overall profitability. Set a few identifiable benchmarks, prioritize them and determine a process to reach your goals.
Tom Anderson is a Farm Business Management faculty member at Riverland Community College.