Invest in knowledge, farm, future

The best investment on a dairy farm isn’t always a new piece of equipment. Sometimes it’s the decision to invest in knowledge and financial skills that will lead to better decisions for years to come.

I grew up on our dairy farm near Chippewa Falls, Wisconsin, where our family has been farming the same ground since 1873. We now milk about 2,500 cows and raise corn, alfalfa and hay on about 3,000 acres with 20 full- and part-time employees.

After graduating from the University of Wisconsin-River Falls with a degree in agricultural engineering, I spent several years working in the manufacturing industry. When my uncle retired, I came back to the farm full time and now work with my dad, Dennis, and brother, Cade. Our dad is the full owner and we’re working into ownership over time.

Working in the manufacturing industry provided valuable insights and perspectives to implement once I returned to the farm. Businesses in other industries succeed when they have a clear plan and structure in place; everyone understands their role and responsibilities and why certain decisions are made.

I saw the opportunity to bring that mindset and structured planning to the farm, and it is one of the reasons I’ve dedicated time to additional learning through Professional Dairy Producers’ programs — specifically levels 2 and 3 of Financial Literacy for Dairy, and their Business Management and Advanced Finance workshop. I’m also a member of a PDP producer peer group. Each of these experiences challenges me to think differently.

The biggest takeaway has been understanding how important financial literacy is. No matter how good you are at farming or how well you care for animals, the success of your farm depends on making good business choices. PDP’s financial courses emphasize calculating the return on investment before making major decisions. It is easy to get excited about the latest equipment or technology, especially when someone tells you how much money it could generate. But learning to evaluate those opportunities with realistic numbers rather than optimistic assumptions helps you make better decisions.

That approach recently helped us evaluate one of our biggest investments: a new commodity storage building with conveyor systems. At first glance, it’s a significant expense. But when our nutritionist brought to our attention the tens of thousands of dollars in feed and additives we were losing to shrink each year, the value of keeping those commodities dry and protected became clear. Having the financial knowledge to work through the numbers gives us confidence in the decision and expected return on investment.

Strategies to fortify your farm’s position

I’m currently working on creating our farm’s first comprehensive annual report. Financial consultant Dick Wittman introduced the concept during the Business Management and Advanced Finance workshop. This report includes a farm’s financial performance, herd numbers, crop acres and other key information along with details about major decisions made and why they were made. Five years from now, this report will enable us to identify what worked, what didn’t, and what influenced the decisions we made.

Another key strategy is to be consistent when reviewing financials. Whether you’re calculating forage costs or comparing year-end numbers, using the same methods and timing allows for meaningful information. If calculation methods and timing are irregular, it becomes difficult to know whether the business is improving.

I’ve also found value in our PDP peer group. Every farm faces challenges and hearing how other producers have solved similar problems saves time and helps us avoid costly mistakes. Honest conversations with people who understand your business are incredibly valuable.

Taking time away from the farm to attend a workshop or meet with other producers isn’t always easy. But it’s an investment that delivers long-term value. Instead of waiting until a problem shows up, you are better prepared and have a framework to make good decisions more quickly. Every course, conversation and new idea helps build a stronger business for the future.

Cody Hawkins is assistant farm manager at Solhawk Dairy near Chippewa Falls, Wisconsin.