Expert With Advice To Ride Out Struggles In The Dairy Industry
Like any other commodity, the dairy industry has had its ups and downs. And for generations, farmers have struggled to find balance during uncertain markets and fluctuating milk prices. In the past these ups and downs came three-year cycles.
But, dairy industry expert Gary Sipiorski of Vita Plus says those cycles have extended to four and five years. In addition, many are facing additional challenges and roadblocks.
“Well, right now we're seeing a lot of consolidation in the dairy industry. Sadly, we see farms every day that give up their license to produce milk. We'll probably see less farms in the future. We're probably going to go through 19, maybe the first part of 20 with maybe a $16 milk price.”
Sipiorski said eventually this cycle will break, and there will be opportunities for those committed to doing an excellent job raising dairy cows and managing the farm. In order for young people to be successful, Sipiorski said producers must look at dairy’s four legged stool.
“Number one is you got to enjoy cows. It isn't just machinery on a farm, you really got to enjoy the cattle. Secondly, you got to know how to buy and grow high quality feed or crops on the farm. Thirdly, you need to understand the financials, balance sheets and cash flows. And then you need to know how to work with family members and hired labor.”
Before all else, Sipiorski said farmers have to set their priorities, and investing in quality dairy cows should be at the top of that list.
“The first thing young people need to do is invest in the milk cows…the cows are what generates the gross income. It takes about a year and a half to two years to pay ... A cow pays for herself once she freshens. Well, we got to keep that cull rate low, so that they're around for three, four, and five years, because that's where they make money.”
Success lies in the daily details he noted, and that extends beyond cow care and day-to-day operations, into business planning and financial management.
“They need to have a balance sheet, they need to understand assets and liabilities. They need to know what a cash flow is and need to know how a projection, and then they need to have a business plan. It doesn't have to be lengthy, but it needs to be detailed of just really what they want to do and what they want to focus on.”
Farmers who take an interested in high-performing cows and genetics, like U.S. Registered Holsteins, will be able to add value now and into the future, Sipiorski said.
“Registered animals are always going to hold their value because they are the seed stock of the dairy industry, not only in the United States but throughout the world. And those that maintain those records and retain the production records and the history of where those animals came from, will actually show an increased value in the future.”
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