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John Oncken: Milking profits in a time of uncertainty
"Solving The Profit Puzzle" was the theme of the Professional Dairy Producers of Wisconsin (PDPW) annual business conference held recently in Madison. Whether or not all of the near 1,500 dairy folks who attended -- farmers and suppliers -- solved the puzzle is open to question, but the opportunities were there to put at least some of the pieces together.
Certainly the 170 commercial exhibitors were ready, willing and able to offer services, products and advice to get the basic puzzle pieces in order.
The topnotch speakers and experts from most every phase of dairying were there to offer programs and answer questions on site and the 422-page bound conference summary will keep folks busy for some time reading and studying.
As always, most active cow milking or cow managing dairy farmers will agree that it's the talking to each other that is most valuable in any dairy gathering. The high sound level in the Exhibition Hall at the Alliant Energy Center proved there was a lot of that going on.
However, not all the farmer talk was happy talk. Dairy farmers have some serious concerns, not all of which can be solved by putting up a building, getting a new herd manager or adding more cows.
The price of food for instance is a popular subject. Dairy producers are wondering why so much is being made of the higher food prices when U.S. food prices have been among the lowest anywhere.
Is it because so much corn is being used to make ethanol? Maybe. But, considering that there are only a few cents worth of corn or wheat in bread and breakfast cereal, they wonder if the price increases are for other reasons?
The cost of gasoline or diesel fuel maybe. That's a cost that everyone can measure and it is a major factor in the dairy farmer's cost of production and the baker's and cereal maker's cost of putting food on the supermarket shelf.
PDPW attendees talk a lot about their future in the dairy business.
Should they go into debt to get bigger? Should they make major changes in their farming system to get better? Should they just sell their cows and farm and take the money?
That's why farmer discussion panels are so interesting at farm meetings. Like the hour-long session "Three things done right, three things done wrong," that was given twice before big crowds.
Dairy producers Dan Truttmann of New Glarus, and Lloyd Holterman of Watertown, enthralled the audience as they related their contrasting approaches to dairying, their successes and not so successful ventures. They combined true to life information with bits of humor in a manner that brought several dairymen to suggest, "they ought to take this show on the road."
Truttmann milks 175 crossbred cows on 350 acres in a grazing mode with seasonal calving. This system has been a positive and profitable experience for 15 years according to Truttmann and a good fit for his farm and family.
- A good move: Truttmann related how 15 years ago he needed to do something about improving the fertility, health traits and longevity of his grade Holstein herd. Thus began a program of cross breeding with Jerseys and Brown Swiss and later a variety of foreign breeds.
- Not so good: Using foreign bulls not ranked high by U.S. standards that hurt his milk production.
- A good move: Building new facilities including a milking parlor.
- Not so good: Not building farther away from the old building set-up and not planning well enough for employees (break room, rest rooms, etc.)
- A good move: Installing a new accounting system in 2004 on advice of a tax preparer. It was great for accounting/payroll but lacked usable data.
- A better move: Putting in a new ag specific system that will provide more management information.
- Good and not so good: Having the opportunity to buy adjoining land but didn't because the timing was wrong. In retrospect, Truttmann wishes he could have bought. He is now looking at other land opportunities.
Holterman's Rosy-Lane Holsteins LLC milks 750 cows in a new 8 row cross ventilation barn. He, his wife Daphne, and partner Tim Strobel have moved from a traditional tie stall barn in 1980, to a freestall in 1997 with 300 cows and to the cross ventilated barn last year.
- Did right: 1) Made decisions based strictly on business. This includes breeding cows for profit only; focusing on efficient use of assets; using the parlor 24 hours a day; buying their own milk trucks and running tractors 1,000 hours a year. 2) Used top dairy genetics including some cross breeding. 3) Hired consultants to plan, design, utilize facilities and track budgets. 4) Maximized "tax deferred" including building retirement investments.
- Could have done better: 1) Assessed manure storage needs when a new barn was built in 1997. 2) Built an average quality parlor that saved $100,000 but cost twice as much over time. 3) Hired sloppy or second rate contractors and suppliers.
Both producers are successful and are pleased with the dairy systems they use: Rotational grazing and seasonal calving in Truttmann's case and the confinement and intensive system used by Holterman.
Holterman's suggestion that one seldom knows which decisions are right or wrong until often much later, registered well to the audience who know from experience. That's why he suggests "industrial strength milking parlors, the best equipment money can buy and top genetics."
That's what Linda Enloe wants to hear. "There were so many great topics at the conference," she says. She and her husband Richard milk 100 cows in a freestall barn and swing 8 parlor near Rewey in southwest Wisconsin. They are doing some looking into adding value to their milk -- yogurt maybe.
Jan and Jim Jenks, attended their first PDPW business conference and were most pleased.
"Wisconsin is a great place to dairy farm and this is an example of what's good," Jim says. "We farmed in Vermont for many years and in Idaho for nine years and moved our 400 Jerseys to Marathon County last fall. Wisconsin is the place to be. "
Ed Kelsey, marketing manager at S.I. Feeders, Portage, calls himself a "rookie" at the PDPW conference. "This is my first year here as a commercial exhibitor and we had a lot of sales success," he says. "Our steel feeders are sold through dealers so I'll know more later. I'm glad I came. "
So are the rest of the 1,500 attendees, all of whom are involved in one common denominator -- producing food for the rest of us. Remember that when you note a price increase in your corn flakes. Remember also, that the corn flakes and milk are always on the shelf, 24/7, in many varieties and prices. Take your choice, pick your brand and thank those folks who milked the cow and raised the grain. They are called farmers.
John Oncken is owner of Oncken Communications, a Madison-based agricultural information and consulting company. He can be reached at 222-0624; e-mail jfodairy@chorus.net
John Oncken
Sharing ideas is a big part of the annual Professional Dairy Producers of Wisconsin conference. Jim Jenks, right, and his wife Jan, who recently moved their 400 Jerseys from Idaho to Wisconsin, talk dairying with Mike Fremstad, left, who milks Jerseys at Westby and Greg Glisczinski, of the Citizens State Bank of Loyal.
