With only two and a half months left in the year, many dairy producers are preparing to look at their year-end financials and make a game plan for next year. What was cash flow like this year compared to last? What can you do at the cow level to improve costs? What strategies do you want to pursue next year that might protect your bottom line and boost efficiency?
When it comes to financial planning, surrounding yourself with a team of consultants who have experience with financial planning can help give you an outside perspective, the ability to dive into the numbers, a way to remain accountable throughout the year as you work toward your goals, and ultimately, some peace of mind.
Several Pennsylvania dairy farmers share how consultants have helped them in five specific areas:
1. Historical data. “By looking at three-year historical data, we can flip from year to year to see where we might have spent more than we should, and then come up with ways to do better. You can always find a way to work financials back into the cows. If a certain cost is too high, what can we do at the cow level to improve upon those costs?” – Zach Kreger
2. Feed over income. “My consultant showed me that my feed over income was 10 cents a hundredweight higher than average. I’m still within the mean, but he challenged me by asking, ‘What can you do to change that?’ So, I talked to my nutritionist and he used the information like he was supposed to. It’s easy to get consumed with your own farm, and you don’t know if you’re way off in certain areas. I never knew I was going to learn this much. –Todd Benedict
3. Benchmarking. “We have two separate operations, one milking 300 and one milking 800. We wanted to work with a consultant to understand areas for improvement. Having the resources from the consultant to be in a benchmarking program allows us to compare several key data points and look for ways to improve. It is easy to see most of the problems that come up on a daily basis. It is much harder to take the time and go through all the books to decide what is cost-effective, efficient, and productive. It’s good to work with an experienced consultant for the knowledge they have working with many farms.” – Cory Mellott
4. Accountability. “When my wife and I made the decision that we were both going to be on the farm full time, we knew the finances had to work. Our consultants can sit down with us and tell us what’s working and what isn’t working. That’s the kind of accountability you need. We’re driven to do better because of it,” Kreger added.
5. Peace of mind. “It can be easy for farmers to [get depressed] or go into a downward spiral. I can see how it happens. I lost money last month, but now that I’ve talked to my consultant, I know that it’s the industry and not something huge I can do. I always felt like such a failure when I couldn’t pay my bills or make money. I always wondered what I was doing wrong. He put it in perspective for me. It has given me peace of mind,” continued Benedict
The Center for Dairy Excellence’s Dairy Decisions Consultants (DDC) Grant is now open on a first-come, first-served basis for farmers in Pennsylvania. Dairy farms can receive up to $4,500 in funds to work with a consultant in one of seven key areas of business, including financial analysis and business planning. Marketing and branding consulting grants and transition consultants are also available for farms outside of Pennsylvania. Visit www.centerfordairyexcellence.org/ddc to learn more or contact Melissa Anderson at 717-636-0079.
