34—Lancaster Farming, Saturday, Juna 9,1979
Dairy economist
(Continued from Page 1)
described as a realist. He predicts good months ahead for
the industry, but he is cautious about it. And he would
never go as far as to say that dairy cooperatives have
corrected their respective financial structuring to the
point of being immune from problems in the future. “The
situations are such that you can’t predict them,” he ex
plained.
But Hand is convinced that a cooperative can operate in
ways to minimize monetary problems. His cooperative,
which has a growing membership of close to 3000, is
commonly considered to be the most stable in the area, a
success story which ; s attributable to first-class
professional management and a dedicated, aggressive
board of directors.
Sharing his philosophy on how to stay on top in business,
Hand emphasizes the necessity of a good capital base. If it
isn’t there, then something should be done about it right
away, he stresses. “Don’t let the cash flow deteriorate to
the point that you have to borrow money just to operate,”
he continued. He speculates that some of the problems
experienced by some cooperatives may have been wor
sened by the management’s failure to face problems as
they surfaced. “When you have a financial problem, it’s
important to act promptly to correct it,” Hand advised.
For a cooperative that is governed by a board of
directors, (as all of them are) that may be easier said
than done, since few men would want to bring unwelcome
news to the membership. But if that’s what the figures
show, it should be brought out. Hand emphasized.
Inter-State’s economist stresses the necessity of having
sound analyses of business activities in order to stay
ahead of upcoming financial situations. “It’s a matter of
philosophy and living with the dictates of sound business
practices,” he explained. “As for the board, let them think
about the situations and air their views - you’ve got to
have that kind of abnosphere,” he advised.
Although Inter-State operates at a good profit
and it boasts a sizeable cash reserve, it has not been
without problems. A year ago, for example, it was bur
dened with unusually high marketing costs, because milk
production in the Northeast exceeded handling capacities.
Inter-State, like many other cooperatives, had to find
alternate outlets. It was expensive.
The delays expenenced at Holly Milk Cooperative, a
butter and powder manufacturing plant near Carlisle,
which is owned jointly by Inter-State and Maryland
Cooperative Milk Producers, represents a current drag on
operations.
Holly Milk was originally to have been m full operation
a year ago. It opened on a limited basis six months behind
sdiedule and then suffered a fire April 21 when things
were just getting ready to go full-throttle. The ultra
modern plant is still in partial operation, however, since
damage was limited to the powder drying area. The butter
churns are operating in hill force and condensed skim
milk is shipped to other plants for further processing.
They’re in business to make things better for
This man knew a better idea when he saw it
That's why he just became the Chromalloy Farm System s dealer
for this area
The Chromalloy Farm Systems dealership gives him what dairy and
livestock men need virtually everything that’s required to store
process and feed out silage, haylage and high-moisture gram
Genuine Madison" Structures:
America’s overwhelming choice for
65 years Madison Silos for corn
silage plus bottom-unloading,
controlled-atmosphere Nutn-Matic"
and Gram-O-Matic" structures for
top-quality haylage and
high-moisture gram
Starline Unloaders:
Sizes and models for every size silo
and everything you put in them
(£,1979 Chromalloy
MEET OUR CHROMALLOY FARM SYSTEMS DEALERS
dairy and livestock men.
St ti Tr ;r ttic r ni, dr
uf il tdi r thdt givt s , >u til)
l i' l />>>i il j rtfitr rl
Making things better for you
FARM SYSTEMS
CHROMALLOY
DIVISION
•orp
Dr. Paul Hand
Despite these set-backs, Inter-State is on sound footing,
analysts agree. Dr. Hand notes that the Holly plant is
contributing substantially to saving transportation costs,
despite its partially crippled condition
Renovations at Holly are underway, although no date is
being set as to when full oparations might resume.
“The problems - you can’t predict them,” Hand com
mented. He notes that the area is experiencing a continual
loss of milk buyers, for example. And he points to the
changes that have taken place during the past decade,
such as changing marketing structures and distribution
patterns. “And what about the milk price freeze imposed
by President Nixon a few years ago?” he asked. “Some
problems we can foresee. The accumulated effects of all
of the changes can feel as though they happened over
night,” he continued.
“You have to be pragmatic,” he encouraged.
Dr. Hand is confident that the new farm bill will provide
for a dairy support price based on 80 per cent of parity.
“That’s a foregone conclusion at this point. There is no
question about it,” the economist assured.
Hand bases his conclusion on what’s happening in the
Midwest and Congress. Hence, he predicts the $l.OO per
hundredweight increase for manufacturing milk. The full
impact of that action won’t be felt on Class I prices until
about December, the economist noted, adding that there
may be some impact on Class I sales as well.
Hand hopes that dairy farmers will continue to be
cautious with their milk production levels. He points out
that production geared to consumption will keep sales and
prices favorable. Overproduction, as in some previous
years, will hurt the dairy economy.
“Close culling is good business - it always is - especially
now. That’s one way to maintain a little check on
production,” he commented.
To keep sales favorable and strong, Hand and many
other dairy leaders are requesting that the advertising
funds be increase. Presently, a deduction of seven cents
per hundredweight is deducted from producers’ milk
checks on a voluntary basis. Inter-State and its sister
cooperatives in the Middle Atlantic area are asking for
advertising deductions amounting to one per cent of the
m System of Choice can save
you S3O 000 or more c ompsrt cl
with glass fused to steci
structures
‘Some problems
we can foresee.
Others we can’t.
You have to
be pragmatic.’
Your time is valuable Save hours
every day with an automated
feeding system Push buttorreasy
~ -S'
Free farmstead planning
service helps you reach your
goals in easy affordable steps
New Providence. PA
Don R Nissley
717-786-7654
Myerstown, PA
Swope & Bashore
717 933-4138
Lancaster, PA
L H Brubaker
717 397-5179
Temple, PA
1 emple Agway
'"IS 930 5264
Class I milk price. Presently that would calculate out to
about 12 cents per hundredweight, which represents a 71
per cent increase. Hand justifies the raise, explaining that
inflation has had a considerable eroding effect on the
funds since the 7-cent program was put into effect on Jan.
1,1977. The new program, if adopted, will go mto effect on
Jan. 1,1980. USDA will hold hearings on the matter in July
or August, Hand revealed.
The economist, while strong on the promotion end, isn’t
particularly bothered by imitation dairy products,
planning that most such preparations are for industrial
rather than home use, and some use dairy ingredients
anyway. Imitation cheeses have pretty good sales now,
where they’re an ingredient with other food components,
Hand pomted out. He does not believe that such products
will catch on with housewives. Nevertheless, the words of
advice are to stay alert and prepared to meet the
challenges
What about the future of dairy cooperatives and milk
marketing orders?
Hand is reluctant to make specific predictions. “We will
see a lot of things happen in our life tune, it’s just a matter
of how and when,” he began. Acknowledging that there
has been talk of one federal milk order for the Northeast
and Middle Atlantic area combined, he opmionizes it’s not
in the near future. “There are too many differences
between the two regions,” he explained.
Among the differences are hauling rate structures,
production plans, and marketing fees. Hand says it isn’t
likely that these and other differences will be resolved in
the near future. Cooperatives in the area are working in
closer harmony, however.
' What about the overall dairy economy?
Hand says it’s good, but not best. “All they’re doing is
trading dollars with less value. Bigger numbers - on the
average it’s not that great,” he concluded.
Inflation is the problem. To meet the rising hauling
costs, for example, Inter-State has negotiated fees that
are tied to fuel prices. The automatic adjuster clause
allows for a %-cent increase per hundredweight in hauling
rates for every 5-cent increase pergalion of fuel.
In conclusion, the dairy business is on an even keel. For
it to stay that way, producers and co-op managers will
have to be pragmatic.
jdaim
*
- ' o^
Feedlot equipment.
Automate your feeding with
Chromalloy Farm Systems conveyors,
shuttle stroke feeders and belt feeders
Manure handling equipment too
Financial help:
A good financing pacnage including
deferred lease arrangements which can
help preserve your working capital and
improve your cash flow
Layouts, Installation & Service;
Whatever your Chromalloy Farm
Systems set-up you have ]ust one man
to call for service advice and warranty
back-up
Can he make things better for you? Just
call and find out He II give you a
sensible system and at a sensible price
that will make you and your banker smile
Avondale, PA Sussex, NJ
Avondale Agway William Systema
215-268-8238 201-875-5449
Lancaster, PA
Lancaster Agway
717 394-0541
Silverdale, PA
IG AG Sales
215 257-5135
Westfiled, PA
MacKmghts Agway
814 367 2715
Milford, DE
Bennett Machine
302 422-4837
Dealer Inquiries
Welcome
717-569-8130