Farming, Saturday, Juna 4,1994 Future (Contbuwd from Pag* A 1) Wolff opened the meeting. Hood likened the planping for the forum as “putting down a lot of hay over the last several years” and said it's now time 10 lake some acton or “make some hay.” “If we don’t get this hay in the bam. our dairy industry is not going to have any feed in the future.” Hood said allegorically. Wolff said that holding the first dairy forum on the first day of dairy month (June) was appropriate. He emphasized need for marketing, management, and cooperation. “We need to find a way to relieve the squeeze on the spread between costs and prices.” Wolff said. Dr. Ronald Knutson, Ag Eco nomics, Texas A & M University, used their large number of study herds in many different parts of the U.S. to illustrate facts about the diversity of the dairy industry. For example, herd size vairies from SO cows to 1,000 cows. Output per cow also varies and is critical to the profitability of individual herds. He showed wide differences reg ionally and among individual farms within the regions. While many people think the milk price is better in California, Knutson said it is actually lower. But he said they are very efficient and produce milk on smaller margins. Another factor in regional dairy farm problems is the enforcement of EPA regulations. While federal laws are standard, EPA delegates authority to states that have at least as stringent laws as federal require ments. But many “dairy” slates are not enforcing the laws, and other Engineered For Life On The Farm. : I Choose from a wide range of standard or custom Lester wood frame agricultural buildings. Each features value engineered Uni-Frame® construction. Top quality materials. The industry's leading warranty LESTER BUILDING SYSTEMS A OivKton of Buffer Manufacturing Company Of Dairy Industry stares are enforcing laws much more stringent. “It takes a large investment to meet the requirements of manag ing dairy waste,” Knutson said. “When dairy farmers are forced to make these investments, they begin to ask other questions about their involvement in the dairy busi ness and the timeliness of an up date to their operation. These kinds of decisions are coming in the next five years for all those farmers who arc not already facing them. "This doesn’t affect the dairy that is making a lot. of money,” Knutson said. “But if a dairy is already on the margin, a large investment is going to be tough.” A more important factor is the unlevcl playing field that exists across the states. Technically, all states have the same EPA regula tions, but not every state is follow ing the regulations. This has an adverse impact on dairy farmers in stares that are cracking down. On the subject of BST, Knutson said research on their model dairy farms across the nation show that its use is profitable on every one of these farms. Tm not saying it is profitable on your farm,” Knutson said. “But on every one of our lest farms it is. Technology is an integ ral pan of successful dairying.” Knutson said analysis studies indicate that the downhill move ment of the dairy industry in Wis consin, Minnesota, and east Texas is sct to also happen in the North east if adjustments are not taken. He said extra debt load will take a dairy farm down the tubes. He said this presents a real challenge to len ders and dairy farmers who have a "V-- r"'i , i son or daughter who wants to take over the farm. “Large, well-managed dafry farms ate realizing favorable returns.” Knutson said. “Not everyone is losing money. But many moderate size dairy farms are experiencing considerable stress. Many are making.the deci sion to grow or get out" Dr. Terry Smith, dairy science. University of Wisconsin, said the dairy industry is competing for “stomach space” but has some optimism because 15 of the top 50 selling items in the grocery store come from the dairy case. New supermarkets have 10 to 15 per cent more dairy case space because dairy items represent double the profit of the next best selling item—frozen foods. “We are going in the right direc tion and should look at it as a posi tive indication of the future (of dairying),“ Smith said. “You shouldn’t be surprised that the retailer is excited about marketing dairy products. He likes the rela tive profitability of that space in the store and it’s the number one reason consumers come into the store. That’s why the retailer puls the milk and dairy products at the rear of the store so you pass the soft drinks and junk foods on the way there.” Smith said management repre sents the key issue in the dairy industry. This applies to dairy far mers as well as to other industries. “With all the dairies in the land, a few are making double the money on their cows than others are,” Smith said. “What causes this dif ference? Simply the exchange of And the support of the nation's leading building company. Reap the benefits of quality, affordable storage. Call your local Lester dealer or 1-800-826-4439 today. THANKS! DAIRY FARMERS We Salute Dairymen For Their Dedication and Hard Work Towards Attaining the Highest Standards of Quality better thought, better knowledge and more energy. The many who refuse to belteye this business requires intelligence are severely punished over the yean by this skepticism.” Smith was quoting what W. D. Hoard had said 105 years ago. Robert Taylor, Pennwest Farm Credit said that when farmers shift into neutral, their income base deteriorates. The average size dairy in Pennsylvania is 64 cows but the top performance group is 146 cows. “Lack of adequate scale is a dis advantage," Taylor said. “Busi ness is business. Farmen need to plan, to organize, to lead, and to control. “Cattle, are living things and the emotional factor plays a roll. But decisions must focus on manage ment goals. A lot of our farms today are not geared for the size of dairy herds we have now. Many are add-on affairs. Lanes built for horses and buggies must now accommodate tractor-lrailor trucks. “Farmers must learn to manage their own money, and the money of others. You need to budget and you need to do comparison shop ping. Many operations are manag ing in reverse. They look for pro duction without consideration of the cost of production. Today, far mers need to focus on returns.” Taylor also said debt must be used properly. He suggested that a $2,000 to $2,500 debt per cow is as high as you should go in long-term debt. “Work with lenders,” Taylor said. “Have a business plan. Have liquidity for emergencies. “In some areas of Pennsylvania multiple land-use possibilities has kept land values high. But general ly a farmer is no longer going to be able to farm to retirement and liq uidate. The opportunity (buyer) may not be there in the future,” Taylor said. Ronald Denker, retired Kraft General Foods executive, explained how a large processing company decides where to locale plants. He said the objective was always sales with saving money also important but secondary. No one reason is responsible for a facility to get closed or a new facil ity to be built. “If you are making a high quality product at a compe live price that the marketing peo ple can take and run with, you will get benefit,” Dcnkcr said. “New technology does influ ence new facilities.. It lakes a lot more room. That’s why a lot of small plants arc gone. Increased productivity is also possible with new technology." ‘ Denker said labor availability is not so much an issue as trained labor and labor that wants to work. Also environmental concerns sometimes close plants. “Things change—the price of inputs or distribution patterns change,” Denker said. “But cost and availability is a primary rea son. The cheaper milk inCalifomi a of $2.00 per hundred equates to 20 cents per pound of cheese, it costs 10 cents a pound to ship cheese to Boston so that’s an 8 to 10 Cent per pound saving. On mil lions of pounds produced you can see why you can close a plant in the East and go to California.” Denker said planning is started five to 10 years in advance of the opening of a new plant and state governments or organizations that know about this planning can have some effect on where the plaHl will (Turn to Pago A 29) Contact The Lester Dealer Nearest You Today For A Quote Or More Information PENNSYLVANIA Annville H.R. WEAVER BUILDING SYSTEMS (717) 838*3753 Centre Hall WISE CONSTRUCTION GROUP (814) 364-1000 West Chester DELAWARE VALLEY STRUCTURES, INC. (610) 344-7242 Coalport FOUR COUNTIES CONTRACTORS, INC. (814) 872-57il Lebanon LEBANON BUILDING SYSTEMS, INC. (717) 272-4449 Montoursville COUNTRY CONSTRUCTION (717) MS-1719 Morgantown VALLEY VIEW CONSTRUCTION (21S) 246-5407 nmn. mjwff NAZARETH “SKS™ ENTKPSSES. INC. (215) 437-7700 (6Qg) 281-3600 LESTER BUILD) NO SYSTEMS A DMUan •) Mlk ManukcMlnf Oim»>ny New Oxford UMBAUGH BUILDINGS, INC. 1-800-222-0047 Winterford ROBERT R. 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