A44-Lancaster Farming, Saturday, June 6, 1998
Dairy Farm Management Basics - Lesson 1
Tins is the llisi of a senes ol articles on topics related to the basics of dairy farm management It is an
attempt to share with you a lot of the things I have learned and observed during my years of association
with dairy pioduecrs, professionals and industry leaders
Throughout this senes of articles, 1 will be focusing on some key aicas of management that need to be
addiessecd by dairy farm families, including
Pcisonal and business considerations
Stailup considerations
Investment and expansion considci.ilions
Faclois affecting (arm profits
Production economics
Mcul management goals
Hcid/farm management slialcgics
I atm iccoids
fanning c.m he a nice way of life' It provides a place for family members to live and work together,
and a place where they can be close to Nature They can be their own boss and more in control of then
own destiny However, before the family can enjoy these qualities ol life, the farm must be a piofilablc
business
Westmoreland Milk Buyers Group Hopes To Boost Profits
RANDY WELLS
Indiana Correspondent
WESTMORELAND, Ind.
To Westmoreland County milk
producer Wayne Frye’s way of
thinking, there are two ways to
boost profits m the dairy busi
ness: Generate more income or
cut farm expenses.
“The experts say get bigger,
get bigger, get bigger. I’m not
sure that’s the answer,” Frye
said
So he’s opted for the second
route, and thinks the recently
formed Westmoreland Buyers’
Group can help take him there.
Frye, who milks about 115
Holstems, was one of the farm
ers in Westmoreland and
Indiana counties who helped
organize the buyers’ consortium
this past winter. The members
decided to consolidate their
shopping lists of supplies needed
to run their farms, and then buy
those commodities in large vol
umes to get discount prices.
Penn State extension agents
Gary Sheppard of Westmoreland
County and Gene Schurman of
Indiana County acted as facilita
tors to get the group started.
“We pulled people together
and said, ‘Here’s an opportunity.
What do you think of it?’ The
concept is certainly not rocket
science,” said Sheppard, adding
it’s the same way some other
farmers’ cooperatives began.
Buying groups have gained
appeal recently as dairymen
increasingly have struggled to
cut costs as prices paid for their
milk stagnated or even dropped.
“Everyone’s scratching to see
if we can produce it for less,”
Indiana County dairyman Tom
McNutt said of the milk-produc
ing industry. “It’s a tough busi
ness to turn a buck. It’s forced
farmers to get together and talk
about prices.”
DAIRY FARM
MANAGEMENT
BASICS
A Farm Management Course by
Glenn A. Shirk
Penn State Extension Agent
Lancaster County, Pennsylvania
And according to McNutt, the
consortium has worked well so
far, with farmers getting better
prices and vendors getting their
money up front.
Glenn Kerr, a self-employed
agronomist from Greensburg,
acts as the group’s buyer.
By pooling their orders
together and buying in volume,
the group’s 17 members have
been able to realize substantial
savings on some products. In
certain instances an additional
discount was also available
because the orders are pre-paid
through a line of credit estab
lished with a local bank.
This spring the group has
purchased spray material for
hay and corn crops, seed, fuel
and veterinarian’s supplies.
As an example, Kerr said the
consortium purchased 10,000
gallons of diesel fuel for 58-1/2
cents per gallon a 10 or 12-
cent-per-gallon savings over the
regular price.
He estimates the group’s
members go a 15 percent sav
ings on the spray chemicals, as a
45 percent savings on the price
of alfalfa seed.
“As a group we’ve bought
about $130,000 worth of sup
plies this spring,” Kerr said. “We
didn’t expect the savings we
got.”
Purchases were made both
locally and from companies out
of the area. Some of the seed, for
example, was bought from a
New York company, but was pur
chased through a local farmer
dealer.
Kerr expects the members to
meet again in the fall and possi
bly draw up a shopping list for
wheat seed and dairy supplies.
They’re also considering a large
order perhaps 1,000 units
of semen for cattle breeding .at
an expected big savings.
Kerr said he knew a lot of the
Feeding and nutrition
Motiving cow comloil and cow bchavioi
Rcpioduction and gcnlctics
I lerd health
Culling and merchandising cattle
Herd replacements
Feed pioduclion, procurement and vintage
Farm salcty
Consortium members were
assessed a one-time fee of $lOO
to join the group. That money
covered some of the costs of get
ting started, including setting
up the line of credit and having
checks printed.
Kerr said the group is not
limiting its membership, but he
notes the consortium can get the
best deals only if its members
are geographically close. If the
group grows too large, it may be
necessary to create two delivery
locations so the vendors don’t
have to truck the deliveries all
around two counties.
Kerr sees one minor draw
back to the consortium concept.
There are many products on the
market, and most farmers have
a preference for particular prod
ucts and brands they want. Yet
the members must agree to used
a limited array of products to
achieve the volume discounts,
he said.
McNutt echoed that observa
tion. The members sometimes
have to sacrifice some indepen
dence to get lower prices. The
group has to be able to say to the
seller, ‘We’ll all use Brand-X.’
The majority of the members
are dairymen, and Kerr is an
agronomist, best able to help the
crop farmers, according to Frye.
He thinks an improvement
could be made by adding a sec
ond buyer, someone who’s an
expert in dairy needs.
With 17 members, it now
takes most of them agreeing to
participate m a purchase to get
As you think about farming, ask yourselves some basic questions, such as the ones listed below It will
help give purpose to all that you do, and it can help keep you and your family more focused.
1 Why are you fanning or why do you want to farm’
3 Dairy farming is a global business. It is a business that - -
suppliers and retailers, and
originally agreed to serve as the
consortium’s buyer for a flat fee.
On the last couple of purchases
he’s worked for a percentage.
Once a list of needed supplies
is pooled, he “shops it around”
with various vendors'to find the
best price on that particular vol
ume.
2 What do you want to accomplish in life, and what arc your goals’
- Earn an annual income of $ ( 0 support the family
Maintain a icscrvc of $.
Create a college fund of $.
Accumulate a retirement fund of $.
Bring children into the business
Have lime for family and community activities
1 What must the farm do to help you reach your personal goals, and what goals have you set foi the
farin’ Some ideas are listed below.
- Generate an annual profit of $ .
Produce and market high quality milk
Merchandise some breeding stock
Be an asset to the community
Be good custodians of the farm's natural resources
Accumulate
Systematic growth of the business to
Meet increasing family expenses
Accommodate children or other business associates into the business
Strengthen your competitive position in the industry
2 I low much piofil do you need per eow per year and per ewl milk lo meet family needs >
Table I can Ire a guide Notice the big spread of about $3 00 in piofil needed pci ewl to gcnciale
$30,000 piofit, comparing 40 cows producing 17,000 lb to 100 cows at 21,000 lb How many
cows ( ) and how much milk per cow ( ) do you need'
Table I Margin Needed per Cow and per Cwt of Milk for $30,000 Profit
Margin
750
500
375
300
40
60
80
100
Converts feeds into milk, cattle and meat It adds market value to the crops that arc
giown and to the feeds that arc purchased - - hopefully for a profit
Provides a return to land, labor, capital investments, and to management
Builds equity tor Us owners
Conti ibutcs to the local economy - - and to the larger economy
an order large enough to qualify
for the volume .prices. If more
members -joinJwhe group, -it
would be possible to place large
enough orders without having to
have everyone participate.
Frye thinks a logical evolu
tion will be the eventual spin-off
of another consortium per
haps one just for Indiana
County farmers. And on occa
sions the two groups might still
consolidate their shopping lists
for bigger savings.
Sheppard estimates the buy
ers group might save the aver-
State Resumes Testing
Moisture Meters
HARRISBURG (Dauphin
Co.) - State Agriculture
Secretary Samuel E. Hayes Jr.
this week announced that the
state grain moisture meter test
ing program has resumed.
"The grain moisture meter
testing program ensures that
those who sell grain are using
accurate equipment to measure
their product," Hayes said.
The program follows require
ments established by the
National Institute of Standards
and Technology (NIST). NIST
requires all meters manufac
tured or placed into service since
Jan. 1, 1998, to have a digital
readout, printing capability and
National Type Evaluation
Program (NTEP) approval.
The new requirements do not
include meters in service before
Jan. 1, if ownership of the meter
does not change
In addition to the NIST
requirements, the program will
continue to monitor other
requirements already in place,
including: the availability of
operating instructions and
updated charts; cleanliness of
for emergencies
by what year
by what year
of net worth, by what year
11000
17.000
5 00 4 41 3 95 3 57 326
3 33 2 94 2 63 2 38 2 17
2 50 2 21 197 179 163
2 00 176 158 I.4'J 130
roducli
age member $3,000 to $4,000 a
year. And while that helps, he
Sees two other benefits. The sav
ings represent a “mental bright
spot” for dairymen who have
been struggling financially, he
said. And another plus is that
the consortium brings dairymen
together in a small group where
they can discuss production
techniques.
That informal exchange of
tips and ideas will help the via
bility of the industry, Sheppard
said.
the meter and environment,
suitability and accuracy of the
scale for weighing grain sam
ples; and suitability and accura
cy of the thermometer for
obtaining the temperature of
grain samples.
INDEX
(Continued from Pago A3)'
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