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Dairy Farm Management Basics - Lesson
Dairy farming can be a profitable business, if managed properly. However, it is a very complex, a very
competitive, and a capital intensive business. Milk prices and feed prices can be very volatile. Poor
management decisions and mistakes, drastic swings in market prices, and unexpected herd health
problems and weather problems can be very costly. In this kind of business environment, there is very
little room for error.
Be realistic and true to yourself and to your family. As mentioned in article one, discuss family goals,
determine what you want out of life and how you expect the farm to help support your life’s mission.
Before you commit your family and your hard earned savings to dairying and take on a lot of debt,
consider some of the following pointers.
Work for someone else before starting on your own. Earn while you learn. Determine if you, your
spouse and other family members are ready, willing and able to make the commitment that is necessary for
a dairy farm business to be successful.
Recognize your strengths and weaknesses, as well as your likes and dislikes.
Align yourself with some experienced, knowledgeable, trustworthy - - people who you can work with
and people you can confide in and turn to for good advice.
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1995 Houle 5,250 gal. w/6 28Lx26 tires, exc
shape, all options
1998 Houle 4800 gal. w/28Lx26 tires, steering and
brakes $ 21,900
1998 Houle 6000 w/Brakes 28Lx26 tires $20,400
1998 Houle 3600 gal. w/23.1x26 tires $ 12,500
1997 Houle 3600 gal. w/23.1x26 tires $ 11,500
1992 Houle 4,250 gal., w/ 23.1x26
1997 Houle 4,800 gal. w/28Lx26 tires, no brakes,
excellent condition $ 15,500
1978 IH Paystar Truck w/approx. 4,000 gal.
Oilier tank $ 15,000
Hesston 2,200 gal. Tank, Good Undercarriage,
1997 Balzer 3,350 vacuum 23.1x26
1992 Calumet 3750,1992 w/50x21-20
1997 Houle 42’ Lagoon Pump w/Duals
Houle 42‘ Multi-purpose pump
Houle 28” Maxi-Pump
Houle 42' Lagoon Pump on
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1997 Houle 42' Lagoon SUPER PUMP, excellent for
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Houle pto Irrigation pumps, rental
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Acquire sufficient equity before start-up so you are m a position to borrow enough capital to finance a
business that is of adequate size and one that is adequately equipped - - one that has a chance to be
efficient, profitable and enjoyable, and one that has a chance to remain competitive for years to come
Keep debts at levels you can afford (the next article addresses debt levels and investment strategies).
Look at ways you can buy into an efficient sized operation gradually over time, at a rate you can afford
Some ideas are;
• Invest in good, functional cattle first. They don't have to be high-pnce fancy cattle, but a few good
foundation cows can be beneficial if you have the ability to breed and manage them well Also ask
yourself, why is that cow being sold, and do 1 really want her in my herd’ Don’t buy your problems
when you can get them free! In other words, be sure the cows are healthy. Concentrate on fine
tuning your management skills and getting the herd to perform at peak efficiency.
Don't be too quick to invest in a lot of expensive machinery and equipment, especially when custom
services are available.
- If necessary, rent facilities unUl you have sufficient capital to invest in machinery, facilities and land
When you rent facilities, consider how the facilities will affect cow comfort, herd health, labor
efficiency and the quality of feed m storage. Poor facilities rented at a very low price can be very
expensive if they are not conducive to good cow performance and efficient use of labor If you rent
from an individual who is phasing out of farming, you might have an option to purchase the
operation at a later date, perhaps with owner financing. The question then will be, does it meet the
criteria below, and can I afford it?
If you can't afford to buy the whole farm or a large-enough farm initially, consider inveshng m
buildings only initially, and purchase the land at a later date. This may require subdividing the
property so the farmstead can be deeded separately from the land Or, purchase a small farm that has
potential for expansion, and located in an area where additional land or farms can be purchased later
Or, buy shares in an ongoing dairy operation
When purchasing a farm, consider these points:
- Are the facilities conducive to good cow comfort, good herd health, preserving feed quality, efficient
use of labor, and the protection of environmental quality’ If not, can the facilities be remodeled or
expanded into an efficient operation? If not, be cautious about investing your money in operations
that have limited future potential or sale value.
- Is there an abundant supply of good quality water 0
Are the soils productive, and is the farm located in an area where climates generally favorable 0
- Is the farm in an area where there are good markets, and where there is good sales and service
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Lancaster Farming, Saturday, June 13, 1998-A3l
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