Fall has arrived and 2013 is winding down, and that means many retailers are reminding consumers that they need to spend some money.
It is amazing how early the stores stock and advertise for the Christmas holiday. These early lures are a mere teasing to the bargain and procrastinator shopper. It is to get the organized shopper to purchase now while the supply is good and to avoid the rush during the days when other duties call.
The bargain shopper is already anticipating the sale ads for Black Friday, Nov. 29. The last quarter of the year and even that one day, Black Friday, relates to a profitable versus unprofitable year for a retailer. It is amazing that one day of sales can change the direction for a business toward having a profitable year.
Unfortunately, I guess because there are some fortunate attributes, the dairy farmer does not have a Black Friday for making a big push for being profitable — it’s a year-long process.
The dairy farmer can’t simply get a major boost in milk production or create a large demand for dairy products in a short time frame to increase sales. A large decrease in expenses will likely reduce milk production. So profitable dairy farming requires a management system of continual quality improvement and monitoring the costs of production.
At this time of the year, here are some things to reflect on for the dairy enterprise:
• 75 percent of the revenues and expenses have already occurred for the year. You can already estimate the profitability of 2013 for the enterprise. With this in mind, is there anything you need to do before year-end that will affect taxes or to prepare for 2014?
• The grain harvest has been quite good this year and with harvest coming to a close, now is the time to contract for concentrates in 2014.
• Even though grain harvest is not even completed yet for some, it is now time to begin to think about what varieties of corn for silage and/or grain you want to plant in the spring. Put your request in early to the seed companies so that the seed you want is available — “early bird gets the worm (or seed)” in really true.
• Have your considered using milk futures for a portion of your milk production?
• During this time of the year, families often have more time to spend together. Spend some time on the mission of the operation and the role of each owner/operator.
• Think about two things that you could change in 2014 that would have the greatest impact on the profitability of your dairy enterprise. Make plans now for these changes.
Some early predictions for 2014 are that milk price will be too low, costs of production will be too high, and the government programs will disappoint you.
Yet, if it is a normal crop year, whatever that looks like, and a weather or world calamity does not occur, a profit from dairy farming can be made in 2014.
Being profitable may require that you are in the top 20 percent of the dairy farms. Being “average” is accepting lower profitability or even sometimes at being unprofitable.
For example, the difference in net farm income was $973 per cow higher for those farms in the top 20 percent compared to the average of the 32 Ohio dairy farms that participated in the 2011 Dairy Farm Business Analysis program.
If you have been hitting below the target, raise your sights.