Will You Be Ready Producers? – Part 2

Back in 2010, I recall writing an article that asked the very same question I listed in the title of this blog: Will You Be Ready? Ready for what, you might be asking, and my answer would be ready for the higher levels of profitability that await us in the next several years.

Most people, when asked this question, quickly respond with “Of course, I’m ready!” I am not suggesting that we are not mentally prepared for better times. I think we’d all welcome better prices for our product. However, let’s go beyond this and consider whether or not your operation is truly prepared to fully succeed. Is your Lender being supportive? Is your Loan to Value and Debt Service Coverage on track? What’s your production level currently? Is your breeding program sound? Are you really poised to succeed at your maximum potential?

Following 2009, I found that everyone was ready for an upturn in milk prices, in terms of what those higher prices could add to their business. However, in some cases, I saw producers whose herds had Pregnancy Rates below 20%, Heat Detection Rates less than 60%, and Milk Flows well below their breakeven levels, even at normal milk prices. Oh, and I was often reassured that they were “saving on feed costs…” Well, we’ve all seen how that plan works out, and it’s not usually positive.

So, were they really prepared? For higher prices, yes. To succeed, maybe & maybe not. To maximize your success, we need to be running on all cylinders before those higher prices arrive. If you wait until the higher prices arrive, your progress will be delayed. Don’t delay. Start moving forward today, if you haven’t already.

What does “Being Prepared” actually include?

  • Is your breeding program on track to succeed? Is your Pregnancy Rate at 25% with Heat Detection Rate of 60%? Do you need to initiate some changes to improve your current program?
  • Are your Days in Milk consistently in the 160 to 170-day range? This has been shown to maintain milk flow and its resulting cash flows extremely well.
  • Are your Costs of Production in line? This doesn’t mean that if your labor is slightly higher than your industry peers, you just make cuts randomly. Every operation & facility is slightly different, so be judicious in your cost cutting. Do what makes sense for you. However, I will caution you, as I have with others, that if you are unwilling to consider positive changes, you run the risk of being replaced by some other producer who is willing to make these changes.
  • What if you aren’t 100% ready when prices start to turn upward? This is not the end of the world. You just may be behind the curve when increases come, which would delay your progress. As the saying goes, “The best time to plant an Oak tree was 20 years ago. The next best time is today!” I will share some positive examples in my next blog of how this can work, but why delay making the changes necessary in your operation?

I hope you’ve found this article helpful. What applications of these lessons can you make in your business? Be watching for our upcoming “Mastermind Group” opportunities we are planning to offer. I am currently introducing new Success Strategies Business Navigator Program in early 2019 that are designed to reach more people with the Finance & Strategy Concepts that I offer business people. I am currently working on the content that I will deliver during those sessions. Be on the lookout for these sessions. Signup today.

This entire thinking process is so crucial today. If you need assistance, please e-mail me at john@success-strategies.com. I’m always open for a follow-up call and wish you the best of success!