I was recently discussing the changes of the past 40 years in the dairy industry with a client of mine, and he was quick to point out that his milk prices have simply not kept pace with every expense he is facing in his business. He pointed out that he had received slightly more for his milk in the late 1970’s than what he received last month, and at the same time, has been hit with increases in every expense item – Feed, Labor, Insurance, Supplies and many others…
I reminded him that just 20 years ago there were 60,000 dairies in the United States, compared with just about 40,000 currently. Yet, our cow numbers and overall milk supply both seem to remain adequate to meet our current market needs, characterized by larger, more efficient operations. If some future predictions are correct, the number of dairies in the U.S. could decrease to just 10,000 at some point, even though total market demand continues to grow. Who is to say how soon that may happen?
It scares me to think that, in a recent survey we completed of over 1,000 dairy operations, there were a number of these producers who claimed that they did not necessarily spend much time measuring their various costs per cwt, or the level of efficiencies in their dairy operation. They seemed too busy to worry themselves with these tasks… Whoa! It is definitely time to realize that we cannot continue to operate in the same way we have always done things, if all the “ground rules” have changed. We will literally get run over! We can both defy science and jump off the edge of the Grand Canyon, screaming “I don’t believe in gravity!” However, landing at the bottom will certainly change our beliefs about gravitational pull.
In my last Success Strategies column, I wrote about how crucial it will be to maximize both Feed Efficiency and Labor Efficiency in your business. The best way to accomplish this is probably through items like automation, where you can milk more cows in less time and/or with fewer employees. Take a look back over the last 40 years, and I think you will observe a pattern here – where producers are milking more cows on larger operations with greater levels of automation. This is true in your industry, and it’s also true in many other industries. In fact, we are even starting to see some “backlash” against this trend.
In author Peter Diamandis’ September 1, 2017 issue of Abundance Insider, I saw this:
Why it’s important: Thirty to 50 percent of all jobs are at risk in the next 20 years, depending on which research you read. Job losses don’t just hurt displaced workers and their families — they also impact revenue for social services when they’re most needed. This initiative represents one approach local governments can take to help ease the transition into a future of increased automation.”
Spotted by Marissa Brassfield / Written by Marissa Brassfield
This may be scary, but I believe it is just one trend that we may soon face as an industry. So, please start reviewing your available options today. I would also invite you to check out our Financial Techniques at https//:www.success-strategies.com. These will guide you to a more financially secure future. There is no better time to start than the present moment. Think about it.
John Ellsworth is a business and financial consultant at www.success-strategies.com. He can be reached at 209.988.8960.