“ I have always been interested in improving profitability in the dairy industry. If there is a dairy
industry in New England, I want it to be in Maine.”
I want people to buy milk, use milk for value added processing and increase demand for milk.
We (Maine industry) are second in New England in number of dairy farms behind Vermont and ahead of
Connecticut. We are 3rd in production of milk/cow behind CT and NY; VT is a close 4th behind Maine.
We are similar in production/cow to PA and quite a bit behind NY. We have 275 herds, NY has 5000. I
am interested in setting a goal of continuous improvement to improve the sustainability of the dairy
industry.
In looking back in my files, I came upon a 4 page list of licensed dairy processors in Maine in 1965, now
there are 4 (large) processors (Houlton Farms, Oakhurst, Hood and Smiling Hill). At that same time there
were 142 dairy farms in York County, now there are 11. We have had a decline in the number of farms
and cows for several decades, but our total production has not changed greatly. In 2013, we lost 6.5%
of our farms which was larger than previous year declines. Officially, we currently have about 200
conventional farms, 55-60 organic farms, and about 15 Amish farms which are much smaller. We have
113 licensed dairy processors in ME. 109 of those are small scale producing a wide variety of dairy
products; while small, they still have technical needs on an ongoing basis and they are all looking for a
high quality source of milk whether it is purchased from others or produced by them. So, our challenges
are to develop and deliver an educational program based on needs of a wide diversity of producers and
processors milking cows, goats, sheep and water buffalo. Again, my primary goal is to increase
profitability and improve sustainability of the dairy industry.
In looking back at prior programs, Extension has provided a wide diversity of opportunities to build the
educational and diagnostic infrastructure in Maine. All of these efforts were collaborative, supported by
extramural dollars and returned subsidized programs for entry into these areas. Examples included:
1.
Computerized ration balancing to provide nutrients on a maximum profit basis
2.
When I wrote the Nutrient Management Computer Program, it was to improve farm
management by better utilizing manure resources. It supplied a way to maximize nutrient use from
manure, reduce purchased fertilizer costs and meet environmental regulations. That program is still
valuable decades later.
3.
The MECHAP (Maine Cattle Health Assurance Program) program was a collaborative effort of
the University, Department of Agriculture, Conservation & Forestry, agribusiness, veterinarians and
producers to bring increased capacity to diagnose disease issues, improve milk quality and improve
profitability. Over several years, we increased the capacity to increase knowledge transfer and
diagnostic capacity for several health issues.
4.
With a diverse group of farm and processing operations, sanitation is a priority issue to
producing high quality food. We teach an all-day sanitation class, and it will be on a DVD soon.
5.
We work with a wide group of producers to evaluate business options through cash flow
modelling, business plan development and financial management.
6.
To have a successful sustainable dairy industry, there needs to be profitable farms for transfer
to new owners/generations. The discussion of profitability, generational transfer , retirement planning
and long term care are important to sustainability. Our website
http://www.farmtransfernewengland.net has a wide diversity of providers and resources on these
issues.
7.
With the U.S. going to risk management as a basis for farm programs, we held several webinars
on the use of the futures and options market to modulate risk. Additionally, we covered the myriad of
programs available to dairy producers from private industry using a model farm. Most recently, we held
educational webinars on the upcoming Dairy Margin Protection Program to roll out in September as a
component of the new farm bill. We developed a spreadsheet to model costs and returns for this
program based on current understanding.
Looking at the breadth of needs takes a lot of people and all the previous programs in the snapshot
above were the result of collaborations. Just as “it takes a village to raise a child”, it takes a diverse
group of people to put together programs for a diverse dairy industry.
With that long introduction, I was interested in how agribusiness, government and University providers
could put together a plan of collaborative programs to improve sustainability in the dairy industry. I put
together a small group of individuals representing all the major segments of agribusiness, government
and University providers including lawyers, farm accountants, feed representatives, soil consultants,
dairy milk buyers, regulatory personnel, records analysis, etc. and called it a Dairy Summit. My message
to the group was: There are a lot of excellent people that we can pull together and collaboratively
utilize to move the industry ahead. Each of their skills is important and needed. I wanted a small group
(<30) and a group that everyone was comfortable with. The goal was that these industry representatives
would take the results of our discussion back to their coworkers for implementation. Our agenda for
the day was:
1.
From your perspective, what do you see as the biggest issues facing the dairy industry? From
that discussion, we pulled together where the industry was currently.
2.
Next, we strategized where we wanted to industry to be.
3.
And finally, goals for our work with the industry and things we could do to emphasize those
goals.
Everyone felt that two of the most effective means of information transfer were through demonstration
plots and the use of dairy profit teams. In essence, we came up with a Strategic Plan for the future as a
result of the discussions. Outcomes were aligned into six major program areas and I’ll quickly go over
their highlights.
1.
Soil health is my/our number 1 critical area for enhanced profitability. Without the soil health
for high quality forage production, we cannot have a sustainable dairy industry. Issues we talked about
included soil amendments, soil testing, pH, micronutrients, tillage methods, etc. Lauchlin Titus
developed some micronutrient recommendations for inclusion in fertilizer formulations that would
vastly improve crop nutrition.
2.
Production Management Improvement – What are the efficiencies and benchmarks that make a
dairy industry profitable? How do we analyze the records on farms to come up with new goals and
identify bottlenecks? Animals per worker, production per worker, improved reproductive performance,
nutrition, udder health, records analysis and costs of raising heifers were all components of this
discussion for improvement. One of our goals was to increase the number of herds utilizing production
testing by 50 (currently about half of Maine’s dairy farms are on production testing).
We stand to learn an increased amount of information about genetics In the next 10 years. The
Connecticut legislature has just given UCONN 1.5 billion for advancing their genetics program across the
University (their animal science department is currently hiring a faculty member who will be a part of
that group). We will learn quite a bit from their work about what turns on and off different parts of the
genome.
3.
Financial Management—There are several areas of financial management that are critical to a
sustainable industry. Certainly, cash flow analysis looks at the ability to pay bills and cost of production
calculations should be done on individual farms on a regular basis and used to make management
decisions. Individual farm products costs are more important than industry costs. These are especially
valuable in positioning a farm to take advantage of new risk management programs. A comprehensive
evaluation is needed to inform farms of the costs of production, but also maintenance of equipment.
We want to continue farms business growth, improve their balance sheet, and increase their net worth.
4.
Farm Transition—This is a comprehensive area that entails a wide diversity of topics from farm
operation in the face of disability to farm succession, transfer, tax management, retirement planning,
long term care, etc. The basic components needed by everyone include a will, medical directive and
powers of attorney. I feel that everyone over the age of 18 needs to consider the implementation of
these components and mentally preparing how they are going to plan for retirement; regular review and
updating after life events is important (birth, death, divorce, major life events). A will gives directions on
how you want assets dispersed which I believe has great value. Without written discussions, the
probate court decides the disposition of your assets. Discussions we have had in these areas deal with
what to do in the event of the 4Ds – death, divorce, disability and disinterest from a business
management perspective. How much money do you need to generate for your family to be supported
by the business?.
5.
Environmental Stewardship—Certainly our goal with this area was to reduce the negative
impact of farm pollutants and Maine especially has been a leader in this area. We discussed the benefits
of nutrient management plans for best use of on farm nutrients, use of buffer strips, use of cover crops
and making best use of nutrients.
6.
Alternative Markets—While there is a wide diversity of alternative markets available to dairy
producers, evaluate the profitability of these ventures. What is the cost and return for what is invested?
While business plans can be difficult to get done, they are critical to determining if a new market is
worthwhile