Management Is the Key for Dairy Producers
Published: Friday, February 13, 2015
Of the three factors that control profitability on dairy farms, management is the only variable that the farmer controls. The other two are feed prices and milk revenue.
Last Wednesday, DairyWorks consultant and veterinarian Tom Fuhrmann challenged area dairy farmers to focus on management.
"I worked around the world, where I've seen other dairies become very efficient, and I think I've just learned that management is the key," said Fuhrmann, a speaker at a regional meeting hosted by Indiana Dairy Producers and NorthStar Cooperative.
Management can be a nebulous term, but Fuhrmann said it involves doing the "little" things that impact your bottom line. Things like lowering your somatic cell count, training your employees, increasing fertility rates in your herd, increasing milk production per cow and limiting death loss.
"When we talk about managing your family business ... we're really talking about profitability. And what is profitability? Either you got to do work to be as productive as possible or you got to do the work to be as efficient as possible. Because you can only generate so much revenue."
As dairy farms continue to grow larger, Fuhrmann said "solid core management" is one factor driving the success of many farms. Another factor is efficiency.
He said a farmer who can milk 100 cows efficiently can probably get an increased return on his investment by adding another 50 cows.
Fuhrmann, who grew up on a dairy farm in Wisconsin before attending veterinary school, has advised some of the largest dairies in the world, including farms in China, Saudi Arabia and here in the United States. He believes producers should develop a business-like approach.
"Dairy as a way of life is generally poor business, but dairying as a business allows family life to develop, mature, grow and be much, much better."
He said China has 18 million dairy cattle. The industry is growing, but production lags because of poor management. He said it is easy to copy facilities and technology, but it's not that easy to copy management.
Successful managers do three things, Fuhrmann said. First, they organize work.
According to Fuhrmann, work "is a bunch of details." The manager's job is to put all of the details together and develop a process for doing work.
Second, successful managers work with all employees, even family members, to show them "how we do it here." If the employees are Hispanic, the operator needs to work with a translator to write the instructions in a step-by-step order.
To improve management, Fuhrmann advised farmers to provide proper training for even simple tasks like cleaning teats. If the operator fails to provide training, the workers themselves will decide on their own how to do it and that could affect profitability.
"There is no job so simple that it cannot be done wrong," Fuhrmann said, urging farmers to provide detailed training for every employee.
And third, successful managers monitor the results.
According to Fuhrmann, some dairy farm work, like milking cows, is fairly routine. But other work, like knowing how to treat a sick cow, involves some decision making. He said it is the manager's responsibility to train his head milker how to diagnose a sick cow and knowing what treatment protocol to recommend.
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