January 29, 2009

Contact: Cornell Cooperative Extension dairy and farm business management educators:
Clinton/Essex County: Anita Deming, 518-962-4810; Franklin County, Carl Tillinghast,
Jessica Prosper, 518-483-7403; Jefferson County: Ron Kuck, Molly Ames, 315-788-8450;
Lewis County: Frans Vokey, Peggy Murray, 315-376-5270; St. Lawrence County:
Brent Buchanan; 315-379-9192; and Dr. Mark Stephenson, Cornell University, 607-255-0324
(See Milk Price Update projection from Cornell in last paragraph)

NNY Extension Offers Farmers Profitable Strategies to Survive Low Milk Prices in 2009

Low milk prices and high feed costs will impact every dairy farm in 2009. Even efficient farms with low debt will be impacted. The dairy educators with the six Cornell Cooperative Extension offices in Northern New York stretching from Lake Ontario to Lake Champlain want farmers to know that they are immediately available to help.

Extension Educators Still Make “House Calls”
“Extension still makes ‘house calls’ or ‘barn calls.’ Extension educators are immediately ready to work free-of-charge and confidentially with producers on their farms to make an in-depth evaluation of ways to make ends meet during this difficult time,” says Cornell Cooperative Extension of Franklin County Director Carl Tillinghast, who is also a dairy herd management and systems educator.

Analyze Data, Estimates
Anita Deming, executive director of Cornell Cooperative Extension of Essex County, says, “There are low investment, high return business management recommendations that have been proven to work on many farms that farmers need to be aware of. Evaluate your profit centers. Review records on the various enterprises in your business to be sure they are profitable. The more data that you have collected, the better your decision will be. If you haven’t collected data yet, get started with estimates. Now is also a good time to evaluate past decisions to see if they are still the best for you.”

Create a Team of Advisors
Farm Business Management Educator Molly Ames with Cornell Cooperative Extension Association of Jefferson County says, “Create a ‘profit team.’ Bring your trusted advisors together to discuss the future of your farm. Some farmers pay their nutritionist, veterinarian, banker, and crop advisor to spend an hour discussing ways to make the farm more profitable, but most will do it once or twice for free to help your farm succeed. Profit teams work best when provided with accurate information on the farm resources and performance before the meeting. Have an agenda and stick to it.”

Cornell Cooperative Extension Association of Jefferson County Dairy & Livestock Educator Ron Kuck adds, “Joining or organizing a peer discussion groups helps farmers understand that they are not alone and meeting with peers is a great way for maintaining a healthy attitude and generating new ideas by talking with neighbors who share your concerns.”

Consider Alternatives, Education
Farm Business Management Educator Peggy Murray of Cornell Cooperative Extension Association of Lewis County says, “Evaluate alternatives. There is a wealth of information on new farming tactics. Look to trusted advisors, online, at classes, or in trade magazines for reliable advice. Brainstorm ways that you could incorporate proven practices on your farm.”

Attend Workshops
Cornell Cooperative Extension Association of St. Lawrence County Agricultural Team Leader Brent Buchanan says, “Take advantage of Cornell Cooperative Extension production workshops, tax schools, and discussion groups or start your own dairy club to talk with other farmers in your area about what is working, or not working and develop solutions or opportunities. Invite speakers to help you explore ideas.”

The Extension educators also suggest:
• taking management classes offered by Extension, local community colleges and online to learn to be a better farm manager

• developing and implementing a plan with realistic objectives as a step-by-step process for making a profit

• shopping for buyers as well as sellers to get the best possible deal for your product and inputs. Talk to neighbors about pooling assets to garner a better deal for all

• adding value to your milk through component changes or lower somatic cell counts.

• using government programs to minimize taxes through agricultural land use value exemption, sales tax exemptions, off road fuel tax exemptions, school tax reduction for farmers, new farm building exemptions, etc.

• selling unproductive or underperforming assets: land, equipment, livestock that are not contributing to the core business. Consider reducing herd size to align with available feed. Consider a timber sale. Evaluate the disposal of assets to see if it will help fill a cash flow problem in the short run.

• getting an off farm job to add to cash flow, if you can take an another job without negatively impacting the farm business.

Talk to Lenders
Deming adds, “Another option might be to borrow money or ask the bank to stretch out your payments. In general, you do not want to put short-term debt onto long-term loans or go to interest only, however, it may be necessary. If you cannot survive downturns the way you are, then you need to identify a new business and management plan that will be profitable in the long run. It is important to stay in close communication with your lender especially when you are having problems.”

Brainstorm with Benchmarks
The Dairy Farm Business Summary is suggested as a longer-term good benchmarking and management tool that allows farm owners to see their progress over time and in comparison with similar size farms across the state. Farm Business Management Educator Jessica Prosper, who advises farmers in Franklin and St. Lawrence counties, says, “Once you have data collected, compare your farm’s performance to statewide benchmarks. Are you at or above average in various measures such as milk sold per cow, milk income over feed costs, milk sold per worker, return on investment, labor and management income, and others? Benchmarking is a good way to find the ‘bottleneck’ areas that are holding you back.”

Farmers can call local Extension offices to schedule a Farm Business review to identify current benchmarks for their farms.

Is it time to sell?
The Extension educators say the list of options also includes evaluating whether or not it is time to sell the farm business.

Get help for the stress
For those individuals or families who are feeling the weight of the stress of the times, Cornell Cooperative Extension can provide a connection to the free and confidential individual and family counseling services available through the NY FarmNet at Cornell. Farmers can also contact FarmNet directly at 800-547-FARM (800-457-3276).

Call Cornell Cooperative Extension
Northern New York Cornell Cooperative Extension dairy and farm business management educators can be contacted at:
Cornell Cooperative Extension Association of Essex County: 518-962-4810, Anita Deming
Cornell Cooperative Extension Association of Franklin County: 518-483-7403, Carl Tillinghast, Jessica Prosper
Cornell Cooperative Extension Association of Jefferson County: 315-788-8450, Ron Kuck, Molly Ames
Cornell Cooperative Extension Association of Lewis County: 315-376-5270, Frans Vokey, Peggy Murray
Cornell Cooperative Extension Association of St. Lawrence County: 315-379-9192, Brent Buchanan, bab22@cornell.edu.

Find Resources Online
Fact sheets, research reports and resources for the dairy, livestock, horticultural, maple and biofuels industry; agricultural-based economic development; and local foods and products marketing are online on the Northern New York Agricultural development Program website at www.nnyagdev.org. 

Cornell Update on Milk Prices Now Online
Cornell University dairy marketing and policy specialist Dr. Mark Stephenson expects the average price paid to New York dairy farmers per hundredweight (cwt) of milk in 2009 to be about $4.70 less per hundredweight over 2008 prices. To see his just-issued Update on Milk Prices go online to http://www.dairy.cornell.edu.  # # #

Summary from Update on Milk Prices by Dr. Mark Stephenson, Cornell University Program on Dairy Markets and Policy (check website at http://www.dairy.cornell.edu for additional updates)

Past National Average Milk Pricing
2008 $18.29/cwt
2007 $19.21/cwt
2006 $12.96/cwt
2005 $15.19/cwt
2004 $16.13/cwt

Expected average Boston Uniform milk price to be $13.95 cwt in 2009
Jan $14.02/cwt
Feb $12.28/cwt
Mar $11.86/cwt
Apr $12.36/cwt
May $12.89/cwt
June $13.16/cwt
July $13.74/cwt
Aug $14.45/cwt
Sep $15.10/cwt
Oct $15.71/cwt
Nov $15.90/cwt
Dec $15.94/cwt
# # #