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DAIRY ST R “All dairy, all the time”™
Volume 22, No. 23
January 30, 2021
Updating on their own timeline Rollers grow herd, improve facilities over six years By Andrea Borgerding andrea.b@dairystar.com
HEWITT, Minn. – The Roller family knew they had to make changes to the facilities on their dairy to ensure the farm’s future. With the goal of improving cow comfort and minimizing labor, Ryan Roller, planned every angle, dimension and feature of the family’s new 62-cow freestall, 30-cow bedded pack, tunnel ventilated facility and swing-10 milking parlor. “We wanted to get a barn that had more cow comfort – that was the main thing,” Gene Roller said. Ryan agreed. “I would say more efciency too,” Ryan said. “We would spend many hours milking.” Prior to updating their facilities, the Rollers – Gene and wife Brenda, along with their son, Ryan, and his wife, Amy – milked a herd of 50 registered Holsteins in a tiestall barn. The barn needed repairs, and with Ryan returning to the farm full-time, the Rollers’ next step was to construct a new Turn to ROLLERS | Page 6
MARK KLAPHAKE/DAIRY STAR
The Rollers – from leŌ, Gene, holding Charlie, Brenda, Ryan holding Macy and Amy holding Caleb – recently nished a facility expansion project. The Rollers milk 92 cows near HewiƩ, Minnesota.
Dairies need to operate as businesses Sipiorski outlines important plans producers need to be protable By Krista Kuzma
krista.k@dairystar.com
After a year like 2020, Gary Sipiorski wants producers to be more proactive when it comes to the business side of their dairy. “There are things we can do as dairy producers to prevent (volatility), and working with your lender is one of them,” Sipiorski said. … “Let’s face it; dairy producers have a great deal of assets invested, and they need to be able to work with a lender to make good use of those and yet have some boundaries of what makes sense to make sure everyone is successful.” Sipiorski, an agricultural business and nancial consultant, presented “Financial knowledge your banker wants you to know” Jan. 15 during a Minnesota Milk Minne-Series webinar. “We do need to plan,” he said about dairy farmers. “I know with cows, you get up in the morning, there are chores to do, cows to milk and other things. ... I’m going to encourage you to take a look at a longer-term
plan then just what the day to day is.” Planning is needed because of the volatility seen in 2020. The novel coronavirus pandemic caused major disruption in the food service industry, which is only back to $54 billion in sales compared to $68 billion before the start of the pandemic, Sipiorski said. Large swings in the milk price also meant more government aid, which accounted for 42% of net farm income in 2020. “We’re not talking gross income, we’re talking net income,” Sipiorski said. “That has been huge. Don’t expect that in the coming year.” Sipiorski said a plan can help a farm manage potential ination, which could happen as the country’s debt to revenue ratio increases. “What happens with ination is we have too many dollars chasing too few assets,” Sipiorski said. On a dairy, Sipiorski suggests the debt to revenue ratio should be 1-to-1. “I encourage you to look at your balance sheet,” he said. “Look at the amount of debt and divide it by the amount of revenue, the amount of gross income you’re generating on your farm. How close are you to 1-to-1?” On a per-cow level, Sipiorski said debt should not exceed $10,000 per cow, and from a production
standpoint, Sipiorski said not to exceed $20 of debt per hundredweight of milk. “We see some farms exceed up to 2-to-1 (debt to revenue ratio),” he said. “The concern is paying things back. I know interest rates are low right now. We have to be careful not to get too far out.” In the last 20 years, Sipiorski said the country’s private debt by individuals and debt from businesses has increased severely, with each category around the $14 trillion mark. “Is debt wrong?” Sipiorski said. “It is not. It’s OK to borrow money as long as you do it for the right purposes.” To stay ahead of ination and debt, Sipiorski said a dairy must have productive assets. Every dollar used to buy an asset should generate at least $1 in return. “Be careful when you buy assets that don’t generate you enough income,” Sipiorski said. “A good example is a dairy cow. We can buy a good dairy cow for $1,500 and that cow will generate between $4,500 and $5,000 in income. That’s a good investment.” Sipiorski cautioned about high-priced tractor and land purchases. “Think about the return you’re going to get on Turn to PROFITABLE | Page 5