PDPW Dairy's Bottom Line September 2014 by Madison.com

Volume 16: Issue 5 September 2014

BOTTOM LINE Sharing ideas, solutions, resources and experiences that help dairy producers succeed.

An overview of farm succession planning Page 8 Projecting the true cost of production and breakeven

Page 14 Managing dairy debt in this economy

Page 22 Build your team

ALSO IN THIS ISSUE: Texas Dairy Tour ..............4 OSHA’s Impact .............. 10 Dairy Technology Tours ..19

Most farmers want to transfer their farms to involved children or employees, and many even tell their neighbors that they have met with an attorney, accountant or consultant to develop a succession plan. While farmers want to do the right thing, few, however, truly understand the meaning and beneﬁts of establishing a formal succession Troy Schneider plan. Many farms have continued to survive under the leadership of a second, third and even further generations. However, for every farm that successfully transitions to the next generation, many more stumble.

Putting these pieces together for a farm succession plan increases your farm’s chances for long-term success and creates a legacy for generations to come.

Identifying the right people means choosing the appropriate people to be the successors. Sometimes in family farms, the qualification of being a future owner means having the right last name. The successors to the farm, however, should be judged based upon business qualifications instead of family qualifications. The family inherently stresses its core values, such DEFINING SUCCESSION as unconditional love, emoPLANNING tional support, loyalty, accepThe online dictionary tance and inclusion within Wikipedia defines succession the family. Because family planning as the “process for values hold the ongoing identifying and developing family relationship as most internal people with the important, mistakes, bad potential to fill key business conduct and underperforleadership positions in the mance are often overlooked company.” The two key eleor tolerated. ments in that definition are Conversely, business 1) identifying the right people values are based on results and then 2) developing the with business decisions right people. and actions being carefully

assessed and often challenged. Business values view effective effort, pro-activity, teamwork and ﬂexibility as healthy. Job performance and conduct are evaluated. Underperformance or poor conduct is not overlooked and has consequences. Developing the right people means providing development experiences to the successor or successors. The senior generation must change the farm’s environment from that of a dictatorship to that of group planning and delegation of authority and responsibility. A succession plan should establish a formal method of development, motivation and training of the successors. CORE CONCEPTS In order for farm succession to be successful, See SUCCESSION, on page 2

Professional Dairy Producers™ I 1-800-947-7379 I www.pdpw.org

2 PDPW - Dairy’s Bottom Line • September 2014 SUCCESSION Continued from page 1

the farm’s senior generation must adopt the following core concepts: Start early. The senior generation must start early to transfer responsibility and authority to successors. This will assure that the next generation will gain experience from the senior owners while also gaining new and more progressive skills. If the process is not started early and an event, such as an unexpected death or illness, causes the transfer of management, the successors may be unprepared for the change. In addition, if the process is not started early, the people who may be the best successors may become frustrated and leave the farm. Communicate. A forum should be developed for the farm’s members to share their perspectives and learn the facts about the farm business. Openness builds trust. Periodic meetings provide the successors objective information about the farm, an opportunity to share their thoughts and the assurance that their opinions will be heard and considered. Formalize the plan. A farm succession plan should be in writing, detailing how the management, and ownership of the farm will transfer from the current owners to the successors. The succession plan is really three interrelated plans: a business plan, a management succession plan and a future ownership plan. The business plan should address the ongoing cash flow needs of the farm. The plan must assure that the financial needs of the withdrawing owner are met.

thought out process. It does not take some time; it takes a lot of time. Because farm succession planning is a process, the sucYou can learn more about cession plan must be periodbusiness succession at a ically reviewed and updated one-day PDPW-developed and changes must be made Business Transition as circumstances require. The workshop. Choose the date progress of the succession plan and location that works best must be analyzed because, as the for you: famous management professor Tuesday, Dec. 2, Eau Peter Drucker once said, “What Claire gets measured gets done.” Wednesday, Dec. 3, If your wish is for your farm Green Bay Thursday, Dec. 4, to be operated by successors, Madison a formal succession plan that identifies successors, develops the decision-making abilities The management succession of such successors and sets plan must establish a formal forth the method to transfer method for the development, ownership to them is extremely motivation and training of important. successors. The plan must be Putting these pieces together developed to delegate responsi- increases your farm’s chances bilities and authorities to succes- for long-term success and cresors. It should include equitable ates a legacy for your farm for compensation planning to generations to come. recognize the real contribution of both family and non-family by Troy Schneider employees and active and inacTwohig, Rietbrock, Schneider & tive owners. Halbach, S.C.‌ The ownership succession plan must set forth how Dairy’s Bottom Line is published six times a year by PDPW with the farm’s ownership will be cooperation from Agri-View. transferred. Lifetime transfers Editorial should be considered, along Marian Viney 608-250-4320 with using one or more business mviney@madison.com entities to make such transfers. Advertising The senior owner’s estate plan Tammy Strauss 608-250-4157 is also important to assure that tstrauss@madison.com succession of the farm and PDPW Office all of its critical assets can be Professional Dairy Producers™ 820 North Main Street, Suite D accomplished in the event of an Juneau, WI 53039 untimely death. 800-947-7379 mail@pdpw.org; www.pdpw.org Finally, the succession plan should be designed to capitalize on ways to reduce taxes for both the senior owner and the continuing successors. Assess the process and the progress. Effectively transferring the farm to the next generation is not an event but a well

Upcoming workshops

PDPW Board of Directors President Keith York Lake Geneva 262-903-6265 kejyork@gmail.com Vice President Mitch Breunig Sauk City 608-643-6818 mysticvalley@wildblue.net Secretary Kay Zwald Hammond 715-796-5510 rfkz@centurytel.net Treasurer Charlie Crave Waterloo 920-478-3812 charles@cravecheese.com Jeremy Natzke Greenleaf 920-371-1968 jnatzke@yahoo.com Brian Forrest Stratford 715-650-0267 bforrest70@gmail.com Marty Hallock Mondovi 715-495-2812 marbec@nelson-tel.net Walter Meinholz DeForest 608-846-4379 wmeinholz@centurytel.net Linda White Reedsburg 608-985-6006 linda@krdairy.com

PDPW Advisors Matt Repinski Land O'Lakes Winfield Division Amherst Dr. Richard Wallace Zoetis McFarland Dr. Steve Kelm University of Wisconsin-River Falls River Falls Steve Schwoerer Badgerland Financial Fond du Lac

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Join us for a 2-day Texas Dairy Tour PDPW’s Texas Dairy Tour slated for Nov. 4-5 will take place in the Texas High Plains, the milk production capital of Texas where the number of dairy cows in the region increased nearly tenfold between 2000 and 2012. Developed by dairy producers for dairy producers, the Texas Dairy Tour will start and end in Amarillo and will take in six stops.

of age to confirmed pregnant. The heifers move through four stages in carefully designed drylot pens with well thought-out windbreaks and return to their home dairies at 20 months of age. The entire operation is so computer-oriented that it requires minimal full-time employees. We will learn about the ranch’s A.I. systems, with each source farm determining which sires are used on their heifers.

Day 1 tour stops

• Hilmar Cheese Company, Dalhart, Texas: Built less than 10 years ago, the Hilmar Cheese Company’s Dalhart processing facility has grown to process almost 1 million gallons of milk per day into cheese and seven varieties of whey protein.

Its latest expansion, scheduled for completion in late 2014 or early 2015, will allow the plant to process up to 20 percent more milk, providing opportunity for

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dairies in the Panhandle. We will zero in on the company’s core value of constant improvement and innovation. • Avi-Lanche Jerseys Dairy, Dalhart, Texas: Avi-Lanche Jerseys, owned by Richard Avila and his wife Jennifer (whose father co-founded Hilmar Cheese Company), was the first herd from California to start milking cows in the Dalhart area and is the home to 2,400 milking Jerseys. Avi-Lanche Dairy’s Saudi-style barns provide input cost advantages over freestall barns while offering protection from adverse winter weather familiar to Dalhart. The dairy uses 80 percent genomic sires and focuses on creating a healthy cow with longevity that is strong on production and conformation. A new business entity in the works is an embryo service to fit the needs of producers both domestically and internationally. • Dalhart Jersey Ranch, Dalhart, Texas: Owned by five California families, this unique ranch can house up to 27,000 heifers, ranging from 6 months

Day 2 tour stops

• Del Rio Dairy, Friona, Texas: Owned by Rocky and Liz Gingg, Del Rio Dairy first started milking cows in June 2006. Today, the dairy’s 3,800head herd is milked between two parlors. The herd is about 80% Holstein and 20% Brown Swiss or Swiss/Holstein cross, with the Holstein cows now being bred to Norwegian Red. Cows are fed three times a day from one commodity barn location. Approximately 3,600 Del Rio Heifers are also raised on site from 5 months in age to calving. Manure is captured in a Double Lagoon setup with solid separators and a composting operation is currently underway. In addition to the dairy having an automated wash system, milkers have the ability to press a code in the electronic key panel and, if there is a mastitis cow, she is automatically sorted and put in a catch pen where she can be treated. We also will learn how management knows if the dairy drops below its desired throughput average of 420 to 444 cows per hour. See TOUR, on page 5

September 2014 • PDPW - Dairy’s Bottom Line

program. The couple also farm about 5,000 acres of land, with Continued from page 4 more than half that acreage irrigated. • High Plains Dairy, Friona, We will learn about the dairy’s Texas: Owners Harry and MarHolstein and crossbred program gret DeWit, in partnership with that includes every heifer being key team members, own and bred for a crossbred calf, as well operate High Plains Dairy based as its emphasis on production on the motto, “If you can’t and low cost. measure it, you can’t manage it. Make plans now to join If you can manage it, you can set fellow dairy producers and other goals.” industry professionals Nov. 4-5 To that end, the dairy uses a on a two-day dairy tour swing software system that measures through the Texas High Plains. metrics at every step in the You are bound to see and learn business for its 10,300 head of about new ideas, ways of doing milking cows, dry cows, heifers This is just one of the six stops lined up for the Nov. 4-5 Texas Dairy Tour that promises to things and technology that can and calves. The dairy’s 72-cow have lots of ah-ha moments. help you at home. More benefits rotary milking parlor handles are yours as you sit by fellow 430 cows an hour. • Dairy Fountain, Plainnumber of dry cows and heifers. dairy producers on the bus and With feed being a big expense, view, Texas: This family-owned An 80-cow rotary is used for the talk with them between tour the dairy grows a large percentdairy has a 5,700-head milking dairy’s Holsteins and crossbreds. stops. age of its feed, farming 7,400 For more information, visit string comprised of 70 percent The Ruynes are both heavily acres that supplies 90 percent www.pdpw.org or contact PDPW of the silages for the two dairies straight-bred Holsteins and 30 involved in the dairy, with the and heifers. percent crossbreds and a similar wife overseeing the heifer-raising at 800-947-7379.

TOUR

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PDPW Calendar of Events Check out PDPW educational events for September through April. We grow YOU! PDPW’s 2014-2015 Calendar of Events includes 63 educational events to help dairy producers, their farm employees and other industry professionals stay in step with the latest ideas and issues in the dairy industry. Designed by dairy producers for dairy producers, this year’s programs include learning opportunities for dairy professionals at all levels and career stages, from those just beginning a dairy career to the seasoned dairy producer looking to be challenged. Highlights of the 2014 calendar include: • Sept. 17: World Class Webinar featuring ag economist Dan Basse, “The New Landscape of Feed Costs for Dairymen: How Best to Protect and Profit into 2016.” • Sept. 24: Dairy’s Visible Voice™ training, enhancing leadership through more effective communication, Baldwin. • Oct. 8: World Class Webinar featuring ag economist Dan Basse, “Risk and Opportunities as the EU Liberalizes Trade in a World Seeking Greater Supply.” • Oct. 14: Dairy Technology Tour, Janesville area

Make your milk samples work harder Like the folks at Badger Holsteins, Unity, WI “We have been using milk samples to test for Johne’s at dry-off. A year ago, we added the IDEXX Milk Pregnancy Test. Testing at dry-off saves us a couple of hours a week in labor and is very accurate and easy to implement.” Joe Meyer

The IDEXX Milk Pregnancy Test is available at NorthStar Cooperative. • Confirm pregnancy earlier with new 28 days postbreeding claim. • Depend on accuracy that is similar to palpation and ultrasound.1† • Work closely with your veterinarian to develop a reproductive management program. Call 1-920-733-6598 or 1-800-631-3510 today to add the IDEXX Milk Pregnancy Test to your recording samples.* *Samples can be fresh, frozen or preserved. † Performance of the IDEXX Milk Pregnancy Test was determined by comparing test results to those from ultrasound and palpation (n=1,315 cows). Rechecks were not included in performance calculations. See IDEXX Milk Pregnancy Test Validation Data Report for full test performance data. 1. Data on file at IDEXX Laboratories, Inc. Westbrook, ME USA. © 2014 IDEXX Laboratories, Inc. All rights reserved. • 105515-00 IDEXX and Test With Confidence are trademarks or registered trademarks of IDEXX Laboratories, Inc. or its affiliates in the United States and/or other countries. The IDEXX Privacy Policy is available at idexx.com.

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• Oct. 15: Dairy Technology Tour, Juneau area • Oct. 16: Dairy Technology tour, Onalaska area • Oct. 28: Calf Care Connection® Workshop, Arlington. • Oct. 29: Calf Care Connection® Workshop, Chilton. • Oct. 30: Calf Care Connection® Workshop, Marshfield. • Nov. 4-5: Texas Dairy Tour. • Nov. 12: World Class Webinar featuring ag economist Dan Basse, “How Long Will Good Times Last? The Merging of U.S. Dairy and Beef Industries’ Profit Cycles.” • Nov. 13: Dairy’s Visible Voice™ training. Location to be announced. • Nov. 18: Dairy Feed and Nutrition Conference, LaCrosse. • Nov. 19: Dairy Feed and Nutrition Conference, Oshkosh. • Nov. 20: Dairy Feed and Nutrition Conference, Madison. • Dec. 2: Business Transition Workshop, Eau Claire. • Dec. 3: Business Transition Workshop, Green Bay. • Dec. 4: Business Transition Workshop, Madison. • Dec. 10-11: Multi-Cultural Management Workshop, Wisconsin Dells. Additional events will be added as needed by members, with changes and additions posted to the PDPW website. Professional Dairy Producers of Wisconsin is a dairy-producer founded organization that provides educational programs and services to fellow dairy producers. PDPW’s mission is to share ideas, solutions, resources and experiences that help dairy producers succeed. For more information, visit www.pdpw.org or contact the PDPW office at 800-947-7379. These events and other PDPW-developed programs are made possible thanks to the following PDPW sponsors. Cargill Animal Nutrition MISSION SPONSORS: Dairy Management Inc. Badgerland Financial Boehringer Ingelheim Vetmedica, Dairyland Seed Co., Inc. DeWitt Ross & Stevens Inc. Diamond V Land O’Lakes DuPont Pioneer MorganMyers FarmFirst Dairy Cooperative Wisconsin Milk Marketing Foremost Farms USA Board GEA Farm Technologies, Inc. Zinpro Performance Minerals Greenstone Farm Credit Services Hastings Mutual Insurance Co. CORPORATE SPONSORS: Progressive Dairyman Agri-View Quality Liquid Feeds, Inc. AgStar Financial Services Roto-Mix Alltech American Foods Group Rural Mutual Insurance Company ANIMART Stewart-Peterson Arm & Hammer Animal Twohig Rietbrock Schneider Nutrition & Halbach S.C. Atten Babler Commodities LLC USAgNet LLC BMO Harris Bank Westway Feed Products BouMatic Wisconsin Cheese Makers Assoc. Zoetis CP Feeds LLC

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8 PDPW - Dairy’s Bottom Line • September 2014

Projecting the true cost of production and breakeven Dairy producers are reminded by lenders, consultants and possibly even themselves that it is important to know their cost of production (COP) and their breakeven (BE). Those reminders create a link between the operational and financial management of their operation. Identifying your cost of production and your breakeven Mark Linzmeier can help you understand where the dairy has been and, more importantly, plan for the overall success of the future of the operation. The new Margin Protection Program (MPP) of the new Farm Bill will create even greater incentive to be able to project COP. While COP and BE may seem like simple, straight-forward terms, several items need to be considered. First of all, a dairy producer should be most concerned about his or her own COP and BE and how it applies to their own situation. While there may be some benefit for dairy producers to compare their numbers to industry averages, it is far more important for dairy producers to understand and compare their own COP and BE with their own operations and ultimately with their specific revenue sources. While COP and BE can be expressed in either absolute dollars or on a per hundredweight basis, many dairy producers are starting to realize the benefit of expressing COP and BE in terms of per hundredweight as that is the measuring stick for

(CBOT), with proper basis adjustments, for certain items, projected market prices from feed suppliers or brokers for certain commodities and feedstuffs, actual costs for purchased ingredients, actual contract prices locked in via feed contracts or a combination of the above. Now let’s consider the cost to maintain the cow herd. Consider the following to properly calculate the costs: cull rate and value, the herd raising its own replacements, using custom Calculating true cost of production may take significant time, but it’s time well spent. calf-heifer growers or buying Consultant Mark Linzmeier, front, reviews numbers with a dairy producer to ensure all replacements and the related important data has been captured. income and expenses related comparing with milk revenue. most volatile portion of the to the herd’s situation. If cattle Understanding COP and BE calculation. Feed cost should be (either mature cow or youngwill be important especially based on what is projected to be stock) inventories are increasing when considering how, or fed on the dairy. That means a or decreasing, that also needs to whether, to participate in the dairy producer should consider be considered. MPP since that program does factors such as: What about other major costs not directly ensure individual • What does the stated ration of production? All costs related profitability. call for? to labor should be considered, Since the MPP only attempts • What is actually being fed including salaries, wages, payroll to calculate a generic industry (does the producer feed above taxes, Workmen’s Compensation milk-over-feed cost margin for the ration dry matter pounds and other benefits. lactating cows, it will not have or feed for more head that are Your COP also must include any direct relevance to the over- actually in the group being fed)? operating costs and interest. All all COP or BE for any particu• What shrink levels does other operating costs besides lar dairy. the dairy have for each of the depreciation should then be So what is the true cost of pro- ingredients? considered and incorporated duction for a dairy operation? • Are any feed ingredients into the projection, again on an Like many other terms used grown by the dairy itself ? accrual basis so as to exclude in the dairy industry, a true cost • If so, how are those being the impacts of any cash or tax of production definition may incorporated into the overall basis strategies. vary from producer to producer, feed cost (actual cost of proThe question arises regarding or even amongst industry production or market prices)? which to use: depreciation, prinfessionals. In addition, COP and • Feed inventories need to be cipal payments or market value BE should be calculated on an considered so that the dairy can changes. If you asked 10 dairy accrual basis. actually calculate and project producers which is most crucial Let’s examine at a high level proper usage amounts. to them, you will most likely get the various components (as • Finally, a reasonable different answers. shown in the chart with an approach needs to be considered Each has merit when properly example) to address that questo project the actual costs of used. However, if depreciation tion and identify key items to any purchased feedstuffs during is used, I suggest a straight project true COP. the projection period. This may line method rather than an IRS Let’s start with feed cost, include using future prices from accelerated method. Bottom See COST, on page 9 which will be the largest and the Chicago Board of Trade

September 2014 • PDPW - Dairy’s Bottom Line

COST

Continued from page 8

Example of calculating cost of production or breakeven.

Per Cwt Feed Cost $ 8.50 Replacement Cow Cost $3.00 Less Value of Cull Cows ($1.50) Net Cost of Maintaining Cow Herd $ 1.50 Labor Other Direct Production Costs $ 2.50 Overall Major Cost of Production $ 0.50 $13.00 Operating Expenses $ 5.00 Interest $ 0.50 Other Income (Bull Calves, etc.) ($ 0.50) Net COP Before Depreciation, Principal or Market Reduction $18.00 Depreciation, Principal or Market Value Reduction $ 1.00 Combined COP or Breakeven $19.00 Less Average Milk Basis

line answer: Choose the one that makes the most sense for your dairy’s financial goals and objectives. Another area to include when calculating your COP is other income and expenses. Consider the impact of bull calf sales, crop sales, patronage dividends—cash and non-cash portions—and any other unusual non-operating expenses. With that said, the following are a number of considerations that each dairy producer should keep in mind when calculating and projecting true COP and BE: $ 2.00 (Gross Price Above Class III or IV) • It may be helpful to flush Class III or IV Equivalent COP or Breakeven $17.00 everything back to the per hundredweight net cost. Other • Consider milk basis and address Class III or Class IV income should reduce operating show a separate COP and BE prices and the gross milk price. expenses. before and after milk basis to • Do not fully rely on histori-

cal COP or BE amounts as feed price volatility will invariably affect future results, so implement a plan to account for that. You should, however, consider historical results for certain operating expenses and other projections. • Consider calculating your COP or BE on an energy corrected milk, or similar basis, to fine tune your projections further. Once you have reasonably projected COP and BE numbers, you will be better equipped to make informed decisions to manage your dairy operation and address the MPP provisions of the new Farm Bill. Mark Linzmeier is a Certified Public Accountant (CPA) and owner of Linzmeier Business Solutions, LLC, a CPA firm that specializes in working with dairies. Linzmeier is based out of Green Bay.

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OSHA’s impact on dairy farm safety Safety is a race without a finish line, with training and communication a never-ending challenge to ensure new workers or non-English speaking employees are aware of the hazards in their workplace. The grand challenge is to develop a safety culture where workers recognize hazards and feel comfortable reporting hazards without fear of reprisal. Together we can create a thinksafety-first environment. In Wisconsin, the Occupational Safety and Health Administration’s (OSHA) goal is to inspect 12 dairies per year based on complaints, referrals, fatality reports or

randomly selected hazard. Farmers and farms. Staff at A General Duty owners need to Clause citation is OSHA have recognize that not appropriate been surprised by the number their safety and for all hazards. In of employee well-being is as order to address complaints they the hazard, the important as have received. farmer is often their workers! The annual LEP sent a Hazard (Local Emphasis Alert Letter to inform him or Program) review her of the hazard and possible shows that inspections do not solutions. This does not carry a result in many violations or citations. That is directly related penalty or fine. During the walk around to the fact that agricultural inspections, the compliance standards are limited, and, officer is often told that the if a hazard is present but no only one(s) who operates or is standard exists, OSHA would exposed to the hazard is the need to invoke the General farmer or his or her family Duty Clause to address the

members. While OSHA cannot issue citations due to the farm family member exemption, farmers and owners need to recognize that their safety and well-being is as important as their workers! Since the emphasis program, farmers have become more safety conscious, and fewer citations for push-off platform guarding, skid steer training and guarding of moving parts are being issued. Areas that deserve more attention, as they are among common violations, include animal handling hazards, hazard communication and electrical.

See OSHA, on page 11

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OSHA

Continued from page 10

Year 2012, with the current LEP expiring on Sept. 30 of this year. At this time, the regional office is reviewing the information to determine if the LEP will be renewed. Several factors indicate the LEP will be renewed: • Concerns, in the form of complaints, are being raised by workers. • A large percentage of the workforce may not be aware of their worker rights or be aware of workplace hazards. • We are identifying hazards. • An emphasis program justifies the outreach activities associated with the industry. Nationwide, OSHA is looking at agriculture as an industry and the more involvement OSHA has, the more OSHA will understand how to serve the agricultural community. To read more about safety and OSHA, see “Changing Hands: Hired Labor on Wisconsin Dairy Farms 2009 – Briefing no. 1 Overview of Immigrant Workers on Wisconsin Dairy Farms” by UW-Madison and UW Cooperative Extension Program on Agricultural Technology Studies. Mary Bauer was raised on a 40-head dairy farm in Birnamwood. She is a Certified Safety Professional and Certified Industrial Hygienist and has served 29 years with OSHA. Bauer worked for 20 years as a compliance officer, and she is working as the compliance assistance specialist in the Eau Claire Area OSHA Office. Mary Bauer Eau Claire Area OSHA Office‌

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Due to the unpredictable nature of the animals, OSHA urges employers to train their workers on how to position and protect themselves. Additional focus should include providing barriers and eliminating the need to interact with the animals in certain pens. Outreach among Wisconsin farmers has been successful, with Wisconsin farmers and associations proactive in learning why OSHA was developing the LEP. Farmers had input into the process of writing the LEP and participated in training sessions for OSHA staff. Farmers took advantage of training offered by OSHA staff, UW-Extension, technical colleges, Susan Harwood Grants, State of Wisconsin Consultation Service, PDPW and insurance companies. New York State announced that it will implement a LEP for Dairy Worker Safety and plans to use Wisconsin as a model. Wisconsin dairy worker safety has been a focus of OSHA since 2009 and was triggered by the death of a Hispanic dairy worker found in a manure lagoon after the skid steer he was driving went through the manure push-off platform. At that same time, farms were consolidating and the make-up of a typical Wisconsin farm was evolving. Herd size has increased, and the labor force has grown to include immigrant labor. A Local Emphasis Program (LEP) has been in effect in Wisconsin since Fiscal

O R M A NC

12 PDPW - Dairy’s Bottom Line • September 2014

Uncertainty and higher incomes stress the importance of tax planning 2014 is shaping up to be a strong financial year for dairies. High milk prices and low feed costs have many dairy farmers seeing improvements to their balance sheets. And, with taxpayers now in the second year since tax reform Andy McCarty that increased top tax rates for individuals, the general principle of defer income and accelerate deductions will apply in many instances. Although it’s easy to put off thinking about taxes until the end of the year, it’s wise to

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the 2014 limit is not increased, there will be limited options on current year purchases. There are proposals from the President and Congress that BONUS DEPRECIATION would raise the Section 179 limit. AND SECTION 179 However, with 2014 being an As of January, federal bonus election year, legislative action depreciation is no longer availis not anticipated until after the November elections. able, and Section 179 expensing Additionally, the proposals are was reduced to a maximum of $25,000. These reduced limits will different when it comes to the dollar amount, with the President’s affect many farmers who have proposal at $500,000 and others at been using immediate expensing to control their income in the past. $250,000. There is also a chance there will be retroactive legislation Expensing of capital assets in previous years has left little depre- in January, as was the case in 2012. Obviously, any legislation in ciation on previously acquired December or January leaves little assets coming into 2014, and if

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Rel.% 98 92 92 99 93 90 93 98 94 92

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or no time to make last-minute, year-end purchasing decisions. As I mentioned before, consider your tax situation and have a plan of action ready. One popular tool that I and other tax consultants are seeing is the use of a lease with an option to purchase. When done correctly, equipment can be purchased at any time during the lease, and with very short notice. This would enable you to acquire needed equipment and maintain flexibility at year end. If Section 179 is not increased, you would at least get a deduction for the entire lease payment made. See TAX PLANNING, on page 13

September 2014 • PDPW - Dairy’s Bottom Line

TAX PLANNING Continued from page 12

DEFERRED PAYMENT CONTRACTS Under a deferred payment contract, farmers sell their crops this year but delay receipt of cash until next year. For tax purposes, these contracts fall under the rules of installment sales. When structured properly, they allow the option either to delay income recognition until actual receipt of cash, or to elect out of this treatment and accelerate income into the year the contract was entered. For added flexibility, this election can be made on each contract independently. At Badgerland Financial, we recommend using many deferred contracts of varying sizes to give you maximum flexibility after year end. Specifics of these contracts

should be discussed with a tax consultant to ensure your individual needs are met. PREPAID SUPPLIES With the unknowns of depreciation, many dairies will turn to prepaid farm supplies (feed, seed, fertilizer, etc.) even more than in the past. Just keep in mind the rules regarding these prepaid supplies. Under the cash method of accounting, the deduction for prepaid farm supplies in the year they are paid for is limited to 50 percent of other deductible farm expenses for the year, unless: • The excess over 50 percent of other expenses is because of a change in business operations caused by unusual circumstances, or • Total prepaid farm supplies expense for the preceding three

LIFE MOVES FAST. SO DOES YOUR OPPORTUNITY TO SHAPE IT. All tra d ema r k s a re th e p ro p er t y of Zo etis In c ., it s affiliate s a n d /o r it s licens o r s . ©2014 Zo etis In c. All right s re s er ve d . GDR 14 0 8 6

tax years is less than 50 percent of total other deductible farm expenses for those three tax years. Prepaid livestock feed also must meet the following conditions (in addition to the above 50 percent test) to be deductible: • The payment must be for the purchase of feed and not a deposit. Consider the following factors: non-refundable, specific quantity terms, seller’s treatment of the payment as a purchase, and no right to substitute other goods or products (can change ingredients). • The prepayment has a business purpose and is not merely for tax avoidance. Examples of business purpose include: fixing maximum prices and securing an assured feed supply or securing preferential treatment in anticipation of a feed shortage. • Deducting the prepayment

does not result in a material distortion of income. Consider the following factors: customary business practices on the livestock farm, the amount of the expense in relation to past purchases, the time of year the purchase was made or the expense in relation to income for the year. RECAP There is a lot of uncertainty regarding taxes heading into the final quarter of the year. And in a year of higher income levels and lower expenses, the uncertainty makes tax planning even more critical. It’s a good idea to meet with your tax consultant earlier than usual to discuss available options and to avoid a tax-time surprise. Andy McCarty Badgerland Financial‌

Two years. That’s all you get to shape a lifetime of milk production. A small window of opportunity when every decision counts and every action has a lasting impact. So make the most of your efforts with Calf Wellness from Zoetis, and discover the true potential of your young herd at CalfWellness.com.

14 PDPW - Dairy’s Bottom Line • September 2014

Managing dairy debt in this economy The business of milking cows is a capital intense business. It is not uncommon to see investments per cow range from $15,000 to $20,000 and more. With a nine-month running streak of positive milk prices in the U.S. dairy milk markets, the question on the minds of many producers is “What’s next?” Is it time to grow the herd and add additional debt to the balance sheet? Is it time to retire debt and just see what happens next? Past lessons have taught agriculture that timing can be everything when it comes to borrowing money. Become aggressive and make moves before the onset of the inflation of the 70s. Get overconfident and witness the pains of excruciating interest rates of the 80s as milk supports melt away. Dairy producer’s experienced increasing expenses along with volatile milk prices in the 1990s and the 2000s. Although it has been just a few months, the profit cushion of 2014 in perspective compared with years past continues to be a time of ongoing decisions. Let’s explore what is influencing the mailbox milkcheck and then try to sort out the options in managing debt. Milk prices have responded to a domestic appetite for cheese, yogurt and butter even though fluid milk consumption keeps ratcheting down. Exports exceeded 15 percent of production last year and should outpace that in 2014. Countries and regions like Mexico, Canada, the Middle East, North Africa and China, along with Asia, are enjoying our safe and nutritious dairy products.

attractive interest rates are still available from lenders. In fact, all lenders have an abundance of money sitting on their balance sheets just waiting for a loan to go. Many dairy producers continue to choose variable, adjustable monthly interest rates because they have been, and still are, the lowest options from their lender. Fixed rate interest rates are higher reflecting what a variety of Bonds and Certificates of Deposits used to fund those loans are paying. A word of caution here: not only if but when interest rates start moving up, those now seemingly low fixed interest rates will move higher. For the last five years consultants have been suggesting No longer is it what the local ment consideration. Obviously producers move to fixed rates. cheese factory is paying for milk, you and your lender will want to That day will come when interor what the once Green Bay make sure your equity remains est rates do move, maybe not by Cheese Exchange bids were, acceptable and the projected much. While quick, fast upper that sets our price. We must cash flow can support additional movements are unlikely, they will now recognize we are dealing in debt. move. a global market and competing Borrowing money now takes Along with interest rates, the with other countries. on a whole different perspecterms of your loans should be Europe is coming off of tive in interest rate movement considered as well. quotas, and they are going head and where the new capital is Generally cattle and equipto head with us. World money invested. ment loans are based on a currencies and geopolitical The Federal Reserve has the three to seven year repayment unrest will affect the milkkeys to interest rate changes. or amortization schedule. Real check deposited into your bank They are focused on the U.S. estate, buildings and land will account. So, with this in mind, economy. The Fed has stated generally have a 10 to 20 year the money investment decisions goals of near 6 percent unemamortization. It is just good continue. ployment and inflation triggers business to make sure the repayOne of the key questions of 2.5 percent. Rates will change ment period matches the life of for new borrowed money is: dictated by these metrics and the item being financed. Will each new dollar invested other economic benchmarks It might be tempting when generate $1.00 to $1.20 in gross that they monitor regularly. extra profit is being generated revenue each year after the loan Let’s turn our attention now due to higher milk prices to pay is made? to interest rates and loan terms down loans with extra payments. Factoring in this thought to help manage the farm’s After outstanding bills are process will take some of the income statement. cleaned up, paying down lines See DEBT, on page15 emotion out of a new investAs of mid-August, very

September 2014 • PDPW - Dairy’s Bottom Line

DEBT

Continued from page 14

rock. If you prepay term loans, you cannot get that money back without rewriting the loan. Make sure you review any prepayment penalties as well. You may not be able to prepay a loan. Dairy producers have seen some good times recently. In tough times producers have few choices in money management. Sometimes it is just paying the bills. Money management may be tougher in good times because then there are more choices to make.

of credit with your lender would make sense. You need to have a discussion with your lender to make sure those now-paidoff lines still remain available when you need them again. Before you start paying off Gary Spiiorsky extra money on cattle, machinery or real estate Gary Sipiorsky is a Vita Plus loans, make sure the equipment dairy development manager and a you use every day is maintained consultant for ABC Consulting that or replaced. works with dairy producers to assess Even though you have not their operation, set financial and been keeping some cash in the business goals and provide guidance in checkbook, I suggest that you making the important decisions that build a half-month’s milkcheck. affect the success of your operation in Milk prices seem to come up slow, but they go down like a the short and long term.

Properly implemented dairy cattle nutrition programs can improve milk production, health and reproductive performance of dairy cows for both the milking herd and dry cows.

Keep this PDPW event on your radar! Dairy Feed and Nutrition Conference Join fellow dairy producers for three one-day conferences in three different locations. • Tuesday, Nov. 18: LaCrosse. • Wednesday, Nov. 19: Oshkosh. • Thursday, Nov. 20: Madison. For more details, visit www.pdpw.org or contact PDPW at 800-947-7379.

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16 PDPW - Dairy’s Bottom Line • September 2014

Why consider colostrum supplements and replacers While feeding 3 to 4 quarts of clean, high-quality maternal colostrum within a few hours of birth is the gold standard of the dairy industry, an adequate supply of high-quality fresh or stored maternal colostrum may Dr. Sandra Godden not always be available. Dr. Sandra Godden, professor in the Department of Veterinary Population Medicine, University of Minnesota, says that is when producers should consider feeding a colostrum supplement or colostrum replacement product. “A colostrum supplement or colostrum replacement product offers a simple, consistent and convenient means of delivering necessary immunoglobulins (Ig) and nutrients to newborn calves while reducing the risk of pathogen exposure,” Godden states. Godden explains that colostrum supplements are designed to provide protective Ig to calves by augmenting poor-quality maternal colostrum (colostral immunoglobulin G less than 50 g/L). Most colostrum supplements provide 25 to 60 grams of immunoglobulin G (IgG) per dose and cost $9 to $18 per

ucts fall under Association of American Feed Control Officials guidelines, and, while manufacturers of non-CVB licensed products will conduct internal quality control testing, Godden notes that testing details will be at the manufacturer’s discretion. Evaluating performance of colostrum replacement products Godden says that achieving adequate serum IgG concentrations (greater than or equal to 10 mg/mL) will be primarily determined by the dose of IgG fed and the efficiency of IgG absorption into the calf ’s There is a time when a colostrum supplement may be needed, and a time when a coloscirculation. trum replacer may be needed. But remember: A colostrum supplement and a colostrum She points out that a dose of replacer are not the same. 150 to 200 grams of IgG must dose. products are derived either from be fed shortly after birth to Godden stresses that feeding spray-dried bovine colostrum or consistently achieve acceptable one dose of a colostrum bovine serum,” Godden states. passive transfer rates. supplement alone will not “Some products are licensed “While most colostrum provide a sufficient mass of IgG through the USDA Center for replacement products provide to prevent failure of passive Veterinary Biological (CVB) 100 to 130 grams of IgG per transfer. while others are not.” dose, some newer products now When maternal colostrum is Godden explains that CVB-li- provide a larger mass of IgG per not available, Godden says the censed products must contain dose or provide label directions alternative is to provide a calf IgG from bovine colostrum that suggest feeding increased with a colostrum replacement collected from Grade A dairmasses of IgG,” she says. product. Colostrum replacement ies. CVB-licensed products Studies have demonstrated products cost $25 to $40 per also must be processed using that several commercially dose and provide a minimum of accepted protocols and must available colostrum replacement 100 grams of IgG per dose. undergo regular purity, potency products, when fed at a high “Immunoglobulins in comand efficacy testing. enough dose (150 to 200 grams mercial colostrum supplements Samples from every lot are of IgG) within a few hours after and colostrum replacement tested at a central U.S. Departbirth, can provide acceptable to ment of Agriculture (USDA) very good serum IgG concenProducts laboratory and annual site trations in calves. The goal is to & sErVIcEs inspections are conducted. get greater than or equal to 90 Husky Equipment Non CVB-licensed colostrum percent of calves with serum Sales & Service • Manure Applications replacement or colostrum supIgG greater than or equal to 10 • Truck-mounted Slinger Spreaders • Truck-mounted Meyer Spreaders plement products may contain mg/mL. • Truck-mounted 4000 Gallon Spreaders colostrumor serum-derived Godden notes, however, that • 4 Spreaders with Injectors Members of the Professional Nutrient Applicators Association of • 4 Semi tankers • Frac tank globulin protein and cannot not all products have proven to Wisconsin, the Minnesota Custom Applicators Association, Iowa • Rental Fill Carts, Props, Pumps Commercial Nutrient Applicators Association, PDPW & DBA. Excellent and Spreaders legally claim that they can be be equally efficacious. working relationship with DATCP, DNR, and UW-Extension personnel. • 60' Boom Truck Pump used for prevention of failure of “Producers should select • Drag Hose • Pit Design Consultation passive transfer. products that have undergone S7701A Denzer Rd. • North Freedom, WI 53951 Non CVB-licensed prodSee COLOSTRUM, on page 17 Office: (608) 544-5445 • Fax: (608) 544-9955 • Toll-Free: 1-877-261-0619

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September 2014 • PDPW - Dairy’s Bottom Line

Serum IgG, mg/mL Maternal Colostrum

Minimum

Summary of treatment means from 26 published studies investigating colostrum products. Number of Means Average Maximum Minimum IgG Intake, g Maternal Colostrum 19 203 447 53 Colostrum-based Replacer 21 126 210 18 Serum-based Replacer 30 129 260 53 Colostrum-based Supplement 8 157 297 85 Serum-based Supplement 4 96 100 90 Maximum

independent evaluation of efficacy in controlled field studies,” Godden states. She urges producers to contact the product manufacturer and ask if efficacy studies have been completed and for the product manufacturer to provide study results. Alternately, producers can read a review of colostrum supplement and colostrum replacement study results conducted before spring 2013, which is reported in the 5th edition of the textbook Large Animal Internal Medicine (2014). “Measuring serum total protein concentrations by a refractometer offers a rapid and inexpensive method to monitor the colostrum program,” she interjects. Serum may be collected from 12 or more healthy calves between 24 hours and seven days of age. For calves fed either maternal colostrum or a colostrum-derived colostrum replacement product, Godden says a serum total protein test cut point of 5.0 or 5.2 g/dL most accurately predicts adequacy (a serum IgG value of 10 mg/mL). In a successful colostrum program, at least 90 percent of calves tested will pass, with serum total protein greater than or equal to 5.2 g/dL. For serum-derived colostrum supplement or colostrum replacement products, she notes that the relationship between serum total protein and serum IgG in calves can vary widely among products, between 4.2 and 5.4 g/dL, depending on the source, level of inclusion or the degree of absorption of non-Ig

Why consider colostrum supplements and replacers Average

Continued from page 16

Number of means

COLOSTRUM

Colostrum-based Replacer 21

Colostrum-based Supplement 8

Serum-based Replacer Serum-based Supplement

Apparent Efficiency of Absorption, % Maternal Colostrum

36 10

Colostrum-based Replacer 14

51 12

Serum-based Replacer

38 15

Colostrum-based Supplement 7

Serum-based Supplement

38 25

The above table summarizes the results of 26 research trials published in peer-reviewed professional journals with nearly 90 different treatments investigating colostrum supplement and replacer products. The table provides a summary of treatment means, which reduces the variability that may have been observed within an individual experiment, or that might occur between individual calves on a farm, and provides a good overview of the performance that can be expected on average. Because some of these studies were conducted during the development of replacer products, they provided less than 100 g/dose of IgG. If preliminary studies are removed from the summary to provide a better estimate of products currently on the market, replacer producers provided an average of 157 grams of IgG, with an absorption efficiency of 31 percent and serum IgG of 12 mg/mL. Supplement products fed in addition to colostrum provided 136 grams of IgG with 19 percent absorption efficiency and resulted in serum IgG of 9 mg/mL. (Source: Pennsylvania State University) proteins. “Given this variation in predicted serum total protein cut points, producers using serum-derived colostrum replacement products should use refractometry to monitor the effectiveness of the colostrum replacement feeding program, but only if studies are available describing the relationship between serum total protein and serum IgG for the specific colostrum replacement product in use on the farm,” Godden states. “If such studies are not available, then the herd veterinarian should periodically submit frozen serum samples for direct serum IgG analysis using laboratory methods such as radial immunodiffusion or enzyme-linked immunosorbent assay.”

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18 PDPW - Dairy’s Bottom Line • September 2014

Webinars to discuss strategies to minimize risks, maximize rewards Last spring at the Professional Dairy Producer’s Business Conference ag economist and commodity marketing guru Dan Basse proclaimed 2014 “the year of the cow.” Calling 2014 an angelic time, Basse predicted Dan Basse that export demand, excellent cow prices, reduced train prices and recognition of dairy products as the cheapest protein on the table would spell significantly better times for dairy farmers. Basse is in the know as he spends his days focused on commodity markets, studying factors impacting the commodity markets and traveling the world

to get a first-hand look at agriculture around the globe. Raised on a dairy and grain farm in Waukesha, he is the president of AgResource Company, a domestic and international agricultural research firm that forecasts domestic and world agricultural price trends. Basse has a keen sense of production agriculture. Dairy producers and industry individuals wanting to know more about potential risks and rewards in the dairy industry are encouraged to participate in one, two or all three World Class Webinars that Basse will lead this month and the coming two months. They include: • Sept. 17, “The New Landscape of Feed Costs for Dairymen: How Best to Protect

and Profit into 2016,” with registration required by Sept. 10. • Oct. 8, “Risk and Opportunities as the EU Liberalizes Trade in a World Seeking Greater Supply,” with registration required by Oct. 1. • Nov. 12, “How Long Will Good Times Last? The Merging of U.S. Dairy and Beef Industries’ Profit Cycles,” with registration required by Nov. 5. Each World Class Webinar is 60 minutes in length, starts promptly at 12 noon Central Time and closes with a question and answer session. Individuals with a date or time conflict can watch a fully recorded version at their leisure as long as they have pre-registered for the webinar. PDPW’s World Class Webinars are open to all interested indi-

viduals, and one paid registration allows as many individuals who can gather around one computer to participate. Webinars are available on a stand-alone basis, with a cost savings to those who wish to participate in all three webinars in this series. For more information, visit www.pdpw.org or contact PDPW at 800-947-7379.

Our clients rise to the top. Today’s dairy farm faces unique challenges and opportunities. AgStar Financial Services is focused on providing you tools so you can rise to the challenges and shine with success. Our clients benefit from our understanding of the industry combined with local expertise and our full range of financial management services, customized to help you find what’s best for your operation. For more information, please contact one of our experienced Financial Service Officers today.

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September 2014 • PDPW - Dairy’s Bottom Line

Save the dates for Dairy Technology Tours: Oct. 14, 15 and 16 PDPW members have been asking for farm tours and the opportunity to see new on-farm technologies and to witness robotic milkers in action. PDPW listened! Three one-day Dairy Technology Tours are on tap for Oct. 14, 15 and 16. PDPW Dairy Technology Tours will visit nine robotic milking farms in three different regions of the state The farms will have anywhere from one to eight robot units. Tour stops also will focus on other technologies, such as robotic feed pushers, auto calf feeders, heat technology and the latest technologies affecting the dairy industry.

Using robotic milkers means data can be at your fingertips.

During the tours, you will hear firsthand from dairy producers why they switched

to new technology, how it has changed their operations and the technology’s impact on

management, production and labor. With each day of tours hitting a different part of the state, the tour bus will depart from a different location each day. Tour areas Oct. 14, Janesville area; Oct. 15, Juneau area; and Oct. 16, Onalaska area. In addition to a full day of information and education and an opportunity to network with fellow dairy farmers and other industry enthusiasts, everything you need for the day, such as transportation, restrooms, lunch and refreshments, comes with each Dairy Technology Tour. For more details, visit www. pdpw.org or contact PDPW at 800-947-7379.

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Boost your calf care knowledge and skills Calves started off right are key to your future profit. For that reason, calf raisers and dairy farmers designed a professional training program to address leading issues and to deliver new research to calf caretakers. The results of this group, a committee of PDPW, are the upcoming PDPW Calf Care Connection® workshops. This committee asked for the dream team of calf trainers, and that is what they got. Four calf care management gurus, Dr. Sandra Godden, University of Minnesota; Dr. Frank Garry, Colorado State University; Dr. Becky Brotzman, The Dairyland Initiative; and Dr. Richard Wallace, Cattle Technical Service veterinarian for Zoetis, will join forces in Wisconsin and share the latest calf care information at three PDPW-developed Calf Care Connection workshops. Workshops will be held at the following dates and locations: Oct. 28, Arlington; Oct. 29, Chilton; Oct. 30, Marshfield. The three workshops combine high level classroom training with hands-on wet labs designed to challenge even the most seasoned calf care provider. The workshop brings to dairy farmers and calf specialists, the industry’s more sought-after experts. This training also is for other industry experts like nutritionists and veterinarians. Continuing education credits are available. American Registry of Professional Animal Scientists (ARPAS) members participating in a Calf Care Connection workshop can receive 4.0 Continuing Education Units (CEUs) while the School of Veterinary Medicine, UW-Madison is offering 5.7 CEUs. The opening session of each

Boost your calf care knowledge and skills

Three one-day Calf Care Connection® workshops are on tap: Tuesday, Oct. 28, Arlington; Wednesday, Oct. 29, Chilton; and Thursday, Oct. 30, Marshfield. Take advantage of these workshops to increase your knowledge of calf care.

workshop will focus on the “Pros, Cons and Best Management Practices for Group Housing of Pre-Weaned Dairy Calves.” During this session, Dr. Godden will hit upon four key topics: 1) Pros and cons of group vs. individual housing systems for pre-weaned calves; 2) Management of computer feeding systems; 3) Best management practices to minimize disease risk; and 4) How to improve calf performance when using group housing systems. Participants will then be divided into three groups for a more interactive, hands-on setting and will rotate through three breakout sessions. Dr. Brotzman’s breakout session, “5 Key Considerations for Housing Calves and Heifers,” will focus on The Dairyland Initiative’s best practice recommendations and will zero in on practical considerations and reallife solutions. Dr. Brotzman will examine five categories of utmost importance: inventory, environment, resting area, nutrition and management. Dr. Godden will lead a

hands-on Colostrum Management Updates breakout session. Calf Care Connection participants will learn new at-side test methods for estimating colostrum quality and evaluating passive transfer methods in calves. Dr. Godden also will discuss management strategies, colostrum replacers and heat-treating colostrum, to reduce bacterial counts in colostrum fed to calves. This hands-on session will have participants working with fractometers, serum samples and colostrum samples to determine results. Participants will learn how to manage their findings, as well. Expert trainers Dr. Frank Garry and Dr. Richard Wallace will team together and show participants the world of calf care from the inside out. Participants will roll up their sleeves and discover what affects a calf under the hide. This truly unique experience is bound to be an eye-opener, and attendees will quickly understand the reason behind some calf care management techniques. After each small group has been through all three breakout

Register today for one of three Calf Care Connection® dates and locations. • Oct. 28: Arlington Agricultural Research Station, Public Events Building, N695 Hopkins Rd, Arlington. • Oct. 29: Chilton Fox Valley Technical College, 1200 East Chestnut St, Chilton. • Oct. 30: Marshfield Agricultural Research Station, 2611 Yellowstone Dr, Marshfield. Register at www.pdpw.org or by contacting PDPW at 800-947-7379. sessions, participants will come together for 45 minutes of table talk. Attendees will sit with fellow calf raisers and share calf-raising ideas, solutions and lessons learned. Dr. Garry will lead the final workshop session: “When and How to Properly Euthanize Calves.” This session will focus on the compromised calf and how to assess the calf in question and determine if euthanization is necessary. Dr. Garry also will address special considerations when determining acceptable practices for calves facing pain issues and terminal conditions. Registration for a Calf Care Connection workshop is $125 for PDPW members, $250 per person for non-members, and $75 for each additional attendee from the same dairy farm. When registering, indicate your choice of date and location.

September 2014 • PDPW - Dairy’s Bottom Line

2015 Managers Academy for Dairy Professionals™: Because ‘Working Together is Success’ People are the driving force of a business, with teamwork vital to the health, vitality and agility of a well-functioning business. Productivity experts agree that teamwork helps businesses accomplish work and goals more efficiently and faster, takes advantage of Mel Kleiman multiple skill sets, increases learning opportunities and promotes synergy. As Vince Lombardi said, Bernard Erven “The achievements of an organization are the results of the combined effort of each individual.” The 2015 Managers Academy for Dairy Professionals™, Jan. 13-15, in Charlotte, N.C., will put teamwork front and center. Trainers and executive-level tours will provide dairy industry executives, dairy owners and managers, industry executives, processors, marketers and distributors with highly valuable information so they can attain uncommon results in today’s business environment. This unique executive training workshop will provide participants with the keys to hiring right and the secrets to creating and sustaining high-performing teams. Yes, the 2015 Managers Academy for Dairy Professionals will take esprit de corps to a new level. Managers Academy executives will spend two days in a classroom setting, with sessions peppered with an abundance of hands-on learning. In between the two

days of classroom learning will be a day of executive-level tours at Atlantic Caviar and Sturgeon Company, Porter Farms and then a teambuilding exercise at the Richard Petty Driving Experience at the Charlotte, N.C., speedway. Day 1 of in-class training will feature Mel Kleiman, president of Humetrics, a leading provider of pre-employment attitude assessments, best practice information, training and resources for recruiting, hiring and retaining frontline employees. Kleiman’s two sessions will focus on “Hire Right” and “Separating the Winners and the Whiners.” Trainer Dr. Bernard Erven will capitalize on the racing environment and deliver two sessions: “Building a Team, One Lap at a Time” and “Victory Lane Team.” Erven, a former college professor, brings more than 40 years of experience to the table, specializing in issues such as hiring, training, motivation, discipline, compensation and performance feedback. Specific topics covered by Erven include team building, leading teams, communication, delegation and being a better boss. One thing is for certain: When you leave this training, you will be aware of choices, armed with strategies to build and lead a winning team, and you will not be in danger of being stopped by fear. Additional information about the 2015 Managers Academy for Dairy Professionals™ is available online at www.pdpw.org or by calling PDPW at 800-9477379. It’s never too early to book your place where you will rub elbows with like-minded, business-savvy dairy executives.

Those involved in the car racing world will tell you that the secret to winning is not necessarily high technology or big budgets. It’s people, how they work with each other and with their equipment. The same applies to the dairy industry. The 2015 Managers Academy for Dairy Professionals™ is going to the home of the Charlotte Motor Speedway, Charlotte, N.C., and will focus on building and keeping a successful team.

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Build your team: Key components to a competitive advantage The ability of the individuals to bond together to form a team offers numerous advantages to a dairy. Yet, the ability for any group of people to become a team can be quite challenging—even really tough. If you’re a Dr. Deb Houden pro football fan, you know a team is comprised of individuals who are typically the cream of the college crop, with these top college picks coming from college teams of

up to 100 players. Even though an NFL team has 53 players who have been handpicked, have you ever wondered why some of these teams with such tremendously talented players repeatedly lose year after year? In a nutshell, any team is only as good as the contribution from each person or member of the team. Some players just play the game and fail to see the big picture. Other players want the team to gel and give that extra oomph needed, keeping team as their focus. When this happens, the team ends up—as it

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should—playing better than the FORMING, STORMING, sum of its parts. NORMING, PERFORMING Think for a minute of a Every group of individuals football team that over-achieved who come together as a team this past season. Now think goes through stages, including about a football that looked forming, storming, norming and good on paper, had all the performing. players to take the team to the In the family enterprise, the Super Bowl but forming happens at Every group of then imploded. birth – and many While sometimes individuals who times the stormthe implosion ing comes quickly come together relates to injuries, after. Getting to as a team goes a lot of times the norming and through stages, performing in the members of the team just couldn’t business is the including get beyond the tough part, and forming, bickering in the many times it is storming, locker room and two steps forward norming, and could not find and one step back the trust within process. performing. each other when Parents or older everything was on the line to generation members often step in win. Bottom line: They failed as when individuals of the younger a team. generation are not getting along. Football teams aren’t alone While this remedy seems like with it comes to assembling peo- it should work, it often doesn’t ple and trying to form a highly work. As hard as it is, parents are functioning team. Family busioften ahead to stay out of the nesses are right there with them disagreement, give siblings space and, like some football teams, and let the siblings figure out can really struggle when it comes what works best for them. to teamwork. A lot of times, The norming stage is the emotional issues get in the way time when individual members as they are hard to overcome agree on the roles, responsibilwhen working with siblings, ities and measurement of the parents, cousins and in-laws. See TEAM, on page 23

September 2014 â&#x20AC;˘ PDPW - Dairyâ&#x20AC;&#x2122;s Bottom Line

TEAM

communicate effectively with each otherâ&#x20AC;&#x201D;and this can be Continued from page 22 really difficult for some teams responsibilities: or team members. Effective â&#x20AC;˘ Who holds whom communication is not only accountable? important with relaying expectaâ&#x20AC;˘ How are we going to comtions but also when differences municate with each other? arise. Communicating during â&#x20AC;˘ How are we going to work differences requires that both through the disagreement when parities keep an open mind, really inevitably the memlisten to the other, When owners, bers are at odds? take the otherâ&#x20AC;&#x2122;s managers and â&#x20AC;˘ Are we going to perspective and respect the individlet go of all of the workers have ual differences as past baggage, while shared goals assets or liabilities? conceding that and vision, â&#x20AC;˘ How do we their way may not reaching them overcome an be the only way. impasse? The best stance together creates A team gathers, to take when coma stronger bond. in this case, as a municating with Just remember family members is means to accomto celebrate plish a goal that all one of curiosity: members want. In â&#x20AC;˘ Why is that reaching those a family business, important to them? common goals there is frequently â&#x20AC;˘ Why are they and acknowledge doing certain tasks a presumption each memberâ&#x20AC;&#x2122;s a certain way? that everyone has the same goalâ&#x20AC;&#x201D; â&#x20AC;˘ What is keepcontribution. althought no one ing them from may have explicitly stated what coming to work on time? that goal is. Thatâ&#x20AC;&#x2122;s why many â&#x20AC;˘ What is it that I keep reacting consultants suggest that families to when it comes to them? in business together talk about a By interacting from a place of mission statement, and talk about curiosity instead of entrenchthe vision of the future. How do ment, a group of individuals can all of the members of the team really develop into an effective know where to focus their efforts team. and in what manner if there is no Teamwork is important vision of what to achieve? because it can minimize conflict A businessâ&#x20AC;&#x2122;s vision statement and produce more than if indiaddresses its goals while their viduals were working singularly. mission and value statements Teamwork can also bring a provide a specific set of operdeeper and satisfying attachment ating principles. When owners, between people. managers and workers have While the storming stage of shared goals and vision, reaching team development may have them together creates a stronger started a long time ago, the bond. Just remember to celebrate norming and performing stage reaching those common goals can be developed now. Working and acknowledge each memberâ&#x20AC;&#x2122;s through disagreements towards contribution. a shared vision, guided by values An effective team must also that are often deeply ingrained

Teamwork is like a puzzle: All pieces must fit together.

within families while defining roles and responsibilities and communicating often and effectively from a place of curiosity is a recipe for not only a successful financial operation, but one that is deeply satisfying for the family. You can create that extra oomph that wins the game.

Deb Houden, PhD, is the Director of the University of Wisconsin Family Business Center. Dr. Houden is also a consultant with the Family Business Consulting Group Inc, specializing in helping family-owned businesses with family communication, transition and next generation development.

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