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12/11/2015
1
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Navigating Through Financials-
Careful Where you Step!
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Margin = Difference
Revenue $$$ less expenses $$$
Improving Margins↑ Revenue↓Expense↓↑ Both
12/11/2015
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
2014 Margins Improved2014 Margin ExampleImproved Margins
↑↑↑Revenues- ↑ Expenses = ↑↑ Margins
$ 24.06/cwt - $ 21.48/cwt = $ 3.84/cwt ∓$ .
2013 Margin = $1.85/cwt2012 Margin = $1.56/cwt2009 Margin = -$6.00/cwt
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Metrics/Benchmarks
• $$$$• Per Cow• Per Cwt• % of Gross
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Revenue Sources
Milk Sales $$$$$$Cull Cows/Bull Calves/steers/breeding livestock sales $$$$Other revenues
• Dividends(Cash and Retained) $$$• Crops $$$• Insurance proceeds $$$• Government Payments $$• Custom Hire $
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
3.00%
7.59%0.98%
86.26%
0.07%
1.45%
0.03%
0.63%
Revenue Sources ‐2015 Ytd Thru Sept‐Typical Dairy
BULL CALVES/STEERS
CULL COW/BREEDING LIVESTOCK
CROP SALES
MILK SALES
COOP DIVIDENDS
CUSTOM WORK
OTHER
INSURANCE PROCEEDS
Milk and Livestock Sales = >90% Gross Rev
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Federal Milk Orders - Different Pay Structure
#30
#33
????
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Milk Pricing
• Class III = milk used primarily for cheese(Fat & Prot)– Class I = beverage products– Class II = soft and frozen manufactured products– Class IV = butter and dry milk products
• Class I and II prices are differentials + Class III and IV
• Futures markets exist for Class III and IV
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Milk Check Building
• Class III Price is ‘built’ from weekly NDPSR (AMS) survey prices on products– Butter– Cheese– Dry Whey
• Class III Price is simply a benchmark, standardized price
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Milk Pricing & Basis
• Federal Milk Marketing Orders (FMMO) establish monthly minimum prices that first handlers of Grade A milk must pay
• 10 FMMO’s originating in 1937 • Milk Class system is used by the FMMO
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Combined Fat & Protein
85%-90% of your milk check is derived from Fat & Prot Yield In Midwest Orders
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
October 2015 Milk Class III Price $15.46
89%
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
2015
Ship Date
Pmt Date
C o w s
Milk per
cow
Lbs Prot
/Cow /Day
Lbs Fat
/Cow /Day
Lbs CFP /Cow /Day SCC % Prot %Fat
Other Solids
%
Dec Jan 870 92.1 2.74 3.40 6.13 115 2.97% 3.69% 5.72%Jan Feb 890 95.1 2.85 3.48 6.33 118 3.00% 3.66% 5.73%Feb Mar 915 97.5 2.94 3.56 6.50 111 3.01% 3.65% 5.76%Mar Apr 935 100.4 2.99 3.70 6.69 118 2.98% 3.68% 5.73%Apr May 950 103.3 3.07 3.72 6.79 106 2.97% 3.61% 5.74%May Jun 955 101.3 2.93 3.68 6.61 107 2.89% 3.63% 5.76%Jun Jul 955 104.9 3.04 3.80 6.84 119 2.90% 3.62% 5.75%Jul Aug 955 103.7 3.09 3.72 6.81 134 2.98% 3.59% 5.75%Aug Sep 975 104.6 3.11 3.71 6.81 136 2.97% 3.54% 5.75%Sep Oct 980 103.1 3.06 3.80 6.86 154 2.96% 3.69% 5.74%
Total/Aves 938 100.7 2.98 3.66 6.64 122 2.96% 3.63% 5.74%Previous yr 826 87.7 2.62 3.20 5.82 146 2.98% 3.65% 5.72%Difference 113 13.0 0.37 0.46 0.83 -23 -0.02% -0.01% 0.03%
Herd #7 Milk Plant Summary –Combined Fat & Protein Calculation
CFP = (2.96% + 3.63%) * 100.7 = 6.64 lbs
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
2015 Pricing
Ship Date
Pmt Date
C o w s
Lbs CFP /Cow /Day SCC
PPD or Other Comp
Prot Price
B.F Price
Other Solids Price
SCC-Qual
Prem/ cwt
Other Comp/
cwtVol
Prem Hauling Mkt'gHaul Per Cwt
Dec Jan 870 6.13 115 $0.60 $2.74 $2.10 $0.40 $0.67 -$0.30 $0.95 $9,438 $4,967 $0.38Jan Feb 890 6.33 118 $0.16 $2.67 $1.69 $0.40 $0.65 -$0.45 $0.90 $9,965 $5,245 $0.38Feb Mar 915 6.50 111 $0.13 $2.41 $1.83 $0.33 $0.66 -$0.53 $0.90 $9,496 $4,998 $0.38Mar Apr 935 6.69 118 $0.02 $2.49 $1.84 $0.29 $0.61 -$0.52 $0.90 $11,060 $5,821 $0.38Apr May 950 6.79 106 -$0.02 $2.56 $1.89 $0.27 $0.63 -$0.20 $0.90 $11,183 $5,886 $0.38May Jun 955 6.61 107 -$0.04 $2.52 $2.06 $0.25 $0.63 -$1.00 $0.89 $11,398 $5,999 $0.38Jun Jul 955 6.84 119 -$0.15 $2.69 $2.10 $0.23 $0.61 -$0.59 $0.99 $11,423 $6,012 $0.38Jul Aug 955 6.81 134 -$0.03 $2.61 $2.11 $0.20 $0.57 -$0.49 $1.00 $11,666 $6,140 $0.38Aug Sep 975 6.81 136 -$0.07 $2.57 $2.27 $0.12 $0.57 -$0.47 $0.99 $12,016 $6,324 $0.38Sep Oct 980 6.86 154 $0.33 $1.98 $2.75 $0.05 $0.46 -$0.37 $1.00 $11,521 $6,064 $0.38
Total/Aves 938 6.64 122 $0.08 $2.52 $2.08 $0.25 $0.60 -$0.50 $0.94 $109,166 $57,456 $0.38Previous yr 826 5.82 146 $0.25 $3.84 $2.35 $0.47 $0.58 $0.10 $0.94 $83,654 $44,029 $0.38Difference 113 0.83 -23 -$0.17 -$1.32 -$0.28 -$0.23 $0.02 -$0.60 $0.00 $25,512 $13,427
Herd #7 Milk Plant Summary
12/11/2015
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Milk Price Variation
• Milk Basis– Difference between Average Component and Average
Quality Milk
• What’s Average or Base Milk (FMMO)?– 2.99 % Prot– 3.5% Fat– 350,000 SCC
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Variation in Basis
ComponentsQuality
• SCC• Plate Count
Milk PlantsBst
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Gross Basis
What is it?(Gross Milk Income – Class III Announced Price)/Cwt = Gross Basis/Cwt
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Mailbox Basis
What is it?((Gross Milk Income $ – hauling $ - marketing $)/Cwt) - Class III Announced Price = Mailbox Basis
Better Comparison across dairies
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Herd 1 October 2015 Milk Class III Price $15.46
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Herd 2 October 2015 Milk Class III Price $15.46
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Mailbox Basis Calc Oct 2015 Class III = $15.46
Herd 1
$18.26 - $0.17 - $0.01 - $15.46 = $2.62/cwt
Herd 2
$19.15 - $0.15 – $0.01 - $15.46 = $ 3.53/cwt$0.91
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Margin = Difference
Revenue $$$ less expenses $$$
Improving Margins↑ Revenue
↓Expense↓↑ Both
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Expenses- The Big Three
• Labor• Capital & Lease Expense
– Principal, interest & leases
• Feed
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Margins
2012‐2014 Proj 2015
% of Gross
Income
Per
Cwt
% of Gross
Income
Per
Cwt
INCOME TOTAL 100.0% $20.83 100.0% $19.92
EXPENSES
Labor 10.1% $2.10 11.5% $2.30
Unpaid Labor & Mgmt 3.1% $0.65 3.3% $0.65
Capital/Leases 11.3% $2.35 11.8% $2.35
Purchased Feed 29.0% $6.05 28.6% $5.70
PARTIAL EXPENSE 53.5% $11.15 55.2% $11.00
PARTIAL MARGIN 46.5% $9.68 44.8% $8.92
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Margins
2012‐2014 Proj 2015 Proj 2016
% of Gross
Income
Per
Cwt
% of Gross
Income
Per
Cwt
% of Gross
Income Per Cwt
INCOME TOTAL 100.0% $20.83 100.0% $19.92 100.0% $18.70
EXPENSES
Labor 10.1% $2.10 11.5% $2.30 12.8% $2.40
Unpaid Labor & Mgmt 3.1% $0.65 3.3% $0.65 3.5% $0.65
Capital/Leases 11.3% $2.35 11.8% $2.35 13.1% $2.45
Purchased Feed 29.0% $6.05 28.6% $5.70 28.6% $5.35
PARTIAL EXPENSE 53.5% $11.15 55.2% $11.00 58.0% $10.85
PARTIAL MARGIN 46.5% $9.68 44.8% $8.92 42.0% $7.85
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Margins 2012‐2014 Proj 2015
% of Gross
Income
Per
Cwt
% of Gross
Income
Per
Cwt
INCOME
Milk Sales 90.9% $18.93 88.4% $17.60
Bull Calves/Steers 1.8% $0.38 3.0% $0.59
Cull Cows 5.7% $1.18 7.3% $1.46
Crop 1.4% $0.30 1.1% $0.22
Other 0.2% $0.04 0.3% $0.05
INCOME TOTAL 100.0% $20.83 100.0% $19.92
EXPENSES
Labor 10.1% $2.10 11.5% $2.30
Unpaid Labor & Mgmt 3.1% $0.65 3.3% $0.65
Capital/Leases 11.3% $2.35 11.8% $2.35
Purchased Feed 29.0% $6.05 28.6% $5.70
PARTIAL EXPENSE 53.5% $11.15 55.2% $11.00
PARTIAL MARGIN 46.5% $9.68 44.8% $8.92
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Margins 2012‐2014 Proj 2015 Proj 2016
% of Gross
Income
Per
Cwt
% of Gross
Income
Per
Cwt
% of Gross
Income Per Cwt
INCOME
Milk Sales 90.9% $18.93 88.4% $17.60 91.7% $17.15
Bull Calves/Steers 1.8% $0.38 3.0% $0.59 1.9% $0.35
Cull Cows 5.7% $1.18 7.3% $1.46 5.6% $1.05
Crop 1.4% $0.30 1.1% $0.22 0.5% $0.10
Other 0.2% $0.04 0.3% $0.05 0.3% $0.05
INCOME TOTAL 100.0% $20.83 100.0% $19.92 100.0% $18.70
EXPENSES
Labor 10.1% $2.10 11.5% $2.30 12.8% $2.40
Unpaid Labor & Mgmt 3.1% $0.65 3.3% $0.65 3.5% $0.65
Capital/Leases 11.3% $2.35 11.8% $2.35 13.1% $2.45
Purchased Feed 29.0% $6.05 28.6% $5.70 28.6% $5.35 ↓
PARTIAL EXPENSE 53.5% $11.15 55.2% $11.00 58.0% $10.85
PARTIAL MARGIN 46.5% $9.68 44.8% $8.92 42.0% $7.85
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
2012‐2014 Proj 2015 Proj 2016
% of Gross
Income
Per
Cwt
% of Gross
Income
Per
Cwt
% of Gross
Income Per Cwt
INCOME TOTAL 100.0% $20.83 100.0% $19.92 100.0% $18.70
EXPENSES
PARTIAL EXPENSE 53.5% $11.15 55.2% $11.00 58.0% $10.85
PARTIAL MARGIN 46.5% $9.68 44.8% $8.92 42.0% $7.85
Cropping Expenses 7.9% $1.65 8.5% $1.70 8.6% $1.60 ↓
Rent 1.0% $0.20 1.0% $0.20 1.1% $0.20
Fuel 3.8% $0.80 3.5% $0.70 3.2% $0.60 ↓
Custom Hire 4.3% $0.90 4.5% $0.90 4.8% $0.90
Hauling & Trucking 0.8% $0.17 0.9% $0.17 0.9% $0.17
Repairs 5.0% $1.05 5.3% $1.05 5.6% $1.05
Supplies 3.6% $0.75 3.8% $0.75 4.0% $0.75
Breeding 1.3% $0.28 1.4% $0.28 1.5% $0.28
Farm Insurance 0.8% $0.16 0.8% $0.16 0.9% $0.16
Taxes 0.6% $0.13 0.7% $0.13 0.7% $0.13
Utilities 1.7% $0.35 1.8% $0.35 1.9% $0.35
Vet and Medicine 2.9% $0.60 3.3% $0.65 3.7% $0.70
Other 1.7% $0.35 1.8% $0.35 1.9% $0.35
TOTAL EXPENSE 89.0% $18.54 92.3% $18.39 96.7% $18.09
FINAL MARGIN 11.0% $2.29 7.7% $1.53 3.3% $0.61
Margins
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• What are your feed costs?– Source of data?
• TMR software (FW, TMR Tracker, etc.)• Nutritionist report• Financials
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• What are your feed costs?– TMR software (FW, TMR Tracker, etc.)
• Could include actual intakes, shrink• Still depends on entered cost accuracy
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• What are your feed costs?– Nutritionist report
• Only an estimate on intake• Likely accurate purchased feed cost
– Market?– Actual?– Shrink?
• Homegrown feed costs– Market?– Actual?
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Feed Costs via nutritionist– Homegrown feed values?
• Actual or market?• Are they driving ingredient decisions?
– Usually allocating forage by inventory and quality– Feed less forage if low quality; more if high – regardless of
cost
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Homegrown corn silage– What is its value?– What is its cost?– Which number should you/your nutritionist use when
reporting your feed cost?– Which number should he/she use when making ingredient
decisions?
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
$250/acre rent7.4 tons DM/acre corn silage4.0 tons DM/acre haylage
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
Cost Value
• Corn Silage $32 $40
• Haylage $71 $85
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Market vs. Cost• Can have the same question about commodities
– Should use current contract price– Or ‘new’ price when off contract– Last load or next load?
• Work with your nutritionist!!
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• What are your feed costs?– Source of data?
• Your Financials
12/11/2015
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• What are your feed costs?– Source of data?
• Financials– The best measure, but never current– What to include?
» Land rent, Fertilizer, Chemicals, Seed, Equipment/depreciation, Repairs, Labor, Custom Hire, Manure Application, Fuel, Crop Insurance, Taxes
– Enterprise accounting likely the best approach» ‘Farm’ sells feed to ‘Dairy’» Can evaluate profit of each enterprise
independently» A lot of work!
12/11/2015
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• What are your feed costs?– Often to compare it to…
• Last month• An article I read• Neighbor at the coffee shop
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Feed costs are very difficult to compare across herds– Forage types– Forage quality– Cost or Market Value?– All diets included (calves, heifers, dry cows)?– Feed Markets/Contracts– Overage/Shrink– Production value
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Total Feed Costs– Per head; Per cwt
• Purchased Feed Costs• Milk to Feed Ratio• Income Over Feed Costs
12/11/2015
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Simple measure of feed costs per head (total or purchased)– No production information– A constantly moving target
• Feed costs per cwt are better– No value of production
(components)
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Income Over Feed Cost– Probably the best measure
we have– Need to use accurate feed
costs– Need to use a relatively
stable milk price• 12-mo average price built
with components?
12/11/2015
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
An example:• Looking Back (Class3 =$16.08):
– Fat = $2.228/lb– Prot = $2.354/lb– OS = 5.75%; $0.217/lb
• Looking Ahead (C3 =$15.63):– Fat = $2.323/lb– Prot = $2.327/lb– OS = 5.75%; $0.100/lb
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Example 1 – Look Back
A BLb Milk 88 90Fat% 3.80% 3.80%Prot% 3.20% 3.20%Feed Cost, $/hd $5.90 $6.28Feed Cost, $/cwt $6.70 $6.98IOFC, $/hd $10.77 $10.77
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Example 1 – Look Ahead
A BLb Milk 88 90Fat% 3.80% 3.80%Prot% 3.20% 3.20%Feed Cost, $/hd $5.90 $6.28Feed Cost, $/cwt $6.70 $6.98IOFC, $/hd $10.42 $10.41
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• What can affect your actual feed costs?– Purchased
• Markets, local basis, contracts, volume, blending, shrink, ration formulation, additives
– Homegrown• Rent, yield, QUALITY, fuel, seed, fertilizer, labor, equipment,
repairs, shrink
– Of these, which can you control/influence?
12/11/2015
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Purchased– Markets, local basis– Contracts– Volume, blending– SHRINK– QUALITY– Ration formulation, additives
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Blood Meal, 2014-2015
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Corn Board Prices/Futures
2014 Avg = $4.19 2015 Avg = $3.82 2016 Avg = $3.84
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Canola Meal, 2014-2015
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
SBM Board Prices/Futures
2014 Avg = $430 2015 Avg = $324 2016 Avg = $282
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Homegrown– Land Rent– Yield– QUALITY (weather)– Fuel, seed, fertilizer, labor, equipment, repairs– Shrink
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• IOFC probably the best measure• Keep a history of your farm’s numbers• Difficult to compare across farms• Home-grown feeds are
difficult – cost vs. value• Control what you can
control
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Make sure you are on the same page with your nutritionist– Which forages are you feeding and why?– Which additives are you feeding and why?
• Outlook: Lower purchased feed costs for 2016• Feed high-quality forage• Control what you can control
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Feed Costs
• Feed cost is still a Dairy’s single largest cost• What % of total costs?
– Old thumb rule = 50%– Still in the ballpark…– Have to include cropping costs
• Is it the biggest risk to your profits?
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Dairy Hedging
• 250 milking cows• 85 lb milk• 44.0 lb CS• 44.4 lb Hlg• 12.7 lb HM Corn• 10.0 lb permeate• 8.6 lb protein• 8.0 lb WDG
=corn=soybeans=corn=corn=soybean meal=soybean meal
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Dairy Hedging
• 250-milk cows• Buying TMR based on market prices• 9-yr range on commodities
– 3,018 bu Corn = $2.25-$8.99/bu– 31 tons SBM = $175-$605/ton– 767 bu Soybeans = $5.23-$16.20/bu– 6,460 cwt Milk = $9.31-$24.60/cwt
• Risk = range in $/month
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Dairy Risk, All Feed Purchased
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Dairy Risk, Only Protein Purchased
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Summary• 2015 >>2016
• Feed- ↓↓• Reduced Energy Cropping Cost ↓↓• Basis(Components, quality, plants)
• Mailbox Basis versus Gross Basis• Breakevens- Class III
• 95% of Producers ($16.50 ±$1.50/cwt)
• Non milk revenues-Culls(Sold vrs Dead ?)• Strong Beef Prices—How Long? Gone !!!• Risk Management Strategies
• Milk Mkt, Basis, Crops, Interest, Land(Rent or Own), Labor
12/11/2015
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
“Improving Efficiency Doesn’t Stop Cycles but it separates the Winners From the Losers in a Down Cycle”
Ian Biggs, Consultant and CEO PIC
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Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Stepping ForwardDecember 9 & 10 | Dairy Summit 2015 | Baraboo, Wis.
Questions???
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