January 2005

How will you fund your retirement? asks Hoard’s Dairyman (Jan. ’05). The article offers a number of tips, including, “Don’t rely on farm income alone. . . . . Don’t rely solely on Social Security as a big chunk of retirement income in years ahead. . . . Start early, but it’s never too late. . . . Consider today’s tax consequences. . . . Pick a plan or plans (the article includes a chart comparing traditional IRA, Roth IRA, SEP IRA, and SIMPLE IRA).” The author notes, “The plans outlined above are the vehicles you use to set up a retirement plan. How you invest that money—how you drive that vehicle—is another question. . . . For all the plans, you can put the money in savings accounts, money markets, bonds or bond funds, stocks or mutual funds, insurance annuities, or in any combination of the above. . . . With all of the choices and consequences, it’s best to get professional advice to review your current retirement plans or to help you set up a new one. . . . Financial advisors generally charge one of three ways—a fee for their service, a commission on sales of investments, or a percentage of assets.”

All In The Family (American Vegetable Grower, Jan. ’05) discusses the need for clear communication on the family-run farm. “Family meetings are a critical aspect to any small farming business. . . . If communication is the most important tool, miscommunication can be the most destructive.” Tips are offered to make the most of family farm meetings. Some tips include: Plan your meetings ahead of time; Address issues in a timely manner and don’t ignore the difficult issues; Keep minutes and record decisions; Make family relationships a priority.” Read the complete article at http://www.findarticles.com/p/articles/mi_qa3869/is_200501/ai_n9473987.

Get creative with retirement income strategies recommends an article in Digger (Oregon Assn of Nurseries, Jan. ’05). “One of the biggest struggles many retirees face, and you may have to deal with, is how to create a secure, guaranteed income stream that allows you to live the lifestyle you have dreamed of and at the same time protect yourself from running out of money. . . . The concept here is to take enough assets out of the growth mode to create a secure income stream for 10 years or so. . . . This allows you to let the remaining invested assets grow over a longer period of time without subjecting yourself to the emotional roller coaster of the market’s ups and downs. . . . There are numerous combinations and options available to you to achieve security and control over your retirement income. . . . You may want to consider using a financial professional to analyze your situation and to help you design and implement a creative strategy that will work for you.”

Working with Teens (Minnesota Nursery & Landscape Assn News, Jan. ’05). “The pool of smart, imaginative, hard-working young people that want to do a good gob are out there. We have the opportunity to have working for us future doctors, lawyers, and engineer…teens with smarts. To be honest, the pool of available adult workers out there doesn’t often include the cream of the crop. By giving teens challenging tasks, making them feel valuable, showing them respect, you will be developing a valuable asset. . . . Like all employees, they need supervision, they need discipline, and they need to know what is expected of them. Once you can establish mutual respect with your teen workers, you will discover a very valuable asset.”

Publication helps families plan farm transfer (The New Jersey Farmer, Jan. 1, ’05). The New Jersey State Agriculture Development Committee has released a new publication, “Transferring the Family Farm: What Worked, What Didn’t for 10 New Jersey Families.” “The book offers real-life profiles of families who describe their successes and challenges, as well as what they learned and what resources proved valuable, as they planned for and undertook the transfer of their land and agricultural operations. The publication is available on the SADC web site, http://www.state.nj.us/agriculture/sadc/farmowners.htm or by contacting the Farm Link Program at 609-984-2504.

Can Costs of Production in the East be Just as Ideal and Economical for Dairy Farmers as in the West? Asks Pipeline (MD & VA Milk Producers Cooperative Association, Jan. ’05). The article notes, “the Southeast has historically been a milk deficit market and the same is true today, only more pronounced. . . . Even the Northeast, with anchor production states of New York and Pennsylvania, is losing ground. From 1998 to 2003, the Northeast has lost 518 million pounds of production. In stark contrast, the Near Midwest . . . has increased production by 1.8 billion pounds and to tip the scales further the Southwest . . . has bumped up milk outputs by 2.3 billion pounds. What factors are pushing this production pilgrimage westward? The overriding catalyst is not necessarily costs of production, but more economies of scale.” The article cites findings from the ‘Farm Credit Dairy Herd Analysis.’ The publication ‘Dairy Herd Analysis: Looking Toward the Industry’s Future (Pennsylvania and Northeast Statistics)’ is available online at http://agchoice.aghost.net/index.cfm.

College to Unveil Online DHIA Course for Dairy Professionals (Ag Sciences 2005, Jan. ’05). Beginning in early 2005, Penn State’s College of Ag Sciences “will offer an online version of their DHIA Records Analysis training for consultants, extension educators and producers who would like to learn how to effectively evaluate a dairy business. Key management areas addressed in the course are production, reproduction, udder health, and culling and replacement. . . . Participants will learn to implement a systematic approach to analyzing DHIA data, so they can detect and correct bottlenecks that are limiting herd performance. . . . The self-paced training takes 10 to 20 hours to complete . . . and costs $165.” For more information, go to www.onlinelearning.psu.edu/DHIA or contact Karen Vines, senior extension associate and distance education coordinator in the department of dairy and animal sciences at 814-865-3097.

Profitability is a Process is the theme of the “Peak Performance” section of Northeast DairyBusiness (Jan. ’05). The section contains four articles and three sidebars on statistical process control (SPC), “a system of regularly monitoring routine measurement, searching for variation, and then acting to reduce that variation to achieve consistent outcomes. . . . Today’s dairy businesses demand that management be much more proactive, requiring an ability to understand complex relationships and predict the future impact of decisions, as well as assess issues and take corrective actions where appropriate. At the core of statistical process control is the reliance on factual data rather than anecdotal evidence or gut-feel management.” The “Peak Performance” articles were prepared by Monsanto Dairy business dairy specialists and the editors of DairyBusiness Communications. Copies can be requested at 800-334-1904.

Survey: Iowa farmers discourage next generation. (Dairy Alert - Dairy Herd Management e-newsletter, Jan. 12, ‘05) “A recent survey conducted by Iowa State University found that more than half of the current generation of farmers don’t want their children to enter the food-production industry. The Iowa Farm and Life Poll found that the majority of farm kids are not encouraged to take over the family business. Their parents cite financial reasons as potential roadblocks including high initial investment cost, low profits and high risk.

When Lifting - Look up! Chin up! An article titled “Farm Safety Resolutions” by George Cook appears in the January edition of Farming. Cook recommends the following resolutions for this years: develop a farm safety plan; avoid working alone; use appropriate personal protective equipment; make tractor safety a priority; place an emphasis on health and respect the limitations of the mind and body; and his final tip: When Lifting - Look up! Chin up! Cook says, “A simple step, taught by a physical therapist during a recent training exercise for our local rescue squad, could prevent a great many lifting injuries. It is really too simple. When lifting an object, once you’ve grabbed hold, instead of looking down at the item, look up with your chin up. . . . As soon as you look up, the arch changes, your back is much straighter, and you will be lifting more with your legs, less with your back.”

Don’t forget to manage your liquidity recommends Bruce Jones, professor of agricultural economics at the University of Wisconsin. (Dairy Herd Management, Jan. ’05). “. . . financial goals have three elements: profitability, risk, and liquidity. . . . Liquidity, however, tends to be forgotten or downplayed because many people wrongly assume it is a less-important part of meeting financial goals. . . . Liquidity is the resource used to cover operating losses in years when either selling prices or production levels fall below what is needed to generate profits. . . . Working capital—the difference between the value of current assets and current liabilities—is the measure that dairy producers should check to determine if they have an acceptable liquidity position.” Read the complete article at http://www.dairyherd.com/ (free registration required).

Stand a safe distance from bunker silos (Dairy Herd Management, Jan. ’05) is available at AgricultureOnline. “At a minimum, stand back one and one-half times the height. . . . That idea has been incorporated in the graphic shown (in the article). The graphic also assumes the danger is greatest when the height of the bunker silo exceeds 7 feet.” View the article and graphic at AgricultureOnline.

No Time to Kill in the January 2005 issue of Dairy Herd Management offers four steps to help hone your time-management skills. “Everyone gets 24 hours in a day—no more, no less. It is the one commodity that you cannot order more of from your co-op or banker.” The four steps are: organize yourself; organize employees; take action; and reinvest your time. Read the complete article at http://www.dairyherd.com/ (free registration required).

Tips on Effective Time Management, an Ohio State University Fact Sheet in their “Small Business Series,” includes a list of the Twenty Major Time-Wasters, divided into 10 external time-wasters and 10 internal time-wasters. At the top of the external list is telephone interruptions. The internal list is led by procrastination. Read the list and the complete article at http://ohioline.osu.edu/cd-fact/1006.html.

4 reasons why California producers continue to thrive by Anthony DeRose, exec. VP of Wells Fargo Bank, Visalia, CA, says California dairy producers are: businessmen seeking growth opportunities; cooperative; forward-thinking; and savvy at finance. He says, “Dairy producers here do strategic financial planning that includes high-quality financial reporting, budget maintenance, projections, business plans, possible hedging, cost cutting and charting for well-planned growth.” In California, he notes, “both cow numbers and milk per cow are on the rise. Counties are approving dairy permits; construction is booming, and ‘mega dairies’ are appearing again. In fact, we currently have more new dairies under construction than at any other time during the previous five years.” (Source: Dairy Herd Management, Dec. ’04).

Fiscal 2005 U.S. Agricultural Exports and Imports Forecast To Balance at $56 Billion reports the Economic Research Service (ERS:USDA). “Large U.S. and foreign crops, lower prices for grains, oilseeds, and cotton, and increased foreign competition combine to reduce forecast fiscal 2005 U.S. agricultural exports to $56 billion. . . . Continued strong domestic economic growth and consumer demand boost agricultural imports to a projected $56 billion, the same as the export forecast. Expected U.S. agricultural trade hovers between a surplus and a deficit, as it last did in the late 1950s. . . . The value of forecast 2005 U.S. agricultural imports led by wine, beer, fruits, vegetables, and beef continue to expand, although at a slower pace than in recent years. A weaker dollar and rising U.S. household incomes raise the import value.” Read the complete article at http://www.ers.usda.gov/publications/so/view.asp?f+trade/aes-bb/ [click on U.S. Agricultural Trade – Outlook for Agricultural Trade – 2004 - Outlook for U.S. Agricultural Trade, 11.24.04 (revised)].

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