September 2005

Can CWT stop a milk avalanche? asks the "Dairy Edge" feature in Northeast DairyBusiness (Sept. '05). "On his website, Ken Bailey, Penn State dairy economist, made some 'rough calculations' to estimate the milk supply with the most recently announced Cooperatives Working Together ( CWT ) herd retirement. The goal of this round is to retire 70,000 head of cows during the months of October 2005 to January 2006." The article details the assumptions Dr. Bailey used in his estimate. It concludes by saying, "'By my estimation the CWT program will help firm milk and cheese prices for the remainder of this year. However, the numbers suggest it will be difficult for the CWT program to keep ahead of the avalanche of milk coming our way.' Expect lower milk prices in 2006, Bailey wrote." Read Ken's web article at http://dairyoutlook.aers.psu.edu/Weekly/2005/WeeklyDairyMarketOutlook081905.htm .

Going Corporate by William J. Lynott ( Grounds Maintenance , Sept. '05) says, "Nearly three-fourths of the millions of small businesses in the United States are sole proprietorships, according to the U.S. Department of Commerce. . . . but is it the best choice for you? . . . There are three classifications of basic business entities from which to choose: Sole proprietorship, partnership and corporation. . . . Some feel that incorporation is the answer to the entrepreneur's dream, and in some ways that's true. The corporate form of business will limit your personal financial liability, be more stable in the event of your death and will make it easier for you to raise money for expansion and growth. . . . However, you should investigate carefully before you leap. One of the problems is the sometimes unrecognized differences between large, public corporations and the closely-held corporations typical in small businesses." The article explains the pros and cons of various forms of incorporation for the small business owner. Read the complete article at
http://grounds-mag.com/mag/grounds_maintenance_going_corporate/ .

Lowering Healthcare Costs: What you should know about Health Savings Accounts by William J. Lynott ( Grounds Maintenance , Sept. '05) says, "The Health Savings Account (HSA) legislation signed into law by President Bush a little over a year ago offers you the possibility of making a dramatic reduction in your costs for staying healthy. . . . HSA's come in two parts. First, you must purchase a low-cost, high-deductible health insurance policy available through a growing number of providers . . . Next, in conjunction with the insurance policy, you open a dedicated savings account into which you make tax-deductible deposits to pay for your medical care. Each year, you may deposit up to the amount of the deductible on your insurance policy. You then use the money in the account to pay for you medical care. Once your expenses reach the amount of your deductible, if it does, the insurance policy kicks in." Read the complete article at
http://grounds-mag.com/mag/grounds_maintenance_lowering_healthcare_costs/ .

Northeast Dairy Outlook Forum is reported on in Cream O' the News (PA Assoc. of Milk Dealers, Sept. '05). Interesting facts highlighted in the article include: " * India is the largest milk producer in the world. They presently consume all of their production but they will eventually become a dairy exporter. *The U.S. currently consumes 95% of its dairy production. We will become a bigger exporter in the future. * New York , Pennsylvania and Vermont produce more milk per square mile than any other region in the country.

Reduce Lameness Losses ( Dairy Herd Management , Sept. '05) details how a Georgia dairy owner used lameness records and locomotion-scoring to start growing his herd again. "We went from an internal growth rate of minus-3 percent to minus-4 percent to a positive 7 percent to 8 percent," says Calvin Moody. "When things get busy, it can be easy to overlook a developing problem. Then, before you know it, a cow has a limp. By consistently locomotion-scoring all cows, treating those that score a 3 or higher and keeping lameness records, we stay focused on lameness." Read the complete article at http://www.dairyherd.com/directories.asp?pgID=724&ed_id=4722&component_id=871 . (Free registration required)

Computer Use on Farms is the "Agriculture Counts" feature from the PA Field Office of USDA's National Agricultural Statistics Service (NASS-PA). The feature appears monthly in Lancaster Farming . September's column (Sept. 3, '05) notes, "Of the 58,200 farms in Pennsylvania, 55 percent have access to a computer, 47 percent have Internet access, but only 27 percent use computers for the farm business. These statistics are only a few percentage points below the national averages. Not surprisingly, larger farms use computers to a greater degree. . . . There are many more details in the USDA-NASS report. . . . go to www.usda.gov/nass/search.htm and use the keyword search for 'computer.'"

Updated Daily Milk Production Management Booklet Available ( Lancaster Farming , Sept. 10, '05 ). "The booklet encourages producers to focus on daily production, allowing them to set goals and monitor these goals on a daily basis. Producers can track consistency over a period of time. The booklet also provides a management checklist to improve profitability. . . . By charting daily production per cow, the owner, family members, employees, consultants, and advisers can all see the influence of their actions on the farm and their influence on profitability on a daily basis. . . . To get a copy of the booklet email info@centerfordairyexcellence.org or call the Center for Dairy Excellence at 717-346-0849 , the Pennsylvania Dairy Stakeholders at 717-948-6328 , or Penn State Dairy Alliance at 814-865-4682 ."

What you don't talk about can hurt you says Lorraine Stuart Merrill in the "People Side" feature in Hoard's Dairyman (Sept. 25, '05). "Anxiety over change and loss of control keeps many farm families from grappling with these decisions and planning for the future. .. Fear of mistakes can also be a major factor, with the ever-higher levels of financial risk in our increasingly competitive dairy industry. But avoiding issues holds farm businesses back, as decisions and investments are deferred. . . . Prosperous farms can fail in short order if the son or daughter was not prepared through gradual management responsibility and ownership."

Survey: Small Business Owners Fuzzy About Future, Financials (Lawn & Landscape Online, Sept. 29, '05 ). " The survey was conducted by Yankelovich affiliate AGI Research among nearly 200 small business owners in New York , New Jersey , Connecticut and Pennsylvania ." Mark Papalia, president and founder of Papalia Financial, was the sponsor of the survey. "Papalia notes that a lack of business and succession planning were not the only areas in which small business owners came up short. The survey also uncovered a notable lack of expertise among owners about certain financial aspects of their business. . . . Respondents were asked a series of questions to gauge their know-how on a range of financial planning topics, such as how best to structure their business, the impact of estate planning on inheritance, tax and legal liability scenarios and investment strategies. As Papalia explains, small business owners again demonstrated a lack of knowledge in these areas." Read the complete article at http://www.lawnandlandscape.com/News/news.asp?Id=3828 .

MSC Dairy Herd Analysis Looks at Opportunity for Profits ( Country Focus , PA Farm Bureau, Sept. '05) "The report used records from approximately 600 Pennsylvania and 600 Northeast producers in determining key financial benchmarks for dairymen in the region." Mike) Evanish, manager of PFB's MSC Business Services, points out, "Northeastern (mostly New York ) dairy farms continue to be more profitable than their Pennsylvania counterparts. The main reason, Evanish said, is that, 'Northeast dairy farms have demonstrated they can do a much better job of covering fixed costs because in every size range, they are willing to milk more cows and produce more milk.' The message to farmers is simple, Evanish said, 'Production does matter.'" You can download the report at http://www.pfb.com/MSCBS/Index.htm

CAFTA-DR Will Boost PA Farm Exports says Country Focus (PA Farm Bureau, Sept. '05). "Farm Bureau estimates that Pennsylvania beef exports will increase by $24 million per year,. . . and the dairy industry will see a boost in exports by $3 million per year when CAFTA-DR is fully implemented. . . . 'Pennsylvania farmers will reap the fruits of a free market,' said PFB President Carl T. Shaffer, 'Under CAFTA, our farmers should generate millions of dollars each year in increased revenues as tariffs on agricultural goods are eliminated and stronger relationships are made with the six Central American countries.'"

Free Credit Report Rollout Complete ( Lawn & Landscape Online , Sept. 19, '05 ). " The rollout was completed on Sept. 1 with the eastern states, making the reports available across the country. TransUnion, Equifax and Experian credit agencies are participating in the program. Americans can request their credit reports from each agency once a year. . . . To get your free credit report today, visit www.annualcreditreport.com and select your state under the "Start Here" headline. From there, you'll be asked to provide your name, date of birth, Social Security number and other information, followed by directions that will allow the credit agencies to confirm your identity. In addition to being able to view your credit report, each agency will also make your credit score available for a fee of $5 to $7." Read the complete article at http://www.lawnandlandscape.com/News/news.asp?Id=3792 .

PMMB To Receive True Picture of Dairy Costs ( Country Focus, PA Farm Bureau, Sept. '05) "Pennsylvania Farm Bureau's MSC Business Services has signed a contract to supply the PA Milk Marketing Board with cost of production figures for dairy farms in the state. The figures will cover a dairy farmer's management input and will provide PMMB with a more accurate picture of what it costs to produce a gallon of milk."

CWT to Remove Cows ( Country Focus, PA Farm Bureau, Sept. '05). "With milk production increasing and prices declining, Cooperatives Working Together ( CWT ) is taking bids to remove as many as 70,000 cows from production between October 2005 and January 2006. . . . CWT is an industry driven and financed program designed to help balance the supply of milk production and the demands of the market to help prevent low milk prices being paid to producers."

Why people expand or relocate ( Hoard's Dairyman , Sept. 10, '05 ) "Any enterprise has to return profits in order to stay in business. Dairy farms are no exception. But apparently it's not only greater returns on investment that's driving people to expand. Those who modernized their operations and had positive feelings about their expansion experiences saw higher milk production, greater profitability, and improved quality of life according to a Wisconsin study. . . . In the survey conducted by the Southern Illinois University, dairies that expanded their operation to an average size of 513 cows went from 18,024 pounds in 1997 to 20,095 pounds per cow during 2003. Michigan also has seen a persistent growth in size of surviving dairies, paralleled with steady progress in milk per cow from about 12,000 pounds in 1979 to over 19,883 in 2002."

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