A retired professional football player, one who had played on championship teams, related to me how the progression of his career had gone from the Pop Warner league of his youth through middle and high school, college and then the pros.

At every change, he experienced the same thing. The other players were bigger, smarter, faster and more experienced than those he played with and against prior to that time. There were more plays, and those were more sophisticated. To succeed at that level, he needed to step up to that level. He had to train harder, learn more, study harder, work harder. What drove him was the desire not to be good enough, but to be the best that he could be. Whether he made the team or not was in the hands of those outside of his control, but whether he had done all he could or not – that he controlled. His goal, which he realized, was to give his best so he could play with the best and be the best. He knew, and experience confirmed, that unless he did his personal best he would never play to the highest level.

The point of this conversation is that though this player’s game was a team sport, it still took individuals giving their best to be the best. Though there were team exercises and team drills and clearly team plays, it was the individual exercises, preparation and training that ultimately led to success.

Over the years dairy farming has moved up the ladder to demand greater knowledge of more things, new and better skills to meet new and more challenging obstacles. Our farms are cleaner and safer, our animals produce more, our milk moves more efficiently, our products reach larger and larger markets, we play on a larger and larger field now called the World. Meeting the challenges of past levels of dairymen will not be good enough for the dairying of the future.

Suddenly dairy farmers have been brought to the highest championship game these last few months. The skills required to meet the new challenges have surprised all, if not in the kinds of the challenges, at least in the intensity and the length. It is introduction to the pros, a rapid introduction, which will test, evaluate and ultimately judge each and everyone. Not all will succeed, and those who do are now promising themselves they will not re-enter this arena for the next game without preparation.

Among the characteristics that permeates the marketing of milk in the U.S. and, as a consequence, its culture, is the collective nature of the industry. It is not just the pooling and the cooperatives and agencies in common, it is everywhere. There is a strong sense of community that includes the processors and the producers. In large part the dairy industry today is the product of the cooperative nature imposed by the federal and state milk marketing orders. Even in those areas that are officially unregulated, they too, are a product of this collectivist approach. It is also the perishability of the product that forces everyone to get along now.

It is to be expected that when we look at these troubled times, which is universal in its pain, sparing no one, that we look for an answer in a collective way. In other words, since this problem is held by everyone in the same way, then the solution involves everyone doing the same thing. “If we can get all the dairy farmers together, we can…” is a chorus sung at virtually every meeting of two or more dairymen. But when this chapter comes to its end, and it will, and we look at who and what is left, what will stand out more than anything else will be those who truly survived. For those survivors, strong enough to face the future, it will be the individual decisions and efforts that defined their success.

There is a lot of talk of what we as an industry are going to do to prepare, or in the minds of some, avoid, the next down cycle. Such solutions, if they do indeed exist, would be long in coming and longer in being in place. There is no solution that has a consensus today which could be implemented, as proposed, in enough time to solve the current problem – that would require a time machine.

But in thinking back on the conversation years ago, it is apparent that though we share an industry and we share its good, bad and ugly, it does not follow that preparation for the next “big one” requires that everyone else has to do what I am doing and, more importantly, I cannot expect someone else to do what I have to do or remove that obligation from me.

The first and foremost issue is preparing to handle price risk. Markets dictate prices. Buyers and sellers, even collectively, in the end have little control over that. Price risk, however, can be individually managed, and it is the risk of being on the wrong side of the price at the wrong time that creates difficult situations, not the price.

Price risk comes in both inputs and sales. There is the risk that feed and fuel prices will be too high or that milk prices will be too low, or both. How to manage those risks is beyond the scope of this article, but some points can be made.

Price risk is personal. It can be expressed globally, but it is personal. Depending on capital, credit, goals, size, location, model, markets and other factors, each person has a different risk profile than his neighbor. It only follows that a price risk management program for one will not fit another.

The underlying flawed assumption in the current discussions on supply management is the assumption that the volatility (a descriptor of price risk) is part of marketing and pricing. Since, so the argument follows, marketing and pricing are now down collectively, it only follows that controlling price risk is to be done in the same way. But the concepts are distinct, just as herd management and milk marketing are distinct. Producers can and are managing their risk independent of the common marketing and pricing. Those who did prior to and during this crisis will, on the whole, fare the better for it.

There are things we can do as an industry. We can prepare more and better management tools. We can remove the impediments of risk management, such as multiple milk prices, from our system. We can stop enforcing mediocrity. We can stop subsidizing individual management errors. We can insist on more, accurate and timely information regarding sales and prices. Those will go a long way to preparing for the future. Most of those can be done now and do not require that everyone agrees.

Rather than demanding or hoping that there is a community-wide program to prepare you for the next downturn, and hoping it is in time, these are programs you can start to learn about today, to use today, all by yourself.

Some of the programs which a producer can use today to manage price risk include trading futures and options on the CME Class III milk price, using the USDA’s Livestock Gross Margin program, forward contracting sales, or, a little more sophisticated, entering into swaps. These programs are not to be evaluated in terms of making a price; they do not make a price. They manage the risk of the price dictated by the market so that you are protected from its brutality. They are margin insurers.

Another area of preparation is quality. Reliance upon the low standards of the Pasteurized Milk Ordinance is not good enough to survive today. Individually you can, and should, be seeking ever higher and higher quality milk. You do not need incentives, you do not need your neighbor to do the same, you need to do it yourself. It is part of being the best you can be so you can play with the best and be the best.

And finally, for this article but certainly not the last of the options, relook at your model of farming. Model success in the past does not mean future success. Questions to be asked and considered are: Is it located in the right place? Should I own more land or contract feed differently? Is the breed I milk the most profitable? Is the style of farming (dry lot, freestall, wind barn, etc.) right for me where I am at? Do I have the right number of the right people doing the right things?

All of those need to be critically evaluated, because the decisions made in those issues may determine whether or not you will be good enough to play and survive the next championship round.

St. Jerome said it well:

“Good, better, best
Never let it rest
Until the good is better
And the better best.”

Dairy farming has entered the pro level. Another championship game is on the horizon. Though teamwork will be critical, our own personal survival depends upon doing our best in the things we control. We cannot affect price, but we can take care of how price affects us. And we can do that ourselves and do it now. PD

Ben Yale for Progressive Dairyman