As I have been working on and finalizing our 2016 budget for the farm over the last month, I have been very pleased with our numbers. Despite that 2016 is going to be a tougher year cash flow wise due to low commodity prices, we are actually sitting in a pretty good place and are going to have the ability to do some debt reduction that will allow for us to be able to take advantage of opportunities as they present themselves over the next three to five years.
As I look back on the changes that my brother and I have made over the last three years to get to this point, I noticed that most of them can be traced back to a single source. When we first came back to the farm and took over the day-to-day operation from my parents, we joined a peer group that was facilitated by Top Producer. Our reasoning for this was that it would help us transition into management and would allow us to get some good ideas to implement and help us be more efficient. Boy, were we wrong.
I can say without a doubt that this group has far exceeded our expectations. In our first meeting, we realized that the group of people we were paired with were some of the best in the industry, and if we could learn from them, we would have the potential to turn a good farm into a great farm. Each of the members brings a different perspective, and they vary along the spectrum from young farmers just getting started to those approaching retirement. So any struggle we face, somebody has already been through it or is walking that path with us so we can get ideas of what works and what doesn’t, and help with implementation ideas. The best part is that the respect we have for each other allows us to have very candid conversations about everything from our professional life to our personal life. So we can have hard conversations that are for the best of the individual and there is no offense taken.
Over the years that we have met with our group, we have opened up our financials and our business practices, and have learned a lot of things that can and should be improved; recommendations have been given to each farm to make improvements in the business, in our work-life balances and our participation in industry organization. After we meet and then go back to our farms, it is up to us to implement those suggestions, but the real motivating force is knowing that we will be meeting again with these folks in three to four months. It is embarrassing to admit no change, so that in itself motivates us.
As far as actual return on investment this year, as we finalized our budget, our cost of production for milk was down nearly $4 per hundredweight from three years ago. All of the major changes that we have made can be traced directly back to suggestions that have come from our peer group. We also have other business opportunities that we have pursued due to their encouragement and help in setting up a business model.
I can honestly say that those eight farms and families that we work with from across the U.S. have been what has made us the operation that we are today. I would very much encourage other farmers to try and find this type of group to belong to, as the benefits of surrounding yourself with top-notch people cannot be underestimated, especially those who have walked in your shoes and can help navigate the sometimes choppy waters of ag. PD
Theo Scholze is a dairy producer in Humbird, Wisconsin. He and his brother, Will, write a blog called Wisconsin Dairy Farmer.
