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You Can’t Manage What You Don’t Measure

By Fay Benson – New York Organic Dairy Initiative

Added December 9, 2012. The two best days of the month on my dairy farm happened on the 5th and the 21st; the milk check arrived. For a brief time I felt I had money. It was hard to believe that all those thousands of dollars would disappear in a matter of days and I would be waiting for the next check to arrive. When my wife and I first started farming on our own this flush to broke feeling happened sooner and sooner each month. When we heard about an Extension series of workshops which would help us manage our “Cash Flow” we both decided to take it. This was back in the early 80’s, the workshop was called Managing For Success. It had a number of segments that broke out pieces that go into managing a dairy farm such as: Labor management, financial management, and time management. Our farm benefitted a lot from that workshop, it made both my wife and I better managers. I learned the importance of setting goals and then developing activities and a time table to achieve those activities. My wife was introduced to the Cornell Dairy Farm Business Summary (DFBS). Now that I look back on my farming career, I think much of our success was based on things that we took from those workshops.

What Is the Cornell DFBS? The information for the DFBS comes from cash flowing into the farm and cash flowing out from the farm. For dairy farms most of the inflow comes from the milk checks but also includes other income streams such as direct sales, custom work performed for others and government payments to name a few. The outflow is tracked through the farm’s check book. Most farms using the Cornell DFBS adopt an account book or computer program that track the same 22 items. These are things such as: labor, machinery repair, field expenses, utilities, etc. Since all the farms using the DFBS track the same items, this allows for benchmarks to be established. Whether it is cost of labor per cow or cost of labor per cwt, the DFBS allows you to compare your farm’s performance not only to your previous years but how your farm compares to other similar size dairies.

To get the best information to help manage a dairy farm it is important to keep good records and once a year that information is uploaded into the DFBS website. This all takes time and is not the favorite chore of most people on the farm. The time also doesn’t yield immediate results, but does pay off in the long run. As my wife and I reviewed our DFBS report we could compare how we did compared to last year, make goals that we would like to achieve for next year and also compare our farm to other similar dairies. Comparing our farm to others help identify weakness in our business whether it was total cost per cwt., feed cost per cwt., or machinery expense. Any weakness became a goal for next year and we then chose activities to obtain those goals. Without measuring the individual pieces of our dairy we couldn’t establish goals or realize when we achieved them.

Cornell publishes the second year of New York Organic Dairy Farm Business Summary
The Cornell DFBS Group now publishes seven different dairy size or regional summaries, including one which covers the data from 17 organic dairies. It is important to identify the differences in how the Cornell Summary and the University of Vermont Summary are put together to help explain differences and similarities. Most notable in those differences is the selection for the dairies included in the summaries. Cornell took information from 17 dairies or 2% of New York’s 400 organic dairies. These dairies have voluntarily participated in the summary for many years, even before they transitioned to organic. Generally the farms that have the records required for the DFBS tend to be more profitable. UVM worked to get a cross section of the organic dairies and is working with 20% of the organic dairies in Vermont.
The table shows summary information for two different farm sizes, those with less than a 100 cows and those with more than a 100 cows. It is interesting to see that the smaller farms had a $1.70 lower cost of producing a cwt. of milk than the larger dairies. Yet the larger dairies were much more profitable. The benefit of scale even affects organic dairies.
Managing For Success for Organic Dairies

This winter we are planning to offer a 2-day workshop on managing an organic dairy farm at 6 sites across New York. To see a copy of the workbook go to:

http://cuaes.cornell.edu/cals/cuaes/organic/projects/dairy/dairy-initiative/resources.cfm

Contact Fay Benson @ afb3@cornell.edu if you would like more information.