The Rural Voice, 1992-04, Page 52ADVICE
IN SEARCH OF
SECURITY IN THE
DAIRY INDUSTRY
A major concern on the minds of
many dairy farmers these days is
security. More specifically, they're
worrying about what's going to
happen to the market value of their
milk quotas.
Dairymen have traditionally
looked upon the sale of quota as part
of their retirement fund. The only
way, then, to "cash in" on its security
value has been to end the business.
That's fine for someone who's ready
to pack it in, and has no sons or
daughters interested in carrying on.
When a person starts thinking in
terms of "cashing in" assets necessary
for running a business, he has
become a speculator as well as a
farmer. Speculating is a tricky
business. Speculators only make
money by having enough insight to
sell when the price is high enough to
make a decent profit, and before the
price falls below the profit level.
Hanging on too long spells trouble.
Quota really has no market value
whatsoever as long as we intend to
carry on farming. It's simply our
right to ship milk. Here's where its
real security value lies — its potential
to make more profit from the farm
business each year. Using this profit
potential to the ultimate, a farmer
never needs to wonder about its
market value whcn it's time to sell the
cows.
Because we are all asset -oriented,
we tend to look for security in the
assets we accumulate. For the
dairyman, it's mainly land and quota.
Perhaps we need to be reminded
again of a basic business principle:
The only security any of us has is our
ability to adapt to change, to handle
any situation that comes along.
That's the only form of security there
is. Everything else can be taken
away from us. Or drop in value. Or
require the death of the business to
"cash in" on it.
Instead, we have to be more
profit -oriented.
Because there is more milk
production, and potential for far more
than there is provincial milk quota
available, the cost for the right to
produce is likely going to keep on
climbing. Those making the most
profit will be at the front of the line to
buy more quota. For those compared
to compete, the number one business
goal is to work on improved profit
levels to pay for the rising cost of a
bigger share of a "matured" market.
That's the real security of dairying.0
by Dave Little, Agricultural
Representative, Hastings County
COST-CUTTING
ON THE FARM
Everybody's cutting costs these
days, from governments to industry,
to private business, to farms. In
tough economic times a businessman
has to trim his costs as much as
possible in order to control his losses.
Most farmers can't lay off people
or close branch plants, so what can
they do to reduce costs?
1. Reduce surplus inventories or
carryover. If there are feed or
supplies that won't be needed until
after the next harvest season, they
may be converted to cash.
2. Sell under -used capital items
such as equipment, or even land.
Some farms are over -powered or are
losing money on feed production.
Selling these items to reduce
borrowed capital can be very
effective in reducing costs.
3. Reduce borrowings. Interest
money is empty costs. It doesn't
produce any return. Before you
borrow, budget to make sure that
your new investment will pay for
itself in the short term. If it will, the
long term will look after itself.
4. Analyze each operation. Make
sure that everything you do gets
results at the lowest possible cost.
Efficiency is getting the most dollars
returned for each dollar spent.
5. Make sure your time is being
rewarded. A producer may be
spending time doing things which
don't give any return. He may be
able to use that time in an income-
producing part-time job, doing
custom work or planning how to
improve his income situation.0
by W. J. Baxter, Agricultural
Representative, Wellington County
COST BEST REASON
FOR NO -TILL
The number one reason he switched
to no -till farming was to save money,
Holyrood farmer Jim Gowland told
those attending the Progressive
Agriculture Workshop in Brussels
March 12.
Mr. Gowland told the 50 farmers at
the meeting, sponsored by the
Maitland Valley Conservation
Authority, that he felt he had to
increase the profitability of his farm
and had to find a way of doing more
work by himself. He also wanted to
cut equipment and energy costs.
Since making the switch to no -till
he has increased his cash crop
acreage from 350 to 550-600 acres
yet the amount of fuel he has used
hasn't increased, Mr. Gowland said.
He said he had tried minimum tillage
but had found the equipment costs
too high and was unhappy with the
seed -bed preparation.
The second biggest reason for the
switch to no -till was environmental,
he said. He worried that the soil
structure on his farm would be
destroyed if he continued yearly
tillage. With light soils, he also
worried about wind erosion. Proper
crop rotation has a tremendous
impact on the soil quality, he said. He
has taken some vulnerable land out of
production and planted it in trees.
Farmers looking to switch to no -till
should move carefully, he said. He
suggested starting with a five -acre
plot of good farmland to experiment
with. Only increase the acreage
under no -till when you have been
successful with what you've got and
confident you can make the
management changes necessary. You
have to learn the reasons for the
mistakes you've made he said. "It will
take many of us a complete generation
to adapt to no-till."0
48 THE RURAL VOICE
1