Dairy Analysis 20/20 Workshop Shows Who Has the Competitive Advantage

UNIVERSITY PARK, Pa. – Which dairy regions of the U.S. have the competitive advantage when it comes to business management factors such as cost of production, labor efficiency, feed costs, and cow turnover?

Penn State Dairy Alliance invited large-herd dairy producers from across the nation to explore who has the competitive edge – and why – at a two-day Dairy Analysis 20/20 workshop held recently in Gettysburg, Pa.

This multi-state business management workshop analyzed each participating producer’s production and financial records for 2006-2007 and compared them to performance indicators, or benchmarks. The comparison showed participants how they performed in terms of various financial and production factors – business performance, cost of production, income over feed costs, parlor performance, and culling management – and the steps that they could take to match top performance levels on their own dairies.

“Dairy Analysis 20/20 was a one-of-a-kind workshop,” said Kimberly Bunting, office and parlor manager at Mains Dairy, Newville, Pa., which milks 750 cows. “I had the opportunity to interact with some of the country’s top progressive dairymen. It allowed for relationships to be made, and ideas to be shared. The power to create changes starts with a group like the one that assembled for the workshop.”

Participants came from Pennsylvania, Ohio, New Mexico, New York, Wisconsin, and South Dakota. “It was eye-opening to be able to benchmark numbers and production costs with producers from around the country,” said Bunting. “It allowed us to see where we can make improvements – where the advantages and disadvantages are – and what we should be doing in order to be prepared for the changes the dairy industry is going to face globally in the next 10 years.”

Each instructional session featured an analysis of participants’ data in a particular production or business management area, followed by small-group discussion to promote producer-to-producer learning. “Interaction with other producers was the best part of the whole thing,” said Lloyd Holterman of Rosy Lane Holsteins, an 840-cow dairy in Watertown, WI. “The workshop gave you the opportunity to talk with others doing the best in an area and you could find out how they accomplished it. During networking time, we could ask questions and pieced the puzzle together for our own dairies.” Holterman proclaimed the workshop “one of the best ones I’ve ever been to. It had actual facts and figures and numbers, rather than people guessing.”   

The workshop was a collaborative effort between Bradley Hilty, business and information management specialist with Penn State Dairy Alliance; Jason Karszes, farm management specialist, Cornell PRO-DAIRY; Dr. Albert De Vries, associate professor of dairy science, University of Florida; Dr. Robert Hagevoort, extension educator, New Mexico State University; and Michael Hosterman, dairy business consultant, AgChoice Farm Credit. The collaborators planned the conference and provided instruction. Cornell University’s Dairy Farm Business Summary and Analysis tool was used to analyze participants’ data.

“To see these progressive dairy operations from across the country communicating and sharing information was inspiring,” said presenter Mike Hosterman. “I believe each operation walked away with at least one new idea and at least one new networking contact. All this made the effort, time, and resources to put on this program worthwhile.”

The workshop was created as part of an ongoing East Meets West series of educational programs offered by Penn State Dairy Alliance in conjunction with New Mexico State University. East Meets West programs bring producers from these regions of the country together so they can learn from each other. The series also reminds producers of the common ground they share and promotes networking for the good of the individual and the industry.

According to Hilty, “Collaborative efforts between universities enable us to offer high level educational programs to some of the industry’s top performers. Each individual brings a wealth of information to the program on different topics and often from different perspective. We present the theory backed by numbers from the producers’ operations to support what we present. The producers have the practical day-to-day knowledge of how to achieve a high level of performance and convey that knowledge to the others. Peer-to-peer learning is a system that works and this program proved it.”

A highlight of the workshop was a presentation by keynote speaker Andrei Mikhalevsky, managing director, Fonterra Ingredients, who presented a session titled: Strategies for Being a Competitive Player in the World Market in 2015. “Andrei’s outlook on the global markets for the next 10 years really makes you stop and think about what we as U.S. dairy producers should be doing now. It fell right in line with the focus of the workshop, which was creating that competitive advantage, just on a much larger scale,” observed Bunting.

Labor rose to the top as a big concern for several workshop participants, including Bunting. “One of the main focuses for us was realizing our labor costs are too high. We pinpointed the parlor as a center where we could be more efficient, labor-wise, and immediately devised a workable plan to achieve our goal when we returned home,” she said.

The sign of a successful workshop rests in what producers can bring back home to implement on their dairies. For producer Holterman, the take home was a renewed sense of hope in the industry, plus some useful strategies to improve profitability. “I came home more enthusiastic. Sometimes, you can dwell on things that are going wrong. The other producers shared some new ways to improve on areas like labor efficiency in the parlor, how to do a better job on cow handling, and how to be a better boss.”

And so at the end of the day which dairy region can claim the competitive advantage in various production and business management areas? Perhaps Holterman sums it up best. “Sometimes we are quick to blame our problems on regional differences, but this workshop proved to me that it’s not regional issues or location that matter, it’s how we run our businesses.”

Support for the Dairy Analysis 20/20 workshop was provided by Acuity Advisers and CPAs; Pennsylvania’s Center for Dairy Excellence; Genske, Mulder & Company, LLP; Monsanto; and Northeast Dairy Business Magazine.

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Dairy Alliance is a Penn State Cooperative Extension initiative.