Earlier this month I attended the 25th Annual National Workshop for Dairy Economists and Policy Analysts in Grand Rapids, Michigan. It was an opportunity to hear many of the folks I read in the national journals and then ask them questions directly.
One of the speakers presented the progression of change in dairy farm managers that I had not thought of before. Before 1970 herd owners and managers who were good cow managers and willing to work hard had a profit incentive to expand. However, there was a limit to the number of cows a family could manage and milk each day.
Soon progressive herd owners found that if they hired employees, they could expand their herds and follow the same profit incentive. The successful ones became good people managers and found that well-trained and dedicated employees made them money. This lead to salary incentives, special employee training and using emerging technologies to aid in maintaining cow comfort and productively. With the advent of automatic milking systems, employers had to evaluate how best to balance technology and employees- this is pushed as low unemployment rates made finding skilled employees harder to find.
This change, along with milk price challenges, has furthered the progression of managers to become good finance and business managers- the best ones had the profit incentive to keep getting bigger. While the herd size is growing faster than ever, during the past 50 years we have progressed from good cow managers to good people managers and now have entered the era where mangers have to focus on being exceptional business managers. The other aspects are not ignored, just often assigned to others in the business organization. The dollars and financial risk are just too great and require a specialized skill set.
This change is supported by following the change in milk by herd size. Since the mid-2000s, all sizes of dairies below 500 head have produced a smaller percent of the national milk supply. Herds from 500 to 1,000 cows have mostly maintained their percentage of the national milk supply and herds over 1,000 cows have increased their percentage. Herds over 2,000 cows have seen a dramatic increase.
While successful mangers have always had elements of all three traits, today’s herd owners and managers will have continue to sharpen their financial and business acumen. Being a small or large producer does not change the requirement manage cows or people well, nor to understand financial opportunities and options: however, as the numbers get bigger, so does the risk.