MILK Readers Most Concerned About Feed Expenses For 2019
A recent poll of MILKBusiness.com readers found feed costs are the costs they are worried about the most. On most dairies feed is the largest expense category, followed by labor. So it wasn’t a surprise to see 44% of the 130 respondents reporting feed was their largest concern and 32% noting labor costs their biggest concern.
Sixteen percent of readers said interest expenses were their No. 1 cost concern. That statistic is yet another indicator that on-farm cash flow, even for large dairies, isn’t what it needs to be in order to avoid debt. As a result farmers are borrowing more.
Fortunately, Curt Covington of Farmer Mac says this isn’t the 1980s, and lenders and farmers are fiscally smarter. From a financial perspective the banks have much healthier lending capabilities, are maintaining good solvency and capital measures despite tighter loan restrictions, he says.
“I think lenders are a lot smarter and have learned a lot in the last 30 years,” he said. “So have farmers. It's not like we see people coming in the door asking for 85 or 90% loan to value or advanced rates. People want 40%, 50%, 60% loan to value, so it's both sides of the equation.”
While there’s little farmers can do to control the size of their milk checks, many have turned to risk management strategies like forward contracting milk to take some price risk off the table.