Art Schaap
December 30, 2016

Prepare For What 2017 Might Bring

 |  By: Anna-Lisa Laca

We caught up with several producers who were on the cover of Farm Journal’s MILK in 2016, to ask them what they anticipate for 2017. Here’s what Greg Hooker of California, Kevin Wulf of Minnesota, Art Schaap of New Mexico and Mike Gerrits of Wisconsin have on their minds for the next year.

What are you looking for - ward to the most in 2017? GH: I am looking forward to a little higher milk prices, and a better margin. The New Year will be a year to shore up our current procedures and practices and finish a couple projects already in the pipeline. Not a lot of dramatic changes for our dairy. The marginal profitability of 2016 has not left a lot of cash lying around for new investment. We will concentrate on the basics; drive up production and drive down costs. In addition, the anticipation is interest rates will rise over the next year so we will look to reduce our debt load slightly to control those costs. KW: We are looking forward to learning from 2016 mistakes and not making them again in 2017. AS: Higher demand for dairy products worldwide. We might see Russia lift dairy sanctions and allow trade with Europe or U.S. MG: Obviously we are looking forward to better milk prices in 2017. We are also looking forward to a stable workforce with new immigration reform.

What technologies are you looking forward to implementing on your dairy in 2017? GH: Genetic improvements: I believe there is a lot of opportunity to improve many areas of herd performance through genetic selection. Immunity traits, reproduction traits and health traits all have an opportunity to improve the bottom line in the future. KW: Continued transition of information to cloud-based platforms to make data sharing less cumbersome. AS: Cow sorting, cow cooling system and a manager web page for documents needed. MG: One technology we are most looking forward to is the planting of cover crops into wheat and standing corn fields and using minimal disturbance manure applicators on those fields. We are also going to use drones for crop scouting our fields.

How much are you expecting feed costs to change from 2016? GH: I think my feed price will be about the same as the second half of 2016. Probably for the year of 2017 it will be a little lower than 2016. The way commodity prices and the outlooks are looking today, it will be hard for prices to sustain too much of an increase. AS: I don’t expect them to change very much but stable out. We might see a commodities rise end of year. It all depends on the value of the dollar. MG: We are expecting a relatively small to no change in feed costs for 2017 with commodity prices staying low for the foreseeable future.

What three things do you want to change with regard to your management style in the coming year? GH: Improve some middle management leadership/management training. As our business grows/matures I realize how much we rely on the good decisions of our mangers for the continued success of the dairy. KW: We would like to improve communication, verification and appreciation among our teams. AS: Adding human a resource person to help employee morale, streamline labor efficiency, spend more time in pens with my rubber boots to fix cow problems. MG: The biggest change in management style for 2017 is giving the next generation more authority in making the day-to-day decisions on the farm. We would also like to change the management on our land by using more no-till practices and cover crops to capture phosphorous and nitrogen runoff while reducing erosion.

Do you expect labor costs to go up? GH: My labor costs have gone up 5% to 6% each of the past two years. We have an increase in minimum wage here in California starting on Jan. 1, however I don’t believe this will affect California dairies too much because most of us already pay significantly above the new level. My labor costs have been mainly affected by health and workers comp insurance cost increases. Bottom line is my labor costs might increase a couple percent in 2017 but nothing too dramatic. AS: Not unless work force in oil improves. If oil stays the same price, labor in the Southwest will be stable. MG: Yes, because there is a small pool of people looking for jobs, and we have a core group of employees who have been with us for years.

Where are you projecting your mailbox price to be in 2017? GH: I’m hoping it will be about $16. KW: The milk price is sure to go up, down or stay the same. Therefore, we need to be sure to maintain a strong balance sheet. AS: I think it will be $15 to $18. MG: We project the first half of 2017 around $16.50 and the last six months $18 to $19.

What are three things you want to get better at for 2017? On the dairy: KW: Enhancing our safety program, our culture and our reputation. AS: Breeding, feed quality and labor efficiency MG: One of the top things we would like to improve is the public perception of large dairy farms. We’d also like to get bigger and become even more efficient in every facet of the business while keeping the same number of employees. Lastly, we would like to see an improved heifer, both in breeding and body condition. They are on open lots at our heifer facility in Nebraska.