Dairy Farm Management and Farm Evolution
By James R. Peck, AAC, PAS, CCA, ConsulAgr, Inc.
Farm businesses start and terminate every day. Most evolve, transfer from one
owner to another, or from family to family. They start up with a few dollars, or are
inherited, or are business ventures, or are just adventures. Partnerships are formed and
dissolved, or grow to become something greater. The older generation fades away, the
younger generation takes the reins. It is usually easier to get started than to get out, both
financially and emotionally. It is life in the business world and certainly in the world of The characteristics of high
farming. achieving dairy farm
But, some farms or farm business rise above the rest. They grow and prosper.
managers are identified and
They operate with a sustained vigor. They transfer from generation to generation with
relative ease. They attract and sustain quality people, form teams of enthusiastic workers discussed. Top managers
and management. Their communities and neighbors consider them to be an asset. consider business growth or
Agricultural consultants studying a full range of farm businesses observe that some expansion a part of ordinary
of them are among the best in the country. Some farms prosper beyond belief, others
never seem to reach their potential, and of course, some fail. The characteristics of the
best or most successful identified in this report are not the result of a scientific study. It characteristics of successful
is difficult to measure the secrets of success in a business that is as dynamic as most farm growth and its management
businesses, but there are a few attributes that seem to be common among those and managers are
businesses that succeed to higher levels. Professionals with experience working with a
range of businesses usually can quickly recognize these attributes and generally agree
that they are important.
First, it is important have some kind of understanding of the definition of a really
good farm business. They can be categorized as a business that consistently meets its
goals and is viewed by contemporaries and communities as a successful and envied
farming business. The term “class” is more often than not associated with these farms
They grow productivity.
These farm businesses do more than just milk cows or grow crops. They focus on
the production that produces profits. Owning cows has consistently yielded better
returns than owning real estate or tractors. Owning high producing cows makes more
money than owning low producing cows. Sometimes not owning the cows makes more
money if you they can be rented with the right terms. Whatever the mechanism or
James R. Peck, AAC, PAS, CCA is president of ConsulAgr, Inc.,
a professional consulting firm. The practice is located in upstate
New York and has been providing comprehensive consulting
services related to management and production to farm
businesses for over 30 years.
Professional Forum & Perspectives
system, the ability to find and pursue the combination They also work with other professionals who can
of business resources that focuses on bottom line support their businesses. The use of consultants is
productivity and profitability is the key. If the business cultivated. The veterinarian is more than a cow doctor.
is making money, then everything that they do simply He becomes a team member with the herd manager, the
works better. Paying good wages and benefits, having feeder, the cow chaser and the milker. The nutritionist
better facilities, having the time to have fun is all the becomes a team member with the feeder, the herd
result of making sure that the production unit is manager, the crop crew, the veterinarian and the feed
working right and producing exceptional profits. buyer. The accountant becomes part of the team with
On a dairy farm that means keeping the barn full the bookkeeper, the payroll clerk, key managers and the
of good productive cows. It also means ensuring that check signer.
the cattle are there and up to speed before new
overhead is committed in terms of new milking parlors, They develop long and short term plans.
upgraded facilities, or new equipment. Planning skills are practiced at every level. A
The concept of leveraging productive resources is mission or vision statement not only exists, but is clearly
important on dairy farms. The ability to grow from articulated to everyone involved with the business. It is
within is a powerful concept. There are few situations in posted and proudly shared internally and externally. It
business when the owner can invest in an asset that over is used to establish a culture as to why and how the
time appreciates and the costs of the appreciation are business runs. Long term plans are made, worked
expensed. A dairy farm can purchase a herd of cattle toward, revisited, and revised as necessary. The long
and if they are prudent in breeding and husbandry, in range planning is done as a methodical process, seeking
ten years the herd will be twice as big and every cow input from many sources. It is considered an ongoing
more valuable. In the mean time, they have sold milk, process. Most goals are eventually met. They are always
cull cows and bull calves. Dairy farms literally grow working on the next step.
their own assets. It can not be done with assets such as Short-term plans are developed on a regular basis.
a combine or tractor. Financial backers value this. There are well-structured crop programs, breeding
programs, feed management systems, financial plans,
They grow people and management. annual budgets, and job descriptions are well-
The super-successful farm recognizes that they are structured. Work schedules are developed so everyone
in a people business. They find ways to allow and knows what is expected. There are written protocols
encourage people growth. There exists a culture of for livestock care, treatments, and emergencies.
being concerned about an individual's ability to do his Machinery maintenance is planned and routine.
or her job and aspire to do better. Training programs Long-range plans include more than how the
are in place to help new workers become oriented to the business will grow and run. A plan also exists for the
job and to understand expectations for job transition of the farm to the next owners and managers.
performance. People are encouraged to help each The successful transition of the larger farm business to
other. Teams are encouraged and cross training is the next owners, operators, and managers is one of the
expected. Job descriptions are the norm and employee truest measures of success. It requires a great deal of
meetings are routine. foresight, organization, leadership, and planning.
Workers are not just employees. They are
considered valued team members. Their personal and They keep a focus on the important things.
family needs are understood and considered. Flextime Successful farm businesses have an ability to focus
is common and there are opportunities to be soccer on those things that are important to the business's
Moms and Dads. Their input is sought and respected on productivity and profitability. They are not distracted
matters of work and business well-being. for long by what others are doing, the newest fad, or the
Opportunities to improve are encouraged and brightest paint. They have strong problem solving
supported. Granting time to attend meetings and skills. If things are not going as planned, or unforeseen
educational courses is expected. problems develop, they quickly identify the problems,
The expectation for personal growth is extended find alternatives, select solutions, and make decisions.
throughout the organization. Owners, middle Decisions are methodically arrived at. Once made, they
managers and key employees regularly attend meetings are implemented. There is seldom much time wasted in
and seek professional growth. Family members are delaying the obvious. On the other hand, important
encouraged to attend meetings, take college courses, decisions are not hastily made.
seek professional travel and take personal development
time. They tend to tap the college worker pool and look
for opportunities to support work-study programs and
2001 Journal of the ASFMRA | www.asfmra.org
They seek and use good information and respect draw it to a meaningful conclusion. It is a person with
the basic principles. some extraordinary vision, some strong desires for
Internal records such as dairy records, crop success, or someone who sees joy in making good
records, and financial records are extensively used to things happen. Often it is a senior member of the
monitor performance and to base decisions. They are organization, but it may just as likely be a son or
routinely used for specific purposes and with daughter, a spouse, or younger partner. It is unusual to
established benchmarks. Quality control principles are find a truly successful business that is really run by a
continuously being developed to improve the value of committee of the whole, although, some of the best
the information from the records. The information is farms may seem that way. In reality there is a really
shared with everyone that may have a stake in the gifted leader somewhere in the background that knows
matters involved. There are few secrets. how to make it appear that everyone is involved.
At all levels, employees, managers, owners, and
even outside people are solicited for information, They consider growth as an ordinary part of
observations, personal knowledge, and insight. The business.
leverage of a person's mind for knowledge is a working The top group of dairy managers thinks of growth
management tool. as just a part of their business. Their usual factor is for
These managers will likely be familiar with the an annual growth of 10%. Anything less they consider
capacity of computers as a business tool. They will be standing still. For the 50-cow herd, that is 5 more cows
knowledgeable about the internet and use e-mail. They for next year. For the 500-cow herd, that is 50 more
can work out a solution using Excel or Access, but will cows this year and 55 more cows next year. That is a
not spend many hours at it. herd a year for a lot of dairymen. Of course it is not
Many of them will regularly work with farm just more cows, it includes all the things that it takes to
advisory panels or boards. These are groups of keep growth going, more barn space, more crops, more
advisors and farm professionals that meet to advise and labor, and more details to manage.
consult as a team on all kinds of farm issues. The
workings, management, and functions of the advisory What are the characteristics of successful growth?
panel have been worked out, and they have become a Growth is part of the long-range farm plan and has
regular part of the farm's management system. been part of the plan for some time. If there has not
The most successful farm managers work with been a plan for growth in place, it is difficult to get one
their advisory panels or boards in the role as the geared up without a great deal of stress. The good
chairman of the board. They call the meeting, set the managers are challenged by the problems of growth
agenda, and run the meeting. They give assignments to and expansion. They have learned how to deal with
the panel, solicit reports from members, and give change and growth from past experience. They have
assignments for projects and activities to individuals on developed an overall growth plan that includes all
the panel. An outside facilitator is often used to get an aspects of the business from cows to crops to people to
advisory panel started or for special issues. The financing. They generally are not expanding or growing
manager reserves the right to make decisions solely for the sake of getting bigger. Usually they have
independent of the recommendations or actions of the recognized that they need to grow their business to
advisory panel. They also accept the responsibility for maintain their competitive position within the industry.
their own actions. They definitely have recognized that they are not in
These businesses and their management have a business just to get bigger.
high regard for solid business principles. They avoid The most successful expansions have been growth
risky business ventures, unfounded investments, and programs from within. With aggressive herd
fads. They appreciate good land resources, good cattle, management, good reproduction performance,
and quality equipment. They also are risk takers when aggressive replacement rearing, and a good herd heath
they are confident that the conditions are right. They program that minimizes culling, it is possible for a 10
also have a high standard of fairness, community, and percent annual herd growth from within. It requires
ethics. detailed attention to good herd management and hard
work, but those are the conditions associated with high
They provide strong leadership. production and profitability. Management's attention to
One phenomenon that is usually present in super- detail is the key to making it happen.
achieving businesses is the presence of strong The alternative to internal growth is to purchase
leadership. This is usually not in the stereotype of the expansion cattle. The down side is that the cost of the
"boss", but in terms of an individual that provides the purchased cattle becomes a cash flow drain and there is
leadership to get things started, to keep it going, and to a replacement time lag until the purchase cattle begin to
Professional Forum & Perspectives
replace themselves with their own progeny. It is a skills to meet the new levels of management is
necessity to keep the facilities filled with producing important. It does not happen overnight. New
cattle. Unused free stalls are very expensive. The management skills can be learned and skillful managers
challenge is to locate, buy at the right price, and can provide opportunities for people to experiment and
assemble groups of cattle as they are needed. grow into larger management roles. As farms get bigger
Biosecurity and herd health issues must be dealt with. it becomes more important to have backup people and
Locating, buying, assembling, dealing with the people in training to replace key personnel who move
biosecurity and managing expanded herd health issues on.
are required skills. A very valuable characteristic of managers as they
The leapfrog concept works for planned growth. expand is their ability to "get outside of the box". Not
For herds in a growth mode, experiencing periods of every farm manager is able to visualize, plan, organize,
overcrowding, followed by culling to improve the herd, and implement an expansion project or growth plan
while growing the heifer herd, building more space, according to a model plan, or to some consultant's best
stocking the new areas, and then letting the barns fill up idea, or in the same way that someone else had done it.
again is an operational reality. Most of the time the It seldom just happens, is easy, or is without pitfalls.
herd is in some mode of being overcrowded. Other ideas such as combining farm operations or
The best managers end up with a minimum of businesses, renting interim facilities, buying
underutilized barn space. Timing is a benefit of the undervalued lost capital facilities, or franchising another
planning process. Knowing when the facilities will be farming business are all things that may work. It takes
overcrowded to the breaking point and having new vision to recognize the opportunity. It takes skill to put
space available just before the whole system collapses is together a plan to take advantage of them. It takes
the sign of outstanding planning. Some would call it courage to try something different. And, it takes a lot
good luck. Barns are the most profitable when filled to of hard work to pull it off, but the rewards can be great.
capacity and then a little more. The skill is knowing In almost every case of growth or expansion there
when the limit has been reached, and having adequate is one very important principle that cannot be violated.
herdsmanship skills to deal with some stress. The bottom line and reality check is that there must be
As the farm grows in size, the demands for enough cows producing enough milk to pay the bills
management increase and change. As herd size grows, and repay the borrowed capital when it is due. The
there are thresholds at which management styles must irony is that in most expansion projects the last thing
change. The first change occurs when the owner can no that can be justified is the new milking parlor, which
longer milk the cows all the time. This usually happens was the focus of what was really wanted in the
at about 300 cows. The realization is that if all the beginning.
workers quit, the cows could not be milked for more
than one or two more milkings. The owner now has to Conclusion
depend on other people and manage with people. The Several management practices can be identified as
second threshold occurs when the owners or managers characteristic of high achieving dairy farm businesses.
realize that they can not make all the hands-on decisions Growing productivity, developing people and
in person and that some of the decisions must be management skills, developing short and long-term
delegated to other people. This usually happens some plans, maintaining a business focus, securing and using
place between 500 and 800 cows. Their role changes to good information, and providing strong business
become a full time manager who then manages other leadership are critical aspects. Ongoing growth is an
managers. important part of successful dairy farm management.
One of the most important aspects of successful Internal growth is a key to the long term plans to
management is the recognition of the need to change manage assets and to maximize the businesses'
management styles. Growth of individual and team resources.
2001 Journal of the ASFMRA | www.asfmra.org