ISU Dairy Team Helps Producers and Agri-business Respond to Dairy Financial Crisis

Dale Thoreson, Larry Tranel, Leo Timms, Ron Hook, John Baker, Donna Andrusyk, Wendell Williams, Chris Mondak; Field Specialists, Program Specialists, and Farm Management Associate; Northwest, Northeast, and Southeast Areas

Problem Statement:

The time period of 2007-2008 was a good year for dairy producers: Increased global demand for dairy products, increased international markets for whey protein, and a shortage of milk in international markets due to drought-caused lower production in New Zealand were factors that caused milk prices to rise to record levels ($18-20/cwt). This scenario encouraged US dairy growth and high production. However, in late Fall 2008 a global recession led to opposite trends involving lower global consumption, lower demand for US milk, and return of milk supply from New Zealand to international markets. These factors combined to create a rapid drop of milk prices to lows in $10/cwt range.  Given costs of production at $16-17/cwt, a long period of low milk prices in the face of high cost of production put pressure on all dairy producers nationwide, and created a scenario where many dairies were losing money and losing equity position.

Programmatic Response: 

Aware that the impending costs of harvest and manure-hauling season could put producers at a critical decision point to stay in business or exit,  the ISU Dairy Team and Extension partners planned and delivered 10  workshops  (“ Dealing with Tough Times: The Dairy Financial Situation”)  through-out the state July and August 2009. The purpose of each workshop meeting was to get the word out about key financial, legal, and stress management strategies to help dairy producers and lenders through critical decision-making processes. Across the state, the workshops drew in not only dairy producers, but also bankers, FSA lenders, accountants, and attorneys who work with dairy clients.

A good publicity campaign not only promoted the meetings, but also resulted in reports and articles that were posted widely throughout the state and in some national dairy publications, thus spreading the key messages to a broad audience throughout and beyond Iowa.

Outcome Statement:  

Immediate short-term results in the form of increased knowledge and awareness were measured either by pre-post quizzes or post-meeting surveys. At the 3 sites that used a short 6-question pre-post quiz, 16 out of 32 people completed a pre-post quiz.  Compared to their pre-quiz performance, all 16 improved their score by marking 4 or more correct answers, indicating a change in knowledge level on financial, legal, or stress management strategies.  At the sites that used an end-of-meeting survey, dairy producers rated their increase in knowledge gained as 6.48 or above on a 10 point scale.  The questions and producers’ answers and comments are detailed in the survey summary below:

Dairy Financial Situation 

Dear Participant:

Your attendance was appreciated.  In an effort to evaluate programming efforts for impact and future programs, please take 1-2 minutes to provide your feedback of the program.

Please rate your increased knowledge of each of the following topics on a scale of 1-10 in the corresponding blank next to each item.  Thank you.

(little increase) 1            2          3          4          5          6          7          8          9          10 (large increase)

Level of Knowledge Increase

1. The Dairy Situation Update     by Dale Thoreson                                        +7.37 (n=27)
I learned…A very nice review of what is occurring with dairy prices; that milk price will come up; some opinions on futures and outlook for future; it is not a local problem; that this “perfect storm: has many sides; cull cow rate doesn’t affect market

I will…be able to express to producers they are not in this alone; discuss with farmers that it is not their fault

2.  Iowa Mediation Law--Mediating with Your Lender by John Baker         +7.24 (n=29)
            I learned…John always brings renewed information; how mediation works; law requirements; a lot about mediation; that we have rights too

I will…be able to follow; keep in mind available options

3.  Managing Dairy Farm Finances in Tough Times by Larry Tranel        +7.66 (n=29)
I learned…keep records for financial profitability; about Dairy Trans; different financial tools to use; what are the key ingredients to farm gauging of assets; what financial statements are important to use;

            I will…be able to give to my customers; help farmers get a handle on finances; prepare statements on Jan. 1 and Dec. 31 contact Larry for review; get more financial info done;

4.  Iowa Bankruptcy Law  by Erin Herbold                                                        +6.48 (n=29)
I learned….probably could have used a few more details; different types of bankruptcy; secured/unsecured creditors, a lot about bankruptcy; new changes in Chapter 12; about reorganization plans; about bankruptcy and what the difference is; good information, thought the presentation could have been more professional

            I will...hopefully not have to use; pass along info; hopefully avoid this; try not to go bankrupt

5.  Farm Stress by John Baker                                                                             +7.34  (n=29)
            I learned…useful; problems have solutions; was reminded about how to communicate and deal with things during stressful times; steps in solving stress; being stressed is ok; SOCS – don’t use “but”, use “and”;

            I will…be able to use these when needed and also how to negotiate; help people deal with stress, say “and” not “but”; try to use SOCS method in everyday life; negotiate and understand myself better;

6.  What Do You Tell the Kids?   by Larry Tranel                                             +7.15 (n=27)
            I learned….again useful; communicate with others; ideas on communicating with kids and others in the situation; how to communicate and solve problems; bad things can develop resiliency;

            I will…be able to help my customers; age appropriate challenge my kids; keep kids informed at an age appropriate relationship;

7.  Has this seminar been of high value for you?      Yes - 26   No – 0  

Please list any other comments regarding the meeting on back. Thanks for your  input.

Very good program

All excellent

Bankruptcy law part drug on – tighten up; John Baker was entertaining and educational

The speakers overall were very good.  I really enjoyed listening to John Baker.  Erin knew what she was talking about as far as bankruptcy however how it is tied in with a dairy far, I am still confused.  She did however help me determine the differences between Chapter 7, 11, 12 and 13.  I have heard of the dairy trans and finn pak – it is nice to have the reminder about those tools and what information we need to have ready to successfully complete those financial tools.


110 Dairy

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