FVTC aids farmers in ‘managing the margins’
NEW LONDON – No doubt about it, these are tough times for many Wisconsin farmers. With low commodity prices, high input costs and other challenges, including the weather, many are struggling to remain in business.
However, the instructors at the Fox Valley Technical College (FVTC) campuses in Appleton, Chilton, Clintonville, Oshkosh, Waupaca and Wautoma are working closely with many of the producers in east-central Wisconsin to help them remain profitable.
“We’re working to help producers more effectively manage their margins,” said Randy Tenpas, who chairs the college’s agriculture department. “We’re trying to help them increase production, while lowering costs, to ensure they have a profit margin.”
He noted that producers are getting sharper in lowering their cost of production. “They’re doing more financial analysis and other things to remain profitable, and they’re making changes more quickly to their business plans when they recognize things aren’t working well,” he said.
Tenpas emphasized that area producers are utilizing many tools in managing their margins. “They’re setting achievable goals, keeping more accurate information on production costs and setting target sale prices at 10 percent gross margin or better,” he related.
Utilizing crop yield data and information collected from the cows to make better decisions, is a key to more effective management, according to Tenpas. “Running the numbers will help you set a better target price for feed purchases, and bulk ordering seed with neighbors can help secure a better discount,” he suggested.
Much of this information can be shared during regular meetings with members of the production team to make sure expense items are in line the budget.”Excel spreadsheets are great for keeping track of information and running scenarios,” Tenpas said.
He also offered these suggestions for improving profitability:
- Know your needs versus wants; don’t have more machinery than you need.
- Diversify into niche markets.
- Understand seasonal price cycles and take action if the market allows.
- Benchmark your operation compared to your peers.
- Look for opportunities to lock in profit, but don’t get greedy.
- Utilize on-farm grain storage to take advantage of post-harvest price increases.
Applying the tools
Tenpas also shared how one farm, Rohan Dairy near Bear Creek, is applying technology and other management tools. “They use activity monitors for both cow and heifer breeding, and the same system also collects milk-weight information,” he explained.
Team meetings provide an opportunity to address issues that might come up on their farm, and provide insight into what’s occurring on other farms.
Margins are measured during quarterly informational meetings for all members of the management team. “They use QuickBooks accounting software, and regular reports are generated to show if they’re staying on budget, and how their farm compares with industry benchmarks.
Price/risk strategies are reviewed and updated on a quarterly basis. “Every quarter we look at where things are headed,” said principal owner Tom Rohan. “We used to purchase puts on the milk price but in recent years we’ve tried practicing stricter discipline to keep our cost of production as low as possible without sacrificing income.”
Looking to the future
Despite current challenges facing Wisconsin farmers, Tenpas says job prospects for students in FVTC agriculture programs are high.
He stressed that on-campus programs have really grown. “Our Ag Business Science Technology program focuses on dairy and livestock, along with crops and soils, or students can take an ag business management path,” said Tenpas.
The school’s precision agriculture and technology program encompasses GPS, precision agriculture and data management.
“We also have two programs in the agriculture power equipment area, and farm operations programs for people wanting to stay in production agriculture. They’re either going to roll into their family farm or maybe start a farm on their own, or be an employee of a larger dairy or crop farm,” he said.
“We have a tremendous number of employment opportunities for our graduates,” he asserted. “I could probably have five to 10 times more students graduating in our ag business program. Also, there are many work experience and internship jobs for students between their first and second year.”
Tenpas is encouraged by both the entrepreneurial spirit among younger people who have a passion for agriculture and the dedication and quality of his instructors. “They focus on specific program areas, and they try to help students meet their goals, whether it’s agri-business, farm operations, or farm business production management. First, and foremost, we’re student focused.”