Embracing Change to Thrive in the Evolving Dairy Industry

“If you always do what you’ve always done, you’ll always get what you’ve always got.” – Henry Ford

Change is never easy, especially in the dairy industry. With a landscape that is constantly evolving, there is a pressing need to adapt, improve and make timely, strategic decisions. An illustration of this hit close to home for me recently, when we decided to switch milk marketing cooperatives. After many years with our previous cooperative, this wasn’t a choice we made lightly. Years of loyalty, the comfort of familiarity and a natural fear of the unknown all contributed to the difficulty of the decision. But after carefully analyzing the numbers, it became clear that this shift was necessary.  

This personal example made me reflect on how to strategically approach our ever-evolving dairy industry. In the past, many dairy producers had limited or no options in milk marketing cooperatives - many felt fortunate just to have a market for their milk. However, the industry has evolved. We now face changing milk supply dynamics and higher export demands, bringing new opportunities. In the Midwest, for example, dairy producers have the potential to improve cash flow, create some market security and leverage their operations with this one strategic choice.

Key Areas of Focus for 2025 and Beyond

1. Financial Review and Forecasting

• How did your operation perform financially in 2024 compared to previous years? Did your cost of production increase?
• Have you set your 2025 budget? Are there anticipated changes in feed, labor or fuel costs?
• Have you updated your balance sheet for year-end?
• Have you met with your accountant for year-end tax planning?
• Have you calculated your breakeven milk price?
  
  

A strong financial foundation is crucial for any successful dairy operation, especially as margins remain tight. Reviewing your numbers and setting a realistic budget for the coming year can help you make informed decisions that will keep your operation profitable.

2. Inventory Management

• What are your current inventory numbers? What are your goals for cow numbers, heifers and young stock? 
• Are there opportunities to capitalize on your current inventory?
• Are you managing replacement heifers effectively?
• Have you maximized your beef-on-dairy strategy and tapped into the high beef market to diversify your income sources? 
• Have you reviewed your current suppliers, and are there opportunities to renegotiate contracts?
  
  

Inventory management is key to controlling costs and ensuring you’re running an efficient operation. By strategically evaluating your herd and supply chain, you can optimize production and reduce unnecessary expenses. 

3. Marketing and Risk Management

• What is your current milk marketing strategy?
• Are there new markets you could be tapping into or switch to?
• Have you considered direct marketing?
• What types of insurance are you carrying? Have you investigated additional options?
  
  

Effective marketing and risk management can make a big difference to your bottom line. Explore ways to diversify your marketing strategies and assess your risk exposure, whether through pricing strategies or insurance options.

4. Technology, Innovation and the Future

• Are you planning a major change or investment in 2025 or beyond?
• Have you evaluated the feasibility of adding new technology to your operation?
• Do you have a next generation coming into the farm? Can you start preparing now?

In today’s competitive dairy industry, adopting new technologies can improve efficiency, enhance production and help streamline your operation for the future. Whether it’s upgrading equipment, implementing data-driven management tools or investing in automation, technology can be a powerful driver of growth.  

Moving Forward: Prepare for Change

By applying a strategic approach to planning, you can position your farm for success. Although we are currently seeing an improvement in milk prices, margins remain tight. If you apply your strategic approach and make some tough decisions, you can set up your operation for success in 2025. With a sharp focus on these four critical areas - financial review, inventory management, marketing and risk management, and technology investments – you’ll be well-positioned to not only survive but thrive in the changing dairy landscape.