Eight Steps for Dairies to Survive the Drought

First, feed a balanced, least cost ration. Do not overfeed your cows. Feed to maximize net returns or to minimize costs. Feeding for maximum production per cow is not synonymous with maximizing net returns or minimizing total costs.

Second, cull carefully; get rid of unprofitable cows.

Third, control replacement inventory levels; if necessary, sell off some of your replacement heifers to control feed expenses.

Fourth, shop and substitute commodities if you have to. Consult your county Extension agent for help in commodity location and ration formulation.

Fifth, if possible, book hay, silage, or commodities for future delivery at a price you can live with.

Sixth, the options in futures contracts traded on the Chicago Board of Trade and New York Exchange may offer some milk producers the opportunity to lock in feed prices for feed needed in three, six, or nine months. A milk producer interested in this strategy should seek advice from someone familiar with the futures market and the process or hedging through options contracts.

Seventh, control other expenses as much as possible. If feed costs cannot be trimmed or held in check, then look for other places in the dairy budget to cut.

Eighth, if you just cannot make ends meet no matter what you do, then you may consider cutting your losses by selling out. This option should be considered only after it is discussed by the family unit. All alternatives to dairying should be discussed in a realistic manner and weighed as to the viability of these alternatives. Seek outside council and advice if necessary. Texas Agricultural Extension Service agents and specialists many times can provide information to help make decisions during periods of career transition. Accountants, lawyers and the clergy also are sources of inputs in this type of decision process.