I am not a big fan of amusement parks. I especially dislike the large roller coasters. I think it is my queasy stomach and the feeling of lack of control of my situation. I feel the same way about milk pricing as once again we are on a wild ride. After hitting the bottom, we are on an uphill climb with pricing (Hurray!!!). However, the thoughts go through my mind of how long will it last? How high is the climb and how soon does it drop and how far? I just feel sick all over again.
Dairying and dialing in a herd is like a train that gains momentum over time. It can stop fairly fast, but it takes a lot of energy and time to build speed. Of course, energy and time cost money… so once going, I hate to apply the brakes.
Protect Your Milk Price
The only thing to do is protect your milk price by contracting portions of your milk. There are different ways to do this using the government, brokers, and processors. I am also a fan of protecting your bottom milk price with a put… or insurance. It will cost money to buy, but peace of mind on a stable price is worth it to me. Now, with some co-ops they lock you in and although you miss the low prices, you also miss the high prices.
My point is that there are lots of possibilities. I’m not recommending one over another, but I am encouraging dairy folks to explore the possibilities.
Milk Price References
Take some time and do the research… here are some references that I find helpful:
- USDA forward contracting website.
- I really like the Penn State explanation for pricing strategy.
- The DFA site is also helpful.
What do you do to protect your milk price? Maybe sharing it will help somebody else…