October 16 2020 Markets & Management Update:
Change is inevitable in all aspects of business and life. This year, we have certainly seen how quickly change can happen. When economies shut down in mid-March, the dairy industry lost nearly 50% of its sales almost overnight because restaurants were forced to close or offer limited service. This rapid change caused a tremendous shift in demand that our industry was not prepared for, leading to empty dairy cases in grocery stores while milk was dumped on the farm. It took some time, but the supply chain adapted so that milk was no longer dumped and dairy cases were full to meet the growing demand at retail stores.
The change in supply and demand earlier this year caused the lowest Class III and IV milk prices since 2009. The subsequent adjustments to supply resulted in an apparent milk shortage that caused Class III milk to jump in just two months to highs not seen since 2014. Class III price experienced an almost 11-year low in May followed by an almost six-year high in July. Unfortunately, Class IV prices continue to trade below pre-COVID-19 values. Milk price this year is an excellent example of how quickly things can change. Like milk prices, there are some things we have no control over and must adapt to in order survive. We cannot control milk price, but there are risk management tools available to help minimize that volatility.
The Center recently hosted its 11th annual Dairy Financial Conference virtually. One of this year’s speakers was Dr. Jennifer Garrett, founder of JG Consulting Services, LLC, a strategic management consulting firm dedicated to keeping agricultural systems profitable. Dr. Garrett is an expert in helping agriculture businesses, including dairy, learn to navigate and manage changing environments. She guides business owners and managers to find changes that ensure better profitability. Dr. Garrett explained that in order for Change to occur, there needs to be Dissatisfaction with the status quo, a Vision for the change, a First step that is taken to obtain the desired change, and Believability that the change will have the desired effect. For a change to occur, all of this must be greater than the Resistance to change. She explained it in the form of the multiplication equation C = D x V x F x B > R. If any of D, V, F, or B are equal to zero, the product of the equation is zero, not greater than R, and results in no change.
In your dairy business or a client’s dairy business, have you ever been dissatisfied with the status quo, knew a change was needed, but did not know how to overcome sources of resistance that prevent change? The Center is hosting its Fall Roundtable Meetings virtually this year to offer dairy farmers and consultants an opportunity to learn more about overcoming resistance and learning to manage change. The title for this year’s roundtable is, “Leading with Change: Managing Change on Your Dairy.” King Hickman, DVM is a founding partner at GPS Dairy Consulting, LLC— a group of independent dairy nutrition and management consultants servicing customers throughout the U.S. and Australia. Dr. Hickman will lead the discussion and provide strategies to help attendees learn how to make goals for change and meet them. The virtual roundtables will be held October 22 and October 29, 2020 from 10 to 11:45 a.m. Registration for the October 22 date is closed, but registration for the October 29 roundtable is open. The roundtables are free, but registration is required. If you are interested in leading with change, visit www. centerfordairyexcellence.org/events for more information or to register.
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