Evaluate your forage options

Hoard's Dairyman: 

Evaluate your forage options

Date: 
Thu, 07/26/2012

by Gary Sipiorski, Dairy Development Manager, Vita Plus, Corp.

Most dairy nutritionists already have been stuffing cows with as many alternative feeds as they can lay their ration formulas on. If there is less corn or soybeans at harvest time, due to our current drought, there will certainly be less of the by-products that come from those main crops.

That shortage will place a huge demand on other feed sources, as well. If there is time, seed down an alternative forage crop for this year or one that will be ready late next spring. Are there corn growers in your area who have corn but will not have a grain crop? Those fields may be available for corn silage.

We have been here before in drought conditions. Most have made it through these difficult events. Now is the time to start thinking through a longer-term plan for the next 12 months.

Crop insurance will help in many cases for those who grow their own crops, but feed will still need to be bought and it will not be cheap. There may be some government programs distributed by the Farm Service Agency (FSA). Those generally take a long time to initiate, and in an election year, it is anybody’s guess what will come out of Washington.

Now is the time to have your loan officer come out to the dairy to see your situation. Lenders are well aware of moisture conditions in your region and nationally. It does help them to see firsthand what is happening on your dairy. Break out the year-end balance sheets and 2012 cash flow projections to review them. Then redo the cash flow to your best guess of what your new costs and income will be. It is better to review and redo your cash flow sooner than later. Try to be realistic and not too pessimistic.

Then sit down with your lender and go through the numbers. Discuss what new operating lines of credit may be needed. Lenders may not grant a new request on the spot and generally will have to take new credit requests to upper management and/or the lender’s loan committee.

Starting this process early tells the lender you are thinking ahead of the need rather than coming in the door when the last few feet are left in the bunker. Have a plan and that plan should remain flexible at this time to allow you to react to any new developments.

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