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Editor's notes: Finding common ground

Darren Olsen, Editor Published on 16 September 2009

Over the last few weeks I have spent time on the phone with forage producers concerning the current dairy situation and the economy in general.

While the mood has been direct and reflective of a slower market, most remain positive about the road ahead and are looking forward to things picking up over the next several months.

While no one knows exactly what is going to happen, individuals in agriculture tend to be optimistic realists, having dealt with ups and downs before.

Because our parent company, Progressive Dairy Publishing, also produces a leading national dairy magazine, I have been surrounded with information on both the buyer and seller sides when it comes to forages.

Neither side would wish to be where we are right now, but that doesn’t change the current situation many find themselves in headed into the fall and winter, needing to both sell or secure feed. Under the current set of conditions, I offer the following advice to people looking to secure forage sales in the near future:

1. Know who you are and what you are selling.
If there was ever a time to get your hay tested, now is it. No dairyman or rancher I know is willing to buy hay right now just on words and looks alone.

They have to know what they are getting with each load, and unless you are willing to put in the time to find out exactly what it is you are offering, you quickly run the potential of being passed over for someone who does.

Also, keep your hay protected from the elements until you are able to get it delivered to the buyer. It is very easy to tell when hay has been treated well or left up to nature to run its course over the stack. As we pointed out in our last issue, water runs downhill, so do what you can to cover your stacks and keep them high and dry.

2. Know your cost of doing business.
With the economy the way it is right now, it is imperative producers know exactly what it takes to get forage from beginning to end.

When determining cost, but sure to factor in shrinkage and other variables that can change from cutting to cutting (like fuel costs). Avoid trying to just take an average over the season, and don’t just base costs over what they were last year. I can’t think of a single expenditure category that is near where it was at this point last year and using old data will just give you old numbers.

3. Be fair and flexible when entering price negotiations.
If you have point number two well-established before entering into a sales contract, it can make negotiations much easier. Be sure to check your local market to get an accurate understanding of where hay prices are in your area.

They have been shifting across the country, and you need to know what to expect going into a contract. When possible, allow yourself a little wiggle room to move if necessary, but don’t sell yourself short of covering your costs.

It is also important to not lose the forest for the trees. Don’t be so set on a price that you can’t budge unless you know you are headed into a loss situation. Again, knowing what you can do will make pricing your hay much easier and less stressful for everyone involved. It is a bad move to lose a 100-ton contract over $2 a ton when you could have moved it and still taken care of your needs.

4. Remember you are in business to stay in business.
While friendships should build with customers over the years, you can’t put your business in jeopardy to ‘save’ another. It isn’t helping anyone if you are putting your expenses on credit cards because your customers are putting theirs on credit cards and you are waiting for a check in the mail.

Don’t extend yourself beyond what you can personally cover and feel good about. While these can be anxious times for everyone, there is usually some kind of common ground both sides of a forage sale can come to terms with and keep everyone moving forward. By knowing who you are and what you have to offer, you can continue to stay in business for a long time to come.  FG

Darren Olsen
FG Editor