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LEARNING FROM THE BESTRESULTS FROM INTERVIEWS WITH 20 OF THE BEST PERFORMING DAIRY FARMERS IN DENMARK

SCANDIC PARK HELSINKI,FINLAND, SEPTEMBER 3RD 2015

SENIOR ADVISER ULRIK TOFTEGAARD JENSEN, CAND.AGRO SEGESTEAM FARM MANAGEMENT – CATTLE PRODUCTION JTA@SEGES.DK

WHY IS IT RELEVANT?

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ABOUT THE PROJECT

1. Mapping of best practices

2. Comprehensive survey of farmers who are

continually among the best, measured on the

bottom line (ROA, Farm Assets – Return on

Farm Assets)

3. Knowledge from the project is used to lift the

other producers

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PARAMETRES/QUESTIONS

1. Strategy

2. Personal leadership

3. Production and economic planning

4. Motivation and values

5. Family life

6. Inspiration, sparring and use of advisors

7. Check value of the production facility

welfare, logistics and routines

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SELECTION OF THE 20 CATTLE FARMS

1. Milk producers

- 80 % of the gross income must come from cattle or

forage production

2. Looking ahead: do not run attrition strategy

3. Over 150 cows

4. Equity to assets ratio, solidity of at least 10 % from

2011 to 2013

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WHO ARE THEY?

Scale of production

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WHO ARE THEY?

● 18 one-man owned, 2 partnership

● 7 free trade, 7 partnership with former owner and 6

family trade

● Age: from mid-30’s to mid-50’s

● 10 milking parlours, 5 robot milking, 3 carousel, 2

with milking parlours and robot milking

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TO WAYS TO PROFIT

Contribution margin - ”Demand to contribution

margin” = profit

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CONTRIBUTION MARGIN, CATTLE

Gross income, Cattle

● Milk, beef sale, net sales of livestock, real

and price changes of livestock

- Unit related costs

● Feed costs, vet & med. breeding, cattle

advice and other cattle related costs

= Contribution margin

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DEMAND TO CM = CAPACITY COSTS +

CAPITAL COSTS

Contribution margin - ”demand to contribution margin” =

profit

TWO WAYS TO PROFIT

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2. Yield max

(Gross income, cattle (milk,

livestock and beef sale) DKK

per cow > 30,000 DKK =

YIELD MAX

1. Low cost

Demand to margin, cattle <

11,000 DKK per cow =

LOW COST

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BALANCE IN THE FARM ECONOMY

(2011-2013)

LOW COSTS

● KISS – keep it simple stupid

● High capacity utilization

● Cost efficient supply chain (make-or-buy)

● Conservative investments strategy

● Sharp eye on the input prices (bargain

with supplies)

KEY SUCCESS FACTORS

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YIELD MAX

● Extraordinary good animal welfare

● Optimal facilities for the cows to perform

● Highly skilled and dedicated workforce

● Contentious focus on the qualities of feed and

other input factors

● Long time relationship with few trusted

suppliers

KEY SUCCESS FACTORS

THE FACILITIES ARE WELL UTILIZED (1)

The barns are neither new nor very old,

typically built between 1997-2004 and extended

five years afterwards.

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They exploit the framework they have

- and they do it very well

THE FACILITIES ARE WELL UTILIZED (2)

Most of them

● At least one cubicle per cow

● Have cow and calves mortality below the

Danish average

● They can improve their disease prevention

● Are very aware on claw health and to check

lame cows immediately

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THE FACILITIES ARE WELL UTILIZED (3)

Most of the farmers…

• Cows and heifers are calving in common calving boxes

with low stocking density

• They are especially alert on first calf cows

• They give colostrum before 6 hours after birth

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They exploit the framework they have

- and they do it very well

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HOW ARE THE BEST?

a. Competence and history

b. Leadership

c. Visions and strategy

d. Inspiration and sparring

e. Financial and management

A. COMPETENCE AND HISTORY

● Very passionate about dairy farming

● Limited formal leadership training

● Working 60 - 70 hours per week

● Act strongly (powerful) and flexible

● Conscious of their own strengths and weaknesses

● Adept at their craft - cows

● Motivated by the results of benchmarking

● Business acumen

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WHO DO YOU BENCHMARK AGAINST AND

WHAT MOTIVATES YOU?

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B. LEADERSHIP

● Flat structure

● Training of employees: "follow me" method

● High degree of delegation of responsibility

● Participation in everyday life: presence

● Good relations with employees

● Handling and attitude – walk the talk

● Motivating employees – approval & recognitions, empowerment, salary, bowling

LEADERSHIP - ADJUSTING

● https://www.youtube.com/watch?v=GQm5P2KypeE

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C. VISIONS AND STRATEGY

● There must be harmony and balance

● Low cost vs. yield max

● Clear strategies with focus on the bottom line

● An inner strategic compass – gut feeling

● A large herd size is not a goal in itself

● Focus on cows – outsourcing of field work

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D. THE SOURCES OF INSPIRATIONS AND

SPARRING

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E. GREAT OPERATIONAL AND FINANCIAL

MANAGEMENT

● Well-planned and systematic workflow

● Excellent overview over the production and

the farms economy

● Use of key performance indicators (KPI)

● Clear communication about the farm goals

● Huge involvement of the staff in the goals of

the farm

● Sharp follow-up on the KPI

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TENDENCY BY MORE THAN 300 COWS

● Greater focus on

delegation of farms with

more than 300 cows

● They have learned to

delegate (others are

afraid of the size > 300

cows)

● Biggest challenges:

- Management of staff

- Time for family life

0

2

4

6

8

10

12

< 270 cows > 270 cows

Only danish

Foreign anddanish (mixed oronly foreign)

The employee nationality

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FARM INVESTMENTS (AVERAGE 2011-2013)

CLEVER INVESTMENTS

● Did not buy land during the bubble (2005-2008)

● Solid investment calculation (NPV and pay back

time)

● Always has a maximum bidding price

● Strength to say NO

● Gut feeling is important

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”If I can't sleep at night - I am not doing it”

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SUM UP

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HERE THEY ARE ESPECIALLY GOOD

● Excellent overview over the production

● Conscious of their own strengths and weaknesses

● Staff management

● Planning and organization of the daily work

● Business acumen (no new tractors, thorough

preparation before any investments, strength to say

no)

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BIGGEST CHALLENGE FOR THE 20 BEST

● Staff management

● Time for family life

● Public bureaucracy and control

● Delegation (afraid of losing control)

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IMPORTANT LESSONS

1. They are not good at all things

2. But very aware of their strengths/weaknesses and uses them strategically

3. Strategy is not something they have – but something they do!

4. Alignment between attitude and actions – walk the talk

5. Important to make tough decisions – early

For example:

● Weak calves

● Employees - there has been trouble with several times

6. Leadership – you can always improve

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POTENTIALS FOR FARM ADVISERS

● Advisers, who have the courage to go (even) closer

and tell the truth ”push me – not please me”

● HR-support

● Leadership training

● Elite discussion groups (national or international)

● Inspiration from great leaders from other trades

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REFLECTION (5 MIN)

1. Find 1 or 2 things from the two

presentations you find interesting

2. Consider what the biggest obstacle is

for you to carry it out (who can support

you)

3. Please tell it to your neighbor

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SMILE AT THE WORK TASK

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PERIODIC TASK

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THE GOOD JOB START (BEFORE HIRING)

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THE GOOD JOB START (AFTER HIRING)

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THANK YOU FOR YOUR ATTENTION

YOU CAN DOWNLOAD THE REPORT AT

WWW.ARBEJDSPLAN.KVAEG.DK

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