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Economist says some cuts actually cost money
An economist says the cost of commodities coupled with falling milk prices has put a real strain on dairy farmers. Dr. Kevin Dhuyvetter with Elanco Animal Health says with many producers experiencing negative margins, the best thing to do is minimize the losses. Dhuyvetter tells Brownfield when producers try cutting costs, it can make their situation worse. “When we do that, if we have any negative implication on production, i-e I saved some money by spending less, my production goes down, I can literally increase my cost of production, so there’s a huge incentive for people to think of saving money but sometimes the way we save money is spending money.”
Dhuyvetter says sometimes, the best thing the farmer can do is nothing, which is hard to accept when trying to save money. “What I don’t want to see people do is to make a rash decision to pull some input out of their ration or whatever it is, negatively affecting production, and actually making themselves worse off in the longer run.”
Dhuyvetter encourages farmers to make sure any changes to inputs make sense because some cuts actually cost money.
Dhuyvetter spoke to Brownfield during World Dairy Expo in Madison, Wisconsin.
