Dairy December 1998 How Do I Find and Keep Good Employees? Dr. Charles L. Moore, Sr. Dept. of Agricultural and Resource Economics North Carolina State University Managing labor is one of the most important functions a dairyman performs, but it is one of the most complex and can be one of the most frustrating aspects of the business. As businesses increase in size and the need for more people (employees) increases, the complexity also increases. More "things" must be accomplished through employees, more delegation of responsibilities to key employees is required, and more skill as a manager of people is demanded. Seldom do you find a "personnel department" in small businesses, especially farm businesses. Thus, the farmer/dairyman himself rather than a personnel specialist handles personnel responsibilities. This can become very frustrating and very uncomfortable because of the multiple activities involved: recruiting a pool of applicants, interviewing selected applicants, making a selection, training this person, evaluating performance, compensating this person, and stimulating a high degree of motivation. Many managers feel inadequate performing these tasks, and may opt to devote very little time and effort to being successful. Many mistakenly convince themselves that they are too busy with the "production" aspects of the business to be "bothered" with people problems, and thus, consider personnel management a mere annoyance and a waste of time. Managing labor successfully requires time and effort. It is probably more important to the success of a business than shopping for the right piece of equipment or other new technology. Therefore, expending the time and effort on labor management (human resource importance to the business, is well worthwhile. Staffing for Success Successful staffing is having the "right person in the right job", NOT just filling a position. Far too often people assume that LUCK is the key element in hiring the right person. It is not! Hard work is required. Hiring high quality people occurs without intentional and conscientious planning by management. Any business functions best when both business goals and the employee's goals are compatible Thoroughly analyzing the various jobs on the farm or in any business, leads to better job specifications and job descriptions. As you evaluate each position, the necessary skills, knowledge, and abilities needed for each position can be determined. Identifying specific skills required and specific tasks to be performed is fundamental in the preparation of a well-written job description. And, a well-written job description is fundamental in recruiting and hiring the "right person" for the job. Often farmers place too little emphasis on what can be accomplished through improved recruitment, screening, and hiring. Have you ever heard a person say that the neighbor down the road seems to have all the LUCK when it comes to finding good labor? Luck has little to do with successful hiring, but there are some specific guidelines that will improve the probability of attracting high quality labor. Know Yourself This may seem elementary, but it is a very important aspect of personnel management. A simple, but honest agree or disagree reaction to the following ten statements ten statements will provide some insight into "knowing yourself."   I am the kind of person I would like as a "boss". I don't like to be thought of as the "boss". I am highly respected by the people I supervise. I enjoy conversation. I am a good teacher. I am a good listener. I have little trouble being understood by others. I trust the people I supervise. I believe most of the people I supervise like having some responsibility. I believe farm workers regularly need a pat on the back. Statements with which you disagree may suggest areas for improvement. Taking a look at oneself is often a bit awkward, and sometimes uncomfortable, but it does provide some understanding of your strengths and weaknesses which may alter what you consider desirable and undesirable in an employee. Know Your Business Be aware of your business objectives and identify specific goals you expect to accomplish through your employees. Know what role each new employee will play in the success of your business. Be aware of the skills, knowledge, and abilities of the current labor force in the business, then recruit and hire to fill the gap or strengthen the weak spots. If you need a mechanic to keep the machinery running and reduce repairs, hiring the best milker in the state still leaves a void and doesn't accomplish your goal. Also, know the financial strength of your business, and what impact the new employee can have on your financial position. Will they increase productivity, and thus the "bottom line," or will they merely add to the cost of payroll? Provide Adequate Training No matter how carefully a farm employer recruits and selects employees, they will lack some of the necessary knowledge and skills. Training is essential if employees are to reach their potential and make maximum contribution to the business. Training should help them feel like they are creating better opportunities for themselves and simultaneously helping the business accomplish its goals. Inadequate instruction and training frequently result in worker frustration, poor job performance, a stressful working relationship between employer and employee, and consequently, high turnover. Good worker instructions and proper training can increase worker output, reduce production costs, improve product quality, and improve employee morale. As with recruiting and hiring, successful training requires time and effort. The trainer must be able to see the job through the eyes of the new employee. The trainer must recognize that the "learning environment" has a great impact on the success or failure of the teaching. The trainer must also realize that explanation, trial, and follow up (evaluation) are all components of a successful training program. A five step teaching method, if followed, can improve your training efforts. It is PREPARE, TELL, SHOW, DO, AND REVIEW. Prepare the learner by putting him at ease, providing an understanding of why they need to learn the task. Tell the learner about each step or part of the task. Show the learner how to do each step or part of the task. Have the learner do each step or part of the task while you observe. Then review the task with the learner offering encouragement, constructive criticism, and additional pointers on how to do the job. Understand Human Motivations Motivating people can simply be defined as getting people to do what you want them to do -- not because they have to, but because they want to. A major factor influencing worker motivation is whether or not the job satisfies some of the worker's needs. Individual needs can be classified into two categories: (1) basic or maintenance needs, and (2) motivational needs. It is important to be aware that these categories apply whether one fills the role of manager/employer or worker/employee. Everyone has both types of needs. Basic or maintenance needs include: food, clothing, shelter safety, job security social belonging, and status and reputation. Motivational needs include: growth in knowledge and skills achievement sense of responsibility, and recognition. A worker often becomes dissatisfied and has little enthusiasm for his or her work if maintenance needs are not met. Therefore, when the major concern of individuals is food and clothing for themselves and their families, little is gained by discussing more responsibility or building equity in the business with these people. However, discussing these items with individuals who have fulfilled all their maintenance or basic needs may prove to be a motivating influence. Obviously, what motivates one employee may not motivate other employees. A fundamental principle that should become apparent from an understanding of employees' needs is that higher wages and more benefits will not necessarily solve all worker motivation problems. An employer who considers motivation concerns as solely a wage issue is likely to be disappointed with the results of merely increasing the pay. Some highly motivated employees may be more concerned with personal recognition of their performance than with a minimal increase in wage. These employees may be seeking the more difficult tasks rather than the easier ones or they may want to work more rather than fewer hours. Of course, these are the workers whose primary concern is not fulfilling a basic need (that is, food and clothes), but rather the need for praise and recognition. An article in September 10, 1998 issue of "Hoard's Dairyman" supports this idea as employees as well as their employers were asked about what would result in better employee relations and improved job satisfaction. Both groups indicated that where there was evidence that (1) "the boss really cared" and respected employees, and (2) where recognition for a job well done was demonstrated, satisfaction and pride in one's work was present. Salary was not "the issue" with either group. Summary The production side of dairying is very demanding. Personnel management whether in the dairy business or any other type of business is very demanding emotionally and with respect to one's time. As in any other aspect of running a business, you may need to acquire new skills, implement advance planning, and pay attention to the personnel issues on a daily basis if success is to be achieved. You will need to understand how additional labor benefits your operation. You must understand yourself -- your goals as well as your strengths and weaknesses as they relate to their managerial position. You may need to develop skills in recruiting, interviewing, and motivating the people for whom you are responsible if you are going to attract and keep high quality employees. As dairies expand to a size where one person, or even one family, cannot do all the work, personnel management skills will become important. At the foundation of a successful business are successful people. Your goal should be to ensure that the personal goals of your employees are being met while your business goals are being accomplished. OCTOBER 1998 HONOR ROLL HERDS* Dairy County No. Cows Lbs ECM** 2X/3X RHA Milk RHA Fat RHA Prot DOT MS. STATE UNIVERSITY OKTIBBEHA 163 60.0 2X 21216 902 688 10/13/98 MELVIN NICHOLSON NEWTON 122 56.1 2X 21607 838 689 10/12/98 NORTH MS BR EXP STATION MARSHALL 95 54.6 2X 19256 705 631 10/12/98 BRAD BEAN AMITE 223 53.9 2X 21841 813 696 10/28/98 A L BOYD JR WALTHALL 79 53.3 2X 20513 615 649 10/28/98 STEWARD FARM INC TATE 391 53.3 2X 21924 749 701 10/26/98 DAVID ROBINSON & SONS RANKIN 128 52.7 2X 18534 771 578 10/19/98 TURNIPSEED DAIRY MONROE 420 51.3 2X 16807 627 537 10/11/98 CAL MAINE FOODS DAIRY HINDS 1646 50.3 3X 19172 704 614 10/11/98 MACTOC FARM OKTIBBEHA 194 50.1 2X 26264 945 870 10/06/98 MILTON AND TERRY JEFCOAT JONES 225 49.6 2X 21874 739 689 10/19/98 TIM WEEKS COPIAH 47 49.5 2X 0 0 0 10/01/98 RAY GURNEY AMITE 223 48.7 2X 17481 640 575 10/14/98 KNIGHTS DAIRY FARM JONES 140 47.6 2X 19925 690 644 10/21/98 THOMPSON BROTHERS MARSHALL 141 47.2 2X 19292 692 624 10/04/98 PAUL W EDWARDS NEWTON 127 46.2 2X 17993 646 584 10/13/98 COASTAL PLAIN EXP STA NEWTON 176 45.9 2X 21834 812 726 10/07/98 ELWAYNE MAST NOXUBEE 165 45.6 2X 17471 0 0 10/20/98 J & L DAIRY WALTHALL 193 44.5 2X 21475 751 695 10/28/98 ROWZEE JERSEY FARM NEWTON 155 44.1 2X 16181 745 626 10/21/98 R E COCKERHAM AMITE 91 44.0 2X 16892 503 541 09/30/98 ABE MILLS SCOTT 271 43.3 2X 15220 582 498 10/24/98 DANNY WALTER SISCO LINCOLN 93 42.8 2X 16977 523 539 10/25/98 RUTLAND FARM LINCOLN 96 42.2 2X 18071 613 600 10/20/98 JIMMY TUCKER & SONS PIKE 216 41.7 2X 16277 618 512 10/13/98 * Top 30 herds enrolled on supervised DHIA testing programs by test day energy corrected milk. ** ECM = (.3246 x test day milk) + (12.86 x test day lbs fat) + (7.04 x test day lbs protein) November 1998 BFP Price Dr. C. W. Bill Herndon Dairy Economist, MSU BFP Finally Sets New All Time Record High, Exceeds $16.00 The October Basic Formula Price, or BFP, finally responded to a persistent upward spiraling of cheese prices and established a new all-time record high price of $16.04 per hundred weight. After two month of disappointing USDA price survey reports, October's BFP at long last exceeded the previous record high BFP of $15.37 per cwt. registered during September 1996. With the October increase of 94 cents per cwt. added to the total, the BFP has risen for the fifth straight month and has jumped $5.16 (+47.4%) since the June 1998 BFP of $10.88 was reported by the USDA. Current milk supplies are being described as very tight with both fluid milk and manufacturing dairy product demand peaking as the market moves into the Christmas holiday season. Milk production remains stagnant, especially in the Southeast and Northeast where dairy farmers have continued to suffer from the lingering effects of the very long summer. During mid-November Southeastern processors /handlers were still importing milk supplies to meet bottling needs and have were paying $2.25-$4.25 per cwt. in over-order premiums to obtain this milk. However, most processors are finding the search for additional milk less difficult than in the September and October. Florida handlers imported 130 truckloads of milk with another 40-50 loads shipped into other Southeastern states during the third week of November. Most of these imports were being found in the Middle Atlantic and Northeast regions but, milk was still being shipped in from as far away as Wisconsin. Despite today's very bright market situation, the dairy industry is holding its collective breath in anticipation of the flood of milk output that is and will be induced by these record high milk prices and moderate feed costs. Most analysts are expecting that 1999 will witness a significant and very steep decline in milk prices of historic proportions that will transpire subsequent to a reversal in the 1998 dairy product demand and milk supply situation. So, dairy producers should get ready for this anticipated decline in milk prices over the next three to six months. The October BFP was reported at $16.04 per cwt. which represents an INCREASE of $0.94 cwt. (up 6.2%) ABOVE the September BFP of $15.10. October 1998's BFP is $3.21 per cwt. (or 26%) HIGHER than the October 1997 BFP price of $12.88. Dairy producers need to remember that the October BFP will be used as the base price to calculate the December 1998 Class I and Class II milk prices and the October 1998 Class III milk price. Because more than 80 percent of Mississippi milk is utilized as Class I and Class II products, farmers will not notice the majority of this 94 cent increase in the October BFP until they receive their January 1999 checks as payment for milk sold in December. Milk production has remained sluggish during the fall months of 1998 with the Northeast and Southeast regions reporting output levels at or near seasonal lows. These regions of the country appear to be enduring the lingering effects of the extremely long and hot summer. Other regions report that milk yields are increasing, especially in the Northwest and Mountain states, and the USDA is expecting milk production to respond to these record milk prices with substantial increases in milk output during the first months of 1999. Comparing the third quarter of 1997 to 1998, U.S. milk output was down 105 million pounds (or -0.3%) and ALL of this decline (105 million lbs., or -3.5%) was accounted for in the 11-states of the Southeast region. Every one of the states reporting the largest declines during this three-month period are located in the Southeast and were Mississippi (-9.6%, -13 million lbs.), Louisiana (-8.2%, -14 million lbs.), Alabama (-6.8%, -6 million lbs.), Tennessee (-6.5%, -24 million lbs.), and Kentucky (-5.7%, -25 million lbs.). The only state in the Southeast region reporting an increase in third quarter production between 1997 and 1998 was Arkansas (+7.8%, +12 million lbs.) while every one of the other 10 states all experienced reduced milk output. In Mississippi, milk output during the first nine months of 1998 was 44 million lbs. less (-8.9%) than for the same period of 1997. USDA statistics indicate that Mississippi dairy farmers produced 492 million lbs. while milking 47,000 milk cows during the first three quarters of 1997 compared to only 448 million lbs. with 40,000 cows (15% decline in cow numbers) in the same period of 1998. Clearly, the Southeast and Mississippi, in particular, dairy industries have suffered more than other regions and states from this summer's and fall's extremely hot and dry weather. Despite the current high milk prices, these difficult milk producing conditions have perpetuated the five-year trend of approximately 8 to 10% of Mississippi milk producers exiting the dairy business each year. The first three weeks of November have witnessed a continuation in the amazing strength of cheddar cheese prices while butter prices have responded to increased import quantities and have fallen almost 40%. Cheese prices have remained strong because of tight milk supplies -- especially, in the Upper Midwest -- that were realized because of anemic production and beefed-up demand fueled by the year's end Holiday season. While butter prices have fallen over 80 cents during November, cheese prices have mapped new territory with all-time record highs recorded for both block and barrel cheese products each week on the Chicago Mercantile Exchange (CME). Grade AA butter prices have decreased $1.025 per pound (-43.6%) between October 9 and November 20 and the factors that have attributed most to this decline were: (1) consumer resistance to higher retail butter prices; (2) increase butter imports and an easing in this summer and fall's market shortage of butterfat; and (3) processors delaying production schedules in anticipation of further price declines. After reaching an all-time record high of $2.81 on September 18, CME Grade AA butter prices have gone down from $2.35 on October 9 to $1.325 on November 20. Astonishingly, cheese prices on the CME have establish new record highs in 12 straight weeks. Block cheese prices were reported at $1.81 per pound on October 14 compared to $1.87 on November 20 -- which represents a 6.0 cent (or +3.3%) increase for this five-week period. Barrel prices have displayed the same pattern and went up 5.25 cents (or +3.0%) from $1.7775 to $1.83 per pound over this same time span. Nonfat dry milk (NDM) prices have maintained their strength in spite of the USDA selling back CCC stocks into the cash market. For instance, the USDA/CCC has sold more than 12.5 million pounds of NDM back to the trade since October 1. But, the market tone has been upgraded to a steady but firm and because of an improving demand picture and so, NDM prices have stayed well above the price support level. Enhanced demand has overshadowed the predicted flood for milk output and the NDM price outlook has improved slightly with prices in the $1.1 to $1.1525 per pound range during the week of November 20. The U.S. dairy industry is bracing itself for the much anticipated innundation of milk supplies which has been forecasted to precipitate a plummeting of dairy product prices during the first three month of 1999. Despite the current record high cheese prices and BFP, dairy farmers' excitement has been tempered with the knowledge of what history has shown the industry time and time again. In the past dairy producers have reacted to a high milk prices by increasing milk production substantially. With this increased output, history has shown that dairy prices have fallen much faster than they increased and that the market usually over-corrects itself which results in a sudden and dramatic decline in milk prices and farmers' revenues. The USDA in its November dairy outlook report predicted that dairy product prices will experience a steep declines within a few weeks once the demand for the year-end holidays is met and declines further when milk production is expected to increase in response to recent high prices. Market analysts have forecast that the BFP has neared its peak for 1998. With increased cheese prices and free falling butter prices, the November BFP (that will be reported on December 4)may rise as much as 30 to 40 cents per cwt. but then a tight market is expected to reverse and cause milk prices to fall, dramatically. November BFP forecasts indicate this price series could increase as much as 50 cents with a realistic chance of setting a new record approaching the $16.50 level. The BFP is expected to start waning as early as December and continue to fall during the first 3 or 4 months of 1999. The worst case scenarios have predicted that the BFP could plunge as much as $4.00 to $4.50 and bottom out near the $12.00 to $12.50 level by next March or April. All these gloomy dairy and milk price forecasts should suggest to dairy farmers that the future is very troubled and that preparations need to be made to weather this rather bleak period. Northeast and Southern Dairy Compacts Begin Collaboration Dairy farmers and other interested parties meet in Raleigh, North Carolina on November 19 to organize their efforts to seek federal authorization of a Southern Dairy Compact and to reauthorize the Northeast Dairy Compact. Recent developments in Washington, D.C. seem to indicate that there may be a better chance of passing the required federal approvals for creating and extending these dairy compacts. For instance with the 106th Congress scheduled to begin in January, Republican leadership positions in the House have changed with the resignation of Newt Gingrich as Speaker of the House and the election of Bob Livingston of Louisiana as the new Speaker. Speaker Livingston, who will move from his position a Chair of the Appropriations Committee, has been very supportive of the dairy industry in the South and has lead several national dairy policy battles. Other changes in the House Republican leadership resulted in all four positions being held by members from Louisiana, Texas, and Oklahoma. Additionally, the new Chair of the House Agriculture Committee is also a Texan, Rep. Larry Combest. With the previous Senate leadership returning, four of the five Republican leadership posts are held by Senators from the South. This concentration of Southern influence on Capital Hill could prove to be needed catalyst to gain the approval of for these compacts. But, there will likely be contentious fights over these compacts because they will be strongly opposed by dairy farmers in other regions of the country, the dairy processing industry, and certain consumer groups. Southeast F.O. #7 "Blend" Price Increases to $17.82 in October The Southeast Federal Order Milk Market Administrator reported the October 1998 "blend" or uniform prices for milk delivered in Federal Order (FO) #7 at $17.82 per cwt. (for 3.5% Butterfat milk) in Zone 7, see the Mississippi map for zones (Zone 5 minus $0.25, Zone 6 minus $0.10, Zone 8 plus $0.10, Zone 9 plus $0.20, Zone 10 plus $0.32, Zone 11 plus $0.50, and Zone 12 plus $0.57 per cwt.). The October "blend" price of $17.82 for Zone 7 of FO #7 represents a INCREASE of $0.30 per cwt. compared to the September uniform price of $17.52. The October 1998 blend price is $3.04 (or +20.6%) ABOVE the October 1997 blend price of $14.78. This 30 cent increase in the October blend price occurred because of moderate increases in all three classes of milk while the Class I utilization rate remained virtually unchanged. The rise in the October blend price is attributed to a 22 cent increase in both the Class I and Class II milk prices and a 94 cent increment in the Class III price. Class I utilization rose 0.1% (from 85.6% in September to 85.7% in October), while Class II utilization fell by 0.7% (from 8.7% in September to 8.0% in October) and Class III utilization increased by 0.6% (from 5.7% in September to 6.3% in October ). The October Zone 7 "blend" price was calculated using: (1) the August BFP price of $14.99 plus the $3.08 Zone 7 Class I differential for a Class I price of $18.07; (2) the August BFP price of $14.99 plus the 30 cents per cwt. Class II differential for a Class II price of $15.29; and, (3) the October Class III price of $16.04 (which is the BFP). Please consult the map in this newsletter to determine which Zone the plant you sell your milk to is located in FO #7. A dairy producer's uniform price and the amount of his milk check is affected by where the plant that processes his milk is located in the Southeast FO. UNIFORM or "BLEND" PRICE FOR OCTOBER 1998 ZONE 5: $17.57 ZONE 9: $18.02 ZONE 6: $17.72 ZONE 10: $18.14 ZONE 7: $17.82 ZONE 11: $18.32 ZONE 8: $17.92

Visit: DAFVM || USDA Search our Site || Need more information about this subject? Last Modified: Wednesday, 18-Feb-04 11:02:42 URL: http://msucares.com/newsletters/dairy/1998/199812.html Mississippi State University is an equal opportunity institution. Recommendations on this web site do not endorse any commercial products or trade names.