Winning The Game-The Dairy Edition A Simulation Game for Dairy Risk Management Dr. Margot Rudstrom...

Winning The Game-The Dairy Edition

A Simulation Game for Dairy Risk Management

Dr. Margot RudstromRegional Extension Educator

University of Minnesota Extension Service

Program Development

Center for Farm Financial ManagementUniversity of Minnesota


Program Delivery


University of Wisconsin Extension Service

Program Financial Support

North Central Risk Management Education Center

The College of Agricultural, Food and Environmental Sciences

Your Local Sponsor


Center for Farm Financial Management, University of Minnesota

Motivation for “The Game”

• Price variability is a relatively new phenomenon in dairy compared to other commodities.

• Futures contracts for Class III milk been trading on CME in their present form in 1998.

Motivation for “The Game”

• Teach price risk management tools Forward contracts Hedging Options Combinations

Taking a Step Back

• Starting point for milk marketing• Don’t overwhelm participants• Wet the appetite for milk marketing

Don’t try and make expert marketers in one session

• Pricing tool that is not size-dependent

Winning the Game – The Dairy Edition Agenda

• Introduction• Game• Seasonality in Prices• Price Variability and Risk• Target Prices • Pricing Tools • Results of the Game • Writing Your Marketing Plan

Workshop Theme

“Selectively using processor contracts can help smooth out the bumps in your milk check!”

Marketing is Important!

• Good marketing is not about finding the highest price

• A good marketing plan helps you more consistently get a good average price

What is a Marketing Plan?

• A marketing plan is a proactive strategy to price your milk that considers your financial goals, cash flow needs, price objectives, anticipated production, and appetite for risk

Proactive, not reactive, not overactive, not inactive

Why do I need a Marketing Plan?

• Fear and greed are powerful emotions - they will affect your decisions. A solid plan is the only effective weapon against these emotions

“Plan your trades, trade your plan”

Emotions Play a Major Role in Marketing…

The Game Set-up

• Farm information• Forward contract specifications• Other rules of the game

Your Farm for the Game

• 100 cow dairy operation

• Rolling herd average of 22,000 pounds

• Fat 3.4%

• Protein 3.2%

• SCC 361,000

Playing the Game

• There is one type of forward-pricing tool available processor contracts on Class III milk

• You have already signed a participation agreement with your processor

• Contract price is 5 cents under the Class III futures price

Playing the Game

• Processor contracts start at 20,000 lbs, then go up in 5,000 lb increments 20, 25, 30, 35, etc.

• Cannot contract more than 120,000 lbs per delivery month

• There is a penalty ($$$$$$) if you cannot deliver

Playing the Game

• The game starts in November, ends the following June

• Each month there is one opportunity to look at Class III futures prices and contract for delivery in future months

• Any milk not contracted in a month will be sold at the announced Class III price

Playing the Game

• Find your decision input sheet (perforated sheet)

• Use the pricing log (big fold-out sheet) to record your ID number and pricing decisions

• Sales need to be made in thousands of pounds (25,000=25). The processor only types with 2 fingers.

Playing the Game

Please print your name at the top!

Name ID # 99

November Decision #1

Feb ___________,000 lbs. June ___________,000 lbs. Oct ___________,000 lbs.

December Decision #2 ID # 99

Mar ___________,000 lbs. July ___________,000 lbs. Nov ___________,000 lbs.

Playing the GameID #

October

Announced Class III -->

Mailbox Price -->

Delivery Month

Average Production

Contracted Amount

Class III Futures Price

Contracted Amount


Contracted Amount


Contracted Amount


February 177,500

March 195,000

April 186,000

May 189,500

June 186,000

July 191,000

August 191,000

September 184,500

October 184,000

November 178,000

December 191,000

Decision #1 Decision #2November December

Decision #3January

Decision #4February

Playing the Game

• You must turn in an input each time even if you are not selling anything

• You will have a limited amount of time to make your decisions. The milk processor doesn’t take calls at home

• We will provide a brief market update before each marketing decision

Ready to start the game???

Summary to this point

• Marketing is important• Rules of the game• No background information in terms

of cost of production or historical price data

• Play!

The Game

November

• Cow numbers are down 3,000 head from a year ago and down 2,000 from last month

• Cheese demand remains strong but butter demand is weakening

• Steep price declines are expected to begin after the holidays

November 18Class III Futures Quotes

Feb 13.65June12.10Oct 12.80

Last Month

Announced Class III 16.04

Mailbox Price 18.44

Copyright © 2004 Center for Farm Financial Management, University of Minnesota

ID #

October

Announced Class III -->

Mailbox Price -->

Average Production

Contracted Amount

Class III Price

Contracted Amount

Class III Price

February 177,500

March 195,000

April 186,000

May 189,500

June 186,000

July 191,000

August 191,000

September 184,500

October 184,000

November 178,000

December 191,000

Decision #1 Decision #2November December

Example

20 12.10

99

20 12.80

13.65-

16.04

18.44


Name ID # 99

November Decision #1

Feb ___________,000 lbs. June ___________,000 lbs. Oct ___________,000 lbs.

December Decision #2 ID # 99

Mar ___________,000 lbs. July ___________,000 lbs. Nov ___________,000 lbs.

Example

Grandma

20 20

3:002:502:402:302:202:102:001:501:401:301:201:101:000:500:400:300:200:100:00

November 18Class III Futures Quotes

Feb 13.65June12.10Oct 12.80

Last Month

Announced Class III 16.04

Mailbox Price 18.44


Margot’s Observations

Lack of background information simulates the feeling of “Am I doing the right thing?”

Getting participants attention with the game creates a receptive audience for more information about milk marketing

The rest of the agenda


Seasonality

Typical milk price patterns• Milk supply and demand

Focus on Class III milkBasisClass III futures contracts


Price Variability and Risk

Define price risk• Visual


0%

10%

20%

30%

Distribution of Announced Class III Prices, 1998-2005



Define price riskIntuitive approach to price risk


Price Variability for One Month

0

20

40

60

80

100

Percent

Which price curve would

you rather sell on?



Define price riskIntuitive approach to price riskAnnounced versus futures Class III

price variability


November Class III1998-2005

0%

10%

20%

30%

40%

50%

60%

$8.00 $10.00 $12.00 $14.00 $16.00 $18.00

Announced


November Class III1998-2005

0%

10%

20%

30%

40%

50%

60%

$8.00 $10.00 $12.00 $14.00 $16.00 $18.00

Announced Futures


Price Risk

Reducing risk through increased opportunities• More opportunities to meet the target

priceClass III futures gives you a greater

chance of reaching a particular price


How Many Times???

Comparison of futures and announced price in any given month.• In the past 8 years, how many times

was the announced price above ____?• In the past 8 years, how many times

was the futures price above ____?


Quiz TimeMay Milk, 1998-2005

Announced Price• $9.50? 7 / 8 yrs• $10.00 6 / 8 yrs• $11.50 3 / 8 yrs• $12.00 3 / 8 yrs

Futures Price• $9.50? 8 / 8 yrs• $10.00 8 / 8 yrs • $11.50 8 / 8 yrs• $12.00 7 / 8 yrs


Summary of Price Risk

Class III futures gives you pricing opportunities in any given month

Are you looking for them?

Proactive marketers are!!!


Target Prices

Target prices make your marketing plan pro-active (plan for action)

What is a good price from the market?

What is a good price for me?


Class III Announced

Prices1988-2005

Average Top third

January $12.02 $12.73

February $11.51 $12.07

March $11.61 $12.22

April $11.99 $12.97

May $12.02 $13.09

June $12.10 $12.99

July $12.42 $13.19

August $12.75 $13.53

September $13.16 $13.93

October $12.83 $13.51

November $12.31 $13.16

December $12.31 $13.22

Source: www.aae.wisc.edu/future


Target Prices

What is a good price for me?Cost of production

• What do you expect the milk check to pay for?

• What is a good price for your operation?

• Helps you act on your plan


Target Prices

Target prices are a balance…• What might be available in the

market in any given month (what’s a good price from the market) AND

• Some idea of cost of production (what’s a good price for me) AND

• Your risk preference


Summary of Target Prices

What’s a good price from the market?

What’s a good price for me? Don’t be upset for making good

marketing decisions• You are not trying to hit the highest

price• You are looking for a good average price

more consistently


Pricing Tools

Fixed Prices• Cash forward contracts• Using futures contracts (hedging)

Minimum Price Tools• Put options• Minimum price contracts with

processors


Example of a Put

Strike price $11.00Premium $0.35Brokerage fee $0.03

My minimum price is $10.62• $11.00 - 0.35 - 0.03 = 10.62


September ‘06 Class III Put

Date Futures / Options

3/20/06 Sept 2006 futures @ $12.03$12.00 put costs 63 cents

Worst case scenario (minimum price)?$12.00 strike price - 0.63 option cost – 0.03 fee = $11.34Best case scenario? Poised for profits should September futures go higher than $12.66 ($12.00 + 0.63+ 0.03)

No limit to your upside potential!


Participation Agreements

Agreement you sign with a processor in order to contract with that processor

Not all participation agreements are created equal

R-E-A-DAsk questions!


The Game Recap

Let’s meet the celebrity players…


Carl has no time to watch the markets. His mailbox price is the announced Class III, plus his basis (PPD, etc.)

Carl Cashseller

Meet Our Players…


Grandma

Meet Our Players…

Goal: Minimize price swingsTarget Prices?

• NoneContracted Amount?

• 120,000 lbs total for a month, in 20,000 lb increments beginning 11 months prior


Grandma

Meet Our Players…

Contracts for December 06

Amount

January 06 20,000

February 06 20,000

March 06 20,000

April 06 20,000

May 06 20,000

June 06 20,000

Total 120,000


Al Averageprice

Meet Our Players…

Goal: Get at least the average price on half of my production

Target Prices?• Monthly average announced Class III price,

from 1988-2005

Contracted Amount?• 85,000 lbs total for a month

Only watching from 11 to 4 months prior


Terry Topthird

Meet Our Players…

Goal: Lock in the price when it moves into the historical top third range

Target Prices?• Monthly top third announced Class III price,

from 1988-2005

Contracted Amount?• 120,000 lbs total for a month

Only watching from 11 to 4 months prior


Harriet Halfandhalf

Meet Our Players…

Goal: Reduce price swings, but keep some upside potential for the fall

Follow Grandma’s plan for contract months January – June

Follow Al’s plan for contract months July – December


Ollie Options

Meet Our Players…

Goal: Price protection without giving up any of the upside

Buys one put six months priorStrike price January to June

$11.00Strike price July to December

$12.00


Your Game Results


Game ResultsMonthly Milk Sales

Jan-99 Lbs Rate Farm TotalGrade A pounds 170,350 Announced Class III price 170,350 16.27 $/cwt 27,715.95$ PPD & other quality premiums 170,350 0.70 $/cwt 1,192.45$ Gross amount 16.97 28,908.40$ Additions / Deductions:

Contract in Mar-98 12.50 20,000 (3.77) $/cwt (754.00)$ Contract in Apr-98 12.10 20,000 (4.17) $/cwt (834.00)$ Contract in May-98 12.78 20,000 (3.49) $/cwt (698.00)$ Contract in Jun-98 12.55 20,000 (3.72) $/cwt (744.00)$ Contract in Jul-98 12.25 20,000 (4.02) $/cwt (804.00)$ Contract in Aug-98 12.20 20,000 (4.07) $/cwt (814.00)$ Put option 200,000 - $/cwt -$

Net amount 14.24 24,260.40$

Feb-99 Lbs Rate Farm TotalGrade A pounds 172,677 Announced Class III price 172,677 10.27 $/cwt 17,733.93 PPD & other quality premiums 172,677 3.20 $/cwt 5,525.66 Gross amount 13.47 23,259.59 Additions / Deductions:

Contract in Apr-98 11.65 20,000 1.38 $/cwt 276.00$ Contract in May-98 12.44 20,000 2.17 $/cwt 434.00$ Contract in Jun-98 12.28 20,000 2.01 $/cwt 402.00$ Contract in Jul-98 12.20 20,000 1.93 $/cwt 386.00$ Contract in Aug-98 12.20 20,000 1.93 $/cwt 386.00$ Contract in Sep-98 12.60 20,000 2.33 $/cwt 466.00$ Put option 200,000 - $/cwt -$

Net amount 14.83 25,609.59$

Grandma


Game Results

1999 Marketing SummaryID # 0.07

CarlMilk Sold Contracted % My Mailbox Cashseller's Contracted %

(lbs) (lbs) Contracted Price Mailbox Price (lbs) ContractedJan-99 170,350 120,000 70% 14.21 16.97 - 0%Feb-99 172,677 120,000 69% 14.80 * 13.47 20,000 12%Mar-99 191,674 100,000 52% 14.09 * 13.68 20,000 10%Apr-99 178,442 100,000 56% 13.42 * 13.20 20,000 11%

May-99 176,869 100,000 57% 13.02 * 12.64 20,000 11%Jun-99 177,282 100,000 56% 13.35 * 13.09 40,000 23%Jul-99 171,914 120,000 70% 13.50 14.51 40,000 23%

Aug-99 160,217 120,000 75% 14.53 16.98 40,000 25%Sep-99 153,314 120,000 78% 13.91 16.57 40,000 26%Oct-99 156,161 120,000 77% 14.93 * 13.74 40,000 26%Nov-99 149,310 120,000 80% 14.69 * 12.23 40,000 27%Dec-99 161,618 120,000 74% 14.03 * 11.81 40,000 25%

2,019,828 1,360,000 67% 14.02 14.05 360,000 18%

Grandma

Group Averages


Game Results

1999 Mailbox Prices

Carl Cashseller

Ollie Options

Al AveragepriceHarriet Halfandhalf

Grandma

Terry Topthird

$14.00

$14.10

$14.20

$14.30

$14.40

$14.50

$14.60

0 0.5 1 1.5 2

Other Participants Celebrity PlayersYou are Here


And the winner is…


Celebrity Mailbox Price Comparisons0.01 0.07 0.03 0.04 0.06 0.02

Carl Cashseller Grandma

Al Averageprice

Terry Topthird

Harriet Halfandhalf Ollie Options

1998 15.43 14.07 14.56 15.33 14.54 15.301999 14.05 14.02 14.02 14.59 14.04 14.282000 11.97 13.58 12.79 12.41 13.21 13.432001 14.99 13.74 14.68 14.82 14.19 14.412002 12.21 13.26 13.00 12.51 13.04 12.932003 12.88 13.11 12.95 12.88 13.29 12.992004 16.75 14.97 15.75 16.37 15.03 16.382005 15.38 14.67 14.77 14.91 14.62 15.19

Weighted average 14.22 13.94 14.08 14.23 14.00 14.37Median 13.95 13.91 13.95 14.39 13.95 14.10

80% of prices between… 12.10 13.10 12.90 12.50 13.05 12.77and… 15.90 14.68 15.17 15.47 15.03 15.62

Difference 3.80 1.58 2.27 2.97 1.98 2.85 0.00

§ The 'Weighted Average' price is the total revenue from 1998-2005 divided by total production (182,636 cwt) over thesame period.

§ Half of 96 monthly mailbox prices are above the 'Median' price and half are below.


Celebrity Results, 1998-2005

Carl

Weighted Average

14.22

HighestPrice *

4

80% of Prices

12.10 … 15.90

Let’s compare to Carl Cashseller!

* Out of 8 years


Carl’s Mailbox Prices1998-2005

0

5

10

15

20

25

10.

50

11.

50

12.

50

13.

50

14.

50

15.

50

16.

50

17.

50

18.

50

19.

50

Mor

e

Monthly Mailbox Price

Nu

mb

er

of T

ime

sCarl



CarlGrandm

a

Weighted Average

14.22 13.82

HighestPrice *

4 2

80% of Prices

12.10 … 15.90

13.10…14.68

Carl vs. Grandma

* Out of 8 years

• 28 cents less total revenue (all from 2004)

• Smallest price range difference (1.58)

• 90% of prices above $13.10


Carl vs. Grandma1998-2005

0

5

10

15

20

25

10.

50

11.

50

12.

50

13.

50

14.

50

15.

50

16.

50

17.

50

18.

50

19.

50

Mor

e


Nu

mb

er

of T

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s

Carl

Grandma



CarlGrandm

aAl

Weighted Average

14.22 13.82 14.08

HighestPrice *

4 2 -

80% of Prices

12.10 … 15.90

13.10…14.68

12.50…15.47

Carl vs. Al

* Out of 8 years

• $0.14 less revenue than Carl over the 8 years

• Reduced his price range

• Still has upside potential, but never had the highest price


Carl vs. Al1998-2005

0

5

10

15

20

25

10.

50

11.

50

12.

50

13.

50

14.

50

15.

50

16.

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17.

50

18.

50

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Mor

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mb

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Carl

Al



CarlGrandm

aAl Terry

Weighted Average

14.22 13.82 14.08 14.23

HighestPrice *

4 2 - 1

80% of Prices

12.10 … 15.90

13.10…14.68

12.50…15.47

12.50…15.47

Carl vs. Terry

* Out of 8 years

• Fewest contracts

• 2nd widest price range after Carl

• Slightly more revenue


Carl vs. Terry1998-2005

0

5

10

15

20

25

10.

50

11.

50

12.

50

13.

50

14.

50

15.

50

16.

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17.

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18.

50

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Mor

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Carl

Terry



CarlGrandm

aAl Terry Harriet

Weighted Average

14.22 13.82 14.08 14.23 14.00

HighestPrice *

4 2 - 1 1

80% of Prices

12.10 … 15.90

13.10…14.68

12.50…15.47

12.50…15.47

13.05…15.03

Carl vs. Harriet

* Out of 8 years

• 22 cents less revenue over 8 years

• 2nd smallest price range (1.98)

• 90% of prices above $13.05


Carl vs. Harriet1998-2005

0

5

10

15

20

25

10.

50

11.

50

12.

50

13.

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14.

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15.

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Carl

Harriet



CarlGrandm

aAl Terry Harriet Ollie

Weighted Average

14.22 13.82 14.08 14.23 14.00 14.37

HighestPrice *

4 2 - 1 1 -

80% of Prices

12.10 … 15.90

13.10…14.68

12.50…15.47

12.50…15.47

13.05…15.03

12.77…15.62

Carl vs. Ollie

* Out of 8 years

• Most revenue

• Worse than Carl 4 out of 8 years

• Reduced price range, mostly on the lower end

• Options can work



CarlGrandm


Weighted Average

14.22 13.82 14.08 14.23 14.00 14.37

HighestPrice *

4 2 - 1 1 -

80% of Prices

12.10 … 15.90

13.10…14.68

12.50…15.47

12.50…15.47

13.05…15.03

12.77…15.62

Carl vs. Ollie

* Out of 8 years

• “Takes money to make money”

• Average monthly cost: $926

• Last month his put made money: June 2003


Carl vs. Ollie1998-2005

0

5

10

15

20

25

10.

50

11.

50

12.

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13.

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15.

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Carl

Ollie



CarlGrandm


Weighted Average

14.22 13.82 14.08 14.23 14.00 14.37

HighestPrice *

4 2 - 1 1 -

80% of Prices

12.10 … 15.90

13.10…14.68

12.50…15.47

12.50…15.47

13.05…15.03

12.77…15.62

* Out of 8 years


Workshop Theme

“Selectively using processor contracts can help smooth out the bumps in your milk check!”


Smoothing Out the Bumps

Average Mailbox Price, 1998-2005

12.50

13.00

13.50

14.00

14.50

15.00

15.50

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec



Smoothing Out the BumpsMailbox Price, 2000

$11.00

$11.50

$12.00

$12.50

$13.00

$13.50

$14.00

$14.50

$15.00




Smoothing Out the BumpsMailbox Price, 2004

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00

$21.00



Sizing Up the Market

What are the celebrities doing today?


Sizing Up the

Market

Contract

Month

FuturesAs of

3/23/06 Target Prices

Amount Contracte

d

July 06 $11.37

Aug 06 $12.02

Sep 06 $12.07

Oct 06 $12.10

Nov 06 $12.10

Dec 06 $12.00

Jan 07 $11.80

Feb 07 $11.77


Sizing Up the

MarketCarl Cashseller

• Still giddy from prices in 2004-05

Contract

Month

FuturesAs of


Amount Contracte

d

July 06 $11.37 ?? 0

Aug 06 $12.02 ?? 0

Sep 06 $12.07 ?? 0

Oct 06 $12.10 ?? 0

Nov 06 $12.10 ?? 0

Dec 06 $12.00 ?? 0

Jan 07 $11.80 ?? 0

Feb 07 $11.77 ?? 0


Sizing Up the

MarketGrandma

• Writing one 20,000 lb contract for July - February

• Next month, August-March

Contract

Month

FuturesAs of


Amount Contracte

d

July 06 $11.37 20,000

Aug 06 $12.02 20,000

Sep 06 $12.07 20,000

Oct 06 $12.10 20,000

Nov 06 $12.10 20,000

Dec 06 $12.00 20,000

Jan 07 $11.80 20,000

Feb 07 $11.77 20,000


Sizing Up the

MarketAl Averageprice

• Above target price for February 2007

• One 85,000 lb contract

Contract

Month

FuturesAs of

3/23/06

Target Prices(Average Announce

d)

Amount Contracte

d

July 06 $11.37 $12.42

Aug 06 $12.02 $12.75

Sep 06 $12.07 $13.16

Oct 06 $12.10 $12.83

Nov 06 $12.10 $12.31

Dec 06 $12.00 $12.31

Jan 07 $11.80 $12.02

Feb 07 $11.77 $11.51 85,000


Sizing Up the

MarketTerry Topthird

• No targets are met

• No contracts

Contract

Month

FuturesAs of

3/23/06

Target Prices(Top third Announce

d)

Amount Contracte

d

July 06 $11.37 $13.19

Aug 06 $12.02 $13.53

Sep 06 $12.07 $13.93

Oct 06 $12.10 $13.51

Nov 06 $12.10 $13.16

Dec 06 $12.00 $13.22

Jan 07 $11.80 $12.73

Feb 07 $11.77 $12.07


Sizing Up the

MarketHarriet

Halfandhalf• 20,000 lbs in

January and February 2007

• No targets are met in July-December 2006

Contract

Month

FuturesAs of


Amount Contracte

d

July 06 $11.37 $12.42

Aug 06 $12.02 $12.75

Sep 06 $12.07 $13.16

Oct 06 $12.10 $12.83

Nov 06 $12.10 $12.31

Dec 06 $12.00 $12.31

Jan 07 $11.80 20,000

Feb 07 $11.77 20,000


Sizing Up the

MarketOllie Options

• Buying a September2006 put @ $12.00 strike price

• Premium is 58 cents

• Total premium is $1,160

Contract

Month

FuturesAs of


Amount Contracte

d

July 06 $11.37

Aug 06 $12.02

Sep 06 $12.07

Oct 06 $12.10

Nov 06 $12.10

Dec 06 $12.00

Jan 07 $11.80

Feb 07 $11.77


Writing Your PlanWhat tools will you use?How much of your production will you

market?What are your target prices?Maybe more than one target priceWhat contract months are your focus?How far ahead will you look?How much time / effort / money do

you want to dedicate to marketing?


SummarySeasonal pattern in milk pricesBy being proactive and taking

action, you can reduce price variability• Nothing you can do to get a better

price yesterday• Woulda…Coulda…Shoulda


SummaryHave target prices in mind

• What is a good price and when?Good marketing is not about

getting the highest price, it’s about getting a good average price more consistently

Forget last month (or yesterday)


Some Final Thoughts

There is no one “right” answer in dairy marketing, and some degree of risk is unavoidable

K.I.S.S. theory•A complex plan is harder to

maintain


Why WTG Dairy?

Based on our experience with more intensive milk price risk management programs, we didn’t see the results we expected

Focus the messageAny size farm can use processor

contracts


Winning the Game – The Trifecta Concept!

Half-day program A simulation game using historical

data with real time results and no risk

The goal of giving participants an attitude that “this is so easy my husband could do it”


Producer Reviews “The game helps producers learn what

they are afraid to try in the market.”“The game is by far the best. It was

great to have a comparison between all marketing options.”

“Good display of information and getting the information across! I do understand the process a little better.”

“Thank you! It was very interesting and opened my eyes a bit. It made me think !”


Sponsor/Other Reviews Radio Broadcaster: “The workshop allowed

for a lot of producer interaction and input. That makes for a very practical presentation producers can relate to.”

Sponsor Lender: “Very good information-great hands on involvement.”

Milk Plant Field Rep: “Nice and informal, knowledgeable speakers, very nicely done, Thank you!”

Farm Business Management Instructor: “Great Job-Thank you! Gets producers involved which is the best way to learn. Thanks to the sponsor, Eastwood Bank, and the U of M presenters.”


Evaluation Results

7 workshops, 149 attendees, 110 evals returned (99 producer 11 other)

Average Herd Size: 145 Median: 100Average RHA: 21263 cwt.

Median: 21900 cwt.Cash forward contracts most

frequently used marketing tool(97% of those fwd pricing use this tool).


Evaluation Results

As a result of the WTG-TDE workshop:74 participants indicated they plan

on forward pricing milk (64 currently forward pricing).

Only 13 participants indicated they will continue to take the announced price (previously 35 participants indicated they always took the announced price).


Evaluation ResultsAs a result of the WTG-TDE workshop:Planned 8.2% increase in forward

priced production.86% of producers indicated they plan

to develop and implement a marketing plan.

10% of participants who are not forward pricing, plan to begin forward pricing.


The WTG Sponsorship Model

Local sponsor responsibilities…• Host the workshop• Provide the facility and refreshments• Recruit participants• Pay a sponsorship fee of $600


The WTG Sponsorship Model

University responsibilities…• Provide promotion materials to

sponsor• Present the workshop• Provide the participant materials


The WTG Sponsorship Model -- Advantages

Local presence for promotion, advertising and partnership

Local meeting arrangements handled by sponsor

Cover direct program costs (travel, printing, etc.)

Pressure on presenters to deliver quality program


The WTG Sponsorship Model -- Challenges

Private vs. public meetingsLogistics of sponsor care

• Recruiting, promotion, billing• Make sure sponsors understand their

responsibilities• Follow-up

Pressure on presenters to deliver quality program


Contacts

Bret Oelke• [email protected]

Margot Rudstrom• [email protected]

Wynn Richardson• [email protected]

Date post:	14-Dec-2015
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Winning The Game-The Dairy Edition A Simulation Game for Dairy Risk Management Dr. Margot Rudstrom...

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