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Timing is everything
Ted Van Raay is worried about the rain. There is a photographer scheduled to take photos of his farm, but it has been raining all week and it is not supposed to stop. He is not sure the timing is right. And Van Raay knows about timing. His farm’s success has depended on it.
Van Raay moved to the United States from Holland nearly 10 years ago to build his dairy from scratch. He comes from several generations of Dutch dairy farmers, and always knew that he wanted to continue dairying. America offered more land and more opportunities, so when Van Raay was 30 years old, he decided to make the leap and leave Holland.
“I’ve known cows since the day I was born,” he says. “It’s a way of life if you like the cow business, and I saw America and the opportunities there. The timing was right, so I decided to take the opportunity.”
He spent a year building his dairy in South Charleston, Ohio, working with a development company to design the buildings and manage the build. During construction, Van Raay worked at other dairies and began building his herd.
“Building a dairy from scratch is challenging,” he says. “But, I worked on other dairies during that time and that helped. I learned a lot. You take the good things, and leave the bad.”
Van Raay started with 700 cows and eight employees.
“Looking back, I’m glad I started with 700 cows and didn’t go bigger for a while,” he says. “It’s a big step to move to another country and deal with employees.”
In 2007, Van Raay decided the time was right to start expanding. He received a permit that allowed him to house up to 3,000 cows, added on to his facilities and grew his herd to 1,200 cows. Van Raay expanded again in 2008, growing to 1,850 cows. He relied on his sense of timing for both expansions, with different results.
“The first time I expanded in 2007, I hit it right,” he says. “I listened to the markets and got all kinds of signals. What I did in 2008 was more challenging because cows were really expensive. But, the markets were strong, so I had to protect myself at that point by contracting my milk for 2009.”
Van Raay says he realized quickly after starting his expansion in 2008 that his timing had been off, so he immediately began working to balance out his misstep.
Through Dairy Farmers of America, Inc.’s Dairy Risk Management Services, he forward contracted much of his milk in 2008, and locked in approximately 80 percent of his milk in 2009.
“2009 was not such a disaster for me as it could have been,” Van Raay says. “I use forward contracting to protect myself, but I always have to watch both ends — not just my milk price, but my feed costs too. It’s not easy, you have to really watch the markets and think about what’s coming.”
Van Raay relied on the lessons he learned during his 2008 expansion when planning his current expansion to 3,000 cows.
“We prepared and worked to make sure the timing was right for this expansion,” he says. “We were working on getting our finances together all through 2010 with our bank and some investors. It’s tough to get an expansion going with what happened last year. It’s beyond tough. However, building costs are lower now, and cows are relatively inexpensive.”
His current expansion, which began in March, will add a new parlor and a new barn to his operation. He says he hopes to be milking in the new double-36 parallel parlor by mid-June.
“The new parlor will significantly reduce the amount of time my cows spend in the holding area,” Van Raay says. “The less time they can spend in the parlor, the more time they can spend in the free stalls and the less stressed they are.”
The new parlor will run 24 hours a day plus wash cycles. The new barn, which will house fresh cows up to 80 days and older cows, will feature wider alleys and larger free stalls.
“We looked at this expansion as an opportunity, not just to build new facilities, but to improve what’s already here for the existing cows,” Van Raay says. “By adding milk meters, sort gates and bigger working areas, it will be a better environment for the cows and the employees.”
With 19 full-time employees, and a significant expansion underway, Van Raay says his role on the farm has developed into more supervising and less day-to-day dairying, although he remains actively involved in the operation.
“I like to challenge myself, and when you grow your business like I’ve grown mine the last few years, it’s certainly a challenge,” he says. “But, I like taking the lead and I like motivating my employees and seeing them succeed. It’s important that I have good people in the barn and in the office, because if I tried to get too far into all of those specific areas, I’d lose control of the overall operation.”
Van Raay says he depends on his farm manager, Nick Anderson, his herd manager, Tom Taylor, and his office manager, Donna Buffenbarger, to handle the day-to-day operation of the dairy, so he can focus on the business as a whole.
Part of that focus is paying attention to the markets and his costs of production and ensuring that he utilizes the proper price risk management tools.
“I look at risk management as protection,” he says. “You can’t gamble with your farm. You have to know your costs of production, watch the markets and time it right. If you lock output, then you have to lock input and vice versa.”
Van Raay says he pays special attention to the strength of the U.S. dollar, the feed markets, milk prices and oil markets in order to make price risk management decisions. But, ultimately, it is all about timing.
On Van Raay’s farm in late April, the sun is breaking through the clouds just in time for a photographer to snap some photos of his well-timed expansion and to get a portrait of the man who believes timing is everything.