Riding the Highs & Lows of Milk Prices Doug & Linda Hodorff - PDF document

12/12/2016 Riding the Highs & Lows of Milk Prices Doug & Linda Hodorff Hodorff Enterprises Our Mission ssion: A team am with th a passi sion on for fami mily y and dairy iry, respe pecting ting people ople, comm mmunity unity and enviro ironm nmen ent. t. Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI Hodorff Enterprises Overview 1. Second Look Holsteins, LLC • 1080 cow dairy including dry cows • 3X- No BST • Goal of 6# of Combined Fat & Protein (CFP) • Partnership • Doug & Linda Hodorff • Corey & Tammy Hodorff Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI 1

12/12/2016 Hodorff Enterprises Overview 1. Second Look Holsteins, LLC • 1080 cow dairy including dry cows • 3X- No BST • Goal of 6# of Combined Fat & Protein (CFP) • Partnership • Doug & Linda Hodorff • Corey & Tammy Hodorff Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI Hodorff Enterprises Overview 2. Broken Bow, LLC • 950 cow dairy including dry cows • 3X- No BST • Goal of 6# of Combined Fat & Protein (CFP) • Partnership • Doug & Linda Hodorff • Jacob Stern Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI 2

12/12/2016 Hodorff Enterprises Overview 2. Broken Bow, LLC • 950 cow dairy including dry cows • 3X- No BST • Goal of 6# of Combined Fat & Protein (CFP) • Partnership • Doug & Linda Hodorff • Jacob Stern Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI Evolution of Hodorff Enterprises Our Mantra: Progressive Growth 2 nd Look Partnership 180 Cows 2 nd Look- 900 cows Established – 700 cows 2 Locations 575 cows 2 nd Look- 1080 cows 1996 1999 2000 2009 2010 2016 1992 Modernized: Broken Bow Broken Bow Dairy in • 400 cows 950 cows • Nebraska Established Free stall facility Nebraska Heifer • Milking Parlor Facility Established Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI 3

12/12/2016 Evolution of Hodorff Enterprises Our Mantra: Progressive Growth 2 nd Look Partnership 180 Cows 2 nd Look- 900 cows Established – 700 cows 2 Locations 2 nd Look- 1080 cows 575 cows 1992 1994-95 1996 1999 2000 2001-02 2009 2010 2013-14 2016 Great Years • Financially Tough • High corn prices • Low Milk Prices • Expansion learning curve Broken Bow Broken Bow Dairy in 950 cows Modernized: Nebraska Established • 400 cows Nebraska Heifer • Free stall facility Facility Established • Milking Parlor Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI Riding the Highs & Lows • 2009: • 2 nd Look Holsteins: Good equity position • Broken Bow Starting Up: Low equity position • Good equity position of 2 nd Look Holsteins helped support Broken Bow Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI 4

12/12/2016 Riding the Highs & Lows • 2009: • Bleeding Red Ink • Never sacrificed the cow comfort, management and nutrition of the cows • Compensation adjustment based on job description – separate out management responsibilities and pay accordingly • Banker relationship is critical • Should help you get through tough times if you are set up right Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI Riding the Highs & Lows • August 2009: • All Hands on Deck • Empowered all employees: • Suggestions to save 3% • Everything was on the table • In the end, we saved more than 3% • We were still losing money….just not as much • Employees felt part of the solution • Regularly visit this exercise with employees Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI 5

12/12/2016 Riding the Highs & Lows • 2009 - 2016: • Milk Marketing: • If You are All In: “Need Nerves of Steel” • Our philosophy has evolved over the last 7-8 years • You can’t make money at milk marketing • You can manage risk • We still participate but at a much lower level Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI Riding the Highs & Lows • 2009 - 2016: • Enterprise Accounting: • Allows you to know your Cost of Production 1. Second Look Holsteins 2. Broken Bow Dairy 3. Peniel Acres • Tracks cropping costs • Sells feed to the dairies 4. Nebraska Heifer Farm • Understand heifer rearing costs better Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI 6

12/12/2016 Riding the Highs & Lows • 2009 - 2016: • Financial Peer Group: • Not just a dairy group • Different agricultural businesses: • Hog producers; Crop farmers, etc. • Different states represented • Highly valuable Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI Riding the Highs & Lows • 2009 - 2016: • Continuing Education: • TEPAP- The Executive Program for Agriculture Producers • Not just for young people • Many great programs out there to take advantage of Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI 7

12/12/2016 What Have We Learned • Best cost feeding philosophy • Solid equity position gives you flexibility • Be your own contractor with simple and basic construction • Know your cost of production • Empower employees for their insight and suggestions • Compliance – Compliance – Compliance • Communication is key Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI Looking to the Future • Try to stay 5-8 years ahead of the curve • Transition plan: • Management responsibilities are pretty well transitioned • Other son, Clint came back in 2016 to manage the cropping enterprise • Transitioning the equity needs to be figured out • Paradoxically, if you are debt free, your business is likely not modernized enough to be saleable • Stay on top of technologies- Genomics, Herd Performance Software, Precision farming, Business Strategies, etc. etc. • Peer groups and continuing education Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI 8

12/12/2016 Hodorff Enterprises Our Mission ssion: A team am with th a passi ssion on for famil mily y and dairy iry, respe pecting ting people ople, comm mmunity unity and enviro ironm nment. ent. Today’s Actions • Tomorrow’s Results December 7 & 8 | Dairy Summit 2016 | Kalamazoo, MI 9