It seems most people have an opinion regarding future herd size, that it will increase, but fewer have explanation of how or why to expand. Some people may have good reason to take more risk than others. Current quota and building costs are about twice this value per cow . Or, if you do not have the luxury of a large cash reserve, be prepared for a major debt load. If history repeats itself, capital assets such as land, buildings and quota, will be a great investment but there are no guarantees.
Profit is a return to risk.
The secret is to manage risk, not necessarily avoid risk. Some producers are telling me they feel uncomfortable about following an expansion trend that will reduce percentage equity and increase debt load. The bottom line is make decisions based on what your financial and production records are telling you, as well as your family's personal goals, not what might be taking place in your immediate area. Maintaining optimum production and reducing your cost of production is one of the best ways to improve profitability on your farm. This information is provided as a public service, but we cannot guarantee that the information is current or accurate.