Zisk helps remove the risk
Krista Kuzma, Associate Editor
March 15, 2021
Hoogendoorn creates free app to project dairy farm profits
IRETON, Iowa – Kevin Hoogendoorn knows the milk prices over the last six years have seen extreme highs and lows. He saw how it was affecting producers.
“Dairy farmers will learn how to run their farm like a business or they won’t be farming,” said Hoogendoorn, a dairy veterinarian and management consultant. “The market is too volatile anymore. We can’t just ride it and try to be a good farmer.”
This realization drove Hoogendoorn to help farmers find a solution. He created Zisk, a free app for dairy producers that helps project what profit will be for their dairy farm using real-time prices from the Chicago Mercantile Exchange and data to estimate expenses based on farm size and pounds of milk.
“My hope for the app is it makes markets less scary,” Hoogendoorn said. “Once you’re familiar with something, it’s not as scary. Just getting dairymen to talk about what the markets are doing, what do they mean and why are they moving – that’s my No. 1 goal.”
He hopes this will drive dairy farmers to talk to their advisors to figure out how to capitalize on possible profit.
Hoogendoorn never imagined he would be creating technology to help dairy farmers. But, he has always wanted to help them.
After working in nutrition consulting for many years after graduating from veterinary school, Hoogendoorn started his own consulting firm to move toward helping dairy farmers with business management.
“If you looked at monthly milk price from 1980 to today, it’s astronomical the volatility we’re having today,” he said. “They didn’t have variability when they were farming in the ‘80s and ‘90s. It was if you work a little harder, treat your cows a little better and get an extra 4 pounds of milk, you’ll make more money. Now, what I see are excellent dairymen with beautiful cows and beautiful operations getting great milk struggling financially because the markets got ahold of them and are shaking them.”
These dairy farmers are not paying attention to the milk price market, Hoogendoorn said. Many other farmers who have done milk contracting did not fully understand how to find the right fit for them. Hoogendoorn said one of two things happen in that case.
“They either did it right the first time, thought they were really good at it, and then they tried it again and it went horribly wrong so they swore they would never do it again,” he said. “Or, they did it wrong the first time and swore they would never do it again.”
Hoogendoorn began working with these farms to build financial projections.
“I would ask, ‘Do you have a profit and loss sheet? What accountant are you working with? What’s your cost of production per hundredweight?’ Most of them had no idea,” he said. “Even if they did work with an accountant, they treated their financials the same way they treated DHIA records – look at your rolling herd average and throw it in the drawer.”
The financial projections Hoogendoorn helped create used futures prices for milk and feed. If there was profit, Hoogendoorn suggested contracting both.
“It was really scary for them, but they did it and they said, ‘This really works. I can sleep at night because I’m not worried about the milk price going to $9,’” Hoogendoorn said.
As new tools like the Dairy Margin Coverage Program and Dairy Revenue Protection Program have become available, Hoogendoorn has begun using them in the financial projections where applicable for his clients, which range in herd size from 60 cows to 3,000 cows.
“Right now, we’re dealing with feed cost,” Hoogendoorn said. “Over 80% of dairies I personally consult with are skating because we locked in beanmeal when it was under $300 back in August. We locked in corn in September. It’s not affecting us so it makes us more competitive with some of these large integrators.”
That makes Hoogendoorn and his clients breathe a sigh of relief.
“It made me feel so good to be able to sit down with dad, mom and maybe the kids and talk about what their plans were for the next year without constantly being in panic mode about whether they were going to lose the farm,” Hoogendoorn said.
While Hoogendoorn felt good helping a dozen of his clients, he wanted other dairy producers across the country to feel the same empowerment to make their dairy business run well. In 2016, Hoogendoorn took the spreadsheets he created and built them into an app.
“It’s an indicator,” Hoogendoorn said. “It’s not going to be as accurate as financial spreadsheets, but it’s a good indicator because it’s constantly updating from the CME – up-to-date milk, corn and soybean prices. Plus, all the other costs of running a dairy farm. There’s a lot of data out there. … I built all the cost in, and I feed in the markets from the CME and project to a dairyman.”
Test versions of the app were put out in 2017 and the app officially launched in early 2018.
“The No. 1 goal from the beginning was it had to be simple, clean and easy to use,” Hoogendoorn said.
Without much previous tech experience, Hoogendoorn said making the app turned out to be one of the biggest learning curves he has experienced.
“I didn’t do the coding, but what I found with software engineers is they can code like crazy but you have to tell them what to code,” he said. “So, I essentially built the app and all the algorithms on all these excel spreadsheets and then I would email to them and say this is what I want it to do.”
Hoogendoorn also realized it takes a large sum of money to develop an app.
“I had to do something to keep the app free for dairy farmers,” he said. “They get asked to pay for all sorts of things and everyone wants to sell them the newest gadget.”
He turned to companies within the dairy industry to pay for advertisements on the app.
“Large companies are willing to pay to get their information out to the dairymen, and it’s a way for the dairymen to get the info without paying for it,” Hoogendoorn said.
Right now, the dairy producers using the app own 1.8 million dairy cows, or about 20% of the cows in the United States, Hoogendoorn said.
While the app offers markets, projections and current news, Hoogendoorn hopes he can develop it to also include a place for dairy farmers to chat and interact.
“My goal is to make this app the one stop for dairy farmers,” Hoogendoorn said. “I would love to see it keep growing and turn into something amazing for the dairy farmer.”