It doesn’t appear to be a great year in the Dairy business. Futures after four year of poor milk price look horrible for 2020. How do you survive? The following are my recommendations in your survival plan.
Review your financial information from your accountant
Both Genske, Mulder & Company, and Frazer, LLC publish industry specific financial information by state. Review that information and see what aligns with your costs. I remember the old saying, “a penny saved is a penny earned.”
Review your feed costs
- Take the time to evaluate your forage costs. Ask the question – what does it cost for you to grow forages? Part of this is to evaluate yields by fields. Pull out your weigh tickets or counts from last year. EZfeed and EZweights will give you this data automatically.
- Consider target feeding different groups of cows. Fresh, High, and Low cow rations can be different with cost savings. However, if you lose milk in switching groups, evaluate that cost versus benefit.
The length of time cows are on the Fresh cow ration should also be evaluated. Too often cows get lost in these pens which affects their yields.
- Look at your shrink on feed. This is an area that most producers lose thousands of dollars.
- Look at the efficiency of your commodity area. Shrink, labor, and fuel costs all need to be balanced.
- Mineral supplementation is always a good place to look. My recommendation is to do a liver biopsy to check the status of minerals that are being stored, then adjust and retest.
You can also target supplementation to different groups of cows. For example Fresh cows have different needs than Low cows. Minerals are usually over supplemented (do you take a vitamin every day?). If you can’t test or choose not to, you can do small trials where you back down the minerals and see what happens. Good records are a must if you choose to do this.
- Review what the moisture levels were when you started or stopped the harvest.
The recommendations for Feed Management and Herd Management that follow are the essential strategies to make sure your costs are in check. However, you want to keep in good financial standing with your lenders. Communicate what you are doing with your lenders. Avoiding them is not recommended. It is important to lay out your plan and continue to update your lenders with your progress.
With our current COVID-19 circumstances, you can also apply to your local bank for the SBA 7a money. This can become grant money from the government. To get started, you will need the cost of your employees (including bonuses, regular pay, 401k, and health insurance). Also, you will need two months of interest and utilities costs.
I call this area the art of feeding and I would suggest that this has a bigger impact than the ration itself. Here you take a serious look at how you feed, and your feeding maintenance processes.
I recall looking at intake data on a herd in a hot humid area. After years of past struggles, they were able to maintain over 50 pounds of intake in the heat for the first time. When I asked the feed manager how he did it, his response was, “You challenged me to improve my feeding art.” Here are some things you can look at:
- Work on reading the bunks. Some feeders can tighten this down and have nothing left.
- How often do you need to feed? This is also a common question. The answer is at least once a day and push up every two hours. Once again it is a balance of labor, feed box size, and time.
- Make sure the feed is smooth all the way down the manger. There should not be gaps or piles when starting or stopping.
- Moisture levels are key in forages within a ration. Consider testing your forages at least twice a week.
- Shake out your ration – see if you are mixing it correctly.
- Check the moisture level of your TMR.
- Do an audit of the TMR mixer. Scale weights need to be adjusted, knives get worn, and parts need to be replaced. This will save mixing time and fuel costs.
- Consider chopping your hay. If you have tough, dry hay, chop it before mixing it. TMR mixers are built to blend hay, they are not typically meant to process hay.
Take the time to review your Herd. I typically look at the herd as biological machines in a factory. The manager determines how they are operating and how efficient they run.
- Evaluate your parlor crews. The first step is to see if they are harvesting the same amount of milk on each shift. Look at their preparation, and then see if milk flows continuously after attachment. Look at start and stopping times for each pen and shift to see if the milking experience is the same each time. Calculate the turn time for the parlor and see if you have time to increase milking frequency.
- Evaluate the reproductive performance of your dairy. Reproduction in the post RBST world is very critical to overall herd performance. I look at both pregnancy risk numbers and services per conception numbers. I find one is like the speedometer in your car – it shows how fast you are going, while service per conception is like the gear you are in. Now we all know that you can go fast in first gear, but it is not efficient. Take the time to evaluate breeders and your heat detection programs. Some dairymen can save money by dropping off systematic breeding programs, while others need to add a breeding program to get their cows bred. My rule of thumb is, If you go past the 150 DIM barrier and they are not pregnant, they will be culled.
- Look for the invisible cows in your herd. These are cows that do not get sick, breed back, and never are seen. I always want a whole herd of invisible cows. Look for their opposite – which I call welfare cows. These are cows that always need help from someone to function. This list includes chronic mastitis cows, lame, slow milkers, chronically poor doers, and hard breeders. The question I always ask dairymen is, do you want more of this type of cow? The answer is of course no, so add Do Not Breed to their record, stop milking them, and get rid of them. Your herd management software can create and evaluate these groups.
- Focus on good starts. Getting a cow to transition well is another critical component. To get an idea of this group, evaluate first milk and death rate in the first 30 and 60 days.
- Quality milk is always a money maker and a quick return. Consider a high SCC pen that you can use as calf milk or put down the drain to maintain a quality bonus check.
- Evaluate your treatment and hospital program. I have reviewed some dairymen’s hospital pens where only 25% of the animals remain in the herd after 6 months. This is not cost effective. Treatments can and do work, but poor results are typical of poor technique and poor protocols.
- Evaluate your culling program. What type of animals are you getting rid of? Also, take the time to evaluate how they got to this state, or how breeding resulted in this kind of cow.
- Young Stock is another hidden cost world. Most replacements do not make you money until late in the first lactation. Look at your death rates, culling rates, and overall costs. Should you be raising heifers at all with the surpluses of replacements in the market? Can you find another dairy that has surpluses – and make it work for you? One of my most successful dairymen in Idaho doesn’t raise a single animal.
- The other common question is what about genomics? My answer is that if your heifer calves have a lot of pneumonia or scours, you are wasting your money. The other thing I would point out is, if you are not capturing value for your cows or heifers after genomically testing them, I would question it’s value.
While the current dairy market situation is very difficult, we all have things we can do to improve our production and financial situation.