Why Successful Dairies Have More Pull

There are many half-truths out there about what makes some dairies significantly more successful than others. They range from “they’re lucky” to “they have a lot of money behind them. In our family, we have an old saying we haul out whenever we hear people using these truths. We say, “Don’t believe everything you hear and only half of what you see.” What this means is that, there are many ways to be successful and judging others on surface appearances or hearsay isn’t going to provide any insight into ways to move your own dairy forward. In our opinion, action is the ONLY way to forge ahead. In the same way that exercise builds heart muscle, action builds the dairy success muscle. Here are three take-action exercises that successful dairies actually use.

They Pull out MORE Data
They Pull for MORE Longevity
They Pull for MORE Profitability

At first glance, those three directives may seem too vague to be of help. But short and sweet is always easier to remember. If you want longer lists, you might be interested to find out that there are almost 100 measurable variables that contribute to the bottom line on operations. Or, you could learn from the extensive experience of others. Our source for saying this is an eleven-year study conducted by Zoetis and AgStar of herds ranging from 500 to 4,715 cows, to look at 90 variables in the management and financial records of 90 Midwest herds starting in 2006. The herds are based in Ohio, Michigan, Wisconsin, Minnesota and South Dakota.

Focus for Success

If you find that you are doing the six main things that separate top herds from their peers, then you will be a believer in the statement that,” Just six factors account for 85% of variation in farm profitability, says Mike Lormore, Director of Cattle Technical Services for Zoetis. “Herds which perform well in these factors are being propelled forward by healthier cows, higher profits and likely greater staying power in the industry.”

Everyone connected to the dairy industry has a vested interest in finding ways for dairy operations to make money. Consultants, veterinarians, banks and consumers all lose when margins are too narrow to support everyone who draws on dairy success.

Walking into the barn every day with 90 variables on your mind isn’t likely to make your job easier, your herd healthier or your bottom line more profitable. However, it is somewhat easier to use the idea of looking at the data (pulling out the stats) reducing the problems (pulling out the stops) and always improving (pulling ahead).

You have waited patiently long enough. Here are the six factors that the Zoetis study identified as separating those who perform best.

Somatic Cell Counts
Energy Corrected Milk Per Cow
Death Losses
Net Herd Replacement Costs
Pregnancy Rates
Heifer Survival

So, let’s look at the six factors in terms of our three simplified areas:

NUMBER 1: SUCCESSFUL DAIRIES PULL OUT MORE DATA

Progressive, successful dairy operators know that they are only as good as the data they use for decision making. For some that may mean the cow-sense they were born with. That is not a problem, if it’s working. But how many times, have they called in a consultant or supplier to help them do some problem-solving. If you’re unwilling to change your approach when results start to slide, you’re not recognizing that the dairy industry is continuing to become more complex in response to the huge number of issues that impact it. So, keep an open mind and start with data on somatic cell counts and pregnancy rates.

Data on Somatic Cell Counts

You can’t help but love it as strategic dairy managers, when data and research come up with significant findings. In the case of this study, somatic cell scores showed that “for every 100,000 increase in bulk tank somatic cell count, milk yield declines 5.2 lb. per cow per day.” This is 3.9 lb. more than the results of the 1980s work done by George Shook at the University of Wisconsin.

In the 30 years between the two studies, milk production per cow has nearly doubled. Furthermore, today it is recognized that SCC impacts several other areas, including health, reproduction and culling. Lorimore makes another important point, “The death rate is much higher in high cell count herds and you get more lifetime milk production with lower cell counts because your cows live longer.”

Data on Pregnancy rates

Limited data in this area affects conclusions, however, preliminary results show higher pregnancy rates drive higher profits to the tune of about $50 dollars per cow per year.

Higher pregnancy rates equate to cows spending less time at lower production at the end of the lactation. It means less time in the dry pen and older cows producing at a higher level. This translates into owners being more willing to spend more money on higher merit semen which impacts the success of future generations.

NUMBER 2: SUCCESSFUL DAIRIES PULL FOR MORE LONGEVITY

The road to success doesn’t need more “STOP” signs. As grim as it is, death is definitely a stopping point on the road to dairy success. Heifer survival, herd replacement costs and death for any reason, are “Stops” that pull down the lifetime longevity of your dairy herd.

Successful Dairies Constantly Strive (and succeed) at Reducing Death Losses

This is another area where you want your numbers to be low. Your animal health and husbandry skills will decide whether you are in the top one-third of herds or the lowest.

Successful Herds Go Beyond Good Calf Raising to Excellent Heifer Survival

Only 2% points separated the herds in the study, when it came to doing a good job of raising heifers. The highest profit group managed to achieve a score averaging 95%. Low profit herds had an average heifer survival rate of 93%. Certainly, heifer survival is good but keeping them past their first and second lactation is even more desirable. “By culling cows early, farms are giving up tremendous volumes of milk each and every day.” says Mike Lormore. Herds with high culling rates often have a higher proportion of first and second lactation animals. Lorimore points out, “These younger cows don’t produce nearly as much milk as mature animals. A second lactation cow will produce 15% more milk than a first lactation heifer, and third lactation cow will produce 10% more milk than a second lactation animal.”

Successful Herds Know Their Net Herd Replacement Cost

Finding effective ways to interpret data means we can find effective ways to take action. In the Zoetis-Ag Star study a formula is used to determine Net Herd Replacement Cost. NHRC is defined in the study as number of cows removed from the herd times their replacement value minus the salvage value of culled cows (including dead cows) divided by the amount of milk shipped during this time period. As NHRC increases, profits decrease.

As already noted by Mike Lormore, “You’re making a ton more money if you have more aged cows in your herd,” He urges dairy managers to change. “As an industry, we need to move from an average age of 2 ½ lactations in herds to 3 ½ lactations to get to more optimal profitability levels.” It is tempting to get into a debate on this point, especially if cull cow prices are high. Some would reason that it doesn’t cost anything to replace cows because high beef prices offset heifer raising costs. “That’s wrong,” says Lormore. “Every time you cull an aged cow, it costs you a lot of money and time to get her replacement to the same point of production.”

NUMBER 3: SUCCESSFUL HERDS PULL FOR HIGHER PROFITABILITY

As discussed throughout this article, actions taken are the drivers that put successful dairies out in front of the crowd. Success needs to translate into profitability and here is what the study found, results that you can actually take to the bank.

Higher Profit from lower SCCs:

Little things can make a big difference. In the case of somatic cell scores, there were not big differences between top herds and the lowest herds and yet bulk tank SCCs were shown to be one of the greatest drivers of profitability. The top third profitability herds have bulk tank SCCs that average 196,000 cells/mL while the lowest one-third of profitability herds had SCCs that averaged 239,000 cells/mL. There is a difference of only 19 lbs. “But the high herds average 91 lb/cow/day of energy corrected milk versus 72 lb/cow/day for the low herds.” Here is where the numbers prove the profitability point. “On an annual basis, it translates to $1.14/cwt in more profit, or for the average size herd in the study, $115,000 more net income.”

Higher profit from lower NHRC:

Once again dollars are available. “The herds with the lowest NHRC were seeing $2.04/cwt more profit than herds with the highest NHRC, or some $60,000 more profit per year. The herds with lowest NHRC were also seeing 10 lb. more milk per cow.”

Higher profit from lower Death Losses

Everyone can acknowledge that death losses have a direct affect on profitability, but perhaps it is surprising at how much this is. The study reports, “The top one-third of herds with the lowest death losses were 86¢/cwt more profitable than the lowest one-third of herds. That translates to $70,000 per year more income.”

The Bullvine Bottom Line

Use your data. Don’t settle for roadblocks. Target continuous improvement. Success isn’t a matter of luck, inheritance or entitlement. You must be willing to take action. Don’t fear change. Never settle for the status quo. Do this and you too will take your place with your peers at the top of the dairy industry and that is definitely worth pulling for!!

For a more detailed look at the results read Six Degrees of Separation