SENECA FALLS, NY — Labor represents one of the largest parts of overhead at any dairy operation. Keeping labor costs under control can help farms increase profits. Ashley Howlett of Cornell CALS PRO-DAIRY Farm Business Management spoke on the topic earlier in the month at one of the free Dairy Profit Seminars at Empire Farm Days, hosted annually by Rodman Lott and Son Farms.
“We’ve seen a wide range in labor efficiency,” Howlett said.
Two years ago, she undertook a research project on labor allocation which named 254 categories of tasks on farms. The study reached out to 63 farms in New York and elsewhere. Thirty-two completed the study.
Some of the farms are strictly dairies that don’t raise crops, so Howlett said the study focused upon dairy and excluded crops.
She found that improving labor efficiency involves capital investment and operating efficiency. Capital investment is either shorter term, which uses less capital and is faster to implement or longer term, which requires significant capital and major changes to the business.
Operating efficiency uses fewer hours, accomplishes more per hour and not working more hours.
Howlett explained that the historic approach to capital investment means that as labor costs increase, there’s increased opportunity for capital investment.
Howlett said robotic milkers represent a growing trend among dairies.
“These are farms where they’re seeing what they can do to make tasks easier,” Howlett said.
Robotic systems bring a costly upfront investment; however, farms purchasing them save both in the sense of reducing the size of their labor force and also allow core, skilled employees to use their time more wisely.
“It can make a huge impact,” Howlett said. “The capital improvement could improve the quality of the output.”
Robotic equipment also can improve cow comfort by allowing the herd to milk on their own schedule.
“With a stable herd size, how can labor hours be decreased?” Howlett posed. “With an expanding herd size, how can more be done with the same labor hours? Capital investment may positively impact more than just labor costs.”
Capital investment can lead to cost categories described by the acronym DIRTI: depreciation, interest, repairs, taxes and insurance.
Howlett thinks that Lean Manufacturing principles may be applied to dairy farms if operators consider how long an activity takes, what protocols and standard operating procedures apply to the activity, and if the protocols and procedures are being followed.
The principles of “5S” can also help increase efficiency: sort, set, shine/sweep, standardize and sustain. Sort means to remove clutter or unnecessary items from the area. Straighten is about organizing tools and equipment. Shine/sweep means that the work area should be kept clean. Standardizing can help improve consistency among workers. Sustain describes the long-term dedication to 5S.
Howlett challenged attendees to consider the “task within a task,” she said. “Estimating how long things take can get tricky.”
For instance, it’s easy to say that feeding the calves takes an hour; however, the time to prep and clean up afterwards also takes time, not just the actual feeding time.
Farmers should also focus on the “one thing that would make life so much easier for that job, within reason,” Howlett said.
Efficiency should make work get done faster; however, farm workers must still perform quality work. Howlett said some operators worry about training employees because they may leave the farm. Yet, if they don’t leave the farm, the operator has less skilled employees working for the farm.
“Explain how employees can be successful at their job,” she said. “Provide vision and then build goals.”
Those could be as individuals or as groups. Offering incentives can help employees feel more motivated, as can fostering a culture of mutual respect between management and employees.
Howlett said employees should feel like they can suggest areas of improvements and ideas for better efficiency.
Howlett administrates the Dairy Profit Monitor Program, which emphasizes income over feed costs and analyzes operational efficiency. A business management program, the Dairy Profit Monitor lets dairymen use data input monthly to help them benchmark their business, track progress, and make decisions based upon readily-available reports. Operators can compare their farms historically and internally or nationally against other farms using the software.