by Gabe Middleton, DVM, DABVP
The financial health of the dairy operation is at the front of producers’ minds. In all reality, it has probably always been that way; however, with rising feed costs and challenges to maintain a profitable operation, it is more important today than ever. Decisions should be made based on the dairy economy. This is easier than it sounds, as some decisions need to be made based on future projections of the dairy industry, not just today. Decisions should be made based on data instead of gut instinct whenever possible. Utilize a solid team of consultants to help analyze data and make the right decisions.
Take a look at a few areas where data can help make solid decisions:
- Calf care – Newborn calf management can be expensive. There is a plethora of products on the market that can be given to calves to help prevent scours and pneumonia and promote growth. These products should receive scrutiny from your veterinarian to determine what is necessary and what is not. Some producers might think these products are all fluff and don’t fit into the protocol. While some herds can grow excellent calves with no preventive products, many rely on them to help promote health.
When it comes to calf care, if disease is prevalent, even the best nutrition plan will not result in optimal gains. Data tell us that for every 0.1 pounds per day of pre-weaning average daily gain, a heifer will milk 250 – 300 pounds more in the first lactation. It seems a bit foolish to try to save money and suffer reduced gains in the pre-weaning period when it results in less milk in the future. It is a delicate balancing act, but promoting health and growth certainly pays off long term.
- Heifer inventory – The days of having a 1:1 ratio of heifers to milking cows seems to be over for many herds. The cost of raising a heifer typically exceeds $1,800. The decision to breed cows with beef semen is becoming more commonplace and makes economic sense. Make sure you have a plan for how much beef semen to use and on what cows. There are many spreadsheets and tools available that look at all the factors involved in beef semen use. Those factors include reproductive performance of the herd, dead on arrival calves, abortion rates and cull rates of youngstock. Hitting the mark takes data and foresight.
There is a huge economic opportunity in properly managing heifer inventory. There are some herds that have decided to completely eliminate their heifer inventory and all cows get bred to beef. This obviously takes tremendous planning and financial responsibility to have an adequate supply of heifer purchases and have money set aside for those purchases. In today’s market of high feed costs and low springer prices, these producers might be setting themselves up for significant financial gains.
- Feed costs – Making decisions related to feed ingredients can be challenging, but could also yield financial gains. There are significant opportunities to save money and improve milk income over feed cost if the scenarios are carefully analyzed. At the time of this article, fat is paying $2.40/lb. while protein is paying $3.17/lb. Work with your nutritionist to weigh the impact of changes on fat, protein and fluid production.
Producer price differential should be taken into consideration as well. Making a short-term decision to save money on feed costs while production suffers or peak milk is reduced is short-sighted and costly in the long run.
- Culling – Many factors go into culling cows and the data deserve frequent and careful analysis. Cull rate is a function of reproductive performance, transition cow health, other disease and injury, as well as heifer inventory. Cull rate may need to be higher if heifer inventory is excessive. Many herds have a reasonably high cull rate; however, the sold and dead cows in the first 30 days of lactation are less than 5%. This is an excellent number and the benchmark for fresh cow culling. Fresh cow culls are extremely costly and a concerted effort should be applied to reduce them. Examine the data to find out your cull rate and the breakdown by days in milk. You may be leaving a significant amount of money on the table by selling or burying too many fresh cows.
Decisions on a dairy operation have significant financial impacts in both the long and short term. Utilize veterinary, financial and nutrition consultants to guide you along. Their experience and expertise can help direct a producer to make financially sound decisions.