Decisions That Determine Your Farm's Direction12 November 2013
Long-term decisions about business direction and profitability are more influential than macroeconomic fluctuations like milk and feed price, says a Virginia State Extension Agent.
Kevin Spurlin, a dairy consulant in Grayson County says that mastitis, fertility and heifer rearing are going to dictate business development and that these rest on the shoulders of the farmer in question.
In Virginia Cooperative Extension Dairy Pipeline, Mr Grayson said: Dairymen on many small to moderate size operations often assume dual roles of management and laborer−milker or feeder and CEO.
"...while dairy industry macroeconomic trends such as milk prices or cost of production are important, long-term business direction and profitability ultimately rest on each farm’s primary decision-maker"
Getting consumed by daily tasks can be an obstacle to effective farm management on dairies of any size. Kevin Dhuyvetter, of the Kansas State Department of Agricultural Economics, noted that there are greater differences in profit between farms in a given year than in a single farm from year to year, writes Mr Spurlin.
(Factors Impacting Dairy Profitability: An Analysis of Kansas Farm Management Association Dairy Enterprise Data, August, 2011). The implication is that while dairy industry macroeconomic trends such as milk prices or cost of production are important, long-term business direction and profitability ultimately rest on each farm’s primary decision-maker(s).
Data from the Kansas State publication indicated that of the factors studied, milk production per cow is most closely related to profitability. The most profitable herds were slightly better at cost control on a per cow basis, but spread all costs over more pounds of milk sold. In fact, more profitable farms tended to invest more in the cows in terms of nutrition, breeding, and veterinary care than less profitable farms, offsetting these investments by controlling costs not directly tied to the cows.
There may be a parallel lesson here regarding time management. Dairymen should invest time in managing the key profit center on the farm. Management time should be devoted to identifying and addressing obstacles to production.
Here are some questions to help refocus a manager when sitting down with their records. Is nutrition or cow comfort limiting production?
What are the production trends? Did yield change with a diet change?
How many cows are lying for at least 12-14 hours per day? Does production decline significantly during hot weather?
Is fresh cow management limiting production?
How are peak yields trending? Are greater than 5 per cent of cows leaving the herd in the first 30 days, or greater than 10 per cent in the first 90 days? What are the rates of fresh cow problems, retained placenta, metritis, and milk fever?
Is mastitis limiting production?
What are current and past somatic cell count scores? Is the farm dumping milk from more or less than 2 per cent of the cows? Are cows freshening with mastitis or do they develop it once in the milking string? Are new infections and chronic cases each <10 per cent of the herd?
Is heifer development limiting production?
Are 1st lactation cows peaking at 80 per cent of 2nd lactation cows or 75 per cent of 3rd and later lactation cows? Is their projected ME milk within 500 lb of older cows?
Is reproduction limiting production? Is the 21 day pregnancy rate 20 per cent or better during most of the year?
Most of these questions can easily be answered from a simple one page herd summary such as the DHI 202 report. Once a deficiency is identified, more detailed information can be attained and action steps taken to address it.
Many farms use external experts as part of a management team, particularly if taking time with records is difficult. Choosing not to take time to manage is itself a decision, but the consequences of that choice results in a lack of direction for the farm.
Make it a priority to sit down regularly to consider the farm’s status and plot its future course, concludes Mr Grayson.