Outputs way to tackle low milk price challenge
Output is the solution to
improving profits on US and
Danish dairy farms,
according to speakers at a
Keenan conference last
week. Jessica Buss reports
MILK prices that fluctuate widely, even in consecutive months, are seen as just another challenge by one US producer.
Dale Hemminger, who farms at Seneca Castle in New York State, told a Keenan conference Moving Up – Not Out in Shropshire that a low milk price was a challenge he addressed in the early 1990s.
At that time his milk price was about 15p/litre and the farm was a traditional unit of 120 dairy cows yielding 9000 litres a year. In 1993 he made the decision to expand.
But he had already learned that keeping more cows in the same accommodation was a false economy. "We added 15 cows one year and sold no more milk because we had 135 cows in facilities for 120," he said.
Increasing herd size to 180 cows by adding to existing buildings was the first option considered. "But the numbers showed we couldnt do the site work on the basis of 180 cows, we had to go to 300 cows."
These cows had to produce an average yield of 10,000 litres for his plan to succeed. Maximising output is directly proportional to profit level because Mr Hemmingers investment in fixed assets and overheads is the same.
To achieve the necessary herd expansion a new barn with cubicles for 300 cows was built. The old barn is used for dry cows and in-calf heifers. The parlour had been updated in 1988, and required little extra investment for milking the extra cows. "If we had gone for an expensive parlour when we expanded, we would have been broke by now."
Making the unit a success has required team work. Farm employees and dairy support professionals are involved in the decision making process.
For example, when the farm needs a new skid steer machine, he costs out the options then allows the farm staff to try out the different machines and choose the most suitable one.
Achieving high production cows required facilities that were comfortable for cows, but with carefully controlled feed costs. These are controlled by making high quality forages and using by-products, with four rations fed.
Further increases in herd size and yields have increased efficiency. He now has 380 cows projected to produce 12,150 litres this year. BST is used to increase yields, as it is in many US herds.
However, buying-in animals to expand has brought Johnes disease into the herd. This has increased cull rates in recent years to 36% a year, but now biosecurity is being improved to reduce cull costs.
But fluctuating US milk prices continue to affect profits. Last year, the price rose to 20p/litre. It fell a little this year, but remained high until September. Octobers price will be nearer 15p/litre again.
"I am not upset by one months low price, but everyone is trying to sell more milk and getting excited about it. We are going to survive and figure out how to make money in this business.
"We identify goals and objectives for the family and business, but then have to separate them to identify the real issues. We make plans each year and track their progress. We then set parameters for the things important to us such as milk shipped a man hour because labour is our largest expense after feed costs, and track them month by month."
• Have written goals and action plans.
• You cant improve what cant be measured.
• You can get bigger and better at the same time.
• Negative attitudes are a cancer.
• Be careful who you follow.
• Take control of your own destiny.