Money-makers in difficult times

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Editor's note: This item ran in the July 2011 edition of Dairy Herd Management.

For the past several years, the dairy industry has struggled. Low milk prices, combined with high feed prices, have cost the industry. 

While no one likes having to deal with economic uncertainty, an element of hardship can cause people to be more inventive and resourceful. 

Dairy Herd Management asked producers from across the U.S. to share the top five things they have turned to in recent years to add value to their operations. Here is what they had to say:

Kelly Farms, Rensselaer Falls, N.Y.

In the fall of 2009, Mary and Allen Kelly built a new free-stall barn. It was an opportune time to do so, since dairy construction crews were not busy in the recession and could work at lower cost. This move added 250 new stalls and allowed the Kellys to increase their herd size by 160 cows. The new barn also allowed them to make some housing adjustments. A pre-existing barn could now be used for dry cows and transition cows. The new barn, with wider stalls and bedded with sand, could be used for fresh cows and the high-production group.

“This one move did a couple things for us,” notes Allen Kelly. “In the year that followed, fresh-cow health improved and milk production went up much more than we thought it would. Culling is now mostly selective instead of us trying to keep the cull rate down.”

Bringing the heifers home was another decision that paid off for the Kellys. In 2006, all of the heifers were raised off-site by various custom-raisers. “Logistics were a nightmare,” notes Mary Kelly. But now, with the heifers home again, she has been able to apply lessons learned from other calf ranches, including goals for benchmarking heifer-raising success. “We use a non-completion rate of 4.5 percent,” explains Mary. Anybody that is not in the milking string in two years is considered a non-complete.

Six months ago, the Kellys built a new calf barn that allowed them to switch from bottle feeding to automated feeding. At the same time, the Kellys switched to feeding acidified milk replacer. “The acidified milk replacer lends itself to automation,” notes Mary Kelly. Milk replacer is mixed every three days. Making this change has been a huge labor-savings for the farm. But, there has been a learning curve, as well. “How a calf responded to the pail told you how to treat the calf. You don’t have that anymore, so we’ve had to develop a new eye to evaluate calf health,” she explains.

A switch to drag-hose injection on the manure-handling side 10 years ago has also had a big impact at Kelly Farms. Switching to drag-hose injection has reduced the amount of time and labor needed to handle manure. “Before making the switch, it would take me and three guys with trucks to spread manure. Now, it’s just me,” explains Allen Kelly.  In wet years, it also allows the farm to get manure on the ground. Over the years, Kellys have added to the system, increasing the distance that the farm can spread manure.

The other positive step has been finding a life off the farm. “We finally found balance in our life when we started kayaking four years ago,” says Mary Kelly. For years, she says they drove by the river and never stopped. Then, one year, they decided to try out a row boat. Row-boating quickly moved to kayaking, and the Kelly’s have never looked back. “Recognizing that we needed to find balance to all the pressures of farming has been huge for us,” she says. “Particularly in the spring, when we can’t crop the way we want to. When it rains, we can’t get in the field, but it makes great kayaking weather.” The Kellys now compete in kayak races and have met people from all over the world. They have even paddled in the Baja Peninsula.

Scheidairy Farm, Freeport, Ill.

Identifying specific skill-sets that people have is something that Doug Scheider says has been very valuable to his operation. “If an employee has interests in a particular area, we try to give him opportunities in that area, even though it is not necessarily the spot he was hired for,” Scheider explains. “Some employees are better suited for record-keeping or analysis; others are better suited to work with cows or equipment. Having the employees that we now have has made our operation much more efficient, and everyone does a better job when they have an interest and passion for what they’re doing.” Employee development and training has also been a crucial part of the operation.

A land base that comes close to meeting our feed inputs has also been beneficial, notes Scheider. “We’ve had to buy some forage, but no corn or grain silage.” This land base has helped shield the dairy from volatile feed cost. 

In November 2009, the dairy converted from bedding with digested manure solids to sand bedding. “We stopped using digested manure solids because we weren’t happy with udder health and milk quality,” explains Scheider. “We tried a number of ways to make it better, but it just didn’t work.” Since making the switch to sand bedding, feet and leg issues have improved, injuries have gone down, somatic cell counts have improved, and milk production has gone up. The herd somatic cell count has also dropped approximately 50 percent, from 300,000 plus. “Changing the manure-handling system to handle sand was a nightmare,” says Scheider. “But the cows were doing so much better on sand that it encouraged us to work through it.” A plastic PVC pipe was added to the back of the stalls to make a deeper bed for the cows and help keep the sand in the stalls.

A strong relationship with the farm’s advisers has also been very beneficial. “We provide data monthly to our banker and hold quarterly meetings with him to keep him in the loop,” he explains. This relationship has paid off. In 2009, when the Scheiders, like many others in the industry, were having a tough time, the bank lent them money to make the conversion to sand.

Making a change to store haylage in a pile versus a bag has been very favorable for the farm. “By storing haylage in a pile, we’ve been able to shorten the harvest window and get a more consistent feed to the cows in terms of dry matter and length of cut,” explains Scheider. “The quality of feed is better in the pile than the bag, and there is little spoilage. We discard less feed since we made the switch.” The farm also uses a food dehydrator to check for dry matter. “The food dehydrator has been nice because you take a sample of multiple forages and put it in the dehydrator. The next morning, you can check all of the samples at once,” he says.

Mountain View Dairy and Horizon Dairy, Delta, Utah

In 1995, John Nye and his wife decided to relocate the dairy from Connecticut to Utah. “Our farm in Connecticut was located approximately 110 miles outside of New York City,” says Nye. “We were farming in a bedroom community, and in order to grow enough crops to feed our 425-cow herd, we farmed all over. Essentially, we were in the trucking business and we wanted to be in the dairy business.”

Upon relocating to Utah, the Nyes decided not to farm anymore. “For the last 15 years, this has been a good formula,” says Nye. The dairy has also been able to reap the benefits of a better labor force in Utah.

Employee management has been an essential part of the operation. “Once we decided to have middle managers and grow employees into the positions, a lot of areas on the farm have improved,” explains Nye. “For example, the night milking crew never seemed to get the right amount of training or supervision it needed. Now, we have a middle manager who has been trained, and it’s his job to go around and train employees on milking procedures. Somatic cell count and milking routine got a lot better. Before moving to have middle managers, it was hard to get below 300,000 SCC. Now, our SCC is 150,000 or less.” Employee retention has also gone up since Nyes adopted this management style.

Developing and maintaining standard operating procedures or SOPs has also been important.  “We developed our first set of SOPs in 2005,” says Nye. The dairy had an intern who helped them get started and they fine-tuned the procedures with a veterinarian. Now, the farm keeps the SOPs updated on a regular basis and is developing videos to do one-on-one training with employees.

Building relationships has also been an integral part of the operation. “We demand a lot from the people that we work with — both employees and vendors — but we try and make them feel like a part of our operation,” he says. “There is no magic formula to build relationships, but we feel that saying ‘please’ and ‘thank you’ are a big part. Being nice and doing little things, like getting the service guy a Coke and sandwich if he’s at your operation over lunch, go a long way. Doing what you say you are going to do is also a part of building relationships.”

The focus on building relationships has helped the Nyes build a solid reputation, which has paid dividends for them. “In 2009, I wrote a letter to every supplier we worked with and made them aware of our financial situation. I explained to them that we couldn’t pay our operating loans and could only buy the bare necessities, asking each supplier to give us the best price they could,” he explains. “We were very up front explaining what we could and could not do.” As a result, every single supplier, including the bank, continued to supply or service the dairy.

Bomaz Farms, Hammond, Wis.

A few years ago, Bomaz Farms decided to change from having their heifers custom-raised, to raising them on the home farm. “This allowed us to have total control over our heifer-raising program,” explains Kay Zwald. “We were able to get control over disease spread, reproduction, and better manage growth rates.” This required a financial investment on the farm’s part, but was well worth it. “Now, we can bring heifers into the milking herd in a timely manner and have complete control of the genetics we are working with,” she says.

The change required a retrofit of some older facilities; the old tie-stall was converted to a sand-bedded free-stall barn for breeding-age heifers. The dry cows were displaced for a bedded-pack barn, and a transition barn was built for the youngest heifers. The heifers are exposed to headlocks in the transition barn, giving them ample time to adjust to them and free-stalls before entering the milking herd.

Three years ago, the Zwalds made the switch from mattresses with sawdust on top to bedding with sand. To retrofit the existing stalls, they removed the existing mattresses and attached a 3-inch by 5-inch angle iron at 0.25-inch thickness to the back of the stalls. The iron is anchored into the floor and holds sand in at a 5-inch depth. “We had some concerns over the curb being too high in the beginning, but we’ve had no problems with the added height,” notes Bob Zwald. “It was a relatively cheap improvement that has paid dividends,” he says. Costing approximately $15 per stall, the benefits in cow health have far outweighed any issues in changing the manure-handling system.

Because the farm displaced the dry cows, a second barn had to be built. The second barn was built with wider and longer stalls. One side has stalls for dry cows that are 54 inches wide by 9 feet 8 inches long. The other side allowed expansion of milking numbers and is used for larger cows. It has stalls that are 9 feet 8 inches long by 52 inches wide. “The new barn is very cow-friendly, which has been a big benefit,” says Kay Zwald.

Renovating their double-eight parlor last fall has also been advantageous for the Zwalds. The remodel changed the stall width in the parlor from 27 inches to 32 inches on center. “We used to have problems with banged-up hip bones; bigger cows would get bruised, and a few cows would cull themselves out of the herd, because they couldn’t fit into the parlor,” explains Kay Zwald. “The remodel has eliminated a lot of injuries.”

The Zwalds have found that genomic-testing has been a very beneficial part of the operation. They have an extensive embryo transfer program and now can be confident they are using the best of their herd. Almost all calves born are genomic-tested. “Genomics add to our bottom-line, and hopefully we are more accurate in investing money into embryo transfer instead of just picking what we think is best,” says Bob Zwald.

Quail Ridge Dairy and Badger Creek Farm, Fort Morgan, Colo.

Employee training and development has always been an important piece of Mary and Chris Kraft’s operation. “We have always felt that our staff was pivotal in taking care of cows the way we would if we could be at every decision point,” explains Mary Kraft. “We partner with many of our vendors to develop training in Spanish,” with experts coming in to help teach classes. “We repeat those classes about every six months because we are trading people around and because we believe in cross-training and making sure each area appreciates the other areas’ team contribution,” she says.

Clear communication with suppliers, employees, lenders and neighbors -- especially when times are tight -- is important. “Let your employees know if you can’t provide raises (and) making them feel included and appreciated helps make up the difference,” she says. “Because we let our suppliers and employees know what was happening — directly from us — they weren’t eaten up by the rumor mill or things they made up.”

Feed management has been an essential part of the operation. “The commodity market is unpredictable, so we hedge by producing a lot of our forages,” she explains. “We control the variety, harvest means and times, storage and quality. This also gives us a place to spread manure and lagoon water, and gives us a great story to tell consumers about the sustainability and circle of life on our farms.”

The Krafts have avoided the futures market. “If you can’t lock in both sides of the futures equation, you could be locking in your own self-destruction device,” she says. “In previous experiences with the markets, the futures allow you to take out the volatility of the market, but in the long run, you don’t make any more money. Plus, there are a lot more savvy people than me on the other side of the market, waiting to take advantage of my situation.” The Krafts have found it more valuable to spend time on training people, fine-tuning management and running a tighter ship.

Telling their story has been vital to the success of their operations. “We provide tours at every opportunity,” Chris Kraft explains. “Mary has done several television interviews and we host events at our facility. We work constantly to put a face on our dairy — especially because we are a larger dairy, we want people to know it is still Chris and Mary there, and that it’s not a one-family dairy, it’s a 70-family dairy.”



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