Poor decision-making can easily occur when a farm’s priorities are not clearly defined, especially during times of turbulent prices.
“Developing and recording goals and management priorities takes the emotion out of tough decisions when times are challenging and the ability to think clearly becomes more difficult,” says Kevin Spurlin, Virginia Cooperative Extension agent. “A common trap when margins are getting squeezed is improper cost-control strategies. A simple goal of focusing on what pays the bills is a great starting point when evaluating cost-cutting opportunities.”
Here are a few low-risk, high-reward cost control tips that align with this goal:
• Review non-income producing units such as the forage system, manure handling, replacement and dry cow enterprises for cost savings that will not hinder immediate and future profitability.
• Do not automatically make cuts to the lactating-cow diet without evaluating potential negative effects on productivity or income. A good nutritionist can assist. Switching an ingredient that is fed at 5 pounds per head a day for a $50 per ton savings saves $12.50 per cow a day or $375 per month on a 100-head herd. The loss of 1 pound of milk per cow makes this a bad decision.
• When pricing the same commodity or supplement, examine where savings can be realized with little or no dietary changes for the lactating herd. Ensure that these commodities are of equal nutritional value by requiring guaranteed minimums on major nutrients and dry matter content.
• Use timely forage tests to determine supplementation needs accurately.
• Determine culling and dry-off breakeven points to determine when cows should be culled or dried off. Feed pricey ingredients to the animals most able to turn that into current profit. Note: Culling and dry-off decisions should also consider body condition score, cow health, and reproductive status.
• Maintain udder and herd health to prevent dumping milk from treated cows who are still consuming the lactating-cow diet.
• Keep up preventative maintenance of the milking system to avoid system failures.
Remember, a great bargain may not be a great bargain after all if you lose sight of your business priorities. Write them down!