Some baseball players spend the better part of their careers bouncing back and forth from the major league to the minor league. Even though the rules of the game are the same for both leagues, and all teams have the goal of winning, the level of management can differ greatly.
Operating a dairy farm can be compared to baseball. The management of both baseball and dairy farming is geared toward performance, a desire for profit, and implementing long-term strategies. And, while it may seem inappropriate to discuss less-than-optimal milk production, it is a fact that many farm owners or managers can not achieve or manage "major league" milk production.
We need to design management programs which match the capabilities of the farm's management team. Doing so will allow many dairy producers to achieve more profit, a higher standard of living, and future success. Not everyone can swing for the fences like Mark McGwire. And, not everyone can go for all-out, highest possible milk production.
Profitability is a function of milk sold, milk price, and the cost to produce the milk. The dairy producer cannot control the milk price, but the cost of milk production and level of milk produced can be influenced.
I believe there should be a balance in the resources of the farm. These resources can include financial capital, land, labor, feed and cattle. As with any business a point of diminishing returns exists, and when cost exceeds the return, financial failure occurs.
For example, when a dairy invests solely in feed as a means to increase milk production and profitability, management assumes that feed is the limiting factor to higher milk production. On many dairies, non-nutritional factors limit production. Investing in higher feed costs when non-nutritional factors are limiting milk yield will simply result in a higher cost of production.
Instead, you must determine what factors limit your earnings potential. I have found that reproductive inefficiency, poor cow comfort, high somatic cell count, or poor feedbunk management are common limiting factors for production.
So, instead of focusing only on increasing milk production, consider these strategies to improve your profitability:
- Milk more cows. For many farms, especially those with average production, this is the easiest way to improve profitability. This may not be as efficient as high milk yield per cow, but if management cannot achieve high milk production at a cost-effective level, then milking more cows may be the answer.
- Use BST or three-times-a-day milking. However, make sure your management team can administer and monitor these two items.
- Maximize parlor throughput. Running facilities at full capacity will help the bottom line tremendously.
- Hire someone to raise your replacement heifers for you. Many farms have found that it is more economical to contract-rear their replacements or purchase all of their replacement heifers.
- Minimize labor cost. The increasing cost of employee benefits has led some farms to begin leasing employee services. This does not interfere with the farm's labor management programs, but it does release the farm from the tedium of procuring and managing employee benefits and payroll taxes.
- Seek competitive bids for feeds, pharmaceuticals, and other products. The old adage that dairy farms sell wholesale – and buy retail – is still true today. In my opinion, the real increase in the cost of production has occurred in the area of labor, supplies, services and equipment.
Do what works best for you
Similar to baseball, not all dairy farms will achieve a winning record when it comes to high milk production. This does not imply that average is best, but average can be profitable when strategies to improve performance are developed and instituted. Copying the winning strategy of one team does not guarantee success for everyone because the players, coaches and financial resources are different from team to team.
Evaluate your capabilities and resources. Plan a course that will allow you to achieve maximum profitability.
Paul Johnson is a veterinarian and consultant in Enterprise, Ala.