Beware of phantom dollars

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Too often, programs and protocols are promoted based on a perceived level of response or financial return. For example, you have probably heard that every day a lactation extends beyond 365 days carries a cost of $1 per day, with every day past 395 days costing $2.

However, these lost dollars are difficult to measure and vary greatly from herd to herd. Instead of phantom measures, I like to use measures that are more tangible to dairy producers. Financial parameters that directly affect a dairy's profit are more real than avoiding potential losses. Here are a few examples:

Reproductive culling
Every cow in your herd that doesn't have to be replaced represents a real addition to your dairy's net income. Say a 1,000-cow dairy has a 15 percent reproductive cull rate and is able to reduce it by one-half. As the table at right shows, the total cost of the dairy's reproductive culling program - measured by the amount of heifers purchased to replace cows - is $142,500. A decrease of 50 percent would decrease the amount of money spent on heifers each year to $71,250. The profit associated with this cull rate reduction would be the same as raising the herd's milk production by 1.5 pounds per cow per day.

Feed additives
This is another area where phantom dollars can occur. For example, the use of some additives can cost up to six cents per cow per day. For a 500-cow dairy, this additive would cost $30 per day - or the same as producing 0.5 pounds of milk per cow per day with milk at $13.50 per hundredweight. The amount of milk needed to cover the cost of this ration addition would be $10,950, or 81,111 pounds more milk per year.

Editor's note: When considering feed additives, be sure to ask for independent research showing the benefits and cost-effectiveness. Some feed additives do a good job meeting this test. A profit tip on page 32 of this month's issue describes the process one producer goes through.

High SCC
That brings us to a final area - high somatic cell counts. I agree that high SCC levels impact milk production, but producers need to ask themselves if the duration of milk loss is sufficient to warrant a monetary purchase to correct the problem.

In many cases, people promote changing milking equipment or adding products to lower SCC, suggesting that total milk sales will increase as a result. However, attributing increased milk sales to SCC is often nebulous due to the many factors that contribute to milk production. I believe the cost-effectiveness of these changes should be based on quality premiums, not increased sales.

Every decision on the dairy has a biological and financial component. It should be the manager's responsibility to evaluate the financial outcome of the biological event.

Only those dollars that you take to the bank can pay the bills. Don't be afraid to challenge any claims presented to you. You need to make decisions that make money.

Paul Johnson is a veterinarian and consultant in Enterprise, Ala.


The price of reproductive culls

The following example looks at a 1,000-cow dairy with an annual cull rate of 35 percent. Nearly half of those culls are reproductive culls. With such a high cull rate, the dairy needs $142,500 to purchase replacements in order to maintain herd size.

1,000 cows x 15% reproductive culls = 150 head sold due to reproductive failure

150 replacement animals x $1,250 (average cost of replacement heifer) = $187,500

150 cull animals x $300 (average cull cow revenue) = $45,000
$187,500 - $45,000 = $142,500 cash required to maintain herd size

$142,500/ $13.50 per hundredweight milk price = 1,055,555 pounds of milk

1,055,555/1,000 cows/365 days = 3 pounds of milk per cow per day to fund replacement program



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