The past two years have been challenging for many of us. Finding a way to reduce costs and making sure that cows didn't feel the impact was a fine balancing act. It caused many dairy producers to ask tough questions, seek advice from trusted advisors, and then make some difficult choices that, in many cases, have positive long-term impacts. November 2010 Round Table Members Ayers Farms - Steve and Carl Ayers Families, Perryville, Ohio Kings-Ransom Farm, The King Family, Schuylerville, N.Y. Meyer Family Dairy - Allen and Mike Meyer, Loyal, Wis. Harmony Dairy - The Vander Kooys, Mount Vernon, Wash.
What strategies had the greatest impact?
What strategies had the greatest impact?
Ayers: AgriSolutions accounting program has been extremely important over the last two years. It has helped us identify our cost of production and allows us to contract a portion of our milk sales above our breakeven costs. This was done by using the various marketing tools available through DFA (Dairy Farmers of America). Like anything else, some years we've done better with that than other years. In 2009, the contracts we had made helped a lot when the milk price went down. In 2008, we contracted some milk at a good price and then the price of milk went higher. We still benefited from the milk we hadn't contracted that year. It has helped take out the lows we would have experienced had we not contracted. We use this strategy on the input side by prepaying chemicals, fertilizer, and seed every year to get the maximized discounts. Other cost-cutting and profit measures included:
1. Improving milk premiums by having low somatic cell counts.
2. Cutting back over 50 percent of iodine use by using dip cups with brushes.
3. Expanded cow pusher role to include hauling recycled sand to barns to free up an employee who was previously needed for this role.
4. Added underground pipeline for irrigating lagoon water to land further away which avoided laying so much soft hose. It also is much safer. This improvement also allows us to start irrigating sooner before removing all crops since pipes are underground. It saved us by not renting as much soft hose and the labor needed to lay it out.
King: We annually prepare a monthly budget for the upcoming year. In late 2008, we scrutinized each area of our business, looking for areas to save. Those areas included: crop expense (less fertilizer), breeding expense (utilizing lower cost young bulls), and vet expense (less antibiotic and vaccine use). We always have a focus on feed expense and were able to trim dollars here, as well. We evaluate our budget versus actual numbers on a monthly basis to see where we are doing well and where we need to improve. This has proven very helpful to keep us "on track" and focused on the results of our decisions. Finally, on many occasions, we have made improvements or built barns using some of our own labor. A very limited capital spending plan allowed us to save on labor, as well.
Meyer: We were able to achieve great advances in labor efficiency when measured by labor costs per cwt (hundredweight). In fall of 2008, we were probably overstaffed during an expansion which brought our heifers home, and we custom raised 150 additional heifers. In 2009, we added 100 cows to the milking herd and made more milk per cow. All of this was done without adding staff. Contributing to improved labor efficiency in the heifer facility were designs for labor efficiency and use of electronic RFID (radio frequency identification). We had started using electronic ID a year before, and it took us a while to work the system into our daily tasks. As we tweaked how we used the system, we were able to perform tasks such as pen moves, breeding injections, and preg checks over more animals in the same amount of time. On top of saving time, we did a much more accurate job.
Vander Kooy: We like to look at each cow and consider if she is paying for herself. What is her future? Is it better to replace her for a more profitable individual? We use milk weights, breeding records, and appearance. We cull all problem animals. Our number one cost-saving measure was bedding. Instead of buying expensive shavings, we started composting and using fiber from a digester that we jointly use with a dairy farm neighbor and an investor partner. Some other savings occurred by: We use more formaldehyde in the footbath and cut all the other expensive footbath treatments. We were spending $7,000 a month and dropped it to $1,000. We started using Thrifty Dippers and cut our teat dip bill in half. We cut our fertilizer bill by using more manure from the digester. A lot of food waste is put in to the digester, as well, and the manure has twice the nutrients.
To read the complete article with descriptions of their operations and more comments on the past two years, see pages 748-750 of the November 2010 Hoard's Dairyman.
