“More efficient, more efficient! That’s all we farmers ever hear! I’d like to know what all these university and government ‘experts’ have done to get more efficient,” exclaimed Jack. “The more efficient we farmers are, the less we get paid! I’m sick and tired of hearing it!”
Fast forward 40 years . . . Last week I heard the same complaint from a present-day dairy farmer, who was roughly 7 years old when Jack vented his disgust to me. So it seems that some things never change.
What is efficiency?
My definition of “more efficient” is to get more units of output per unit of input. For dairy farmers, the relevant output is milk, and the inputs can be many things. Feed, labor, land, buildings, and equipment are the main ones that come to mind.
And at the risk of offending some more of you, I must say I agree with those who advise dairy managers that they must constantly strive to become more efficient. This is true despite the fact that you already are tremendously more efficient than you were even 10 years ago, and as an industry, you are certainly no better paid than you were then.
The only benefit is that you are still in business, compared to some of those who have been forced to exit. The hard, cold fact is that you must continue to be more efficient because your neighbors are doing so, as are farmers around the globe.
Not every dairy producer has the same reaction to being more efficient as the two I listed above. Some seem to actually relish the competitive atmosphere that comes with dairy farming. Over my career, I have had the privilege of working with many who were always looking for a way improve that nasty word, efficiency. When I was on their farms, they were always oriented to lowering somatic cell counts, or improving reproduction, or having heifers freshen earlier, or reducing their cull rate, or simply shipping more milk per cow. Any and all of these factors allowed them to improve the amount of output compared to input.
Real world example
In 1989, I started working with Bill (yes, a long time ago). He and his family were milking 44 cows with a 22,000-pound herd average, which was outstanding back then.
Ten years later, in 1999, with the same family labor, he was milking 72 cows with a 28,000-pound herd average. He had more than doubled his output from the same labor. He had invested in an addition to his barn but farmed the same acreage. He was significantly more efficient.
Today, Bill, in partnership with two of his sons, milks over 300 cows with no nonfamily labor. I am not sure of his production today, but he now milks 100 cows per family, compared to 72 cows when only one family was involved. And he is still looking for ways to further improve.
I realize that many of you have followed the same path as Bill, and you are discouraged because economically you are no better off than you were in 1989. Right now you may actually feel worse off financially, but don’t forget 2014. Neither the good times nor the bad ones last forever.
In the long term, the dairy industry will follow the economic theory of supply and demand. The price of milk will be just high enough to keep enough dairy farmers in business to meet the needs of consumers, and no more.
There will certainly be lean years and good years, but there will be no long-term great returns for the average producer. Your only way to improve your individual situation is to be more efficient than the average producer.
Now you can go and vent to the next person who comes to your farm. I just hope it’s not me.
