I have been told over the years that owning a restaurant is a lot like owning a dairy. The similarities are obvious. You come to work early and you stay late for both endeavors. A dairy is a 24-hours-a-day, 7-days-a-week, 365-days-a-year proposition. Although not all restaurants are open every day, let’s assume for this comparison that a restaurant is open 7 days a week. From morning coffee to busy mealtime hours, a late-night meal, or dessert and coffee, the doors are open.

For sure, both a dairy and a busy restaurant will try to take captive every waking moment of the owner’s and manager’s time. Maybe a way to describe the similarities is to say that neither is anywhere close to a 9-to-5 job that you can mostly turn off when not at the office.

I have recently noticed another less obvious similarity between these two businesses. Since there are three meal opportunities for a restaurant, each business has to decide if they will do breakfast, lunch, dinner, or some combination of the three. Obviously, some restaurant types, like a high-end steakhouse or seafood place, don’t really fit the breakfast model. But, for this discussion, think more about a fast-food chain or local family restaurant that can cook eggs and bacon as well as hamburgers and fried chicken from 5 a.m. straight through to midnight.

In recent years, a popular hamburger chain decided to get into the breakfast business. I am guessing that they did not enter into this decision lightly and considered many factors to decide if this was a good move for their business. In a little different direction, I see more and more restaurants that are breakfast-focused but are also open for lunch. However, don’t show up there later in the day for a plate of spaghetti. They won’t be there!

As I ponder these different business models, I can’t help but wonder how similar these decisions between two or three meals served are to a dairy considering twice a day (2x) or three times a day (3x) milking.

The value proposition

Let’s first mention the primary difference. The two or three meals decision is most, if not all, driven by economics. Sure, there is a customer service angle along with issues with employees, owners, and managers. But the decision will most likely be driven by economic factors like return on capital investment, marginal income opportunities, and the specific return on added variable cost.

In a dairy, these are things like more potential return on capital investments and fixed costs by producing more milk on 3x milking. But there are also added variable costs like labor, supplies, utilities, and so forth. In the case of the dairy, however, the decision is not just about math on dollars; it is also about the biology of the cow. Included in these biological factors are topics such as negative energy balance, hoof health, time spent away from feed/beds, impacts on reproductive performance, cow longevity, and many more.

I think that the question about 2x or 3x milking never has an easy answer. Considering the restaurant that is open for breakfast and lunch, the owner must look at the locked doors around supper as a lost opportunity. A dairy producer looking at a quiet parlor can have the same question. There is a significant difference in the economic decision that is available to the dairy owner but not the restaurant owner. A dairy producer can add more cows to avoid the unused parlor capacity while keeping the biology of 2x milking. This is the usual decision point for the dairy.

Answering the 2x versus 3x debate

Considering the goal of an investment in a parlor being maximized, the dairy owner can decide to either milk more cows 2x to keep it full or milk fewer cows 3x. The decision points for this are many, but none are probably more critical than the ability to sell more milk. If a dairy is limited by quotas or tier pricing, perhaps selling the max limit of milk possible with fewer cows is the path. This favors 3x milking.

If milk sales are not limited, you can probably send more hundredweights (cwt.) over the scales by milking more cows but keeping the parlor humming on 2x. Included in this financial analysis are the cost of cows and feed and the availability and cost of labor.

The encouragement here is to challenge your first assumption of what is best for each dairy. There are so many factors! There are a few principles that should guide the decision.

The first of these is that when cows make more milk on 3x, they also need more feed. You also hear a wide range of experience and expectations on milk per cow increase going from 2x to 3x. But don’t forget that the extra milk doesn’t come magically. They eat more feed to create it.

Equally as important is the strong likelihood that the higher milk flow from the 3x milking will have lower components. Depending on how the milk price is calculated in your region, this must be considered in the economic analysis. When a dairy goes from 2x to 3x, either components will go down or you will have additional feed costs to better support milk protein and butterfat. Among these extra investments would be additional rumen-protected amino acids and a more fine-tuned, costly fatty acid supply.

The question of 2x or 3x will never go away. There is also the option of 4x milking in early lactation. Many dairies end up in a combination of 2x and 3x milking. This allows a dairy to be flexible to find the sweet spot between cow numbers, pen space, freestall beds, and parlor capacity. One last point is not really biological or financial, and you may not even be able to do the math on it — some dairies just work better on 2x milking. A little downtime is not always bad.

If changing from 2x to 3x at a particular dairy has a very nice increase in milk but it causes the farm to be less able to handle unexpected events in weather or other challenges, it may be the wrong decision. Any system running at close to 100% all the time has an inherent risk. Perhaps a little margin of time for the dairy and the people that make the dairy go is the factor most likely ignored in the decision. So, a careful analysis is critical for the people, the cows, the dairy itself, and the dollars involved.

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(c) Hoard's Dairyman Intel 2023
June 22, 2023

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