With low milk prices and rising costs for inputs, 2023 is not shaping up to be a profitable year for dairy farmers.

“It’s going to be a real challenging year for a lot of our dairy farmers,” said University of Minnesota Extension dairy specialist Jim Salfer. He had a discussion about improving margins with colleagues Fred Hall and Jennifer Bentley during an I-29 Moo University podcast titled, “Managing your dairy through low milk prices.”

Salfer shared that he has been getting asked by producers, “How can I make my dairy more profitable?” The trio bounced around a few ideas of how farms might get themselves in a better financial situation.

Hall, a dairy specialist with Iowa State University Extension, noted that without promising milk prices on the horizon, farms need to have strategies for what they are going to do. One area to look at closely is feed costs.

Many farms feed one total mixed ration to the whole herd, Salfer said. He acknowledged that this could be due to labor and time issues, but he said it might be time to rethink that strategy.

“Our fresh cows need all the goodies to make milk,” he said. Once cows are in the back half of their lactation, there might be some additives that can be removed. Or, there might be by-products available locally that could lessen the ration costs. He encouraged producers to visit with their nutritionist about this.

Hall agreed that later lactation is the place to look for cutting costs, not early lactation. “We don’t want to jeopardize the peak of the cows,” he said. “If we cut feed costs and see the peak milk drop, we hurt our total potential income.”

Bentley, a dairy specialist with Iowa State University Extension, noted the importance of minimizing feed shrink. The losses from shrink can be hard to quantify, but we know it is expensive.

She also said now is a good time to review herd records.

“The cull market price is good right now,” she said. “Evaluate the cows that are making milk. Maybe ones that are less profitable could be more profitable somewhere else.”

Doing some rough math, Salfer said when feed prices are low, a cow can pay for its feed with 30 to 35 pounds of milk production. In today’s market, a cow must make 40 to 50 pounds to cover the feed and maybe a few other expenses. “We really need to be thinking how we want to deal with these lower producing cows,” Salfer said.

The trio also touched on stocking density. While some facilities and herd management styles can handle overstocking, many farms may be keeping more cows in their barns than they should, Salfer noted. “You cannot afford to hurt production on a whole herd level by keeping too many cows by hanging on to lower end cows,” he said.

“It really depends on the type of facility. You don’t want to sacrifice cow comfort and cow health by overstocking,” Bentley agreed.

Hall noted that overstocking might work better for late lactation cows. “We absolutely don’t want to crowd fresh cows, transition cows, or first lactation heifer pens. We know that’s going to affect production really fast,” he said.

Salfer mentioned that some farms are also looking more closely at their heifer inventories. “Heifers are cash flow drains,” he stated. Some farms should not be keeping extra heifers around, especially if they are buying feed for them.

Hall and Bentley also pointed out that calves and heifers treated for illness are not likely to reach their full potential as lactating cows. These are animals that may best be culled from the herd. With decision-making tools like genomics and options like breeding dairy cattle to beef semen, farms have more options for managing heifer inventories.

“Producers realize we don’t have to keep every heifer,” Bentley noted.

Lastly, the group emphasized the importance of taking care of yourself, your family, and your employees during challenging times. “If we are not taking care of ourselves, we can’t take care of our animals,” Bentley concluded.

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(c) Hoard's Dairyman Intel 2023
August 31, 2023

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