Dairy Initiatives

Dairy

Department of Animal Science

D A I R Y   I n i t i a t i v e s   N E W S L E T T E R
V o l u m e   9      I s s u e   2       S u m m e r   2 0 0 0

Don't Let Milk Prices Get You Down

You can still improve your profit when milk prices are low

JERRY STEUERNAGEL
Department of Animal Science, University of Minnesota

Are low milk prices eating up your profit? You may think there is little you can do to change the price of milk sold. But there are a number of other factors contributing to profit that you can do something about.

The worksheet below can help you assess how various management changes in your herd can affect your profit, rank the relative merit of the various changes, and decide which changes to make.

To use the worksheet:

1. Record the current average value for your herd under "My Goal."
   
   
2. Ask yourself, "If I really concentrate on this area of management, how much change can I make in my herd?" Fill in the answer on the second half of "My Goal." Make some notes: What two or three things can you do to make this change happen?
   
   
3. Calculate the dollar impact for your herd by multiplying the number of units of change you can make times the value per cow times the number of cows in your herd.
   
   
4. Repeat the process for each item. Then rank the changes from high to low impact.
   
   
5. Look at the items on the top of your list and check your notes on what you would change to achieve this impact. Estimate the cost of making the change and compare the cost with the dollar impact. Choose those changes that will increase your profit the most. Warning: It is not valid to add up all the impacts, since changes in one area might affect another.
   

When used recently by dairy producers in Carver and Dakota counties with herds ranging in size from 40 to 300 cows, the worksheet uncovered some impressive opportunities to improve profit. For example, improving somatic cell count was calculated to return $619 to $15,480 per herd per year. Improving peak milk in cows and heifers showed potential returns of $1,600 to $48,000 per herd per year.

More information on the impact of management changes is available at http://www.ansci.umn.edu/dairy.htm.

Management Change Impact Worksheet

OPPORTUNITY: Decreasing herd average linear SCC one unit will result in a gain of $86.00 per cow per year.
MY GOAL: Decrease herd average linear SCC from _____ units to _____ units
IMPACT: (units decrease) x $86.00 x (# of cows) = $__________ per herd per year
COST: $ ____________     PROFIT: (subtract cost from impact) $_________ per herd per year

OPPORTUNITY: Decreasing average age at first calving by one month reduces rearing cost by $20.00 per cow per year.
MY GOAL: Reduce age at first calving from _____ mo. to _____ mo.
IMPACT: (mo. decrease) x $20.00 x (# of cows) = $__________ per herd per year
COST: $ ____________     PROFIT: (subtract cost from impact) $_________ per herd per year

PROFIT OPPORTUNITY: Increasing average body weight at first calving by one pound will increase herd production $0.20 per cow per year.
MY GOAL: Increase size at first calving from _____ lb. to _____ lb.
IMPACT: (lb. increase) x $0.20 x (# of cows) = $__________ per herd per year
COST: $ ____________     PROFIT: (subtract cost from impact) $_________ per herd per year

OPPORTUNITY: Reducing the culling rate by 1% will reduce the replacement overhead by $7.00 per cow per year.
MY GOAL: Reduce the culling rate from _____ % to _____ %
IMPACT: (% units reduction) x ($7.00) x (# of cows) = $__________ per herd per year
COST: $ ____________     PROFIT: (subtract cost from impact) $_________ per herd per year

OPPORTUNITY: Reducing the herd average days in milk by one day will increase herd production $8.00 per cow per year.
MY GOAL: Reduce the average days in milk from _____ days to _____ days
IMPACT: (days reduction) x ($8.00) x (# of cows) = $__________ per herd per year
COST: $ ____________     PROFIT: (subtract cost from impact) $_________ per herd per year

OPPORTUNITY: Improving identification of herd sires by 1% will increase herd production by $0.80 per cow per year.
MY GOAL: Improve sire identification from _____ % to _____ %
IMPACT: (% units improvement) x ($0.80) x (# of cows) = $__________ per herd per year
COST: $ ____________     PROFIT: (subtract cost from impact) $_________ per herd per year

OPPORTUNITY: Improving sire selection one unit of PTA$ or NM$ will increase herd production by $1.00 per cow per year.
MY GOAL: Improve sire selection from _____ units to _____ units
IMPACT: (units improvement) x ($1.00) x (# of cows) = $__________ per herd per year
COST: $ ____________     PROFIT: (subtract cost from impact) $_________ per herd per year

OPPORTUNITY: Increasing peak milk one pound will increase herd production by $35.00 per cow per year.
MY GOAL: Increase peak milk from _____ lb. to _____ lb.
IMPACT: (lb. increase) x ($35.00) x (# of cows) = $__________ per herd per year
COST: $ ____________     PROFIT: (subtract cost from impact) $_________ per herd per year

OPPORTUNITY: Reducing feed cost per cwt. milk produced by $1.00 will reduce feed cost $200.00 per cow per year.
MY GOAL: Reduce feed cost per cwt. from $ _____ to $ _____
IMPACT: ($/cwt. reduction) x ($200.00) x (# of cows) = __________ per herd per year
COST: $ ____________     PROFIT: (subtract cost from impact) $_________ per herd per year

D A I R Y    I n i t i a t i v e s    N E W S L E T T E R
Volume 9    Issue 2    Summer 2000