Dairy Information: Center Focus Column

Mid-Year Check Up for Your Dairy

By John Frey, Executive Director Center for Dairy Excellence

Businesses in all industries rely on income and expense budgets to guide their work as they enter into a new year. In dairy, the first six months of 2015 were very close to the predictions that came as the calendar turned in January. However, decreased milk prices coupled with even level feed prices have resulted in tighter margins and compression on the bottom line. As the year has progressed, what was earlier predicted to be a stronger second half has been pushed well into 2016. Futures market projections have December milk prices about 25 cents below August prices with the lower price levels continuing through June 2016.

FreyWith six months under our belt and the fall harvest quickly approaching, if you haven’t already done so, now is a good time to do a mid-year checkup on your operation’s budget and cash flow projections. With price forecasts now lower than what was predicted in January, the time is right for adjustments to be made. In addition to testing budget assumptions made eight months ago, evaluating herd performance and progress toward goals is a good strategy being done in many dairy farm offices this summer.

In August, I attended the Professional Dairy Managers of Pennsylvania’s Summer Summit farm tour and attended breakout sessions where key benchmarks for herd performance were discussed. Those being tracked at the host farm included:

  • Average percent of milk harvested per cow in the first two minutes of each milking (Farm goal = 50%)
  • Stall maintenance and subsequent comfort
  • Parlor capacity (Farm goal of 80% = 18 hours / day)
  • Fat/Protein Ratio (Farm goal = 1.4)

While key performance goals vary from farm to farm, having them is essential to optimizing performance especially during periods of tightened margins. Each month, the center compiles data on all 3,200 DHIA herds in Pennsylvania. Levels of performance we track to compare your herd are listed below:

  1. Average Milk Rolling Herd Average for June was 22,031 lbs.
    1. 24% of PA DHIA herds exceeded goal of 80 lbs. of daily average milk production
  2. Average Combined Fat and Protein Pounds were 1511 in June
    1. 28% of PA DHIA herds exceeded goal of 1650 lbs. in June
  3. The average somatic cell count on DHI-tested herds was 231,000 SCC
    1. 50% of farms achieved levels less than 200,000 goal
  4. Average Pregnancy Rate was 20 percent
    1. 36% of farms achieved levels above goal of 20%
    2. 18% of farms achieved levels above 29%
  5. Average Age of 1st Calving was 25.5 months
    1. 40% of farms achieved levels between 21-24 month goal

Achieving high levels of herd performance in each of these management areas has a dramatic impact on your profitability both now and in the future. Improving milk quality has immediate impacts on milk checks and involuntary culls. Forages harvested this summer and fall will determine herd production performance levels this winter and next spring. A genetic replacement program which includes a focus on total protein and fat yield will serve as the foundation for those animals entering the milking string in 2018. Making adjustments in your best management practices to work toward these goals could translate into a much needed tune up for your dairy as you continue through the low price cycle.

Earlier this year, the center began making the Dairy Analyzer Program (DAP) available to dairy farms in Pennsylvania. Using DHIA data, this program provides financial impact at current milk prices on improving each of the areas listed above and other key performance areas. Using this tool can help provide you the right numbers to use in your mid-year business budget check-up. It could also provide you with an analysis of your herd performance relative to other herds your size, or other groups if you choose to compare to those. The program also provides a 36 month in-herd trend for these herd performance areas.

The Dairy Analyzer Program is made available to any dairy farm in Pennsylvania at no cost through the Center for Dairy Excellence. Although the tool can be used by individual farmers, it does work better to have a trusted advisor such as your veterinarian or nutritionist review the information with you. To register to use the Dairy Analyzer Program, visit www.centerfordairyexcellence.org and go to the “Business Tools” section. Click on “Dairy Analyzer Program.” Or contact the center at 717-346-0849 for more information this and other resources available to help you complete that mid-year checkup on your dairy operation.