To optimize profits, optimize profits per stall. That means each stall must be occupied by the most prof- itable cow. An
Herds with the lowest net herd replacement costs were seeing $60,000 more profit per year and 10 lb. more milk per cow.
PROFIT IN THE STALLS Profit per stall dictates total bottom line BY JIM DICKRELL
PHOTO: RICK MOONEY
12 | Managing the 40,000 lb. Herd
| DHM Insight
T
“In the U.S., we’re pretty comfortable turning cows over really, really fast,” Lormore says. “While you should never keep a cow around whose time for a career change has come, we need to think about how we can reduce overall risk to the cows in our herd so we don’t break them and force them to leave. “We have a lot of cows that make 40,000 lb., but we dilute their production down across the herd with young cows,” he says. “If we keep the older cows around longer, we don’t have that dilution effect of the 2-year-olds bringing the herd average down.” For example, he says, a herd with an 80 lb. per cow per day tank average with a 41% turn-over almost automatically becomes an 85 lb. per cow per day average when the turn-over rate drops to 27%. That can equate to 1,800 lb. more milk per stall across the dairy. Over 100 cows can mean 180,000 lb. more milk per year. And the profitability potential doesn’t stop there. Reducing the turn-over rate reduces the number of replacement heifers you need to raise and feed. Feed for replacements typically accounts for a fourth of the feed cost on dairies. So if you reduce heifers numbers by a third, you reduce their feed costs by that amount as Optimizing farm profits means optimizing profit per stall. And that can well. And the over-all feed budget for the best be done by milking a higher proportion of mature cows. farm might drop 7% to 8% as well.
o optimize profits, optimize profits per stall. That means each stall must be occupied by the most profitable cow. And the most profitable cow is typically an animal in her third, fourth or fifth lactation. Granted, every herd must have first-calf heifers occupy some proportion of their stalls simply to replace those older cows that are no longer productive. But turn-over rates of 35% to 40% mean heifers are taking up a disproportionate number of stalls and creating a drag on the profit potential of the overall herd, says Mike Lormore, director of dairy cattle technical services for Zoetis. “We always think about pushing cows up in production, but by changing the dynamics of the herd with a higher proportion of older cows, we produce more milk per stall,” he says.
The Zoetis-AgStar study found one of the biggest drivers of profitability among farms was somatic cell counts. The best farms were seeing $1.14 per cwt more profit.
PHOTOS TOP LEFT, RIGHT: WYATT BECHTEL
Six factors of profitability
Death losses. Cows die. That’s a given on dairy farms, but the study shows their risk of dying varies from farm to farm. “Death loss is really a proxy for animal health and husbandry skills,” Lormore says. The top third of herds with the lowest death losses were 86¢ per cwt more profitable than the lowest third of herds. That translates to $70,000 per year more income. Heifer calf survival rate is an important factor. “Everything you do early in life, from vaccinating the dam to getting colostrum into calves, is important,” Lormore says. Transition cow management is also critical to cow survival in the first 60 days of lactation. There is a high correlation with death loss and net herd replacement costs.
1
4
Somatic Cell Counts. One of the biggest drivers of profitability was milk quality and somatic cell counts. The differences among herds weren’t large. The highest onethird of profitability herds have bulk tank SCCs that average 196,000 cells/mL while the lowest one-third of profitability herds had SCCs that averaged 239,000 cells/mL. But the high herds average 91 lb. per cow per day of energy corrected milk versus 72 lb. per cow per day for the low herds. On an annual basis, that translates to $1.14 per cwt in more profit, or for the average size herd in the study, $115,000 more net income. That’s probably because milk production per cow is nearly double that of 30 years ago, and we know mastitis also impacts other aspects of health, reproduction and culling. “Death rates are much higher in high cell count herds. As a result, turnover rates are higher, meaning you have more younger cows giving less milk. You get more milk with lower cell counts both because of better udder health and because your cows live longer,” Lormore says. Energy-corrected milk. It seems obvious more milk per cow means more profit. Achieving that higher production, however, is correlated with healthy cows. Lower cell counts, death losses, feed costs and days open are all hidden but important drivers of milk per cow. In other words, healthy cows produce more milk. The profit difference between the top and bottom third of herds is $1.44 per cwt, or some $85,000 of profit per year. This is largely due to production efficiency, commonly described as marginal milk. All cows must eat a certain amount of feed simply for body maintenance. Once that requirement is met, this maintenance requirement becomes a smaller portion of her total feed bill as she produces each pound of additional milk.
Net herd replacement cost. The net herd replacement cost (NHRC) is defined in the study as number of cows removed from the herd multiplied by their replacement value minus the salvage value of culled cows (including dead cows) divided by the amount of milk shipped during this period. As NHRC increases, profits decrease. The herds with the lowest NHRC were seeing $2.04 per cwt more profit than herds with the highest NHRC, or some $60,000 more profit per year. The herds with lowest NHRC were also seeing 10 lb. more milk per cow. Some will argue that when cull cow prices are high, it doesn’t cost anything to replace cows because high beef prices offset heifer raising costs. “That’s wrong,” Lormore says. “Every time you cull an aged cow, it costs you a lot of money and time to get her replacement to the same point of production.” “The message is that we want more of the right kind of heifers in the first place, and we need to keep them in the herd as long as possible,” Bodart says.
5
Pregnancy rates. The data on pregnancy rates is limited, but preliminary results show higher pregnancy rates drive higher profits to the tune of about $50,000 per year or $50 per cow per year. Higher profit herds are also spending more on semen which makes sense, Lormore says. If cows are more likely to get pregnant at each insemination, farmers are more willing to spend money on higher-value semen. That, in turn, perpetuates their advantage in future generations of the herd.
6
Heifer survival. All the herds in the study were doing a good job raising heifers. The high profit herds, however, were doing a bit better with heifer survival rates averaging 95%. Low profit herds had an average heifer survival rate of 93%.
DHM Insight | Managing the 40,000 lb. Herd | 13
2
3
In a study published last year of 90 Midwest herds and nearly 95,000 cow (See “Six Degrees of Separation,” December, 2016), Zoetis and AgStar Financial Services were able to identify six factors that largely determine farm profitability. “We’ve talked about some of these things, such as net herd replacement costs, year after year after year,” says Steve Bodart, an AgStar principal business consultant. “This study give us the ability to reinforce the message with producers.” The six factors include:
