DHI Notes...
January 2006 | Time to recapitalize the dairy business | Bennet Cassell
State DHI averages for important management areas in December 2005
Management area |
December 2005 |
Change from last year |
Rolling herd average milk |
21428 |
+819 lbs. |
Peak yield in heifers |
74 |
3 lbs. |
Days to first breeding |
95 |
-2 days |
Days open |
162 |
-3 days |
Net Merit of proven service sires |
$297 |
* |
Herd turnover less dairy sales (%) |
28% |
-1 % |
Monthly average SCS |
3.2 |
0.2 |
Feed cost per cwt. (milking cows) |
$5.31 |
-$0.06 |
Milk blend price |
$16.08 |
-$0.31 |
* Comparisons are not valid because of changes in the genetic base.
What is the best opportunity to Virginia dairy herds to improve farm profit? Every farm is unique, of course, so no one answer fits all herds. “Make more milk” is an appropriate suggestion in many cases. We are enjoying one of the most robust increases in rolling herd average for the state that I can recall. The rolling herd average in the table is the highest in the history of DHI in Virginia. Does increased production mean more profit? While most agree that it beats the pants off the alternative, many producers point out that milk prices have decreased more than feed prices have over the past year. You can’t argue with that math, but for the individual herd, very little can be done about milk prices. The chance for the individual herd to improve profit is through lower “per cwt” production costs. One way is to buy cheap semen or use a herd bull, drop off DHI, fire the vet, and cut purchased feeds. Those moves will reduce costs, but they are highly unlikely to lead to prosperity. For many Virginia dairy herds, the real limit to profit is old, worn out facilities that discourage good nutrition practices, jeopardize cow health and comfort, and make life pretty miserable for the dairy farmer at the same time. Those milk prices that always seem to take one step forward and two back are set by herds that adopt modern management systems and sound business plans. Those herds anticipate see-saw milk price fluctuations and make business plans to prosper financially in the long term. They aren’t afraid of borrowed capital and accept that dairy facilities wear out and have to be replaced to stay in business. It’s time – past time - for many herds in this state to upgrade facilities and “recapitalize” their businesses. Exactly why should Virginia producers NOT benefit from lower costs of production and ease of management that upgraded facilities make possible?
Bennet Cassell
Genetics and Management
