It is not news that we have seen prices rise in the past two years due to inflation and other factors. On a dairy farm, operational costs like feed, fuel and labour have increased significantly. Dairy producers are seeing their bottom line decrease substantially and are left with the challenge of balancing the books to keep their businesses profitable. Situations like this can create stress and may be difficult to deal with on your own.
To reduce overhead expenses, dairy producers should take a closer look at all their fixed and variable expenses. Feed and labour are two major expenses that represent a large percentage of the cost of operating a dairy farm. Wisely managing those costs can make an important difference in your bottom line.
Cow comfort is one, possibly the most important, factor that will guarantee a steady income to the business. Anything that impacts cow comfort should remain the same or be improved upon. Enhancements in this area have the potential to boost milk production.
Dairy producers should have a small, select circle of advisers that can give them an honest assessment of their operation. These advisers might include key employees, veterinarians, nutritionists, hoof trimmers, bank managers and farm management support from equipment and service providers. Your suppliers and service providers should have your best interest in mind. If your business is profitable, their business will be profitable.
Your advisers can share their expertise in their respective fields and make suggestions for improvement. They can help refine your standard operating procedures (SOPs) and help identify areas where cost and labour savings could be achieved. Sometimes, small changes can represent great savings.
Depending on the farm’s milking system, the changes that can be made will vary from one farm to another. However, before implementing these changes, ask if it will improve cow comfort. Don't make too many changes in one area, as this could negatively affect cows' behaviour and milk production.
Your business will see a return if investments are made to improve cow comfort. For example, increasing resting behaviour results in greater feed intake, rumination and milk production.
Labour is another significant cost of a dairy operation that can impact many areas of your business. Does your farm have a clear job description for each employee? What are their responsibilities? When and how often should they perform their tasks? How do you manage them? Do you know how long each task should take? Do you track the usage of supplies, medication and time to make sure everyone has the animals' and your business’s best interest in mind?
This doesn’t mean micromanaging your staff or adding paperwork and spreadsheets to their daily tasks. Maximize your employees’ time by having them work on what is important in an efficient manner. Leave the control tools, such as spreadsheets, to the operations manager.
What kind of culture does your business have? Are your employees encouraged to make suggestions, and are they rewarded for improvements that have positive results? If not, here is your chance to improve your business. Your employees could become a trusted second tier of advisers, if they are given the opportunity to do so.
Tools to track your farm’s expenses can be time-consuming, and while you may not see the importance and value of them, they can provide you with a clear picture of the areas that need attention. What is not tracked cannot be managed.
Comfortable cows make you money. Good business management helps you stay profitable even when the economy is not favourable. Choose your advisers carefully; explain the goals and expectations of this project clearly. Make sure the animals have a comfortable, stress-free and predictable environment. Consistency is the key to success when managing your farm.
Consistency = happy employees = happy cows = happy farmers
It is uncertain what will happen in the next quarter or two, but we all want to see farms succeed. Dairy farms help feed the world, and by taking a closer look at your operations, expenses and the comfort of your cows, you can identify areas for improvement that will keep your business profitable.
Consider these areas
Work with your farm's advisers to evaluate the following areas where cost and labour savings could be achieved.
Feed (all groups)
- Ingredients (look for less costly alternatives)
- Storage and location
- Mixing and delivery
- Waste analysis
Milking barn
- Ventilation system analysis (current condition and controller calibration)
- Lighting
- Stabling assessment (proper dimensions and current condition)
- Bedding (delivery, management, condition)
- Concrete alleys (traction analysis)
- Footbath protocol (frequency, solution analysis)
- Water (quality and quantity)
- Cow flow analysis
- Animal analysis (production, reproduction rate, lameness, etc.)
- Milking and milk storage equipment (preventive maintenance)
Calf barn/replacement animals/dry cows
- Ventilation system analysis (current condition and controller calibration)
- Bedding (delivery, management, condition)
- Water (quality and quantity)
- Calving pens
- Colostrum management
