Not all milk markets are the same, which means each dairy’s goal is unique. Producers are paid for their milk based on its final product, so all dairy cows should not be created as equal, as they are not always producing the same final product. Rather, they should be created to boost profitability within a specific operation. It is key to reflect on your operation from time to time, determine how you get paid and deploy genetics that will optimize your milk check.
The essential goal of dairy farming is to convert animal feed into dairy products as efficiently as possible. With the volatility that commodity agriculture can face, it is important to focus on controlling what you can control to ensure your herd is efficient, productive and profitable.
Every cow you create might not be right for your market. To withstand market ebbs and flows, you need to create cows that meet the needs of your operation. The cost of raising a replacement heifer is not cheap, so it is necessary to be sure you are raising the right ones. Before we get to that, let’s dive into the economics and what questions to ask yourself to ensure money is not left on the table.
Optimize your dairy's economics
The name of the game is to optimize your dairy’s economics. You can only control what you can control. Simply put, you cannot fully control the market and the price you get paid for outputs. However, you can manage the cost and usage of inputs as well as understand how you get paid to optimize what you get out of your milk check and why cows leave the operation.
It is no secret that today’s dairy industry is changing and will continue to do so. Here are three things to be aware of as you operate in this changing environment.
- Know your cost of production (breakeven).
- Produce the right composition of milk as efficiently as possible compared to other dairies in your market.
- Reduce the cost of production to weather market downturns.
Knowing the ins and outs of your milk check and who your end consumers are makes the difference in maximizing profitability. Answering these questions can help you optimize your dairy’s economics: How do you get paid? What milk quality do you get paid for? Can you get paid for more than just fat and protein? Consider your milk check as your constant checks and balances system to tell you what you are doing well and where you could improve.
The other piece to reflect upon is the cows leaving your operation. Why are cows struggling in your system and what are your reasons for culling? You could be culling for issues that genetics can help improve – health, well-being and survival. On the flip side, another thought to ponder is if you are culling because you are overproducing heifers and just need a stall for a fresh heifer. Heifers are not always synonymous with better. It is possible that some heifers may not be genetically superior compared to your more mature cows who have paid off their heifer-raising bill and are outyielding the heifer you are replacing her with.
Genetics can positively impact your dairy’s economics. If you are not, you should be thinking about what genetics can influence when it comes to your milk check and culling reasons. A focused genetic plan can help you tailor the milk leaving your driveway by generating productive cows while minimizing inputs by creating more efficient cows.
The three fundamental takeaways to remember when it comes to your dairy’s economics are:
- Create the right number of productive heifers to cull strategically and harvest more milk from a mature herd.
- Avoid raising more heifers than you need or the wrong type.
- Continue to improve your beef-on-dairy revenue stream.
Designing the ideal cow for your herd
Now that we understand the economics that guide genetic selection, it is time to uncover who the ideal performers are in your herd. Your dairy’s genetic plan should always be heading toward the performance your operation will need in the future. It will also include areas you want to improve in, which will likely be identified from the considerations above. The following questions will help you determine what the ideal cow needs to look like for success in your system.
- How do you get paid for your milk?
- Why do cows leave the dairy?
- What processor demands and facility changes are anticipated in the future?
- What does your herd need to look like in five years?
- Are there cow design issues affecting efficiency in your operation?
- Is your herd's udder design sufficient for milking?
Designing your ideal cow is all about understanding where your herd is currently and where you want to go – it’s genetic progress. You may have seen the genetic progress equation before (Figure 1), but if you have not, it includes these variables: selection intensity, accuracy, variation and generation interval. The key to note here is that you have tools at your fingertips to increase accuracy and reliability within the equation, ultimately leading to faster and more precise genetic progress.
Tools to help you produce your ideal cow
On the sire side of the industry, we have been laser-focused on speeding up the rate of genetic progress for a long time. Today, we can now do the same on the female side with the tools available. Leveraging the subsequent tools can help you amplify genetic progress and increase profits.
- Custom index: This is a tailored selection index based on your management style and herd goals. Think of a custom index as the GPS for your herd’s genetic progress because it provides the directions to reach your genetic potential. The best part is that you are in control of selecting the traits you want to focus on and their weightings when you build a custom index.
- Genomic testing: Genomic testing allows producers to create a genetic roster of all the females in the herd and accurately rank them based on an index, which we suggest is a custom index. Armed with genomic data, dairy producers can design more effective and targeted breeding programs by precisely identifying which females will produce replacements and which to breed to beef.
- Sexed semen: With rising input costs, it is imperative to not raise more heifers than you need. With sexed semen, you can increase your selection intensity and create the right number of genetically superior replacements from the best dams.
Your ideal cow begins with understanding what your future females need to look like in order to optimize your dairy’s economics. With the advancements in technology, tools like a custom index, genomic testing and sexed semen give you the power to make better cows faster. Are you leveraging the tools available to create the right females to maximize profitability?
