With no turnaround of global milk prices expected until the at least the last quarter of the year, producers need to look hard at their return from their variable and fixed costs. The key to weathering this difficult period will not be finding where to cut costs directly but by cutting costs through dilution, that is improving efficiency. According to leading agricultural analysts, the volatility within the dairy sector is here to stay and three key areas which will allow dairy farmers to maintain viable businesses during the periods of low returns have been highlighted;
1. Maintain a cash reserve generated from profits during the high milk price periods even if this results in paying more tax. Paying tax is an indicator of the strength of your business.
2. Investments designed to reduce your tax bill should predominantly be in facilities and technologies that improve output efficiency, i.e. cow comfort, feeding space, transition facilities, lighting, heat detection technology etc.
3. Improve technically and monitor the effects of changes using whole farm costings/benchmarking. Toyota have been the most successful motor company in the history of the industry. So what do they do that is so unique? Toyota are pioneers of lean manufacturing and the Total Production System, otherwise known as TPS. This approach is wholly responsible for their success in the world motor vehicles industry. One of the reasons is the emphasis that they place on continuous improvement. This is achieved by continually reflecting on their performance and a systematic approach to problem solving called PDCA or Plan-Do-Check-Act. This concept was derived from American W. Edwards Deming and is employed by Toyota to eliminate all waste that adds cost without adding value. Quite simply it revolves around repeatedly making changes to the production system and reflecting on the effect. It works because it is continuous and never stops.
Dairymen who know their costs for each input will be at a distinct advantage as they can see where the most significant opportunities are for reducing costs without affecting performance. More importantly they can continually monitor the effect of the refinements have on their costs. Response, Repeatability, Research, Return and Reassurance are the 5 most important considerations to take into account when considering the application of new technology on farm. Quite simply any change implemented has to be shown to be repeatedly effective in research trials conducted at reputable institutes and guaranteed to give you a return on investment. At Wynnstay we are strong advocates of the 5 R’s philosophy and for this reasons we have decided to put together a list of products, management regimes and technologies that meet this criteria. Based on the results of the supporting research we have also calculated an expected return of investment.
1. Transition Cow Management. Extensive studies conducted at Wisconsin University’s department of Veterinary Medicine have demonstrated that the difference between a poorly transitioned and a successfully transitioned cow is around 2500 litres per lactation. Sub clinical ketosis which is the main indicator of poor transition management costs around £690 per case. A 100 cow herd with an average incidence rate of 30% would be losing £20,700 every year. The cost of constructing new transition cow facilities with adequate lying and eating space and comfortable surface would be recouped after 1 herd cycle.
2. Improving Fertility. Pregnancy rate or risk is the most accurate measure of how efficiently cows are getting in-calf. On average one pregnancy rate point has a value of £24/cow/ year. For a 100 cows an improvement in pregnancy rate/risk of 1% is values at £2400. Pregnancy rate/risk can be improved by effective heat detection and increasing submission rates and by improving early lactation energy balance. Early lactation energy balance is affected by transition, diet and dry matter intake. An improvement in pregnancy rate/risk of 2% would return the investment made on heat detection collars in around 2 years. Combine the use of collars with manual heat detection and robust reproductive protocols and the ROI would be less.
3. Lying Times. Time budgets and stall design are two biggest factors affecting lying times. For every hour a cow lies down over 11 hours, milk yield increases 0.9 to 1.6 litres. Long milking times will affect lying times as will a shortage of feeding space when cows have to stand around and wait for a chance to feed. Checking stall dimensions and evaluating and upgrading the stall surface will give a healthy return on investment.
4. Rumen Protected Choline. Protected choline has been shown to have a positive effect on liver function and consequently milk production when fed 4 weeks pre and 8-10 weeks post calving. These results were achieved at a feed rate of no less than 15g/d. The cost of including Protected Choline in the dry and fresh cow diet for a total of 12 weeks would be £12.00. The extra milk would be worth £31 at a milk price of 25ppl.
5. Yeast. A meta-analysis of 52 production experiments showed that when live yeast was included in the diet of lactating dairy cows both DMI and milk yield were increased by around 2.5%. For a thirty litre cow that would be an extra 0.75litres at 25ppl which would be worth 18.75p. The cost of including live yeast in the diet would be approximately 6p/day. 6. Long Day Lighting. Providing long day lighting throughout the majority of the year for dairy cows has been shown to increase milk production by between 5 and 12% with a concurrent increase in DMI. Taking the lowest reported response of 5% would equate to a return on investment of around 8 months.
7. Including Availa chelated minerals in dairy and youngstock diets has been shown to benefit immunity, fertility, mammary health, claw integrity, milk production and milk quality and has been demonstrated in over 50 peer reviewed papers. The Wynnstay Team can provide the tools for measuring the success of the PDCA approach and can also support the establishment of benchmarking groups. Toyota has built its successful business on the Total Production System and the Wynnstay Team is here to help you adopt these practices to maximize efficiency and profitability.
Written by Dr. Huw McConoche – Head of Dairy Technical Services
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