Managing with Low Milk Prices

October 10, 2016

The downturn in dairy pricing has forced most of our clients to look critically at their dairy enterprise. In the best of times and worst of times, a business should be consistently striving to reduce costs and maximize revenues. The following article provides a simple dairy management checklist that you can use along with your advisors to help survive and thrive in the volatile dairy market.

  • Maximize income over feed costs. Work with your accountant and nutritionist to maintain current, up-to-date total feed costs
  • Never cut corners, underfeed cows, or make changes that lower milk production.
  • Manage TMR nutrients precisely.
  • Shop around and Evaluate every ingredient in your rations with your nutritionist.
  • Use supplements/additives strategically (necessities: Rumensin, yeast, silage inoculants, mycotoxin binders, anionic salts).
  • Procure high quality forages.
  • Watch feed efficiency.
  • With any feed change monitor changes in milk(daily, peak, 150d), MUN, Dry Matter Intake, Components.
  • Control feed shrink at harvest, storage, mix, and on the feedbunk.
  • Build your milk check by increasing milk components and quality premiums.
  • High producing, healthy, pregnant cows are the most profitable.
  • Pregnancies impact cow flow and milk sales, days in milk, stage of lactation. You achieve a 3:1 return for cows in the first 100 DIM.
  • Cull aggressively (career change for unprofitable cows). Maximize profitability per freestall. Keep a full barn.
  • Work with your management team to decrease dead cows focusing on cow comfort, transition cow management, stockmanship, and culling strategies.
  • Focus on Transition cow management which will improve peak milk and lessen costly metabolic disease.
  • Group cows by stage of lactation or at the very least, separate first calf heifers.
  • Minimize replacement costs. How many replacements do you need to maintain herd size?
  • Control labor costs. Get the most out of your labor force through consistent and proper training. Empower your employees and make them feel respected members of the management team.
  • Spread costs over more milk. Produce more milk, more efficiently.
  • Ask your financial advisors about Risk Management/Margin protection.
  • Work with your financial advisors to create a strategic financial plan.
  • Consult with your Advisors and do not fire them to save money.
  • Understand the Long Term Impact of your Decisions.

It is easy to become disillusioned during the constant struggle to stay afloat during down times. Understand that your management team has the same goals that you have and want to see you succeed. Along with your management team, identify areas of weakness and try to make them strengths.