Managing Margins

Anyone who has been in dairy farming for twenty years or more knows full well, the margins we once had don’t exist today. What we thought were ‘tough times’, we now realise were luxury margins. When I started share farming in the early “70’s”, costs, including finance costs, were benchmarked at 30% of farm income.

The range of margins across farms has always been variable in line with management and debt, multiplied by a whole raft of variables beyond farmer control. We tend to focus far too much on the influences over which we have no control, weather and milk price being the dominant stressors. This leaves us with influences that are within our control.

I’ve have written many times, the two drivers of farm profit are feed and fertility. Feed drives milk production and income, and fertility drives a herd’s capacity to utilize feed in conversion to milk. This is determined by a herd’s average days-in-milk. Obviously the more fresh cows we have in a herd the higher the milk production will be, provided feed is offered to enable our cow to consume to capacity. This is compounded by cows in early lactation possessing greater feed conversion efficiency.

Below these two pillars of farm profitability lay a variety of ‘foundational’ issues we do have control over, to a large degree. Whenever I go to my banks teller machine to draw cash, it comes up with a statement that 37% of farmers, or a similar, agree agtech is the way of the future. I would question this statement. If we do not have these foundational issues under control, no technology under the sun is going to make one iota of difference to a downer cow!

I guess you know where I’m heading now. I’m no financial wizard to advise on slick accounting techniques to improve your margin.

Sick cows cost money. We track a number of performance indicators on our clients’ farms around feeding efficiency. As any of my nagged clients will tell you I get highly repetitive, especially on dry matter intake, as the key to all else. None of the indicators we study are visible through normal accounting analysis of farm businesses, and therefore, pass under the radar completely unknown, evaporating the gap between feed cost and milk income.

Although the sick cow is thought to be visible, with improved nutrition, especially in transition, clinical milk fever rates have plummeted over the last twenty years. This is very positive, but research knows full well, as is often the case in life, the visible issues were only the tip of the iceberg. Subclinical disease is by far the greatest thief of farm profit and attracts little interest because of its non-visible status.
The non-visible, subclinical milk fever, is usually where the ‘train wreck’ starts, then, precipitates a trail of further metabolic diseases, often referred to as the ‘cascade effect’ of milk fever. Some of these secondary diseases remain under the radar just holding back our cow from rapidly increasing DM intake immediately post-calving and induce ketosis.

By now we have a compromised immune system incapable to dealing with pathogen entering the mammary system even under normal farm conditions. Mastitis plays havoc with fertility due to systemic inflammation from mediators sent out by the immune system to address the infection. Immunosuppression enables metritis to establish. Compromised blood calcium status can trigger LDA’s.

Any or all of these disease scenarios will hamper feed intake, limiting milk production at a stage she was at her greatest potential for whole of lactation production. The likelihood of further disease limitation to both milk production and fertility are high. Subclinical ketosis is well researched as to increase risk factor to other metabolic disease, fertility and recent, although early work at Cornell (USA) indicates ketosis in this lactation will reduce milk production in subsequent lactations, and possibly, whole of life production.

Transition management has potential to make or break our margins and justifies every effort to micro manage cow nutrition through this phase. Following are some costings of disease, commonly seen around calving; 1) Mastitis $420, 2) Lameness $330, 3) Retained Placenta $320, 4) LDA $650, 5) Ketosis $180, 6) Milk Fever $250

From this list it would not be hard to list a few disorders that would completely wipe out a cow’s lactation margin.

Managing Margins is managing transition. Fertility will be a serendipitous outcome. That only leaves feed supply to meet our fresh cow’s appetite to complete successful margin management.

Dry cow/springer cow nutrition is number one in prevention strategies. Tools are available to assist, especially springer cow and fresh cow. Urine pH strips will tell you the springer ration DCAD is or isn’t correct. Milk Keto test strips to monitor for ketosis in fresh cows and alert to the need for treatment. These two on-farm tests can save thousands of dollars of farm margin.

John Lyne is a dairy production specialist with Dairytech Nutrition

John Lyne

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