Gas is over $4 per gallon, diesel over $5. March corn is $7.57, and beans are $17.45. July wheat actually came down about a dollar, but still well above $11 per bushel. Fertilizer is at least 50% more expensive than last year; nitrogen sources are at least double what they used to cost. It’s time to pinch pennies – production costs, fertilizer rates, chemical application. Even family living expenses may be reduced. Chris Zoller, my colleague in Tuscarawas County, wrote an article on reducing dairy farm expenses back in 2016 when milk prices were low. While we’re not in the exact same situation, margins are going to be tight. Sharing his wisdom may give some considerations where and how costs can be cut.
Five Rules to Remember
- Do not cut anything that cuts milk production. That is usually bad economics. Your focus should be on income over feed costs. That is your margin to pay the other bills. Does it line up with your margin protection plan?
- Don’t do anything that will hurt pregnancy rate. Next to feeding and milking, getting cows pregnant is the most important thing you need to do for your dairy to remain profitable.
- Calculate your feed cost per cwt of milk every month. Break that out for the milking cows and then add all animals on the farm. Calculate daily feed cost per head for each group of animals. Then, considering your production and milk price, ask yourself how many dollars of milk per cow per day are leaving the farm. Is your feed cost half that value of milk being sold per cow per day?
- The best way to lower feed cost per cwt is to have higher milk production to spread the cost over. Half your cows should be under 150 days in milk and no cows should be over 365 days in milk. Feed efficiency is greater earlier in the lactation cycle.
- The best way to lower purchased feed cost is to have higher quality forage. High quality forage lowers purchased feeds needed and total feed cost, and increases dry matter intake and production. Alfalfa to corn silage ratios influence purchased protein supplement amounts; but digestibility of the forage, whole farm yields and cow preference all need to be taken into consideration.
Cutting pennies can literally save thousands in costs per year. For example, if you choose to substitute part of the ration’s soybean meal for brewers’ grains or corn gluten meal, you may be able to draw down the protein cost of the ration by $0.03. Additionally, alternative sources of energy can also cut costs. Using refusals from cereal or other snack manufacturers may allow you to cut ground corn costs. If, on average, the ration cost can be decreased by $0.05 per day per cow, there is a $5 savings per day per 100 cows, or $1,825 in savings per year per 100 cows.
Making small financial changes can certainly add up to big savings, so drastic measures aren’t quite yet required. Tight margins mean tight strings on the pocketbook, but the goal hasn’t changed – maintaining production levels while producing high quality milk.
The Wayne-Ashland Dairy Service Banquet will be March 22, 2022 at the Wayne County Event Center at 6:30 PM. Tickets are $10 apiece and includes dinner, dessert, a dairy foods tasting courtesy of ADA Mideast, and a chance to win door prizes. Please RSVP by March 15 to Susan Mykrantz (330-988-8114) or Brenda Eberly (330-317-2386).
The East Ohio Women in Agriculture Conference Returns in 2022 at the FFA Camp Muskingum on March 25, 2022 from 9 AM to 3:30 PM. Speaker tracks include natural resources, plants and animals, food and family, and special interests. Cost to attend is $55 and includes breakfast, lunch, the keynote speaker address, and 4 breakout sessions. There will be vendors to meet and interact with as well. Please visit go.osu.edu/eowia2022 to register!
Pastures for Profit is returning as a virtual webinar series. Webinars on grazing education, the science of pasture, and creating grazing goals will be held from 7 to 8:30 PM on the evenings of March 31, April 7, and April 14. Registration is $50 and a $15 discount is applied to Ohio Forage and Grassland Members. Registration includes exclusive online content and a USB drive of the Pastures for Profit manual. Please visit go.osu.edu/pasturesforprofit2022 to register.
Haley Zynda is an Extension Educator, Agriculture and Natural Resources for Ohio State University Extension. She can be reached at 330-264-8722 or email@example.com.
CFAES provides research and related educational programs to clientele on a nondiscriminatory basis. For more information, visit cfaesdiversity.osu.edu.