Coronavirus has changed us. It’s forced us to think differently. Our status quos have been challenged, and it’s how we choose to respond that will shape our future.
How have you been challenged? Pressure brought on by shifting prices in the marketplace has led to widespread uncertainty. These changes will expose bottlenecks in our systems. Hard decisions need to be made — including about things that need to be cut out or added. Mindsets are changing, and different goals are being set. I’ve had to adapt to a “new normal.” Something as trivial as my normal route through the grocery store was required to change. During the height of the global pandemic, in a moment when I was not following the one-way arrows put in place by the grocery store, a store associate politely asked if I’d follow the directions. I bristled at this and grumbled to myself — nobody is going to tell me how to walk through a grocery store!
Sometimes we can’t control things. We adapt to these things as they happen. We adapt to shifting milk prices. We lean on our experience and do more with less. In the case of the grocery store, I could choose to either operate within their system or shop at a different establishment. Likewise, some farms will choose to exit the dairy business, while others will continue to operate. This should not be news, though; it happens every day.
If our intention is to stay in dairy long-term, what will we need to do to stay profitable now and into the future? For one, it starts with controlling what we can control and minimizing our risk. Knowing your cost of production is key in assuming control of your dairy. The return on any investment or expense on your dairy can be assessed by a tuned-in manager working with a knowledgeable team.
Income over feed cost and income over purchased feed cost are simply metrics with benchmarks — they don’t measure profit. In the same vein, having a 30,000-pound herd average doesn’t guarantee a positive return, nor does having the cheapest feed program. True profit is the difference between ALL farm income and ALL farm expenses.
Let’s control our income and our expenses by keeping our cows healthy. Healthy cows create more valuable income than unhealthy cows — with the added bonus of not being expensive! A high-forage diet fed in a well-managed feed bunk creates healthy rumens, bolsters dry matter intake and churns out more fat-corrected milk. Exceptional cow comfort (e.g., adequate stall size, bedding, cleanliness, cooling, footing) must be maintained for a dairy cow to perform at its peak and to minimize health problems. An effective reproductive protocol will help control herd metrics like days in milk and the number of replacements relative to herd size and will dictate additional income received from extra heifers or cull cows sold.
Work with a team of trusted advisors to help guide you to a profitable endpoint. We are here to serve you. If you aren’t an expert in a certain area or need a second opinion, contact somebody who will listen to your needs and provide solutions. Your A.I. rep, nutritionist, veterinarian, banker and agronomist all need to be professionals in their areas of expertise. If yours are not, find ones who are, and let us adapt and work together to stay profitable.