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Folks, The two columns below are an attempt to describe the typical well managed Ohio dairy farm (left) and an emerging new high profit style of Ohio dairy farm (right). These lists were developed to stimulate discussion at a meeting of 14 young Mennonite graziers and conventional dairy farmers. ---------------------------------------------------------------- Characteristics of a high ! Characteristics of a low cost structure dairy farm. ! cost structure dairy farm. ---------------------------------------------------------------- Full line of machinery for ! One small tractor, small tillage, row crop production, ! skid loader, manure spreader manure hauling, 3 or more ! and mower, hand cart, different forage, storage and ! pitchfork, broom. feeding methods, feed ! processing, feed mixing, ! cattle hauling. ! ---------------------------------------------------------------- Newer, dependable machinery. ! Older rebuilt machinery. Machinery purchased with ! Total fair market value of borrowed money. ! all machinery under $5000. ---------------------------------------------------------------- Powerful pickup truck less ! No pickup or a well than 5 years old with ! maintained 10 yr. old or payments. ! older truck. No payments. ---------------------------------------------------------------- Attempts to maximize ! No seed or herbicide production per acre. For ! purchased. A little example attempted corn yields ! fertilizer and lime of 150+ bu/A. ! purchased. Max. effort ! devoted to precise manure ! distribution by cows. ---------------------------------------------------------------- Near constant use of 2 to 5 ! Tractor use usually a few tractors and loaders. ! minutes or less per day. ---------------------------------------------------------------- Year around cow exposure to ! Cow exposure to concrete concrete stress & free stalls. ! limited to milking time and ! winter months. ---------------------------------------------------------------- Little or no nutrients from ! 100% of forage from pasture pasture. ! April 10 to Nov. 25. ---------------------------------------------------------------- Attempt to grow most forage ! Maximum use of very low cost and concentrates. ! purchased feeds like shelled ! corn and coarse hay for ! winter feeding. ---------------------------------------------------------------- Purchased feed tending to be ! Purchases feed limited to high quality imported hay and ! cheap low quality hay and exotic protein supplements ! cheap local shelled corn. like cottonseed. ! ---------------------------------------------------------------- High level of dependence on ! Total lack of need for agri business for products & ! agri business products and services. ! services. ---------------------------------------------------------------- Hire consultants for ration ! All management functions balancing, animal health, ! handled by owner-operator agronomy and financial mgt. ! with vet. principal advisor. ---------------------------------------------------------------- Multiple employees ! No employees ---------------------------------------------------------------- Larger herds, 3x milking. ! Herd size limited to number 16 to 24 hr/day milking ! owner can milk in 2 hours or parlor schedule. ! less. ---------------------------------------------------------------- High tech milking facility. ! Simple, home built and Replacement value of over ! maintained milking facility. $100,000 dollars. ! Replacement value of less ! than $5000 total. Could be ! a stanchion panel bolted to ! two posts and a cheap used ! pipeline. ---------------------------------------------------------------- Popular, high value, high ! Max. use of A.I. and natural index proven bulls used. ! service young sires. ---------------------------------------------------------------- Frenzied, fast paced, toxic ! Slower sustainable life lifestyle. ! style. ---------------------------------------------------------------- Focus on herd average and ! Herd average totally ignored high individual cow ! as irrelevant to anything. performance. ! ---------------------------------------------------------------- Very strong temptation to ! No cash flowing out except ignore profit and ! the electric bill and to buy seek maximum cash flow to ! low cost local shelled corn service debt, pay employees ! and rough hay for winter. and agribusiness suppliers. ! ---------------------------------------------------------------- Net profit potential per cow ! Net profit per cow in 1994 break-even or less in 1994. ! of up to $1200.00 Herd size Herd size 100-400 milking. ! up to 80 milking. ---------------------------------------------------------------- For many years I operated a farm like the one on the left. Through the 1970s this type of operation was very, very profitable. By the mid 1980s it was less profitable. By the year 1990, it was not profitable. I now have a farm more like the one on the right. Unfortunately, influential people advising farmers have picked up older (therefore misleading) income data on the farms in the left column and projected it into the future. As a result dairy farmers are struggling to get into the left column, while remaining largely unaware of the style of dairy farming on the right. For the last four years I have been an Enrolled Agent doing dairy farm tax consulting. In that time period no dairy farmer coming to me has shown a profit with the exception of two small groups. (1) Older farmers who have not expanded to make room for a son, and (2) graziers. One of the young graziers is showing a net of over $1500/cow for 1994 taxes on a herd of less than 30 cows. Showing this to Graze-L is like preaching to the choir. Most of Graze-L readers probably are aware of this contrast between farming styles. Kindest regards, @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @ F. W. Owen @ @ Owenlea Holsteins @ @ 9430 Spencer Rd. @ @ Homerville, OH 44235 @ @ 216/625-2369 voice & fax @ @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@
