[Table of Contents] Low Cost
Structure
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 graziers and conventional dairy farmers.
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Full line of machinery for tillage, row crop
production, manure hauling, 3 or more different
forage, storage and feeding methods, feed
processing, feed mixing, cattle hauling. |
One small tractor, small skid loader, manure
spreader and mower, hand cart, pitchfork,
broom. |
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Newer, dependable machinery. |
Older rebuilt machinery. |
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Machinery purchased with borrowed money. |
Total fair market value of all machinery under
$5000. |
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Powerful pickup truck less than 5 years old with
payments. |
No pickup or a well maintained 10 yr. old or
older truck. No payments. |
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Attempts to maximize production per acre. For
example attempted corn yields of 150+ bu/A. |
No seed or herbicide purchased. A little
fertilizer and lime purchased. Max. effort devoted
to precise manure distribution by cows. |
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Near constant use of 2 to 5 tractors and
loaders. |
Tractor use usually a few minutes or less per
day. |
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Year around cow exposure to concrete stress
& free stalls. |
Cow exposure to concrete limited to milking time
and winter months. |
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Little or no nutrients from pasture. |
100% of forage from pasture April 10 to Nov.
25. |
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High Cost Structure |
Low Cost Structure |
|---|---|
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Attempt to grow most forage and
concentrates. |
Maximum use of very low cost purchased feeds
like shelled corn and coarse hay for winter
feeding. |
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Purchased feed tending to be high quality
imported hay and exotic protein supplements like
cottonseed. |
Purchased feed limited to cheap low quality hay
and cheap local shelled corn. |
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High level of dependence on agri business for
products & services. |
Total lack of need for agri business products and services. |
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Hire consultants for ration balancing, animal health, agronomy and financial mgt. |
All management functions handled by owner-operator with vet. principal advisor. |
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Multiple employees |
No employees |
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Larger herds, 3x milking. 16 to 24 hr/day milking parlor schedule. |
Herd size limited to number owner can milk in 2 hours or less. |
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High tech milking facility. Replacement value of over $100,000 dollars. |
Simple, home built and maintained milking
facility. Replacement value of less than $5000
total. Could be a stanchion panel bolted to two
posts and a cheap used pipeline. |
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Popular, high value, high index proven bulls
used. |
Max. use of A.I. and natural service young sires. |
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Frenzied, fast paced, toxic lifestyle. |
Slower sustainable life style. |
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Focus on herd average and high individual cow
performance. |
Herd average totally ignored as irrelevant to anything. |
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Very strong temptation to ignore profit and seek
maximum cash flow to service debt, pay employees
and agribusiness suppliers. |
No cash flowing out except the electric bill and to buy low cost local shelled corn and rough hay for winter. |
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Net profit potential per cow break-even or less.
Herd size 100-400 milking. |
Net profit per cow of up to $800.00 Herd size up to 150 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.
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