Beyond the Barn: The Graduating Class…in 24 Months – Gary Sipiorski, Vita Plus

By Gary Sipiorski, Vita Plus dairy development manager
It is hard to think forward to the day when a newborn heifer calf will freshen herself.  It is really difficult when milk prices on her birthday are less than the cost of the farm’s ability to produce milk. In some producers’ minds, it can be just another expensive mouth to feed.

The take-home message here is that she will need to be well fed and cared for every day leading up to when she drops her own calf.  Remember, the day she freshens could very well be the day when the milk price is chucking cash into the checkbook again.  That is not the time to ask the question, “Could I have taken better care of her?”

The business of milking cows is a worldwide commodity business.  No longer does the local milk, cheese or butter plant 6 miles down road determine the milk price.

The U.S. dollar is higher than other world currencies.  That means foreign importers must pay more, resulting in them buying less.  European dairy farmers are milking without a quota and milking more cows, adding to the world milk surplus.  Oil-producing countries are getting far less for their black gold; therefore, they have less money in their pockets.  Russia has retaliated against sanctions placed on them by the West and boycotted any western imports.  And the Chinese have backed off buying as they try to figure out which way their economy is moving.

In the meantime, “back on the farm,” the milk price is lower.  Until the above paragraph is sorted, milk prices may be a struggle.  So what does a dairy producer do now?

• Calves and heifers have not taken courses in economics.They understand comfort and being fed correctly.  Keep calves on a high plane of nutrition. They are an investment.  Any good investment that a business person plans to generate cash from in the future needs proper cash and growth infusion now.  Keep the youngstock in a comfortable facility with good air, water, feed, bedding and bunk space.  If you do any building or remodeling of their housing, make sure it is labor efficient in feeding and cleaning. Some dairy producers have sent their heifers to custom growers nearby or states away.  Make sure those facilities and management styles produce the heifer that is ready to run when she returns home.  No matter how or where heifers are raised “right,” there will be a cost.  Remember the cost is an investment in the future.
• In lean times, some dairy producers sell heifers and hope to buy others back in better times. Think about the genetics leaving – will the same kind of heifers return?  This might not always be the best choice.
• If building a heifer unit on your farm is not practical, think about renting a “good” heifer unit.  Some dairy facilities could become available where other dairy producers do not have a next generation or just decide to stop milking.  Just like renting facilities, leasing or buying good used machinery may be a better financial move than owning at this time.
• Be careful of the “hidden cost” of not raising heifers right. A dollar saved may well end up as less healthy and lower-performing heifers that produce thousands of pounds less milk and generate far less gross income dollars.

Milk prices are cyclical and the lower times always seem to last longer than the high times.  But, the cycle will resurface to the higher level in the future.  Make sure that cutting heifer corners does not send the dairy’s future in the ditch.  Make sure management decisions today to ensure a graduating class of dollar scholars tomorrow.