While there are many different ways to track profitability, the Kelly’s choose to monitor cost per hundredweight of milk shipped. “It is simple to calculate using only four inputs, and I can easily track it every day,” said Allen, “at the end of the month I go back and add components and component pricing, but we can’t afford to wait until those numbers are available. Cost per hundred gives me an idea of how our farm is preforming right now.”The Kelly’s participate in many different profitability monitoring programs, including the Farm Credit East Benchmark Summary and the Cornell Dairy Profit Monitor discussion group. However, their biggest strength comes from keeping their thumb on the pulse of their farm’s profitability every single day.
Daily tracking even allows Allen to anticipate profitability changes before they happen. For example, due to lower corn silage yields, the Kelly’s were unable to harvest high moisture corn silage in 2015 and 2016. “The need to purchase corn meal as a substitute increased our cost per hundredweight,” said Allen, “however, since we have tracked our costs both with and without high moisture corn, we knew exactly what to expect when we made the decision to harvest our standing corn as corn silage.”
Any farm could track cost per hundredweight the way that Kelly’s do. The trick is to keep it simple, and Allen just uses an excel spreadsheet. There are four inputs:
1) Bulk tank weights
2) Number of cows milking
3) Total tons of purchased concentrates, including dry cows and heifers
4) Feed costs per ton
Using these inputs, the spreadsheet automatically calculates cost per hundredweight.
Just like any family business, maintaining economic viability is critical to a sustainable future. It allows Kelly’s to provide excellent care to their cows, reduce their environmental footprint, and be contributing members in their community. It also gives them a competitive advantage, allowing them to produce food for their family and yours for many years to come.