What’s the Best Ratio?

John Ellsworth of Success Strategies

New John Ellsworth
John Ellsworth

The January 31, 2020 issue of the Daily Dairy Report, which I highly recommend, was entitled “Heifer Supplies Shrink.” Essentially, the report told us that during the past 10 years dairymen in the U.S. have culled heavily and still were able to expand the milk cow herd. How was that possible? It was due to the large heifer numbers in the U.S. dairy herd. Producers have been carrying a large inventory of heifers because they may have been expanding and, for some, it seemed to serve as a security blanket.

I often hear, “Well, I need these extra animals because, if I ever need cash, I can always sell them to raise some capital.” I’d suggest that worked out OK when you could raise them for $1,200 and sell them for $1,500-1,800. However, when it costs $1,300 to raise them to two years, and they only sell for $1,200 or less, that doesn’t work so well. You certainly can’t “make it up on volume.” In fact, if we hadn’t been spending money feeding these excess heifers, maybe our cash position would have been improved.

I am often asked by producers, “How many heifers should I keep in my herd?” My answer is normally, “It all depends.”

 

 

Depends on what, you might ask. Great question. It absolutely depends upon what your business objectives are. Are you expanding your operation, perhaps in an effort to fill your current facility and maximize its efficiencies? Is your son or daughter home from college and you’re planning to increase the size of your operation to accommodate two families?

If your annual cull rate is 40% and you are freshening your first lactation animals at 24 months or less, why would you need more than 80% heifers to cows? “Oh, I need a cushion against possible heifer losses because we’ve had some big ones in the past” is one statement I’ve heard. Perhaps you would better served if we figured out what was causing these severe death losses. If you are having this concern, then keep 90% heifers to cows, but most importantly, correct the facility problems or whatever is causing the deaths. In any event, you shouldn’t need 100% or more heifers to cows.

There are only two real reasons I can think of to have extra heifers, particularly with the advent of sexed semen and other reproductive technology advances. One would be if you are expanding your operation, as outlined above. However, during the last three years, you could have probably bought them cheaper. The second sound reason would be if you are running a consistent ongoing program of selling springers or fresh two-year olds every month (i.e. not 20 head every three years…).

So, what should you do? Go through the same process I suggest with all business challenges. Review your current situation in comparison with your business objectives. Ask yourself what needs to change and then outline potential steps to take. Finally, move forward and implement your plan.

Future success in our industry, as with any business, will go to the players who seek the best outcomes by fine-tuning their operations. What action(s) do you need to undertake this week? What will you do differently, going forward?

I invite you to sign up for our new Success Strategies Business Navigator Program. If you are open to learning new concepts and discussing them with other producers, you should take a look at this new program that will start soon. It’s completely online, freeing you from travel but offering you an opportunity to learn from industry experts in the areas of milk marketing, management, financial analysis & banking/finance. For the value of the milk production of one 85 lb cow for a month, you can enroll in this quarterly workshop program for one year. What have you got to lose? Check out our “Free Preview Class” at:

https://success-strategies.com/navigator-program-for-dairy-farmers/

You won’t regret it. I wish you the very best for a success-filled year!

The related YouTube video can be found below:

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