At the outset, it is worth emphasizing that there is no magic formula for achieving profitability with dairy farming. In fact, there is a path that involves a lot of work and countless challenges.
However, some tools, processes, and assumptions can contribute (and do contribute) to the planning of the dairy farm that aims to increase the profit of the activity.
The results of the milk business have been very satisfactory lately. Of course, there are fluctuations between farms, with some seeing great returns and others needing to be more efficient to start seeing money from the activity left in their pockets.
As the world population continues to grow, so does the demand for milk and other dairy products. Dairy farmers are under constant pressure to produce more milk while keeping costs low. Luckily, there are a few things that you can do to increase your dairy farming profit. To start, you need to focus on producing high-quality milk. This means milk that is nutritious and free of contaminants. You can achieve this by providing your cows with a healthy diet and keeping your milking facilities clean. In addition to producing high-quality milk, you also need to focus on efficiency. This means milking your cows regularly and using the latest milking technology. By being efficient, you can increase the amount of milk you produce without incurring additional costs.
How will the herd evolve in the future?
Having control of the current herd stock as well as its indicators is essential for us to project how it will be in the next year and in 2, 5, or 10 years.
- How many cows will be lactating year after year?
- Will you have surplus heifers to sell and increase the farm's cash flow?
- With the number of calvings to come, will it be necessary to adjust the calf or will the current capacity meet the demand?
All these and many other questions are answered by herd evolution, a tool of great importance for the management and planning of dairy farming on any property.
The evolution of the herd takes into account all of the animals on the farm, their categories, and their zootechnical indicators. It also sets clear, attainable goals for the next few years. "Foot on the ground" is a phrase we always use to describe goals that are realistic and sensible.
Imagine you consider very optimistic goals for the herd evolution indicators, and she projects 300 lactating cows in 2 years' time producing 30 kg of milk per day, but when the established deadline arrives, the farm has only 250 cows in milk with an average of 28 kg of milk per day.
This situation is not very pleasant, right? But imagine another situation in which you work with more moderate goals and after 2 years your herd has the same 300 cows in lactation and the average production of 30 kg of milk per day (or, who knows, even more!). This second condition is much more satisfactory, don't you agree?
Herd evolution is one of the guides that help you run a dairy farm and one of the pillars that help you plan your property.If you want to increase the activity's profit, you will certainly have to set goals for the zootechnical indicators and know the future behavior of the herd through herd evolution.
How to make the dairy farm capable of producing all the food for the herd
A phrase that is accurate in dairy farming is "milk enters through the mouth". After all, it is necessary to have food so that the cow can produce milk. However, this food needs to be of good quality and not just a lot of food.
And this is where another tool tip that can help a dairy farm make more money comes into play. planning.
One of the bases of planning is herd evolution. But why? Precisely because we need to know the total number of animals that the farm will have in the next year in order to calculate how much the demand for food will be.
In summary, we must analyze the number of animals per category in a stratified manner, multiply it by the estimated average daily food consumption per head, and then multiply by the number of days we will have to feed these animals. At the end, we will find out the total amount of food that will be needed to feed the herd. Quickly and simply, the reasoning is along these lines.
Let's say that you did these calculations and came to the conclusion that your herd, which is all confined, will need 3,720 metric tons of corn silage to feed all of its members, from calves less than a year old to lactating cows and dry cows.
The planting area available on his farm is 90 hectares, and the average productivity per hectare for corn silage in recent years is 40 tons of natural material. Soon, with this productivity and this planting area, your farm will be able to produce around 3,600 tons of corn silage (90 hectares x 40 tons per hectare).
That is, in the current situation, the farm will not be able to produce all the food needed for the whole year. In this case, it will be necessary to increase the planting area or increase the efficiency of the crop to produce more tons of silage per hectare.
Suppose you identified opportunities in the agronomic management of the crop on your farm through improvements in soil management and a more appropriate choice of hybrids and envisioned an increase in productivity to 55 tons of natural matter in corn silage per hectare.
With the same 90 hectares and now with a new productivity, the farm will be able to produce 4,950 tons of corn silage, which meets the herd's annual demand for food.
Not all of the silage that is made, though, is actually used because food is wasted while making and using it.For well-managed silages from planting to silage removal, a good loss reference is around something close to 15%.
As the herd's food demand in the example we are using is 3,720 tons, we must add 15% loss, which will give another 558 tons more that must be produced to compensate for the losses. This will result in a total amount of silage of 4,278 metric tons.
Note that even after accounting for losses, the farm's food production capacity in the second scenario will exceed the herd's demand. when well constructed and criticized, brings security to the farm. Carrying it out year after year with the support of herd evolution is essential.
How will the financial behavior of the farm be?
Most likely, you have heard about the budget. This tool is used to plan and estimate expenditures, revenues, available capital, economic goals, financial goals, and operational goals for the property for the next year or the year to come.
- How much milk will the farm produce in a year?
- What will be the expected expenditure on machinery maintenance?
- How much will be disbursed with the next harvest?
- What will be the revenue from the sale of surplus livestock?
We always say that the budget should be the boss of the farm. In other words, whenever there is an intention to make an investment for an activity, for example, we must first consult the budget and assess whether it will be possible to carry it out at that time or not.
If the investment is made at the wrong time, it could hurt the financial health of the property.That's why it's important to use the budget as a guide in all farm decisions.
The accuracy and assertiveness of the budget depend not only on the experience of those who do it. Getting accurate information about the farm's past also helps improve the quality of the budget.
Of course, some information is difficult to predict, such as, for example, how the price of milk sold month by month will behave throughout the year and how much the main food inputs that will be used in the animals' diet will cost. However, the prediction of other items already has greater dominance, as is the case with expenditure on machinery.
Periodically checking the budget and comparing it to what was carried out on the farm allows the verification of deviations from the targets and the identification of possible causes. Ideally, action plans should be drawn up, designating those responsible for each step.
Let's think about a situation in which, analyzing what was planned in the budget and what was done, you identified higher expenses with machinery maintenance in the month of February. When the reasons for this rise in costs were looked into, it was found that it was because the mixing car hadn't had any preventive maintenance done on it.
So, you made a plan so that the farm manager would be in charge of hiring preventive maintenance services for the equipment to make it last longer and avoid spending a lot of money on this item that wasn't planned for.
One of the great contributions of the budget management tool is precisely this: keeping the farm on track as planned, being profitable, and protecting it from unpleasant surprises. Budget, herd evolution, and planning must go hand in hand and inseparably. After all, one depends on the other for the success of the property.
How to use indicators for management
Indicators are the only way to measure and analyze results.
No matter the area, whether it's dairy farming or something else, developing the herd, planning food production, and managing the budget are all for nothing if the indicators aren't calculated and looked at often.
Management by indicators lets you figure out how well the farm is doing. And when we talk about efficiency, we're not just talking about zootechnical indicators like the number of births, deaths, and somatic cell counts (SCC), no matter how important they are.
Efficiency is a more general idea. The farm needs to be efficient in terms of zootechnology, farming, and cost. In other words, the property must have animals that do well, produce enough food in both quantity and quality, and buy and use inputs, services, tools, etc. well.
To make more money from milk, you need to be technically efficient (in zootechnics and agriculture) and cost-efficient.
For example, the farm's operating profit goes up as its technical efficiency increases. If you want to make more money in the dairy business without keeping an eye on the indicators, it's like wanting to drive a car without a dashboard. You will lead him without knowing what is going on or knowing if you have the right tools to reach the goal.
Conclusion
For dairy farming to be profitable, management tools like herd evolution, planning, a budget, and management by indicators must be used together.
Everyone who wants to reach this goal must know how to plan activities and critique how they are done.
