Understanding Your Break-Even Cost of Production

With earnings dropping from 2017, and this becoming the fourth year of low or negative earnings for many dairy farms, understanding different financial aspects of your business is critical. A key starting point is to understand different measures of cost of production and what a break-even milk price may be for your farm.

The costs that have to be covered by the milk price determine the break-even point, or price. The challenge becomes what to include, or not include, to determine what those costs may be. Several different measures of cost of production can be calculated for your farm, each with different implications.

Jason Karszes, Cornell CALS PRO-DAIRY, highlights Break-Even Cost of Production, using data from the Dairy Farm Business Summary and Analysis Program to show averages and ranges for both 2016 and 2017.

Looking at Leases: Part 3
Right of First Refusal

Generally only of the length of the lease is considered when thinking about the land security that leases ensure. While some leases may have longer terms than others, this is still a relatively short-term solution to landbase security. With the right planning, however, a lease can be a tool that provides your operation the opportunity to secure its landbase for generations to come.

Anna Richards, Cornell CALS PRO-DAIRY, continues her series: Leases Part 3.

First Quarter Dairy Profit Monitor Update

During first quarter of 2018, 43 farms participated in the Dairy Profit Monitor (DPM) program for the past 12 months. This DPM March 2018 data set includes farms that entered at least nine months of data within the last year and collectively averaged 836 cows. Each farm in DPM is provided graphs that includes their individual data. The same farm is not always the highest or lowest across all months. The graphs are intended to show trends to benchmark against the average of others in the program.

Since the start of the year, pounds of components per head per day has shown a steady increase, with the average of 5.91 lbs for the 41 farms entering data in March. Milk price received by farms was $15.05 per cwt for March, which was a slight increase from February at $14.81. The last time farms saw below $15 per cwt net milk price was June of 2016. Net milk price takes into account the value of milk shipped (component value), PPD, quality and volume premiums, and any deductions regarding milk hauling, promotion, coop dues, and marketing adjustments.

With a wet spring last year, producers have been feeling the effects of forage quality. Many farms have seen a slight decrease in feed conversion due to less milk production. Many farms adjusted diets for lower forages shown in the graphs for the fall and winter months. The effect of this is seen in feed cost per cwt., which has steadily increased since last June, when costs averaged $7.67 per cwt compared to $8.11 in March 2018. This feed cost measure does include the value of homegrown forages, which are valued in DPM at the cost to grow and harvest them.

Net milk income over feed costs using the actual milk price showed a decrease, but on a fixed milk price basis, the average farm was steady and slightly increasing their margin. Although producers don’t have control over the milk price they receive, operationally they do have an impact on how effective their feed program is. Using DPM to focus on component production, feed conversion, and feed costs allows producers to manage and improve their monthly margin. For additional information, visit the DPM website, or email Ashley Howlett at agh92@cornell.edu.

For more information about PRO-DAIRY, visit prodairy.cals.cornell.edu.

Julie Berry, Editor | Tom Overton, Director | Facebook

Guidance and Clarity on Waste Tires

Farmers have raised several questions about compliance with Part 360 and several farms have made efforts to modify tires or purchase new sidewalls to replace whole tires. In an effort to clarify some of these questions and issues, NYFB, NEDPA, and PRO-DAIRY hosted a farm tour with DEC officials as an educational opportunity to learn more about the use of tires on bunk silos on farms. An update on Tire Compliance clarifies portions of the beneficial use determination (BUD) for tires used on farms.

Evaluate Fields for Compaction

With corn growth starting to take off in many fields, now is a good time to evaluate fields for compaction. Though compaction is hard to measure consistently and easy to avoid even thinking about, research has shown that axle loads of 10-20 tons can cause serious damage resulting in significant yield reduction, as much as 30% the following year, and can continue to have a negative impact on yield up to 10 years later depending on factors like the weather. 

Even when grain yields are not affected, compaction can reduce crop height, suggesting the penalty to dairy producers can be greater than for grain producers. More farms are reducing the use of heavy manure tankers from fields, switching to drag hose systems. This is an excellent way to reduce compaction but check soil conditions also when draghosing manure as the tractor pulling the drag hose can cause compaction when the operation takes place on soils that are too wet. Drag hose injector shanks can smear sidewalls as well, possibly adding damage. Tires, Traction and Compaction is a good summary of compaction issues and offers suggestions for reducing compaction losses on your fields. 

Corn Silage Hybrid Evaluation Program

Corn hybrids entered into the New York and Vermont Corn Silage Hybrid Evaluation program have been planted for 2018. Once again we were very pleased with the support and participation in the program. A total of 77 hybrids were entered from 17 companies, a slight increase over 2017. Each hybrid is planted at three different locations across NY and VT.

Regional collaboration: We continue to work closely with our partners across the Northeast and are excited by the progress being made in the advances in corn silage evaluation coming from this collaboration.  In addition to our work with University of Vermont, Professional Dairy Managers of Pennsylvania/Penn St. and Western New York Crop Management, we have begun collaborating with the University of Maine.

Apply for Beginning and Junior Dairy Leader

Beginning and Junior Dairy Leader applications are due June 30. These popular programs help youth explore dairy and agricultural careers and educational opportunities in a networking environment.

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