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Increased Milking Frequency during Early Lactation: Expected Changes in Profit

Jackson Wright, Dairy
Northwest New York Dairy, Livestock & Field Crops

April 23, 2013

Summary

  •  Partial budget analysis suggests that increased milking frequency, that is, 4X for days 1 through 21 of the lactation, 2X thereafter, is attractive over a wide range of milk prices and marginal purchased feed and crop costs per additional pound of milk when compared to 2X for a dairy farm described as averaging 90 cows for the year.
  • Results are sensitive to expected milk price, marginal purchased feed and crop cost, and milk yield response.
  • Due to the sensitivity of results to changes in key variables, a farm manager's decision making regarding frequent milking during early lactation will benefit from analyses that reflect conditions, and expectations specific to the farm.

Economic Analysis

One measure that producers use to evaluate possible changes in practices is the expected change in profit. Profit equals the total value of production minus the costs of inputs used in production. Expected change in profit equals the expected change in total value of production minus the expected change in costs. Analysts construct a partial budget to estimate the expected change in profit associated with a proposed change in the farm business, for example, frequent milking during early lactation.

Selected Assumptions

  • Average number of cows for the year: 90 (Source: Cornell University Cooperative Extension's Dairy Farm Business Summary (DFBS) Program, 2011, Group average for NYS, less than 200 cows, 2X milking, May 2, 2012)
  • Proposed change: 4X milking in early lactation, that is days 1 through 21, 2X for the remainder
  • Current: 2X milking
  • Additional pounds of milk per cow per day, days 1 through 21: 17.27
  • Additional pounds of milk per cow per day, days 22 through 270: 6.801
  • Additional labor hours per cow per day attributed to 2 additional milkings: 0.2
  • Number of animals milked 4X daily: 5
  • Annual pounds of milk sold per cow per year - current: 18,800
  • Milk receipts in $ per cwt. and marginal purchased feed and crop costs ($/additional pound of milk) are varied

Results

Twenty two of 25 expected milk price, expected marginal purchased feed and crop cost combinations yielded expected changes in profit greater than zero (Table 1).

Table 1. Expected Change in Profit by Gross Milk Sales per Cwt. by Purchased Feed and Crop Expense per Additional Pound of Milk -- 4X Days 1 through 21, 2X thereafter vs. 2X; Average Number of Cows is 90; Initial Expected Milk Response.

Given DFBS net farm income results for 2009, 2010 and 2011, the results from table 2 suggest that 4X milking during early lactation at the reduced expected yield response can be expected to increase profit by about 9 percent on average when compared to 2X.

To learn more about this work, please contact John Hanchar.



Table 1 (pdf; 30KB)


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Announcements

USDA Announces New Decision Tool for New Dairy Margin Coverage Program

WASHINGTON, April 30, 2019 ? Agriculture Secretary Sonny Perdue announced today the availability of a new web-based tool - developed in partnership with the University of Wisconsin - to help dairy producers evaluate various scenarios using different coverage levels through the new Dairy Margin Coverage (DMC) program.

The 2018 Farm Bill authorized
DMC, a voluntary risk management program that offers financial protection to dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer. It replaces the program previously known as the Margin Protection Program for Dairy. Sign up for this USDA Farm Service Agency (FSA) program opens on June 17.

"With sign-up for the
DMC program just weeks away, we encourage producers to use this new support tool to help make decisions on participation in the program," Secretary Perdue said. "Dairy producers have faced tough challenges over the years, but the DMC program should help producers better weather the ups and downs in the industry."

The University of Wisconsin launched the decision support tool in cooperation with FSA and funded through a cooperative agreement with the USDA Office of the Chief Economist. The tool was designed to help producers determine the level of coverage under a variety of conditions that will provide them with the strongest financial safety net. It allows farmers to simplify their coverage level selection by combining operation data and other key variables to calculate coverage needs based on price projections.

The decision tool assists producers with calculating total premiums costs and administrative fees associated with participation in
DMC. It also forecasts payments that will be made during the coverage year.

"
The new Dairy Margin Coverage program offers very appealing options for all dairy farmers to reduce their net income risk due to volatility in milk or feed prices," said Dr. Mark Stephenson, Director of Dairy Policy Analysis, University of Wisconsin, Madison. "Higher coverage levels, monthly payments, and more flexible production coverage options are especially helpful for the sizable majority of farms who can cover much of their milk production with the new five million pound maximum for Tier 1 premiums. This program deserves the careful consideration of all dairy farmers."

For more information, access the tool at fsa.usda.gov/dmc-tool. For
DMC sign up, eligibility and related program information, visit fsa.usda.gov or contact your local USDA Service Center. To locate your local FSA office, visit farmers.gov/service-locator.


New Guidance for Mortality Disposal Issued

NYS Department of Ag and Markets has posted guidelines on disposal of livestock carcasses, in response to reports that some rendering companies have halted pickups from farms.

https://nwnyteam.cce.cornell.edu/submission.php?id=761&crumb=dairy|1

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