6/29/2013 7:00 AM
By Andrew Jenner Virginia Correspondent
TIMBERVILLE, Va. Though laying down the money for a massive expansion of the family dairy a few years ago could have seemed a bit scary, David Yutzy generally tries to look on the bright side of things. Now, a little more than two years after he bought three new herds (taking him from 250 to 650 milking cows) and moved them into his new freestall barn and milking parlor, that sunny perspective appears justified.
“I’m very optimistic about the dairy industry at this point,” said Yutzy, who milks for DFA.
Now milking about 680 cows, Yutzy said he’s “absolutely” glad he expanded. Among the key aspects of the operation’s profitability, Yutzy said, are outstanding reproductive and cull rates. He attributes his 28 percent pregnancy rate and 20 percent cull rate in large part to the high degree of comfort his cows enjoy in the new barn. The decision to use sand as a bedding material 85 percent of which he washes, recovers and reuses is a major contributor, Yutzy said. He also credits his son, Ben, 28, who serves as the farm’s herdsman.
Yutzy’s wife, Jewel, handles human resources for the farm’s nine full-time employees, six of whom milk around the clock in three shifts, while their second son, Aaron, 25, works with the farm’s crops and maintenance.
The farm directly loads its milk into tankers (sparing the capital cost of storage tanks) and fills a 48,500-pound load about every 22 hours. Yutzy said he earns DFA bonuses for quantifty, bacteria and somatic cell levels, all of which “add up to a nice piece of change at the end of the month.”
A second major key to his profitability, Yutzy said, is minimizing feed costs. He now crops about 290 acres, and is in the process of acquiring another 175. Yutzy estimates that he grows 70 percent of his forages, including corn, rye and barley, and further reduces costs by feeding various byproducts. Windcrest Holsteins goes through two loads of brewers grains from the Coors brewery in Elkton, Va., every three days and feeds wheat middlings (“very palatable”) from a pasta plant in Winchester, Va. He said that okara, a byproduct of soybean processing, is the most cost-effective byproduct he feeds. (His ration costs come out to about $7 per hundredweight, with per-cow milk production at 76 to 77 pounds.)
Yutzy noted that a business mentality is more important that ever in today’s dairy industry. “It’s no longer about just hard work,” he said, adding that dairy farmers need to stay current on ways that their competitors are improving efficiency and profitability.
Peter Callan, a former dairy farmer and lender who is now an extension agent based in Culpeper County, Va., agreed whole-heartedly with that viewpoint.
“It’s imperative that a farmer has a long-term perspective so that he can position his business to be competitive long-term,” Callan said.
One important piece of that, Callan added particularly in an industry with such volatile markets is becoming a good manager of cash flow and developing strong relationships with lenders. That can help farmers make good business decisions about managing their money during good times and improve their access to capital during lean ones.
Callan also said noted that while production-per-cow numbers are important to track, the real difference-maker is the net income per cow. “That pays the bills,” Callan said.
John Welsh, an extension agent in Rockingham County, echoed that sentiment.
“To be successful in the dairy industry, you have to make lots of cheap milk,” Welsh said, acknowledging that the statement is both trite and true.
In the Valley, the making “lots of cheap milk” piece of the equation is a challenge for many of its relatively small dairies of between 100 and 200 cows. While conventional wisdom advocates, and Windcrest Holsteins demonstrates, improved efficiency through economies of scale as an answer, limited land resources are often a significant challenge to expansion. Other farmers have found success by adopting much lower input management techniques, like grazing, as a way of staying profitable.
(Yutzy noted that the various options dairy farmers have for achieving profitability is one thing he enjoys about his industry.)
Over the past decade or so, as feed costs have been subject to increasingly wild fluctuation, Welsh added, profitability has become an increasing challenge for the small, 100- to 200-head dairies that are common in the Valley.
Standing outside his milking parlor, Yutzy said that some aspects of dairy profitability such as price volatility and corn costs are generally beyond his control, while many others infrastructure, feeding program, herd management, etc. aren’t.
“I spend my time on things I can fix right here on the farm,” Yutzy said, adding that he tends to let that other stuff go “over the dam.”
So far, so good: Yutzy has already added capacity in the barn and parlor, and plans to increase his herd to 800 cows by this fall. While that’s as far as his near-term expansion plans go, he figures he could eventually milk up to 1,500 cows at his farm.