KINZERS, Pa. — The old saying about the bird in the hand is true in the dairy barn.
Getting more from the cows a farm already has, rather than adding more cows, is a wise way to boost revenue while keeping a lid on costs, said David Galligan, professor of animal health economics at the University of Pennsylvania School of Veterinary Medicine.
Galligan spoke at Farming Through Adversity, a King’s AgriSeeds workshop on Feb. 7 at the Kinzer Fire Company.
Galligan’s strategy is based on the concept of marginal cost — what it takes to produce one additional unit of something.
For example, if a cow makes 70 pounds of milk per day, the marginal cost is the outlay to get that 71st pound.
The main component of that marginal cost would be the extra feed the cow eats.
Fixed costs like electricity and the mortgage aren’t included because they will be paid no matter if that additional pound of milk is made.
Buying another cow would raise various fixed costs in addition to the feed cost, so increasing milk per cow is often the more cost-effective option.
In one example, Galligan found that adding 0.2 pounds of milk per cow in a 100-cow herd would equal the production from a new cow.
“That screams to me, ‘make milk, make milk,’ ” he said.
As cows eat more, the feed travels through them faster and fewer nutrients get absorbed.
Even then, Galligan’s model suggests the higher intake levels provide a return.
Joe Bender, a Penn Vet staff veterinarian, has seen this concept work in real life.
He worked with a family that was making money milking cows and had the chance to buy a nearby property.
“Is there anything more tempting than buying the neighbor’s farm?” Bender said.
The farm’s financial advisers said the purchase wasn’t a good idea, but the family bought the farm anyway.
The business was soon bleeding money.
The family got back into the black by adding 10 cows and making some adjustments to boost milk production.
Obviously, this was not an ideal situation, but “they were smart enough to say right at the very beginning, ‘Hey, we bought this farm. Now we have a problem right away,’ ” Bender said. “Not go three or four years not being able to pay your bills and then asking for help. Then it’s too late.”
Farmers can also maximize per-cow milk production by getting cows bred back expeditiously.
That’s because a cow produces the most milk early in the lactation and because her second lactation is generally more productive than her first.
Shortening the open period spreads the farm’s costs across more pounds of milk, Galligan said.
Farmers can also find efficiencies through culling.
Letting a cow linger in the herd till she breaks down isn’t smart if there’s a better heifer coming up behind her.
The efficiency gains are important enough that some large farmers are even starting to use computer models to make culling decisions, Galligan said.
The heifer herd needs to have the right number of animals to replace the cows exiting the milking herd, and the age at first calving can dramatically affect how many heifers are needed.
In a 100-cow herd with a 33 percent annual culling rate, a farmer would need to raise 61 heifers that have their first calving at 22 months.
If the age at first calving falls back to 26 months, 72 heifers would be needed.
“You have to feed a lot more heifer feed for 72 animals than 61, right? And the revenue of the milk is staying the same,” Galligan said.
Milk price and yield are by far the largest drivers of cow value.
Farmers mostly have to live with the price they get, but they have more control over how much milk they make and whether they earn component bonuses.
“If you’re not going after that top tier, you’re not going to move that annual profit much,” Galligan said.
“If you’re going after what I call small potatoes, OK, you’re treading water.”