Kentucky
Dairy Notes
March 2010
2008 Dairy Enterprise Analysis
Curtis Mahnken
With the worst of the recent dairy crisis behind us, a renewed focus is being placed on the
economic viability of the dairy industry. This focus results from the increasingly thin line between
profitability and financial distress. The dairy enterprise analysis for 2008 was performed using
Kentucky Farm Business Management dairy cooperator data. Twenty-three enterprises were
included in the study, and while the sample is too small to be statistically representative of the
“typical” dairy farm in Kentucky, we can utilize this study to identify potential areas of focus. For
this report, the dairy returns and cost of production are examined by dividing the 23 farms into three
groups; those that earned the most for their management efforts, those that earned the least and a
middle group.
A simple way of estimating profitability is to examine dairy returns against total costs of
production (COP). Dairy returns are receipts from milk sales, as well as patronage, FSA receipts,
and cull sales. Cost of production includes cash expenses, such as feed and paid labor, as well as
non-cash expenses such as unpaid family or operator labor and depreciation.
Dairy Returns vs. Cost of Production- by Management Returns Group
The previous chart details the difference between returns and production costs for these
three groups, in order to determine what it was that made the high return group the most
successful. Gross returns per CWT was not the key as the high returns group grossed less than
either of the other two. The mid group actually had the highest dairy returns ($22.74/cwt milk sold),
followed by the low group ($21.54/cwt) and then high group ($21/cwt). The high group grossed
$1.74 less than the middle group and still earned the most for their management efforts!
The key to being in the high group was managing cost of production. The low returns group had
the highest total costs at $24.31/cwt of milk sold, followed by the middle group at $21.09/cwt, while
the high returns group produced milk at $17.90/cwt. The high group produced milk for an average
of $6.41 less the low returns group!
The largest cost difference category between the high group and the other groups was in paid
labor. The high group’s labor cost ($1.05/cwt) was half of the other two groups (mid-$2.10, low$2.38).
While the average cooperator did cover all costs, making a $0.49/cwt return, the low returns
group did not. These small returns occurred during a time of higher prices, both in milk and feed.
This analysis dramatically demonstrates the importance of cost management.
Many producers experienced a reduced equity position in 2009. Therefore producers must be
increasingly aware of their cost of production. It can be easy to start reducing expenses, but
cutting in the wrong areas can create problems for the future. For example, cutting feed can affect
milk production and create breeding issues that may linger and affect milk production in the future.
Producers should focus on cutting areas that will decrease their COP, without reducing productivity.
Utilizing available resources, such as extension personnel and consultants, can help producers
survive during the down times and thrive during the good times.
2010 Base Change for National Dairy Genetic Evaluations
Jack McAllister
Genetic change keeps happening in U.S. dairy breeds as a result of the selection decisions made
by dairy producers and the AI organizations who choose the parents of the next generation of AI
young bulls. This makes it necessary to change the bases for the genetic evaluations of dairy cows
and bulls so that bulls and cows can be fairly evaluated over time. The first updating of genetic
bases took place in 1965 and has continued until this latest base change for 2010. In fact, the last
three base changes have taken place on 5 year intervals – one in 2000, one in 2005 and one in
January of this year 2010. The base group for each of the most recent base changes is the cows
born 5 years earlier. That means for 2010 the base is cows born in 2005. The idea here is for the
base of genetic evaluations to be a relatively recent cow population.
The base change represents the change in predicted transmitting abilities (PTA’s) of the traits in
the Net Merit $ index (such as yield traits, productive life, somatic cell score and daughter
pregnancy rate) as well as 19 individual type traits. The base change is calculated separately for
the 6 U.S. dairy breeds – Holstein, Jersey, Brown Swiss, Guernsey, Ayrshire and Milking
Shorthorn. Base changes for calving difficulty are calculated for the Holstein and Brown Swiss
breeds and a base change for stillbirth rate is only calculated for the Holstein breed. The base
changes for these two traits are for bulls born in 2005 compared to bulls born in 2000.
The table below shows the base change in PTA progress for each dairy breed and for all of the
traits on the Net Merit $ index.
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PTA progress (2005 − 2000 birth year)
Holstein
Jersey
Brown
Swiss
Guernsey
Ayrshire
Milking
Shorthorn
Lifetime $
132
119
60
50
37
71
Protein
Pounds
14
12
10
6
3
6
Fat
Pounds
15
17
10
12
3
8
Milk
Pounds
417
323
267
231
53
199
Productive life
Months
0.6
0.8
0.3
0.1
0.3
0.8
Somatic cell score
Log
(base 2)
−0.01
0.00
0.01
0.02
−0.02
0.01
Daughter pregnancy
rate
%
0.0
−0.1
−0.5
−0.4
0.1
−0.1
Service sire calving
difficulty
%
0.4
…
0.4
…
…
…
Daughter calving
difficulty
%
−1.0
…
−0.5
…
…
…
Service sire stillbirth
rate
%
0.2
…
…
…
…
…
Daughter stillbirth rate %
−0.4
…
…
…
…
…
Udder composite
0.85
0.40
0.25
0.30
0.35
0.25
Feet and legs
composite
0.65
0.20
0.10
0.30
0.15
0.15
Body size composite
0.60
0.15
0.30
0.35
0.30
0.10
Dairy composite
0.75
…
…
…
…
…
Trait
Unit
Net merit
Source: VanRaden et al. Genetic base changes for January 2010. 2009. AIPL Res. Report Base2
(8-09).
Progress for Holstein PTA service sire calving difficulty and stillbirth is the change between
bulls born in 2005 and those born in 2000; progress for Holstein PTA daughter calving
difficulty and stillbirth rate is the change between bulls born in 2000 and those born in 1995.
For Brown Swiss, PTA progress for service sire calving difficulty is calculated as the
change between bulls born from 2001 through 2005 and those born from 1996 through 2000;
PTA progress for Brown Swiss daughter calving ease is the change between bulls born
from 1996 through 2000 and those born from 1991 through 1995. Brown Swiss bulls had to
be grouped because of their limited numbers.
The Holstein and Jersey breeds have made the most genetic progress from 2000 to 2005 in the
Lifetime Net Merit $ index of $132 and $119, respectively. That is a change of $26 and $24 per
year respectively. Change in milk, fat and protein yield was the greatest for Holsteins, Jerseys and
Brown Swiss with these breeds increasing fat + protein yield by 29, 29 and 20 pounds respectively.
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All breeds made important progress in productive life with the Jerseys and Milking Shorthorns
having an increase of 0.8 months and Holsteins an increase of 0.6 months.
Change in type traits was apparent for all breeds but the greatest change in udder composite, feet
and legs composite and body size composite was for Holsteins. Stature increased in all the dairy
breeds with the Milking Shorthorn increase being the greatest (data not shown). Final type score
(not shown) increased for all breeds but was the greatest for Holsteins, Jerseys and Guernseys.
The generally positive change for all dairy breeds for both production and economically important
non-production traits is encouraging.
Keys to Successful Reproductive Performance
Mike O’Connor
Dairy and Animal Science Extension
Penn State University
(We prefer to use our own material in Dairy Notes. However, the author of this article just retired
from a career of helping dairy farmers and has some good advice for all. Reprinted with permission
from the Penn State Dairy Notes)
I have had the privilege to visit dairy herds which consistently achieve high milk production and
excellent reproductive performance. Some major common characteristics among these herds are:
1. Commitment to maintaining a high heat detection rate or submission rate to first service
The strategies to accomplish this vary among herds but include one or more of the following
systems:
● Routine visual observation for estrous behavior which results in accurate and efficient detection
of estrus.
● Proper use of either traditional heat detection aids or electronic systems to capture activity
associated with estrus.
● Implementation of a proven estrous synchronization or timed insemination program.
● If available, contracting the services of an artificial breeding organization to perform estrous
detection and other tasks associated with reproductive management.
The key is a systematic approach assuring a high percentage of the herd is inseminated between
the voluntary waiting period and 100 days.
2. Timely resubmission for insemination cows which failed to conceive to a previous service
More herds are adopting resynchronization programs to shorten the interval between services.
Recent DHIA data shows that there has been improvement in reducing the interval to first service
but the challenge is to reduce the intervals between subsequent services. To accomplish this,
pregnancy status must be determined accurately and early enough so open cows are identified and
resubmitted for insemination in a timely manner.
3. Maintaining accurate records and monitoring performance
I have been impressed with the information these dairy producers keep at their finger tips related to
the key benchmarks of reproductive performance, use this information on a regular basis to monitor
performance and quickly seek help in identifying potential problems.
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4. Implementation of a comprehensive herd health program
Herds performing well have adopted the appropriate vaccination program for both heifers and cows
for their geographical region and understand the importance of biosecurity. In conjunction with a
sound nutrition program, a complete herd health program results in a low incidence of periparturient
and postpartum reproductive and metabolic problems and good udder health. Such problems have
a significant impact on conception rate. Implementing a routine hoof care program and appropriate
calving management procedures are included under the general area of herd health.
5. Using standard procedures related to AI technique
Achieving good conception rate requires attention to the details associated with timing of
insemination, semen handling and insemination technique. Always remember, you are handling a
delicate commodity.
6. Place a high priority on nutrition and feeding management
These herd managers realize the importance of feeding a balanced ration to not only the lactating
herd but breeding aged heifers, dry cows and the transition group. These managers or their
consultants routinely evaluate body condition, monitor dry matter intake in all groups and quickly
make adjustments.
7. Provide a good environment for the herd
Whether the cows are housed in a tie-stall barn, free stall barn, dry lot or bedded pack; high
performing herds are provided adequate ventilation, attempt to improve the footing surface to
minimize slipping and encourage mounting activity, allow for frequent interaction among cows and
implement strategies for heat abatement. The maternity area is clean, dry and not overcrowded.
8. Utilize a team approach
Many successful small and large herds involve their veterinarian, nutritionist, AI consultant and
employees in discussion related to reproductive management. Since reproduction is a complex
process which is impacted by all many aspects of management, everyone must be aware of the
economic importance of good reproductive performance, attention to detail, compliance with
procedures and monitoring performance on a regular basis. When changes are made everyone
must be informed.
One of the major misconceptions I encounter related to reproduction is: “good reproductive
performance and high milk production are not compatible”. I have been on many herds that are
successfully managing both areas and there is DHIA summary data to illustrate, that as a group,
high producing herds achieve similar reproductive performance to lower producing groups of herds.
Granted, it takes commitment to implement and maintain a systematic approach to reproductive
management utilizing the concepts presented above.
4-H Dairy Cow Camp
April 24, 2010
Taylor County Fairgrounds
Cost: $10 per person (add $5 after April 1st)
Registration Deadline: April 1, 2010
For More Information & Send Registration to: Amanda Sublett, Taylor County 4-H
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Cooperative Extension Service
PRESORTED
STANDARD
US POSTAGE PAID
University of Kentucky
Animal and Food Science Dept.
400 W. P. Garrigus Building
Lexington KY 40546-0215
PERMIT
RETURN SERVICE REQUESTED
2008 Dairy Enterprise Analysis
Kentucky Grazing School
April 14-15, 2010
Princeton, Kentucky
2010 Base Change for National Dairy Genetic
Evaluations
4-H Dairy Cow Camp
April 24, 2010
Taylor County Fairgrounds
Keys to Successful Reproductive Performance
Kentuckiana Exchange Trip
August 3-4, 2010
Logan County, Kentucky
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