B2—Lancaster Farming, Saturday, January 31,1981
How dairymen can beat inflation
BYDONCUNNION
LANCASTER Thinking
about adding a few more
cows to your dairy herd as a
way to bring m more dollars
and stave off some of the
inroads of inflation’
Before you do, maybe
you’d better stop and do a
little figuring, suggest dairy
management experts. You’ll
probably find it makes more
sense to pay more attention
to mcreasmg the production
level of the cows you’ve got
already.
Dick Denison, who heads
up the Farm Management
and Business Analysis
Service for the Pennsylvania
Farmers Association, says
there are four simple
reasons why you should
carefully consider “getting
better before you get
biggtr”:
1 High costs for new
housing and animals
2. High interest rates.
What higher cow
production
can do for you
Glenn A Shirk, Lancaster County dairy specialist,
took 1978-79 DHIA figures and adjusted them for 1979-
80 inflation. He valued milk at $l3 per cwt for a herd of
60 cows.
He allowed $15,000 for family living expenses
HERD AVERAGES 10,123
Milk sales $1,316
Cattle sales 150
Total income per cow 1,466
Feed costs
Other costs
Total costs per cow 1,383
Pi ofit per cow
Profit for 60 cows 4,980
Margin after Living
($15,000) -10,020
Cost of 15% inflation 12,447
Margin after
inflation
Debt servicing
ability
WEDNESDAY IS
DAIRY
i?x DAY
AT NEW HOLLAND SALES STABLES. INC.
New Holland, PA
If you need 1 cow or a truck load, we have
from 100 to 200 cows to sell every week at your
price Mostly fresh and close springing hols
teins
Cows from local farmers and our regular ship
pers include Marvin Eshleman Glenn Fite,
Kelly Bowser, Bill Lang, Blaine Hoffer, Dale
Hostetter, H D. Matz, and Jerry Miller
SALE STARTS - 12:00 SHARP
Also Every Wednesday,
Hay, Straw & Ear Corn Sale -12:00 Noon
All Dairy & Heifers must be
eligible for Pennsylvania Health Charts
For arrangements for special sales or herd
dispersals at our barn or on your farm, contact
Abram Oiffenbach, Mgr.
717-354-4341
OR
.. Norman Kolb
7 17-397-5538
They’ve never been higher.
3 Additional labor costs
4 Additional feed costs
By way of example,
Denison picks a dairyman
who has an 80-cow herd and
feels the need to increase his
gross farm income by about
$30,000. The present herd
averages $12,000 pounds for
a total output of 960,000
pounds. At $l3 per cwt., the
gross return totals $124,800.
By adding 20 more cows and
getting the same output per
cow this farmer will produce
240,000 pounds more milk
and take in an additional
$31,200.
What will it cost to make
this move 7 Dick says the tab
will look like this.
20 cows @ $1,500 per cow
$30,000, Additional housing
for 20 cows $lO,OOO, Interest
on capital costs @12%
$4,800; Additional labor
required $5,000; Additional
12,687
$1,650
15,339
$1,994
250
1,900
400
2,394
911 '
830
553
1,013
675
16,88
607
1,518
382
22,920
706
42,360
7,920
13,662
27,360
15,192
-22,467
-5,742
12,168
83,917 229,366
Milk 9 not cows 9 is the key
feed required $7,000, Total
cost $56,800
That means spending an
additional $56,800 to add
$30,000 more gross per year.
But, Denison says, you get
a completely different
picture when you thmK about
doing a better management
job and increasing the yield
of your present hero
“Nearly every dairy cow
in Pennsylvania has the
genetic potential to produce
15,000 pounds of milk,” he
says, “so let’s take a look at
what it would mean to get
another 3000 pounds a year
out of the herd that’s now
averaging only 12,000
“That herd of 80 cows
producing 15,000 pounds of
milk per cow will produce a
total of 1,200,000 pounds for
the year, instead of just
960,000 pounds. At $l3 cwt,
that comes to a total gross of
$156,000'- or $31,500 more
19,245
$2,502
.A
600
3,102
1,199
799
1,998
1,104
66,240
'*‘**~'**~' m w&*m
~ '--W -
51,240
17,982
. . i- *
33,258
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than before And what will it
cost 7
"It won’t cost more for
housing. We already have
capacity for 80 cows
“It won’t cost any more for
cows We’ve already got 80
“It won’t increase any
bank payments we’re
already making
“It won’t cost any more
labor. We’ll still be handling
the same number of cows.
“It will cost more for feed,
but not the $7OOO we’d need
by adding 20 more cows.
Better than 60 percent of a
cow’s feed goes for body
maintenance alone.”
Glenn Shirk, dairy
specialist in Lancaster
County, the state’s number
one milk county, warns that
“a wide margin of profit is
necessary for survival m
these times of rapidQy rising
costs” and adds that the only
way to obtain adequately-
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OW CROP PLANTER
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Phone-717-444-3447
sized profits is to increase
output per cow - not add
more cows
Adjusting 1978-79 DHIA
figure to take into account
the inflationary spiral of
1979-80, and putting the value
of milk as $l3 cwt., Shirk
shows that the profit per cow
at 10,123 pounds came to only
$B3
But the profit jumps to
$382 per cow when
production went up to 12,687
pounds At 15,339 pounds the
profit level hit $706 and at
$19,245 it came to a whoppmg
$llO4.
The answer, of course, lies
in the fact that the cost of
feed and other inputs does
not go up in direct proportion
to milk output.
As you’d expect, the most
dramatic example came in
the boost from 10,123 pounds
to 12,687 pounds, showing an
increase of 25 percent in
HINIKER ADVANTAGE
output versus an increase of
only 10 percent in costs But
even going from an average
of 15,339 pounds to 19 245
pounds paid off That
represents an increase in
production of about 25
percent with added costs of
18 percent.
Say you’d like to show a
$20,000 profit. Based on
(Turn to Page B 3)