Countdown to dairy profits: 5, 4, 3, 2, 1 LLOYD HOLTERMAN - PowerPoint PPT Presentation

Countdown to dairy profits: 5, 4, 3, 2, 1 LLOYD HOLTERMAN Watertown, Wis. USA Unlock your herd’s potential Northern Ireland ~ Nov. 2019

1981

2019: 1810 acres / 720 hectares

Four partners

Overall goal 1.7 liters of milk per 1 kg dry matter total mixed ration fed to cows

Calves Technology Genetics Milk Harvest milk from 1 Kg. DM Herd Health People Nutrition Housing

Countdown to profits 5. Great people 4. Measure, measure, measure 3. Finances & recordkeeping 2. Biosecurity & disease control 1. Genetic excellence

#5: Great People

#5: Great People  Spend lots of time on new hires  Training, assimilate into our culture  Written SOPs  Follow or CHANGE  Other staff help train  Safety, NO SHORTCUTS!  Keep moving people up  Teach new skills

#5: Great People  Promote from within  Internal growth allows culture to develop positively  “I have a chance here”  “I ’ m appreciated for my efforts”  Cross-train employees within departments  Emergency-ready  Appreciation for other team members, builds respect

#5: Great People My golden rule: Pay everybody based on how easy they make my life

# 5 Great People Labor cost per cwt. $2.61 (£1.96/cwt or 3.9ppl) for 2018 • $0.42 benefits • $2.19 labor • £0.32 benefits • £1.64 labour

#4: Measure, measure, measure  Technology has a big return  Afi-Milk (heat detection, milk weights)  DairyComp 305 (herd metrics)

Afi-Milk  Daily milk production per head  Milking speed  Conductivity, quality measure  Activity, pedometer

#4: Measure, measure, measure  Technology has a big return  Feed mixer, TMR tracker  Scale Hawk  Driveway scale for commodities

TMR Tracker & Triotrac Mixer  Pounds of each ingredient  Projects future feed use  Tracks deviations – actual vs. ration on paper  Self-propelled mixer saves $22,000 ( £16,500) /year  Mixer costs less than machinery it replaced

#4 Measure, measure, measure Cost per pound dry 10.3 cents/ lb. matter (4.0p/Kg/DM) Lactating feed cost $6.49/ cow/day (£4.87/cow/day) Milk sold per employee 1,204,971 lbs. milk FTE (530,000 l) Feed conversion 1.67 lbs ECM / lb. dry matter fed to milking herd 1.62 Kg ECM/Kg DM % forage in diet 46%

#3: Finance & recordkeeping  Focus on long-term, incremental growth  Provides more options  Goal: > 60% equity  Lock all long-term interest rates  3 different loans  Land, buildings 10 years  Cows, machinery 5 years  Operating 1 year  Balance business growth, taxes and leverage

#3: Finance & recordkeeping  Sharpen business acumen  Attend classes, seminars; non-ag?  Read financial publications every day  Wall Street Journal, Fortune, Forbes  Cornell University dairy peer group twice a year  Benchmark against similar farms  Meet with financial consultants quarterly

#3 Finance & recordkeeping  Great tax and accounting firm, people  Quickbooks  Year-to-year comparisons  Partnership reconciliation  Lender relationship  Transparency  Plan ahead, be ready to buy  Loans set up $5M

Key financial measures at Rosy-Lane Cost of milk production/cwt $14.48 (21 ppl) Feed cost/cwt $7.64 (11 ppl)  Net herd replacement/cwt $0.88 ( 1.28 ppl)

Net herd replacement cost (# animals removed x balance sheet value springer) minus all cow sales divided by cwt. of milk sold per year EX: (466 x $1800) Minus $555,088 Divided by 323,661 = $ 0.88 / cwt (1.28 ppl)

#4: Biosecurity & disease control  Test all incoming animals for BVD type 2, Johnes  Buy from healthy, high-performing herds  Clean trucks and trailers  Calf barn entry

#4: Biosecurity & disease control  Vaccinate for Johnes, Brucellosis  Test every animal at 9 weeks for BVD type 2  Close relationship with veterinarian to design protocols  Eradicate Staph aureus, Mycoplasma bovis  Monitor diseases with regular testing of bulk tank, calves

#4 Biosecurity – what we do differently  Vaccinate for Johnes  Monitor bulk tank Staph aureus, Mycoplasma  Deliveries only to farmhouse office, barns off limits

We are often asked… “Why is Rosy -Lane able to achieve such high levels success/milk/management?”

#1: Genetic excellence Long-term strategy to improve margins  Traditional view  Today’s view  Type  Fat  Milk  Protein  Fat  Feed efficiency  Protein  PL, DPR  SCS  Mastitis resistance  Livability  Calving ease  Beta, kappa casein • TPI  Net Merit

#1 Genetic excellence  No classification, genomic test all females  Focus on cutting costs, reduce:  calving problems  displaced abomasums  mastitis  ketosis  Reduce lameness  Moderate foot angle, slightly spread toe

RosyLaneLLC Delta 10090-ET

#1: Genetic excellence Reality check • Milk price unlikely to increase • Additional pounds of milk/cow too costly • Expanding cow operating margins is our greatest opportunity • Focus on reducing maintenance & replacement cost $$$

#1 Genetic excellence Dairy Wellness Profit from Zoetis (DWP$)  Measures genetic resistance:  Scours, Pneumonia  Livability  Milk fever  Ketosis  Lameness  Mastitis

Pounds milk per day lifetime Lactation Lbs. Days Lbs. Litres Milk lifetime Milk/Day Milk/Day 1 st 24,578 1055 23.3 10.3 2 nd 29,978 1430 38.0 17.2 3 rd 31,830 1805 47.9 21.2 4 th 31,830 2180 54.2 23.8 5 th 29,000 2520 58.4 25.7

Older cows return more milk & profit Lactation Liters milk Net Total net revenue revenue 1 st 11,172 $ 1413 $ 1413 2 nd 13,626 $ 1723 $ 3136 3 rd 14,468 $ 1830 $ 4966 4 th 14,468 $ 1830 $ 6796 5 th 13,182 $ 1667 $ 8463

#1: Genetic excellence Reduce vet costs  Do it yourself  Biosecurity  Farm sanitation  Genetics  Breed for mastitis resistance, lameness resistance  Breeding for longevity indirectly reduces health costs  2008 Rosy-Lane vet cost/cwt: $0.96/cwt (1.4ppl)  2018 Rosy-Lane vet cost/cwt: $0.34/cwt (0.5ppl) $0.62/cwt … $197,160 (£147,870) /year difference

#1: Genetic excellence Breeding strategy  < 600 NM$ bred to Angus  600-700 NM$, high DPR, Holstein conventional  700-800 NM$ sexed semen 1x, Holstein conventional  800-900 NM$ sexed 2x, conventional Holstein  > 900 NM$ sexed semen 3x or flush

11 years progress at Rosy-Lane 2007 BST 2019 Cows 695 1079 Milk 12,953 L 13,948 L Fat 492 Kg 616 Kg Protein 374 Kg 457 Kg Vet EUR/45 Kg milk 1.8 EUR 0.60 EUR

11 years progress at Rosy-Lane 2007 BST 2019 Services/conception 3.1 1.7 Preg rate 18% 37% Dead on arrivals 8.6% 3.3% % milking herd treated 0.9% 0% Liters milk/Kg feed 1.62 1.68

Financial impact of feed conversion  By improving from 1.62 to 1.68 kg/milk per kg/feed fed to milking herd, gained $288,958 (£216,719) US per year 13,948 kg milk x .06 x .32 cents/L x 1079 cows

Summary: Countdown to profit $$ 5. Great people 4. Measure, measure, measure 3. Finances & recordkeeping 2. Biosecurity & disease control 1. Genetic excellence

Which direction is your business headed? Which of these 5 will you take action on? When?

P.S.  The price of inaction is far greater than the cost of making a mistake. -- Meister Eckhart  Inaction creates nothing. Action creates success. -- Stephen Richards