Buckeye Dairy News: Volume 1 Issue 4

  1. Milk Price Outlook

    Gary Schnitkey

    The Basic Formula Price (BFP) for January was released on February 5th.  For January, the BFP was $13.25 per cwt.  This is the second month in a row that the BFP has been above $13.00.

    Currently, BFP futures contracts for February are trading above $13.00.  This trading, along with most analys projections, places the February BFP above $13.00.  It's highly likely that we will have 3 months of BFPs above $13.00 per cwt.

    BFPs above $13.00 per cwt. will place producer pay prices for milk in the mid to high $14.00 range for both January and February.

    High milk prices are occurring because of below expected milk production increases. December milk production was up only .9 percent from year earlier levels.  Moreover, cheese prices were strong and held steady in the $1.40 per pound range during January.

    How long will high milk prices last?  Most analysts now are projecting declines in milk prices from February to June.  In June, the BFP will likely be around $12.00 per cwt., near its historical average.  Then, the BFP is projected to rise into the fall and winter months.   If this scenario occurs, we are looking at an average milk price for 1998 that is about $1.00 higher than the historical average.

  2. Factors to Consider in a Program for Heat Detection

    Dr. Joe Ottobre, Associate Professor 
    Department of Animal Sciences

    Data from DHI summaries of Ohio dairy herds indicate that the average estrous (heat) detection rate in Ohio is approximately 45%.  Thus, Ohio dairy producers are missing 55% of the opportunities to breed cows, or are breeding at the wrong time, resulting in delays in conception and substantial economic loss.  It is estimated that the calving interval in Ohio herds could be reduced by at least 40 days if more heats (>70%) were accurately detected.

    Detecting dairy cows in heat is challenging because the duration of estrus in cattle is short. Estrus normally lasts from 10 to 18 hours, but could be as short as two to six hours - especially under hot environmental conditions.  Even with twice-a-day heat checking, you may not observe heat in the cows with the shortest estrous periods.  There is an advantage of the short estrous period of cows that should be appreciated, though.  Estimation of time of ovulation and determining the best time to breed can be done more accurately in cattle than in some of the other domestic species.

    An important point to remember about estrous detection in cattle is that the only definitive sign that a cow is in heat is that she will stand to be mounted.  Cows mounted on the run are not displaying true standing estrus. Cows that mount other cows may or may not be in heat. It is true that estrous cows tend to be more active than herdmates, but to verify that they are in heat, you must see them stand.

    There are secondary signs that you might use as clues that a cow is in heat, but these signs do not tell you for sure.  Sometimes clear mucous secretions can be seen coming from the vulva.  At the time of estrus, mucous secretions from the cows reproductive tract are more voluminous and less viscous than at other stages of the estrous cycle.  The vulva may be swollen and pink.  As mentioned above, cows are more active at the time of estrus.  They may display an increase in vocalizations, nudging, and sniffing, and may attempt to mount other cows.  Pedometers have been used to get an objective measure of their activity.  Other secondary signs are decreased milk production and depressed appetite.

    Occasionally, a small amount of blood may appear in the mucous secretions or a patch of blood may be observed on the tail.  This is called metestrous bleeding and occurs about 35 to 45 hours after the end of estrus.  This is not an indication of conception or failure to conceive. Observation of this phenomenon indicates that estrus and ovulation have already occurred. Therefore, if heat was not observed in a cow with metestrous bleeding, she should not be bred until her next detected heat.

    To increase the rate at which cows are observed in heat, it is best to have cows in a situation where they are most likely to attempt to mount one another.  Naturally, cows will be more inclined to attempt to mount when they have secure footing.  Potentially slippery surfaces, such as concrete, and sloppy conditions, tend to discourage cows from mounting.

    Cows that are distracted by other things, such as eating, are not very likely to investigate each other for estrous cues.  As such, there is not much value in checking heat while cows are eating.  Obviously, cows that are laying down will not mount other cows, nor will they be mounted.  Therefore, cows should be encouraged to move around and interact during the observation period.

    To optimize heat checking conditions, observations should be made while cows are in a clean area with good footing.  A well-drained, dirt exercise lot works well, or a pasture if the cows are not too distracted by grazing.  The cows feet should be properly trimmed.  Cows with sore feet are less likely to mount other cows, or stand to be mounted.  The cows should be grouped in reasonably close proximity, to encourage them to investigate one another.  If they are spread out in a wide open space, group them so that they are closer together; however, they should not be grouped so tightly that their movement is restricted.

    Observe the behavior of the cows for at least 20-30 minutes two times per day. Additional periods of observation would further improve detection rate.  Since cows often come into estrus  in the middle of the night, it is best to check as early in the morning and as late in the evening as possible.  Take note of the animals that stand still and allow other cows mount.  If the cows do not seem to be investigating one another, move them around to improve the opportunity for a cow to pick up the scent of an estrous cow.

    It is important to keep good records of the occurrences of estrus, secondary signs of estrus, and even metestrous bleeding.  Such records can be used to predict when the cow is due to return to heat.  The estrous cycle of a cow ranges from about 18-24 days and averages 21 days. If a cow is showing estrus more frequently than this, she may have a cystic follicle that is stimulating estrous behavior repeatedly.  In this case, the cow should be examined by a veterinarian.

    There are various aids to estrous detection that the dairy producer could consider using. Aids, such as heat check patches, can be very helpful, but do not substitute for a conscientious program of regular observation for estrus.  The electronic recording of mounts is an emerging technology that may prove to be effective.  Methods for estrous/ovulation synchronization should also be considered for optimization of reproductive success. (See accompanying article entitled: Emerging Technologies for Estrous Synchronization.)

    In summary, detection of estrus is critical for a successful breeding program.  As such, the dairy producer should take this responsibility seriously and consider assigning this duty to a well-trained staff person.  Higher estrous detection rates translate into improved fertility in the herd and ultimately result in greater economic benefits.

  3. 15- Measures of Competitiveness

    Dianne Shoemaker, Agriculture Agent

    This month: Debt per cow 
    Competitive Level:   Less than $2000 per cow 
    Less than $3000 per cow during an expansion 
    Calculation: Total farm debt/(lactating cows + dry cows) 
    Example: $800,000 debt / 300 cows (249 lactating + 51 dry) = $2,667 debt per cow

    Often farmers ask: how much debt can my dairy handle?  While the debt to asset ratio looks at the overall debt position of the farm, debt per cow looks at how the farm will repay the debt.  As the profit center of a dairy, cows generate the money needed to make principal payments.

    If debt per cow is too high

    • When debt per cow is above $2000, businesses may have difficulty making all principal and interest payments. 
      Solutions include: 
      -sell unproductive assets and pay down debt 
      -increase number of cows with little additional debt 
      -increase net income per cow and pay down debt 
      -withdraw less from the farm for family living and pay down debt (this is not a good first choice!)

    If debt per cow is too low

    • If debt per cow is very low and the business is profitable, the management team should assess the business to see if moderate investments could increase efficiency and profitability.  While a common goal in our grandparent's generation was to pay off all debt, that is not necessarily a practical goal today.  Continuing to invest in new technologies and improved facilities will be an important strategy for growing Ohio dairy businesses as they compete with dairymen around the world.
  4. Who's Who

    Normand St-Pierre 
    (614) 292-6507

    Normand is a faculty member in the Department of Animal Sciences with an 80% Extension and 20% research appointment. His primary area of responsibility is dairy herd management. He is a new faculty member in the Department, arriving July 1, 1997.  Many of you may have already known Normand prior to his arrival at OSU. He received the B.S. and M.S. degrees from Universite Laval in Quebec, Canada and the Ph.D. in 1985 from OSU. He worked in the feed and related industries before and after completion of his doctoral degree. His immediate employment prior to becoming a faculty member at OSU was serving as President of two agricultural firms. He brings a lot of human and fiscal resource management skills to the position as well immense knowledge of and experience with the dairy industry.  His schedule has been quite packed with speaking engagements since his arrival. He has become a very active member of the Ohio Dairy Team and the OSU Dairy Restructuring Team, and he is the editor of this outstanding newsletter that you presently reading. He is a pleasure to work with, having a sense of humor, high level of motivation, and an ability to get others excited. We welcome him and encourage him to continue to keep the trail ablaze! 

  5. Tough Management Yields - Dairy Profits

    Donald J. Breece Ph.D., Southwest District Specialist, Farm Management 
    Ohio State University Extension

    The last three years in the dairy business has required decisive action and tough management by dairy farmers.  Yet, those Ohio dairy farms that controlled costs, especially feed, have shown good profits.  Farmers that did not plan for feed purchases or that failed to take control of production efficiency saw profits deteriorate.

    Results of the Ohio Farm Business Summary clearly demonstrates the potential for profits on well managed dairy farms.  This report summarized over 90 Ohio farm businesses that used FINPACK for year-end analysis.  The report represents farms from 31 Ohio counties.  Participation is voluntary, through educational programs offered by The Ohio State University Extension and several FBPA programs.

    The FINPACK computer program is a comprehensive financial planning and analysis system.  The data in the Ohio report were not collected from a random sample.  Therefore, caution should be exercised in generalizing results to the situation of Ohio farms. Rather, it is a useful example of differences between farms resulting from improved management.  The dairy enterprise analysis is sorted by return to overhead and is separated by lower and upper third of farms participating in the summary.

    The management function most required by dairy managers is controlling.  It is measuring performance in order to ensure that plans are achieving enterprise objectives.  There are four steps in the control process: 
    1. Establish performance objectives and   standards, 
    2. Measuring actual performance, 
    3.Comparing performance to standards, and 
    4. Taking corrective action.

    "Milk prices are what they are; a farmer must control his own efficiencies."  Cost control, quantity and quality production, are within a farm managers own realm of influence.  A farmer may choose $6.50 per hundred weight of milk as a performance objective for covering feed costs of the cows and replacements.  Feed records, including feed inventory changes, are required to measure performance.  Comparing results from records analysis and taking corrective action will follow.  Corrective actions may include improving forage quality, changing rations, controlling waste or using a total mix ration system.

    The table, representing the top third of dairy farms, demonstrates the results of tough management and cost control.  Even with the higher than normal feed cost of 1996, net return per cow remains very good at $689 vs $358 for average farms.

    "Our farmers, who get half their income from milk, are in economic trouble.  Add a penny to the price paid to farmers and you will add half a billion to their income."  No, this is not a modern quote, it comes from an article in Readers Digest, September 1942.  If we think about the changes in dairy farming, since 1942 can we really expect less for the future.  Certainly, milk price is an important factor in dairy farm profits, as it has always been.  But, it will be the tough dairy farm manager that will take control of their own efficiencies and make superior profits in the competitive dairy business. 
      
     

    Average Rsults of Top 33 % of Dairy Farms  
    -Ohio Farm Business Summary, 1996 -
     
    Gross Return
    $15.64
    Direct Expenses
    $9.29
    Overhead Expenses
    $2.99
    Net Return
    $3.36