Originally published in 1997, 15 Measures of Dairy Farm Competitiveness is an Ohio State University Extension publication that has undergone revisions and is now available for use by dairy farmers, lenders and others interested in dairy farm finances.
The bulletin is available at dairy.osu.edu or by contacting your local Ohio State University Extension office.
The measures described in the bulletin represent key characteristics of the most competitive dairy producers in the Midwest.
While a single dairy may not meet all 15 measures, those that meet the majority should maintain long-term competitiveness.
The measures fall into broad areas which provide an overview of the competitiveness of a dairy farm business.
These areas include rate of production, cost control, capital efficiency, profitability, liquidity, repayment schedule, solvency, mission, maintain family’s standard of living, motivated labor force and capturing dairy manure nutrients.
The bulletin provides a summary of each measure, along with instructions for calculating, evaluating and interpreting the measure, followed by a discussion of the competitive range.
Energy corrected milk
The first measure, Rate of Production: Pounds of Milk Sold per Worker, evaluates the pounds of energy corrected milk (ECM) sold per worker.
Pounds of ECM sold per worker is an important tool for evaluating the productivity of workers and cattle. It combines efficient labor utilization with good to excellent herd production.
If all feed is purchased, the general rule is to double these benchmarks. Because freestall parlor systems can handle more cows, these systems allow more pounds of milk per year per worker than tie stall or stanchion systems.
Tie stall or stanchion barns entail considerably higher costs per cow than larger, modern freestall facilities.
The combination of lower investment per cow and more efficient labor utilization make freestall housing systems much more economical because they generally result in lower costs for producing each unit of milk.
However, existing tie stall or stanchion facilities may be able to compete with freestall systems if the operation carries little or no debt.
Fewer pounds of milk per worker will likely be sold per year for small versus large breed herds, but the value of ECM sold per year may be similar under similar management systems.
This occurs because of the higher value per cwt of milk for the small breeds of dairy cattle (milk is higher in concentration of fat and protein).
However, because the value of milk sold is affected by milk price fluctuations, gross milk sales is not a very useful tool for measuring productivity trends over time.
If the pounds of milk sold per worker is below the competitive level:
Evaluate herd productivity
To achieve the desired level of pounds of ECM sold per worker, cows will most likely need to be above average in production for their breed.
Many competitive farmers implement strategies to increase herd productivity.
Some strategies include feeding balanced rations, optimizing cow comfort, using proven milking technologies, improving cow flow in the parlor, milking more than two times per day and filling facilities over 100% when labor is only slightly affected.
Evaluate labor efficiency
Antiquated facilities and uncomfortable working conditions reduce labor efficiency. Careful hiring also plays an important role in labor efficiency.
Employee training, motivation and pride in doing a job well help workers to be more efficient and effective, whether they are family members or unrelated employees.
Workers in tie stall or stanchion systems should be able to handle 30 to 35 cows per full-time equivalent, including raising crops.
Workers in freestall systems should be able to handle 40 to 50 cows per FTE, including raising crops.
Efficiently operating parlors will turn a minimum of four times per hour.
Set a realistic goal. Collect information for your own farm, compare your performance with the goal and take appropriate corrective action, if needed.
Extension educators and specialists are available to analyze, evaluate and provide recommendations.
