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Current feed costs and resulting margins may tempt you to add more cows to improve profits and cash flow. While this seems to be a path to increased cash, it may also be the beginning of decreased performance and profit.
From the obvious health effects, overstocking in the close-up and fresh pens seems to be under much better control on an increasing number of dairies. However, the urge to overpopulate the lactating strings continues to result in overstocking—often at the expense of profits.
First-lactation pens should also be kept at lower stocking densities to avoid decreased performance.
The potential impact of overstocking on income over feed cost (IOFC) is illustrated in the table below. Not only do farms B and C produce more total milk on the market than farm A, they also consume more feed to produce as much profit.
In this example, farm C is producing 20% more milk to net the same profit as farm A. Cow comfort, water availability, ventilation and feed delivery may also have a significant impact on the net result of increased density for pens on your dairy. How do the actual numbers differ on your dairy?
Decreased feed efficiency is expected in pens of higher density—especially in first-lactation animals. Feed cost per cwt. of milk produced is more than $2 higher in the example for farm C as compared to farm A. Not only is gross margin decreased for farms B and C, but labor and total variable costs would be expected to be greater to cover the additional cows for these two dairies as compared to farm A.
Since each point in Milk Profit Index is equal to $25.50 per cow per year in IOFC, the per-cow profitability advantage is more $1,400 per cow per year for farm A as compared to farm C.
To determine how feed efficiency is related to stocking density on your dairy, it may be helpful to calculate daily IOFC for each pen. Then evaluate the results over time as pen density changes.
Once you have determined the optimum pen density (based on gross margin), it will be easier to set goals for each of the pens. The results will not only help to maximize gross margin, they will result in fewer total pounds of milk marketed to achieve the same level of profit.