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Stocking Rate Conundrum

September 30, 2013
By: Jim Dickrell, Dairy Today Editor
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Is there a happy medium to stocking rate—where the added returns equal the extra costs?  
 
 

Tradeoff is welfare versus profit

Well-established science shows that cows do best when they have access to one stall per animal. But economics show overall profitability is higher when pens are overstocked. Is there a happy medium—where the added returns equal the costs of overstocking?


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More on overstocking

Albert De Vries, a University of Florida dairy specialist, says such a cost and benefit analysis must take in several factors: the additional milk generated by having more cows per pen; the amount of diminished milk production per cow; and the impact on stall lying time, dry matter intake, herd health, fertility, lameness and milk quality.

"The effects of a change in stocking rate are tricky," De Vries says. When stocking rate increases, fertility goes down, which leads to cows that are typically later in milk with the associated lower milk production and higher risk of culling. Also, higher somatic cell counts can result.

De Vries used the following baseline prices and costs:

  • Milk—$18.20 per cwt.
  • Milking cow feed cost—17¢ per lb. of dry matter.
  • Dry cow feed cost—10¢ per lb. of dry matter.
  • Other variable costs—$1.50 per cow per day.
  • Fixed costs—$1 per stall per day.


Using these numbers, the analysis shows that the baseline profit was about $173 per stall at the 90% stocking density. Additional profit per stall per year climbs from about $28 at 100% stocking density, to a peak of about $40 at 120% stocking density. It drops back to $32 per stall at 130% stocking density, $18 per stall at 140% and goes negative at 150% stocking density. (See chart below.)

"This extra profit depends quite a bit on variable cost," De Vries. The analysis also shows that as variable costs rise from $1 per cow per day to $1.50, the break-even stocking rate declines from 140% to 120%.

In other words, if variable costs are low, the optimal-profit stocking rate goes up.

The opposite happens with milk price. As milk price increases, the break-even stocking rate increases. The optimal stocking rate can exceed 150% when milk prices are more than $20 per cwt. But when they drop to $18 per cwt, the optimal stocking rate drops back to 120%. Profit per stall goes negative with even lower milk prices.

"In our analysis, 120% was the optimal stocking rate in terms of maximum profit per stall," De Vries says. "Profit per stall goes down after that, but is still better than 90% stocking rate until about 147%."

Lower variable costs and high milk prices increase optimum stocking rate and profit per stall per year. Fixed costs impact overall farm profitability but not optimum stocking rate.

Animal welfare is reduced at the economically optimum stocking rate when it exceeds one stall per cow. "At 120%, there is not much loss in welfare, so I would say 120% stocking rate is close to a realistic recommendation," he says.

Finally, transition cows should never have a stocking rate that is higher than one cow per stall. 

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FEATURED IN: Dairy Today - October 2013

 
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