TUCSON – An $8 million annual feed bill for raising heifers is big enough, but when it climbs to $10 million, you can't afford any slippage.
Coping with the increased operating expenses of today's heifer-raising business requires a more hands-on management role, careful cost control and creative thinking, a three-producer panel said at the 13th Annual Dairy Calf and Heifer Conference here this week
"Whether you've got high- or low priced feed, you've got to manage all the time,” said Darin Mann, who owns a heifer-rearing company with 12,000 head in Parma, Idaho.
With a $2 million increase in his feed bill over last year's, Mann has focused on feed loss, or shrink. Fortunately, Mann's operation, which raises replacements for six local dairies, built a new feeding facility a couple of years ago to help control shrink. The upgrade included adding three-sided commodity barns, and an asphalt pad and tanks to hold feed. He's also packaging and coverage silage more carefully.
"At the end of the day, a cost savings of 3 percent equals hundreds of thousands of dollars,” Mann said.
Joining Mann on the panel were Allen Vander Horst, who milks 9,400 cows at two Texas dairies and raises some of his own replacements, and Bart Hansen, of Rupert, Idaho, who raises bull calves for dairy beef.
Hansen said his operation lost clients last year, forcing him to look for ways to survive. He and his partners prepared in-depth spreadsheets to determine costs and margins.
"That has helped immensely in helping us keep close control over inventories,” said Hansen. The ranch also put silage in bags to cut waste and incorporated alternative feed.
Vander Horst said his relationship with his lender has changed. "Historically, we didn't talk much, but now we communicate more,” he said.
Although he used up low-quality feed in storage to reduce expenses, Vander Horst said he has fine-tuned but not changed the fundamentals he successfully developed over the last 12 years. He built a cross-ventilated barn for his calves two years ago when he had the capital to invest in a facility. The downturn has made it a good time to acquire equipment at cheaper prices.
Even so, Vander Horst said dairy producers should not bear the brunt alone. "We've lost a lot of money this year,” he said. "Producers must pressure suppliers and vendors to cut their costs.” Those include fuel surcharges, he added.
Elsewhere at the meeting, Dairy Calf and Heifer Association members reviewed progress on the organization's Gold Standard, a scorecard of basic production standards for the dairy calf- and heifer-rearing business.
Catherine Merlo is Western editor for Dairy Today. You can reach her at email@example.com.