MANAGEMENT SYSTEMS TO IMPROVE THE ECONOMIC AND ENVIRONMENTAL SUSTAINABILITY OF DAIRY ENTERPRISES (REV. NC-1119)

• Sponsoring Institution: National Institute of Food and Agriculture
• Project Status: COMPLETE
• Funding Source: HATCH
• Reporting Frequency: Annual
• Accession No.: 0217502
• Multistate No.: NC-1042
• Project Start Date: Oct 1, 2007
• Project End Date: Sep 30, 2013
• Program Code: [(N/A)]- (N/A)

Recipient Organization
UNIVERSITY OF FLORIDA
G022 MCCARTY HALL
GAINESVILLE,FL 32611

Performing Department
Animal Sciences

Non Technical Summary
The NC-1042 committee maintains that a systems paradigm will remain the most useful approach to help dairy managers make the best decisions. The revised project will develop decision support systems that address nutrition, management, environmental impacts, and economics of 1) calves and heifers; and 2) lactating and dry cows; and furthermore integrates these decision support systems using a 3) whole farm systems approach. Whole dairy farm management research remains needed to enhance understanding and application of farm records, and reduce undesirable impacts on the environment. In dairy farms of the future, a system to integrate data from production, financial and management databases into routine decisions will be necessary to optimize efficiency and economic sustainability. Since the start of this project, several member states and developed and assessed financial databases. These databases provide the framework for further expansion and development of financial benchmarks. As energy costs continue to increase, their impact on management decisions for profitability and sustainability become more dominant in the rank of inputs. The creation of a database for total farm energy budgets and usage is needed to accurately evaluate alternatives. Niche markets or alternative management schemes (organic, on farm processing, electricity generation, grazing, and climate (Carbon) trading) have been proposed for sustainability of dairy enterprises. These enterprises need base line data and financial benchmarks also. Dairy producers need to make daily decisions about whether and when to treat, inseminate, cull, dry-off, raise, or purchase dairy cows. They need to simultaneously consider a cows future biological performance, milk and cow prices, and herd constraints such nutrient balance or availability of labor to make the best decisions day after day. These future estimates are subject to seasonality and price and production risks. Directly associated with these complex tasks are questions about the economic value of proposed changes in management, such as reproductive management. Dairy producers and allied industries have indicated that they need support in making these complex planning decisions to improve their efficiency of production, profitability, and for the dairy industry to remain economically and environmentally sustainable. The computer programs developed in this project will enable evaluation of financial implications of the direct and indirect effects of various management options, and assist dairy producers with making effective decisions. Finally, dairy farms need to make sure they do not cause undesirable impacts on the environment.

Animal Health Component

(N/A)

Research Effort Categories

Basic

(N/A)

Applied

(N/A)

Developmental

(N/A)

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
307	3410	1060	30%
307	3410	3010	35%
307	3410	3100	35%

Knowledge Area
307 - Animal Management Systems;

Subject Of Investigation
3410 - Dairy cattle, live animal;

Field Of Science
1060 - Biology (whole systems); 3010 - Economics; 3100 - Management;

Keywords

dairy

economics

sustainability

reproduction

culling

replacement

Goals / Objectives
Main objective: To evaluate and develop sustainable management systems for dairy herds that address critical quality and variance control factors with implications to economic efficiencies and environmental impacts. a) To analyze management and nutrition strategies for replacement heifers as they pertain to production and profitability (heifers) b) To optimize lactating and dry cow decision-making as it relates to animal health, nutrient utilization, milk production, reproduction, and profitability (cows) c) To evaluate system components and integration of information into decision-support tools and whole farm analyses to improve efficiency, control variation, and enhance profitability, and environmental sustainability (whole farm)

Project Methods
The proposed work focuses on the analysis and application of farm records, and farm strategies for environmental enhancement. The existing Dairy Business Analysis Project, under the leadership of FL and GA will continue to provide benchmarking summaries of dairy enterprise financial records similar to the western accounting firms. Additional benchmarking and analysis will be developed by gathering key investment and cost center information from dairy enterprises, starting with PA dairy farms of various sizes. Subsequent comparison of business models will compare combinations of enterprises relative to their effect on profitability. Survey and analysis tools will be shared with other stations. The use of process control on dairy farms will be investigated to reduce variation and minimize deleterious effects of weather and health on production, and in one instance on crop systems. Highly statistical in nature, these business techniques have not been applied routinely to dairy farms and are not well understood by farm managers. It is important to achieve some competency in these techniques to evaluate their value to dairy managers. Several stations contributing to NC-1042 have extensive experience with software development. Software for managerial decisions has proven problematic when a large volume of input is required and a multitude of assumptions make the software cumbersome to operate and have confidence in. This committee is proposing to intensify two types of software to assist in dairy decisions. The first is spreadsheet software that enables farmers, advisors, and extension personnel to make recommendations to address specific well-defined decisions for which inputs can be changed to assess the economic sensitivity. An example would be a spreadsheet to assess the efficiency and net cost of pasteurizing waste milk for dairy calves in lieu of purchasing milk replacer. Several states have these types of spreadsheets, and more need to be developed cooperatively to encapsulate NC-1042 results in managerial decisions. The second category of software includes broader repetitive decisions based on production records that are already computerized on farms. An example of this is a cow replacement model that will be further developed at FL. New Mexico will take the lead in developing a stochastic dynamic model of herd performance and integrate it with more recent equations about manure excretion with the purpose to better predict seasonal manure excretion following Cabrera et al. (2006) and integration of it with the most up-to-date parameterizations of manure excretion referenced in the literature, which will be locally adapted.

Progress 10/01/12 to 09/30/13

Outputs
Target Audience:Colleagues in thismulti state project. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Two students participated. How have the results been disseminated to communities of interest?Yes through extension talks, newsletters, and peer reviewed publications. What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported

Impacts
What was accomplished under these goals? We developed decision support tools for dairy farmers. These tools help to?optimize lactating and dry cow decision-making as it relates to milk production andreproduction, and profitability (cows).

Publications

Progress 10/01/07 to 09/30/13

Outputs
Target Audience:Dairy farmers, Extension personnel, and allied dairy industry personnel. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest?Results have been published in the peer-reviewed literature, and through newsletters and University of Florida Extension publications. What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported

Impacts
What was accomplished under these goals? Objective 3: To evaluate system components and integration of information into decision-support tools and whole farm analyses to improve efficiency, control variation, and enhance profitability, and environmental sustainability (whole farm) Decision Tools for Dairy Producers DairyVIP, a model that optimizes breeding and culling decisions, was used to study the effect of changing milk prices on optimal culling decisions and rule-of-thumb decisions like culling open cows when their daily milk production does not cover variable cost anymore. Contrary to common belief and practice, lower milk prices should reduce open cow culling. The Dairy Business Analysis Project (DBAP) has been continued with a survey of the 2008 data. Twelve dairy farms located in Florida and Georgia had contributed complete financial and production data by the end of September 2009. All DBAP data (1995-2008) are stored in a SAS database that allows for easy further analysis. For example, data from DBAP was used to calculate the weighted cost of capital on dairy farms in Florida. A large linear programming model (DairyPLAN) was developed to study optimal and non-optimal decisions regarding the use of type of semen (conventional, sexed, beef), culling decisions, heifer purchase decisions, and calf keep decisions. Seasonality can be simulated, which was used to study the economic value of using in-vitro fertilized embryos in cows to increase pregnancy rates under heat stress conditions in the summer. More recently, the value of genomic testing has been evaluated. The advantage of linear programming is that individual (group) decisions can be optimized while herd constraints may be implemented. For example, a closed herd without purchase of animals can be modeled. Results of these analyses have shown that herd constraints affect optimal decisions and should be considered. In particular, the use of sexed and beef semen could be advantageous while embryo transfer in the summer could be profitable. A simple spreadsheet (DairyCALC) has been developed to simulate the daily technical and economic performance of young stock and cows in parities 1 to 4+. Key are the virtually immediate results from changes in inputs. The results of two sets of inputs can be compared side by side. There is a screen with a limited set of inputs and a screen with an extended set of inputs, depending on user preference. The spreadsheet has been used to evaluate the economics of sexed semen, stocking density, Herd Navigator, and genomic testing. Lactation records received from DRMS in Raleigh, NC, were analyzed for risk of culling with specific disposal reasons. Results showed risks by parity, dim, and pregnancy status. The data set was also analyzed for the effect of days open on fresh cow culling in the subsequent parity. Ninety percent of the farms showed increased risks of culling and death with greater days open. Regression results showed approximately $0.25 extra cost per day open due to increased culling and disease. DHIA data analysis is continued to document the amount of seasonality in dairy cattle production in the Southeast US.

Publications

Progress 10/01/11 to 09/30/12

Outputs
OUTPUTS: We studied the effect of optimal genomic testing in dairy cattle with simulation models. Linear regression equations were developed. The eequations were built into the linear program previously developed. This linear program is state-of-the art and publications are planned for 2013. A simpler herd calculator was greatly extended to do on-th-fly calculations of herd evaluations, such as overcrowding, the use of sexed semen, and genomic testing. The model was used to support the value of new information technology and genomic testing. An existing model, DairyVIP, is being converted for on-line use with the help of IFAS-IT and should be ready in Spring 2013. We evaluated the agreement between Afilab and DHI testday components. We started building a model for evaluation of embryo transfer economics. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
Results from the herd budget calculator showed that the Herd Navigator could be of value to dairy producers in Canada. The calculator also showed that 120% stocking density was optimal for dairy herds for typical assumptions, but this stocking density leads to reduced welfare. The Afilab - DHI comparison showed "average" agreement which fluctuates greately from month to month and cow to cow.

Publications

• Inchaisri, C., A. De Vries, R. Jorritsma, H. Hogeveen. 2012. Improved knowledge about conception rates influences the decision to stop insemination in dairy cows. Reproduction in Domestic Animals 47: 820-826
• Bethard, G., and A. De Vries. 2012. A Financial Perspective of Herd Reproductive Performance and Fertility. Pages 88-99 in: Proceedings Dairy Cattle Reproduction Conference, November 8-9, Sacramento, CA. (Summarized in pages 18-19 of Cow Management magazine, December 2012 (Vol.4. Issue 6)
• De Vries, A. 2012. Economics of Heat Stress: Implications for Management. DAIReXNET, available on http://www.extension.org/pages/63287/economics-of-heat-stress:-implic ations-for-management Last Updated: April 03, 2012
• De Vries, A., J. B. Cole, and D. T. Galligan. 2012. Economics of getting cows pregnant: the quality of the pregnancy. Pages 70-78 in: Proceedings Great Lakes Regional Dairy Conference, Mt. Pleasant, Michigan, February 9-11.
• De Vries, A. 2012. The value of a pregnancy. Pages 36-49 in: Proceedings Great Lakes Regional Dairy Conference, Mt. Pleasant, Michigan, February 9-11.
• De Vries, A. 2012. Milk sensor systems: how can we use the data Pages 104-108 in: Proceedings National Mastitis Council 51st Annual Meeting. St. Pete Beach, Florida. (featured in Conducting a Milk Scene Investigation, Cow Management, February 2012)
• Salfer J., and A. De Vries. 2012. Where does genomic testing fit into your herd Hoards Dairyman, December, 2012. Page 789.
• Salfer J., and A. De Vries. 2012. Do we need very heifer calf Hoards Dairyman, October 25, 2012. Page 684.
• Kaniyamattam, K., K. D. Gay, E. J. Diepersloot, D. R. Bray, C. R. Staples, and A. De Vries. 2012. Accuracy of the Afilab real time milk analyzer to predict DHIA fat, DHIA protein, and lactose. J. Anim. Sci. Vol. 90, Suppl. 3/J. Dairy Sci. Vol. 95, Suppl. 2:476 (abstract 533).
• De Vries, A. 2012. Regression meta-models to predict the value of pregnancy in dairy cows. J. Anim. Sci. Vol. 90, Suppl. 3/J. Dairy Sci. Vol. 95, Suppl. 2:475 (abstract 531).
• Maltz, E., L. F. Barbosa, P. Bueno, L. Scagion, L. F. Greco, **K. Kaniyamattam, A. De Vries, and J. E. P. Santos. 2012. Effect of precision feeding on performance, nutrient excretion, and feeding behavior of early lactation dairy cows. J. Anim. Sci. Vol. 90, Suppl. 3/J. Dairy Sci. Vol. 95, Suppl. 2:715 (abstract 799)

Progress 10/01/10 to 09/30/11

Outputs
OUTPUTS: The linear programming model that was developed during the last 2 years was refined and extended. The key ability of the program is that it can incorporate herd constraints, such as a limitation on the number of milking cows or the availability of replacement heifers. The model was used to investigate the combined effect of using sexed semen to generate a surplus of heifer calves, with the effect of using genomic testst to select the best of the heifer calves. A greater surplus of heifer calves is more expensive to produce but also allows for a greater selection intensity, and therefore genetic progress. Initial results were shared in producer meetings in Florida and the Dairy Cattle Reproduction Council meeting in Kansas City, as well as this multi-state annual meeting. The linear program was also used to study the economics of improved pregnancy rates in the summer in heat stressed cows. The model was extended with a comprehensive biological model that details the impact of heat stress on cow and heifer performance. The results were reported at the ADSA annual meeting, the Dairy Cattle Reproduction Council meeting, and producer meetings in Florida and Puerto Rico. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
The combination of using sexed semen in heifers to generate a surplus of heifer calves, and genomic testing to better select among the calves, resulted in an extra profit of $37 to $48 per cow per year as a result of genetic progress. The value of genomic testing was greater when no parent information was available, but the combination of genomic testing with parent information was more valuable. Therefore, the availability of parent information was worth $11 per cow per year. Regarding the seasonality of heat stress, the transfer of in-vitro fertilized, sexed embryos in the summer was most valuable when the number of milking cows as the constraint. When the total number of cows was the constraint, the transfer of IVF-embryos was not profitable. The results clearly showed the effect of herd constraints on the value of improving reproduction in the summer. A paper on which heifer calves to select with genomic tests was widely distributed within Pfizer Animal Health.

Publications

• De Vries, A., J. B. Cole, and D. T. Galligan. 2011. Economics of reproduction: the quality of the pregnancy. Pages 90-97 in: Proceedings Dairy Cattle Reproduction Conference, November 10-11, Kansas City, MO
• De Vries, A., D. T. Galligan, and J. B. Cole. 2011. The use and economic value of the 3K SNP genomic test for calves on dairy farms. EDIS Document AN270.
• De Vries, A. 2011. Economics of heat stress: implications for management. Pages 49-62 in: Proceedings Dairy Heat Stress Road Show. Okeechobee, FL; Camuy, PR; Stephenville, TX; Clovis, NM; and Tulare, CA. in English + Spanish)
• De Vries, A., T. R. Bilby, J. Block, and P. J. Hansen. 2011. Economic evaluation of embryo transfer in dairy cows during the summer using linear programming. J. Anim. Sci. Vol. 89, E-Suppl. 1/J. Dairy Sci. Vol. 94, E-Suppl. 1: 351 (abstract T248)
• De Vries, A. 2011. Linear programming to evaluate the economics of reproductive efficiency and sexed semen considering herd constraints. Midwest ADSA/ASAS abstracts. Page 27 (invited)

Progress 10/01/09 to 09/30/10

Outputs
OUTPUTS: Selective use of sexed semen in heifers and cows may increase genetic progress from the daughter-dam path and allows all calves from low producing cows to be sold because they are not needed to replace culled cows. Economic aspects of the insemination mix in dairy heifers and cows were evaluated with a linear programming model. The model considered 3 semen types (sexed dairy, conventional dairy, conventional beef), 5 levels of milk production, and 10 parities including heifers. Each parity had 20 voluntary culling opportunities for non-pregnant animals. Heifers were allowed 5 insemination opportunities and cows 10. The model contained 2,425 decision variables. Genetic value of heifer calves was a function of service sire net merit, age of the dam, and level of milk yield of the dam. Heifers were assumed to be genetically equal. Inputs were lactation curves, milk price, feed costs, insemination costs, service rates, conception rates, dystocia costs, involuntary culling risks, and other costs. All bull calves and crossbred calves were sold, as well as excess heifer calves. The linear program has been extended to include seasonality in milk production, conception rates, and risks of involuntary culling and death. When all options are allowed, the model contains 70,000 variables and 200,000 constraints. Animal categories vary by parity (10), calendar week (52), insemination opportunity (10), type of semen (3), and whether the calf is raised or sold (3). Objective is to evaluate optimal strategies in seasonal herds. Typical herd constraints are a closed herd, herd size, parlor capacity, and milk quota. The model is used to evaluate the use of sexed and beef semen, embryo transfer, and value of improved fertility in Israel. Results of the model have been disseminated at national conferences for dairy producers, allied industry, and academia. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
The optimal decisions resulted in $335 profit/cow per year when only conventional semen was allowed without a constraint on the number of heifer calves. Additional choice of sexed semen increased profit/cow per year to $339 with sexed semen being used in the first inseminations in heifers and higher producing first parity cows. Profit/cow per year increased to $368 when beef semen was offered as a third choice but fewer dairy heifer calves were born than were needed to replace culled cows. Setting the number of born heifer calves equal to the number needed to replace culled cows, profit/cow per year was $321 considering only conventional dairy semen. Sexed semen was not used when offered. When beef semen was also offered, profit/cow per year increased to $353 with beef semen used in lower producing cows and conventional semen and some sexed semen in higher producing cows and heifers. The optimal insemination mix often included sexed semen but depended greatly on the relative value of dairy bull calves, dairy heifer calves and crossbred calves. These outcomes will help dairy producers make better informed insemination decisions. Impacts have not yet been documented.

Publications

• De Vries, A. 2010. Effect of sexed semen on dairy heifer supply from 2006 to 2012. Univ. Florida EDIS Document AN242.
• De Vries, A. 2010. The Economics of using sexed semen. WCDS Advances in Dairy Technology 22, pages 357-370 in: Proceedings of the 2010 Western Canadian Dairy Seminar, University of Alberta, Alberta, Canada.
• De Vries, A. 2010. Effect of sexed semen in heifer supply and economics. Pages 27-38 in: Proceedings Northeast Dairy Producers Conference, Liverpool, NY.
• De Vries, A. 2010. Economic aspects of dairy fertility in the USA. Abstract book of the 61th Annual Meeting of the European Association for Animal Production. Heraklion, Greece, August 23-27. Page 144.
• De Vries, A. 2010. Economic aspects of the use of sexed semen in dairy heifers and cows considering herd constraints. J. Anim. Sci. Vol. 88, E-Suppl. 2/J. Dairy Sci. Vol. 93, E-Suppl. 1/Poult. Sci. Vol. 89, E-Suppl. 1: 783.
• De Vries, A. 2010. Optimization of insemination and replacement decisions under herd constraints. J. Anim. Sci. Vol. 88, E-Suppl. 2/J. Dairy Sci. Vol. 93, E-Suppl. 1/Poult. Sci. Vol. 89, E-Suppl. 1: 753

Progress 10/01/08 to 09/30/09

Outputs
OUTPUTS: Thirteen dairy producers in Florida and Georgia submitted their financial and technical data for 2008 to the Dairy Business Analysis Project. Data were collected by extension specialists and agents. Benchmark reports were returned to the participating dairy producers. We continue to develop dairy management software that help dairy producers make better decisions regarding insemination decisions and replacement decisions. Results from these developments have been used in producer and academic meetings. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Target audiences for the Dairy Business Analyis Project are dairy producers in Floria and Georgia, and their advisors. Newsletters and calls are placed to dairy producers to ask them to participate. Target audiences for software development are dairy advisors. Dairy advisors are targeted at meetings and newsletter and magazine articles. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
Partcipation by 13 dairy producers in the Dairy Business Analysis Project has resulted in increased knowledge of the financial status of their business, and in relation to other dairy businesses. Producers took actions to improve their conditions based on this data, or so they told us. Software development may have educated people on culling and insemination decisions. Given the many invited talks from these works, there is a demand for these results. It is not known if or how people took actions to improve their conditions based on the gained knowledge.

Publications

• Bell, A.A., P.J. Hansen, and A. De Vries. 2009. Profitability of bovine somatotropin administration to increase first insemination conception rate in seasonal dairy herds with heat stress. Livestock Science 126:38-45.
• De Vries, A., and R. Giesy. 2009. Florida Dairy Farm Situation. EDIS Document AN215.
• De Vries, A., R. Giesy, M. Sowerby, and L. Ely. 2009. Dairy Business Analysis Project: 2007 financial summary. EDIS Document AN213.
• De Vries, A. and M. Sowerby. 2009. The Dairy Business Analysis Project in 2009. Dairy Update, Winter, Vol. 9, No. 1, page 6.
• De Vries, A. 2009. To keep or cull a cow. J. Anim. Sci. Vol. 87, E-Suppl. 2/J. Dairy Sci. Vol. 92, E-Suppl. 1: 541
• Ely, L. O., A. De Vries, R. Giesy, M. Sowerby, B. Broaddus, and C. Vann. 2009. Financial performance of dairies in Florida and Georgia in 2007. J. Anim. Sci. Vol. 87, E-Suppl. 2/J. Dairy Sci. Vol. 92, E-Suppl. 1: 414
• De Vries, A., R. Giesy, L. Ely, and M. Sowerby. 2008. Dairy Business Analysis Project 2007 Benchmark Reports (21 individual dairy farm reports). UF/IFAS Internal reports. 13 pages each.

Progress 10/01/07 to 09/30/08

Outputs
OUTPUTS: Nothing to report during this time period PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
Nothing to report during this time period

Publications

• No publications reported this period