Progress 09/01/09 to 08/31/12
Outputs OUTPUTS: The goal of this project is to develop strategic steps for change in key areas that dairy owners can implement to increase profit in their businesses. Objective 1: Forty-seven farms have provided data for the PA Dairy Tool. For the PA Dairy Tool data, herd sizes range from 41 to 1582 adult cows. The return on assets using 2009 data ranges from -10 to 8.7 with a mean of -0.6 and for 2010, the data ranges from -8.8 to 10.7. The asset turnover ratios ranged from 0.17 to 0.78 with a mean of 0.36 in 2009 and ranged from 0.12 to 0.72 with a mean of 0.35 in 2010. Operating expense ratios ranged from 0.52 to 1.29 with a mean of .85 in 2009 and ranged from 0.52 to 1.28 with a mean of 0.80 in 2010. For the herds in the project, in 2009 milk sold per worker ranged from 332,290 to 1,244,330 lbs with a mean of 725,694 and milk per cow ranged from 53 to 99 lbs with a mean of 71. In 2010, milk sold per worker ranged from 384,817 to 1,202,043 lbs with a mean of 689.191 and milk per cow ranged from 53.6 to 79 pounds per day with a mean of 67. For IOFC, monthly data is gathered from the farms and an IOFC was calculated each month. Of the participating, the range of IOFC from October 2010 to August 2011 was $5.09 to $13.93 with a mean of $8.79. The average monthly IOFC was lowest in January at $7.38 and the highest in March at $10.10. Objective2: It was noted that the relationship between capital investment and return on assets was correlated (r2=.78). Few farms that had a capital investment of over $8,000 per cow had a positive return on assets for years 2009-2010 when data was collected. Objective 3: Common strategies used by for high profit (>2% ROA) herds included higher than average milk production and milk sold per worker, higher than average internal herd growth rate and more attention to detail in young stock care and better communication and interaction with both on-farm employees and off-farm advisors. Objective 4: Outcomes of this research were shared with dairy producers, agribusiness representatives and Extension educators through two years of a conference call series entitled: "Show Me the Money" that provided key research summaries and new strategies on a variety of topics to help enhance on-farm profitability. Quarterly newsletters with summary data were disseminated to project participants, and popular press articles reached a broader audience with preliminary project results. PARTICIPANTS: Key Personnel: L. A. Holden, R. White, V.A. Ishler. Professional Development opportunities included: Participation in Show Me the Money conference call series (2010-2011 and 2011-2012). Collaborations: Ag Choice Farm Credit offered "Smart Start" credits for participation in this conference call series. TARGET AUDIENCES: The target audience of producers who participated in the project received individual results from the PA Dairy Tool and Income over Feed Cost Tool. Those farms were encouraged to use that data in there Profit Team meetings. A quarterly newsletter was provided during the project to share summaries and tips for increasing profitability. Following completion of objectives 1-3, a conference call series was provided in 2010-2012 for the dairy industry, including producers and their agribusiness advisors. Feedback from the first series (2010-2011) indicated that 94% of the participants surveyed found the information useful and 89% planned to use information in their own business. The second series in currently ongoing. PROJECT MODIFICATIONS: Due to low milk prices in 2009 and subsequently lower than expected returns, the "high profit" group was determined to be those over 1.5% rather than the 4% as indicated in the proposal. This change was made in order to complete objectives with enough farms to allow for some reasonable analysis and summaries to be made.
Impacts Farms receiving summary data for the PA Dairy Tool had an opportunity to focus on the area most likely to improve their return on investment. Most of the farms in the study have continued to complete IOFC tool information on a monthly basis and have found it valuable when making feeding management decisions in the herds. A few of the projects herds have developed annual cash flows for their dairies and enrolled in Livestock Gross Margin. Key understanding about specific strategies for enhancing profitability like maintaining a reasonable capital investment per cow, monitoring IOFC and controlling feed costs, creating a positive internal herd growth through better youngstock care, and being above average in both milk quality and milk yields on a per cow basis found in this study were shared with producers and the industry as a whole through both quarterly newsletters, work with on-farm Profit Teams and with a final conference call series entitled: "Show Me the Money".
Publications
- No publications reported this period
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Progress 09/01/10 to 08/31/11
Outputs OUTPUTS: The goal of this project is to develop strategic steps for change in key areas that dairy owners can implement to increase profit in their businesses. To date 37 farms have provided year one data for the PA Dairy Tool and Income Over Feed Cost Tool (IOFC) and 17 have provided data for year two. For the PA Dairy Tool data, herd sizes range from 41 to 1582 adult cows. The return on assets using 2009 data ranges from -10 to 8.7 with a mean of -0.6 and for 2010, the data ranges from -8.8 to 10.7. The asset turnover ratios ranged from 0.17 to 0.78 with a mean of 0.36 in 2009 and ranged from 0.12 to 0.72 with a mean of 0.35 in 2010. Operating expense ratios ranged from 0.52 to 1.29 with a mean of .85 in 2009 and ranged from 0.52 to 1.28 with a mean of 0.80 in 2010. For the herds in the project, in 2009 milk sold per worker ranged from 332,290 to 1,244,330 lbs with a mean of 725,694 and milk per cow ranged from 53 to 99 lbs with a mean of 71. In 2010, milk sold per worker ranged from 384,817 to 1,202,043 lbs with a mean of 689.191 and milk per cow ranged from 53.6 to 79 pounds per day with a mean of 67. For IOFC, monthly data is gathered from the farms and an IOFC was calculated each month. Of the 26 herds participating, the range of IOFC from October 2010 to August 2011 was $5.09 to $13.93 with a mean of $8.79. The average monthly IOFC was lowest in January at $7.38 and the highest in March at $10.10. Quarterly newsletters with summary data were disseminated to project participants, and popular press articles reached a broader audience with preliminary project results. PARTICIPANTS: L. A. Holden, R. White, V. A. Ishler, G. A. Varga, and M. Douglass. TARGET AUDIENCES: Dairy owners and their agribusiness advisors. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts In 2010, the averages and ranges of return on assets and asset turnover ratios did improve or stay steady but it will take a few years for the dairies to recover from the low milk prices in 2009 and high feed costs in 2010. Farms receiving summary data for the PA Dairy Tool had an opportunity to focus on the areas most likely to improve their return on investment. Most of the farms in the study have continued to complete IOFC tool information on a monthly basis and have found it valuable when making feeding management decisions in the herds. A few of the projects herds have developed annual cash flows for their dairies and enrolled in Livestock Gross Margin.
Publications
- White, R. A., L. A. Holden, V. A. Ishler, G. A. Varga, and M. B. Douglass. 2011. Using Whole Farm Assessment Tools to Identify Strategies for Change to Increase Dairy Farm Profitability. J. Dairy Sci. 94:(E-Supplement 1)42. (Abstract).
- White, R. 2011. Penn State Tool Helps Dairy Producers Find Bottlenecks to Profitability. Farmshine. February 4, 2011. page 20.
- White, R. 2011. Penn State Dairy Extension Team Dairy Profitability Newsletter. Quarterly. Provides news, research updates and tips for dairy producers. 4 pages.
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Progress 09/01/09 to 08/31/10
Outputs OUTPUTS: The goal of this project is to develop strategic steps for change in key areas that dairy owners can implement to increase profit in their businesses. To date 37 farms have provided at least partial data for the PA Dairy Tool and Income Over Feed Cost Tool (IOFC). Twenty-six farms have complete data sets and have received a summary of the tool data for their herd. For the PA Dairy Tool data, herd sizes range from 41 to 1582 adult cows with a mean of 198. The return on assets using 2009 data ranges from -10 to 8.7 with a mean of -0.6. The asset turnover ratios ranged from 0.17 to 0.78 with a mean of 0.36 and operating expense ratios ranged from 0.52 to 1.29 with a mean of .85. For the herds in the project, milk sold per worker ranged from 332,290 to 1,244,330 lbs with a mean of 725,694 and milk per cow ranged from 53 to 99 lbs with a mean of 71. For IOFC, monthly data is gathered from the farms and a IOFC was calculated each month. Of the 26 herds participating, the range of IOFC from February 2010 to September 2010 was $4.13 to $11.32 with a mean of $7.53. The average monthly IOFC was lowest in April at $6.76 and the highest in September at $8.66. PARTICIPANTS: L. A. Holden, R. White, V. A. Ishler, G. A. Varga, and M. Douglass TARGET AUDIENCES: Dairy owners and managers in addition to their agribusiness advisors. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts Due to the low milk prices in 2009, return on assets and asset turnover ratios are much lower compared to benchmarks. For the farms currently in the project, investment per cow was high, averaging $10,870. Year 2 data will be especially important in identifying the "high profit" farms that were able to maintain some level of profitability in spite of negative economic conditions. Most of the farms in the study have continued to complete IOFC tool information on a monthly basis and have found it valuable when making feeding management decisions in the herds.
Publications
- White, R. and L. Holden. 2010. Take it to the farm: Navigating the PA Dairy Tool. DairyPROS Presentation. July series. http://www.das.psu.edu/dairy-alliance/events/july-dairy-pros-series/ searchterm=dairy%20pros
- Ishler, V., T. Beck, and R. White. 2010. Focus on margin, not feed cost and milk price. October 25, 2010. Hoard's Dairyman p. 719
- Ishler, V., T. Beck, C. Williams, B. Kelly, and G. Wilcox. 2010. Managing risk to control your future. DairyPROS Presentation. October series. http://www.centerfordairyexcellence.org/index.php/register-for-dairy- pros.html
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