A Computer-Based Tool for Evaluating Dairy Expansion & Production

1. A Computer-Based Tool for Evaluating Dairy Expansion & Production Victor E. Cabrera & Jay Janowski

2. “Everybody talks about the weather, but nobody does anything about it.” ~ Mark Twain ~

3. Topics 1. Overview & Introduction to the Dairy Expansion Decision Support System Tool (DE-DSS) 2. “How Can I Use This Program on My Dairy Today?” (Case Study) 3. Results & Discussion

4. Topics Overview & Introduction to the Dairy Expansion Decision Support System Tool (DE-DSS) 2. “How Can I Use This Program on My Dairy Today?” (Case Study) 3. Results & Discussion

5. Overview • Mission: Foster a proactive approach to forecast future cash flow • Organize Information • Simulate Changes in Herd Structure & Performance • Effectively evaluate management changes & facility upgrades

6. Benefits • Anticipate Potential Problems • “See the future” • Plan Ahead • “Measure twice, cut once” • Risk Management • “Maximize your potential”

7. Program Operations • Microsoft Excel • User-friendly • Avoid “paralysis of analysis” – browse the user manual • Fully Customizable Format • Over 250 input cells describe herd & farm conditions • Does require thorough records and time commitment to complete • Quality of information out depends on Quality of information in

8. “What IF…?” Monitor individually or more than one at the same time! • Real – Time Simulation • Herd Structure • Cattle Purchases/Sales • Aggressive Herd Expansion • Sensitivity Analysis – Quantify Changes in: • Milk Price • Milk Production • Culling Rates • General Dairy-Related Expenses

9. Topics • Overview & Introduction to the Dairy Expansion Decision Support System Tool (DE-DSS) 2. “How Can I Use This Program on My Dairy Today?” (Case Study) 3. Results & Discussion

10. Case Study – Identify the Issue • Current freestall barn is limiting production & growth • Stall size too small • Cull Rates are too high • Inefficient layout • Overcrowded • “I want to build a new freestall barn to accommodate future herd growth (from 200 to 300 total cows in 3 years). If I do this, I expect to see a production increase of 4 lb/cow/day and a decrease in my culling rates. • How can the DE-DSS help me during the planning process?”

11. Case Study - Inputs • 200 Dairy Cows • Initial Herd Structure • 81: 1st Lactation Cows @ 24,000 RHA • 65: 2nd Lactation Cows @ 25,000 RHA • 52: 3rd Lactation Cows @ 25,000 RHA • Mailbox Milk Price: $15.25 • Feed Cost: $0.09/lb DM • General Labor Cost: $12/hr • Other farm expenses: $175,000/yr

14. Inputs – Sensitivity Analysis These Inputs will be the same for lactations 2 & 3.

15. Topics • Overview & Introduction to the Dairy Expansion Decision Support System Tool (DE-DSS) 2. “How Can I Use This Program on My Dairy Today?” (Case Study) 3. Results & Discussion

16. “Should we purchase bred heifers or grow from within?” Purchase 15 Bred Heifers each month in months 1-5 No Cattle Purchases

17. “How will my bottom line benefit from the new freestall barn?” Current vs. Improved Situation + 22.1% + 42.3 % + 56.0 % + 53.9 % Income Over Variable Cost ($/cow/month) Current Improved

18. “How will my bottom line benefit from the new freestall barn?” Current vs. Improved Situation + 23.8 % Current Net Present Value of Cash Flow ($/farm) Mean $1,879/month Mean $2,012/month Improved + 60.9 % + 49.8% + 66.3%

19. “What IF…” Milk Price Increases to $16.00/cwt One Year From Now Current vs. Improved Situation + 42.3 % + 49.8 % + 56.0 % + 66.3 % + 22.1 % + 23.8 % + 53.9 % + 60.9 % Original Increase New Increase Current Income Over Variable Cost ($/cow) Improved

20. “What IF…” Milk Price Increases to $16.00/cwt One Year From Now Current vs. Improved Situation + 22.1 % + 23.8 % Original Increase New Increase Current Mean $2,283/month Net Present Value of Cash Flow ($/farm) Improved + 102.9 % + 112.2 % Mean $2,536/month + 78.1 % + 87.5 % + 94.5 % +107.4 %

21. DairyMGT.info