The dairy industry is going through a major transition that will result
in fewer, but larger dairies. Dairy managers are incorporating the latest
technologies to improve profitability, efficiency and quality of life issues.
These technologies include milking parlors, freestall housing, TMR feeding
systems, etc. This modernization of existing facilities will continue to
increased herd size, because 1) implementation of new technologies allows
more cows to be managed with the same labor force; 2) more cows are needed
to justify expensive equipment; and 3) specialization of the labor force
becomes possible. Many dairy managers are re-deploying assets and specializing
in a single enterprise to improve their operational efficiency. As the
industry consolidates, its’ effect will be felt across most service areas,
because less support people will be needed to support this smaller number
of herds. Industry people on both the production and service sides will
need increasing levels of technical competence.
Modernization and expansion of herd sizes is not new. In the United
States large herd sizes became popular in the south and west first and
now have spread across the country. Often the typical dairy herd size in
different areas of the world is related to the geography, climate, crop
producing capability and traditions of that area. California herds grew
rapidly because open dry lots resulted in low housing costs. High quality
forage was easily hauled to the farm which minimized the need for dairy
managers to invest in land to produce crops. These two aspects resulted
in low investment per cow and high productivity through specialization
and excellent forage quality. In contrast, Wisconsin with its sever winter
weather required dairy producers to invest capital in housing. Land resources
and climatic conditions lead dairy managers to develop dairy operations
with multiple enterprises (cows, heifers, crops, etc.). These things led
to smaller herd sizes and high investment per animal. Although these two
areas developed quiet differently, both experienced constant expansion
paralleling the technologies that were available at the time. The average
herd size in Wisconsin was 14.7 cow in 1945 and 53.7 in 1997. Today, the
majority of Wisconsin dairy operations are in the 50-99 cow herd size range,
but has several herds of over 1000 cows and is building many more of this
size. As dairy farm managers contemplate increasing herd size, two options
normally are considered. Both the step-by-step and all-new approaches are
valid, with the decision of which to chose often based on the financial
strength of the operation, the owner(s) goals and the future growth potential
of the current operations’ site.
As the dairy manager evaluates options and strategies, council should
be included from non-farm members. The manager needs to understand where
the industry is going and attempt to develop an operation that has long-term
profit potential. While making the decision of if, and how to modernize,
the manager should remember that direction is more important than speed.
Expanding too fast can increase risk.
Whenever a major expenditure is being considered, the manager needs
to answer the following questions: