It’s not only about the cost associated with building new infrastructure. It’s also about the cost, in lost potential, of continuing to utilize old facilities. If your dairy isn’t meeting reproduction, milk production or income goals, or if you are culling cows due to health concerns, finding out why and evaluating your options is needed.
If your current facilities can’t provide “adequate cow comfort in order to achieve the genetic potential that those cows have,” then you are losing income, Don McFarland, agricultural engineer with Penn State Extension, said during his presentation “Out With the Old, and In With the New: Is it Feasible?” at the 2016 Penn State Dairy Cattle Nutrition Workshop.
Is it feasible to build new?
Building new animal housing can ease the drudgery for you and your workers while increasing your labor efficiency and is a factor in any decision-making process. New facilities can make your cows more comfortable, keeping the herd healthier, increasing milk production and milk quality, and decreasing your cull rate.
All of these components add up to less stress for you and the cows – and increased earning potential for your dairy.
The primary goal is animal health and well-being. A new barn may be needed if you want to expand the herd, add a partner or change your management system, such as going from a tiestall to a loose housing arrangement. Any facility should meet your management goals, now and well into the future, looking 10 to 15 years ahead.
“It’s like any other investment. It’s just on a larger scale,” McFarland said. “What is the breakeven price that is going to make the facility feasible?”
A feasibility study will consider long-term assets, debts, financing options, breakeven points, cash flow, cash reserves and your farm’s goals. Actual building costs of different types of facilities differ.
Cow costs and operational costs do too. Financial indicators such as cost per cow, debt per cow, cost per hundredweight of milk, cost for feed, investment per cow and many others need to be calculated.
Manure storage, feed bunkers, your land base and other related factors may also be impacted by facility changes. If you build new housing, your manure handling may change. If you expand your building footprint, you may decrease your land base, impacting your feed or herd management.
Will confined animal feeding operations rules and nutrient management plans be impacted? There is a “ripple effect” to be considered, McFarland said, which goes beyond the building itself.
If, after doing the math and being realistic in your assessment, building new isn’t financially feasible, other options exist.
Incorporating incremental changes that allow you to add cows or increase cow comfort can ultimately reposition the business in the short term, making it possible to finance new facilities down the road. This route allows you to put changes into place that will make the most impact at a lower cost than a new build.
Retrofitting old barns with new stalls, equipment, flooring or ventilation systems can address some concerns, but it doesn’t necessarily “move the business forward,” McFarland said.
Remodeling existing barns isn’t always the best option financially. The cost of a remodel can easily add up, often without as much benefit to you, the cows or the bottom line. If a remodel will cost more than 66 percent of a new build, it typically is better to start anew.
Another option is to do nothing. Honestly assessing what will happen should you choose this path often helps to clarify what road to take to ensure longevity of your dairy business. Getting out of business may be the best option in some situations.
“Things get a little more honest in their plans,” when producers consider these alternatives, he said.
Facility versus management issue?
Not all problems are caused by poor facilities. Assessing whether or not building new facilities will address your core problems, or if management changes can provide the needed results, requires evaluation of your existing concerns and practices.
Facility problems are those such as slippery floors, uncomfortable rest areas, poor air or water quality, limited access to water or overcrowding. Other concerns, such as heat stress, decreased feed intake, lameness, injury, illness or lack of cleanliness may be management-related issues.
“Good management can overcome poor design,” McFarland said – warning, however, that poor management will compromise good design.
Labor concerns can be facility- or management-related. If the facilities require that more time is spent herding or fetching animals, or if there is a need to reduce employee numbers, a new facility may be both justified and feasible. If workers aren’t performing their duties, rectifying this can add to the bottom line without facility changes.
If feed is not available and accessible, intake goes down. This could be a facility problem, with not enough space for all cows to feed comfortably, or a management problem. If the feed quality is poor, intake will be reduced. If feed is not pushed up regularly, cows can’t eat when they want to.
If cows are in the parlor too long, they can’t access feed. These are all things an adjustment to management practices can change.
No more than three hours per day should be spent in the parlor. Feed should be available 20 hours a day minimum.
Cows need to have the proper amount of time allotted to various activities in order to maximize milk output. The cow time budget needs to include adequate rest time. Researchers have found that after 10 hours of rest per day, every additional resting hour results in a gain of 2.2 pounds of milk daily.
If cows are spending too much time doing other things, or resting areas are uncomfortable, productivity drops, McFarland said.
Productivity can drop for other reasons, too. Increased calving intervals mean less milk production. If your facilities don’t properly protect cows from heat or cold stress, they expend energy regulating their body temperature. When cows are stressed, ill or injured, reproduction drops and milk quality suffers. Herd longevity decreases, and cull rates increase.
One way to enhance profitability is to increase milk output per lactation, giving a greater per-year payoff cost per cow. If cows are culled before their third lactation, they are unlikely to be profitable, and adding one more lactation can make a big difference financially. Keeping cows to 6 or 7 years old increases their lifetime profitability.
“What can we do to keep cows longer?” is a question producers need to ask themselves, McFarland said.
Whether the answer is building new – or not – depends on many factors, financial and otherwise. Honestly assessing your operations and finding room for improvement is the first step in determining your best route to dairy profitability.
PHOTO: Photo by Mike Dixon.
Tamara Scully, a freelance writer based in northwestern New Jersey, specializes in agricultural and food system topics.
Slide presentation from this workshop can be found online (McFarland - Justifying new facilities 2016)