MODERNIZATION: Building for a dairy future

 

A 2008 survey of Wisconsin dairy producers found modernization projects provided personal, financial and cow benefits. 

By Dave Natzke

Dairying in the eastern United States is still comprised primarily of small farms owned and managed by family members. For example, based on 2007 USDA dairy statistics, the average herd size was 89 cows in the Northeast; 94 cows in the Midwest; and 155 cows in the Southeast. A majority of those commercial dairies still milk cows in traditional stall barns. However, things are changing, as producers invest in new and more efficient facilities and equipment. 

Mark Mayer, associate professor, University of Wisconsin-Extension dairy agent, and David Kammel, professor, biological systems engineering, UW-Madison, working in conjunction with the University of Wisconsin Center for Dairy Profitability, compiled survey results from 99 Wisconsin producers who modernized their dairy facilities in the past decade. They recorded producers’ observations regarding benefits to themselves and their cows. They were asked to identify planning and financial resources, as well as modernization challenges.

Most producers involved in the survey switched from a stall barn to some type of parlor system. Of those who moved to a parlor system, 62% built a retrofit parlor in an existing facility; 38% built a parlor in a new building. Parabone and parallel parlors were the most popular choices. Parlors averaged 13.7 units.

 

Modernization time frame

The average time for a modernization project – from conception to actual use of the facility – was 23 months. However, there was a wide range: from as short as 3 months to as long as 120 months.

The average construction time – from the start of construction to the first milking in the parlor – was 17 weeks. Again, there was a wide range: 4 weeks to 26 months.

Only 36% said they developed a written business plan for their modernization project.

Producers said they provided an average of 37% of the labor, with 63% provided by professional contractors. Producers provided more of their own labor on retrofit parlor projects than on new construction projects.

 

Modernization costs

Converted to 2008 dollars, average parlor construction costs ranged from a low of $3,360/unit for a retrofit flat barn parlor to a high of $22,361/unit for a new construction parallel parlor (see Table 1).

Total investment for the 99 dairies was $65.3 million (2008 dollars). The average investment was $659,671 per dairy, or $3,250 per cow. Total investments included expenditures for modernizing calf, heifer, milk cow and dry cow housing, milking parlors, manure and feed storage and handling systems. Parlor and milk cow housing costs averaged 73% of total expenditures.

 

Before and after

Pre- and post-modernization characteristics of the dairies were analyzed. Among the findings (see Table 2):

1) Herd size: In most cases, modernization included herd expansion. The average herd size was 82 cows before a modernization project; 203 cows after it. 

2) Labor efficiency: While average herd size increased 148% after modernization, full-time equivalent (FTE) dairy labor increased just 85%. Cows per FTE increased from 35 to 50.

Of the dairies that switched to a parlor system, cows milked per hour per person increased from 22.7 pre-modernization to 44.1 after the project was completed. 

3) Land: Total acreage owned or rented increased, but acreage per cow declined by 45%.

 

Cow benefits

Asked to identify the cow benefits they observed as a result of modernization projects, producers cited the following most frequently:

1) Improved overall cow health

2) Less feet and leg problems

3) Lower somatic cell counts

4) Increased production

5) Lower culling rates

6) Increased conception rates

 

People benefits

Producers most frequently cited the reduction in labor per cow as a benefit to a modernization project. Labor savings averaged 25.8 hours per cow per year, with about half coming at milking. At an average hourly wage of $12/hour, annual savings averaged $310/cow/year after a modernization project.

Other benefits cited were: improved working conditions; improved worker health/safety; allowed the business to continue; increased profitability; provided entry for the next generation; and increased family time. About 43% said they would no longer be in business without the modernization project.

 

Income impact

Based on increased milk production resulting from modernization, the report’s authors calculated average gross milk income per cow in 2008 ($17/cwt. milk X +1,439 lbs. milk) increased $245/cow. Per herd (+121 cows), gross income increased $466,099.

 

Resources

Producers most frequently cited visits and tours of other farms as a resource to design their own modernization project. They also ranked visits and tours of other farms as the most important resource in their decision-making. 

Other resources included Extension meetings/seminars and/or publications; farm visits by county agents and/or state specialists; magazines and newspapers; and farm shows.

When getting advice from others, fellow dairy producers ranked highest. Other advisors (by rank) included: builders/contractors; ag lenders; Extension agents/specialists; nutritionists; milking equipment dealers; financial consultants; veterinarians; and professional design consultants.

 

Challenges

Among major challenges to modernization projects, producers most often cited working with contractors and serving as their own general contractors. Other major challenges were:

• deciding on type of system/number of cows

• budgeting and financing

• milking in existing facilities during construction

• designing milking and housing facilities

• cost overruns

• finding good and knowledgeable contractors

 

Can I have a ‘do-over’?

If they were allowed to start the modernization project over, what would producers change?

The No. 1 response: They wish they would have started sooner.

Other responses included:

• increased parlor size/number of freestalls

• start expansion at another site to allow for future expansions

• spend more time planning and get more help with design

• start with new building and equipment right away

• start building earlier in the year (not fall)

 

 

FYI

■ To view the complete report, “Wisconsin Dairy Modernization Survey, 2008,” visit the Center for Dairy Profitability web site at http://cdp.wisc.edu and Click on “What’s New” Or, phone: 608-263-5665 or e-mail: dairyprofit@calshp.cals.wisc.edu.

■ For information on dairy modernization design and strategies, visit www.uwex.edu/ces/dairymod/index.cfm.

 

Mark Mayer, associate professor, University of Wisconsin-Extension dairy agent, and David Kammel, professor, biological systems engineering, UW-Madison, working in conjunction with the University of Wisconsin Center for Dairy Profitability, compiled survey results from 99 Wisconsin producers who modernized their dairy facilities in the past decade. They recorded producers’ observations regarding benefits to themselves and their cows. They were asked to identify planning and financial resources, as well as modernization challenges.

Mark Mayer, associate professor, University of Wisconsin-Extension dairy agent, and David Kammel, professor, biological systems engineering, UW-Madison, working in conjunction with the University of Wisconsin Center for Dairy Profitability, compiled survey results from 99 Wisconsin producers who modernized their dairy facilities in the past decade. They recorded producers’ observations regarding benefits to themselves and their cows. They were asked to identify planning and financial resources, as well as modernization challenges.

 

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