Reviewed October 1993
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When you begin dairying, you should realize that you are making a long-term commitment. If you are planning to enter the dairy business, you need to evaluate available resources and the management skills required for a profitable enterprise. Consider your experience, your interest, management ability, financing, available labor, milk market, feed resources and available facilities.
A successful dairy operation demands timeliness and total commitment by the entire family. Dairy cows are creatures of habit. They need to be milked twice daily at approximately 12-hour intervals, and the milking routine is seven days a week all year long. In comparison to other agricultural enterprises, dairying is an intensive agricultural enterprise requiring considerable attention and management.
It is important that the farm be able to furnish most of the roughage or that adequate roughage is available for purchase in the area. Roughage should consist of high-quality legumes such as alfalfa, red clover, corn or sorghum silage. In many instances, the grain can be purchased. You will need to provide approximately 9 tons of hay equivalent and 3 tons of grain per dairy cow and replacement. This hay equivalent may be divided to provide 5 tons of hay and 12 tons of corn silage. Table 1 gives an estimation of productivity of crops in Missouri. These estimations are only approximate because conditions vary considerably throughout the state.
Table 1
Approximate productivity of crops in Missouri as reported by the mail-in record program
| Crop | Tons per acre |
|---|---|
| Corn silage | 12.7 |
| Alfalfa | 3.5 |
| Mixed hay | 2.0 |
| Other hay | 1.4 |
| Cropland pasture (hay equivalent) | 1.0 |
| Noncropland pasture (hay equivalent) | 0.9 |
| Bushels per acre | |
| Corn | 90 |
| Milo | 87 |
| Soybeans | 36 |
| Wheat | 44 |
Table 2
Information on Missouri dairy farms participating in the 1980 mail-in record program
| Size of herd | ||
|---|---|---|
| 50 cows | 70 cows | |
| Milk sold per cow (pounds) | 13,400 | 12,854 |
| Milk sold per person (pounds) | 321,000 | 480,000 |
| Milk sold per farm (pounds) | 925,647 | 1,247,002 |
| Total acres operated | 418 | 620 |
Farmsteads should be located on a well-drained area with a slope of 1-1/2 to 3 percent. Adequate slope is necessary for good drainage and ease of manure handling.
Evaluate the soil type carefully. It will determine the number of acres needed for forage production. You may need 3 to 4 acres of excellent land and 4 to 8 acres of marginal land per cow unit if you plan to raise some or all of your forage. Add an additional 1-1/2 acres per cow if you will be producing your own grain.
Traditionally, dairy farmers have sought to produce most of the forage for their cows, but as land and machinery costs have risen, more dairy farmers have chosen to dry lot their cows and operate with a minimum acreage of farmland. Nevertheless, it is important to determine whether a sufficient supply of quality forage is available prior to establishment of small acreage dry lot dairy operations.
Your local MU Extension center and Natural Resources Conservation Service can provide more detailed information on area soils and productivity.
You will need about 50 to 75 gallons of potable water per cow per day. A properly cased and sealed well or a pond and filtering system meeting local health requirements may be used. Information on water requirements can be obtained from your local health sanitarian or milk plant field representative.
In Missouri, there are two markets based on milk quality standards: Grade A and Manufacturing Grade milk. Manufacturing Grade milk receives a lower price than Grade A: however, the facility requirements are generally not as high as those for producing Grade A milk. For higher milk profits, consider designing the facilities required to meet Grade A milk market standards. You can get information on Grade A requirements from your local dairy field representative or MU Extension specialist.
Use of family labor is essential for a successful dairy. Approximately 65 hours per cow will be required annually, but this does not include the labor required for farming or harvesting crops. The labor requirement for a 60 cow herd requires 500 eight-hour days or 1-1/3 people working 365 days per year. Usually, one person can take 45 cows. Consider whether either the husband or wife will be working off the farm, and whether both will be available to assist with the farm labor.
Capital requirements are the most critical considerations in the dairy business. According to 1981 figures, your debt load may range from $1,500 to $6,500 per cow. Debt capacity depends upon level of production and efficiency. Again according to 1981 figures, realistic ranges of investment may be from $2,500 to $4,000 per cow.
Be sure to investigate many sources of financing: local banks, the Farm Home Administration, Production Credit, the Federal Landbank, private individuals and insurance companies.
It is important to determine long-term financing and short-term operating capital requirements. You will need operating capital for purchase of feed, fuel, supplies, seed, fertilizer and many other day-to-day expenses.
To make budget estimations, use 12,000 to 14,000 pounds of milk per cow per year for Holstein cows. Do not overestimate milk production.
In general, the debt repayment capacity should not exceed 25 to 30 percent of the gross milk sales. This includes interest plus principle payments on the debt. Debt repayment capacity improves with good management practices and higher production levels. Larder herd size also may improve repayment capacity if the management and labor resources are available.
Data from the Missouri Dairy Herd Improvement (DHI) program illustrates the importance of high levels of milk production (Table 3). Herds producing at 14,000 pounds of milk or greater show higher income over feed costs.
Table 3
Relation of production to income, Missouri DHI, 1980
| Production milk | Cow fat | Number of herds | Value of product | Grain fed | Feed costs | Income/feed costs |
|---|---|---|---|---|---|---|
| 6,487 | 254 pounds | 6 | $738 | 3,276 | 369 | $369 |
| 9,195 | 334 pounds | 19 | $1,049 | 4,583 | 503 | $546 |
| 10,268 | 378 pounds | 51 | $1,194 | 4,643 | 509 | $686 |
| 11,371 | 424 pounds | 114 | $1,331 | 5,135 | 584 | $747 |
| 13,008 | 478 pounds | 140 | $1,512 | 5,568 | 600 | $912 |
| 14,304 | 525 pounds | 142 | $1,672 | 5,920 | 644 | $1,027 |
| 15,303 | 572 pounds | 111 | $1,798 | 6,279 | 682 | $1,116 |
| 17,079 | 645 pounds | 74 | $2,006 | 6,590 | 722 | $1,284 |
Be sure to allow sufficient time in planning the financial part of the dairy business. Some common financial mistakes dairy farmers make are:
The facilities required for a dairy include the milking center, feed processing or handling center, the feeding system, a housing system and a manure handling system.
The most important facility is the milking barn, which includes the parlor, the bulk tank room, holding pen and the milking equipment. Newer parlors are frame-constructed units that require a sizable investment. According to 1981 figures, investments of $35,000 to $60,000 include the building, milking equipment and bulk tank. Many times, little advantage is gained by purchasing and installing older, used milking equipment. Depending upon the herd size, you might purchase a used bulk tank for getting started. Bulk tank capacity needs are estimated at approximately 25 gallons per cow based on every-other-day pickup.
Base your selection of milking equipment on current requirements, availability and personal preference. Your local milking equipment dealer is a very important consideration in the selection since you will be needing routine maintenance. You might also visit with local dairy farmers about different installations before making a selection.
The dairy housing system should complement the feeding system. It also may depend upon the method you choose to harvest and store forage. Enclosed-type free stall barns cost slightly more than semi-enclosed units; however, they offer certain advantages during the winter.
A small dairy of less than 40 cows may get by with minimal facilities. However, as dairy units grow in size, the confining or semi-confining of cows requires more adequate housing and feeding systems.
Consider how you will store your hay and sage. Work at the Southwest Research Center in Mount Vernon shows great savings in hay quality and value by providing roofed hay storage. Bunker-type silos for storing silage require a lower initial investment per ton than do tower silos; however, they have additional requirements for feeding.
When selecting cows, consider their age and stage of gestation, genetic producing ability and cost.
Bred heifers are most often free of disease, particularly mastitis. They suffer less stress from hauling and adjust more easily to a new herd situation. Also, bred heifers have certain investment and tax advantages. However, they will produce slightly less milk during first lactation, about 80 percent of a mature cow.
Purchased cows should have the potential to produce at least 15,000 pounds of 3.5 percent milk. Only DHI tested herds have this type of production information. The extra price you pay for years of superior breeding will be a sound investment. It is possible to purchase animals through a herd dispersal or through a well respected cattle dealer. Use caution in buying animals at local sale barns since they often serve as an outlet for other dairy farmers' problem animals.
All Grade A milk is produced under the approval supervision of the State Department of Health. One of the first things a new dairy farmer should do is visit with the area MU Extension specialist, local milk market field representative and the local health sanitarian. They will provide information on selecting a site for a milking parlor, designing and approving a milk barn plan, getting approval for handling waste disposal, getting approval of the water source, and installing milking equipment.
The approval and signature of the local health sanitarian is required to sell Grade A milk. When the milk barn has been completed and sanitation requirements met, a Grade A permit will be issued. The local health sanitarian will visit and inspect facilities periodically. Milk will be tested in a laboratory to determine whether it meets local health standards. The local health sanitarian does have the authority to suspend a Grade A permit if it is determined that existing facilities, conditions or milk quality do not meet Grade A requirements. If so, the Grade A permit will be suspended until the management or production problems has been resolved.
Similar steps and a permit are required for the production of Manufacturing Grade milk. These requirements are handled by the State Department of Agriculture.
G3500, reviewed October 1993