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By Ciaran Murphy, B.Sc. ,
Ruminant Nutrition Consultant
The current economic environment presents significant challenges to the established narrative. Before joining GVF, I had limited knowledge of the Canadian dairy industry, knowing only about its division between East and West, the impact of extreme weather on crop production, and the continued existence of quotas, which had been abolished in my home country of Ireland in 2015.

However, after eight months in the industry, it’s clear that I entered during a pivotal time, especially for BC dairy producers. They are facing abnormally high debt per kilogram of butterfat (kgbf ), soaring production costs, and interest rates, along with increased dairy imports due to unfavorable trade deals with the USA, leading to unpredictable milk prices. Factor in extreme weather events, and one can’t help but question the rationale behind milk production in BC. Yet, driving through Fraser Valley and Okanagan reveals modern dairy facilities nestled in breathtaking landscapes, displaying the beauty and viability of dairy farming in these regions. It reassures me that dairy farming is a way of life for people here, and they really love the work they do.

Nevertheless, it’s disheartening to note that British Columbia has seen a decline of 109 dairy farmers since 2009 (Figure 1), with over twenty leaving in the last eighteen months due to inflated input costs. Each farm’s decision to exit varies, but the common thread is the inability to turn a profit amidst rising expenses and tight margins, causing understandable mental strain for producers.

Dairy farming was once more profitable and less financially burdensome, but things have changed, and today’s landscape is marked by tighter margins, hefty interest payments, and milk prices that don’t align with costs. These factors, beyond a producer’s control, necessitate finding efficiencies elsewhere in the business.

BC Producer Numbers

Figure 1: BC Producer Numbers

U.S. milk prices weighing on blend prices in Canada

Figure 2: U.S. milk prices weighing on blend prices in Canada, limiting impacts of recent support price increases.

Control the Controllables
While most dairy operations feel the financial squeeze, some have adapted well, maintaining profitability, or at least servicing debt efficiently. Key themes emerge among these successful farms that drive operational efficiency.

Understanding the Numbers
Producers who grasp their actual production costs can pinpoint areas for improvement. Knowing the cost per kg of quota enables a detailed assessment of business expenses, highlighting avenues for cost reduction or investment with assured returns, which is crucial during economic downturns. Farming is a labour-intensive profession, and some may be unsure when it comes to numbers. If producers are unsure about where they can make changes to improve efficiency, a fresh pair of eyes is a great place to start. Talking things out with a trustworthy person can make a big difference when unsure.

Future Goals
Armed with accurate financial insights, it’s time to realign farm objectives. Assessing current strategies against profitability goals can unveil alternative approaches and revenue streams. For instance, let’s examine this scenario; ‘A producer is anticipating increased quota availability in the coming months/year. More quota means more profit, but the farmer hasn’t got the capacity for more cows, and extending the barn isn’t an option financially.’

• Nutrition – Can they get more from their cows? Do they have optimal rumen function to produce more?
• Nutrition – Will they push the cows too hard and run the risk of making them unwell? Does the ration make economic sense?
• Management – Can they alter the youngstock rearing program to improve the milking output?

Herd Management
Considering the cow is the focal point of the whole dairy business, it seems obvious to start with the cow when chasing efficiency. There are many considerations (breed, milking potential, feed efficiency, genetics, etc.), but the easiest thing producers can control is how the animals are reared. Efficient herd management, especially in rearing youngstock for optimal milk production potential, is paramount. Research indicates specific weight targets for young stock/heifers that correlate with improved milk production, emphasizing the need for meticulous attention to herd nutrition and growth metrics.

To be specific, research shows that heifers should be bred at 55-65% of mature body weight (MBW) and should be 85% of MBW after first calving. During 2023, GVF tested this within their own herds across Canada to compare and contrast with other research, and to show that they have the producer’s best interest in mind when it comes to nutrition.

The results show that the herds who hit the target weights have better milk output than they did before they tried to reach the targets. It challenges the current narrative of breeding by age, or by eye. Most producers measure their stock by eye, which can be inaccurate and misleading when trying to find areas of improvement. To put it straight “you can’t count what you don’t measure”.

From the results, we can see cow size is bigger in Canada compared to the cows in the Northeast United States, which may be something to consider if feed shortages become an issue. In each case, it shows that the numbers may vary, but the targets remain the same. Real efficiency can be found with how early you can hit those targets.

References: https://agriculture.canada.ca/en/sector/animal-industry/canadiandairy- information-centre

This article was written for the Summer 2024 Central & Atlantic Dairy Grist. To read the whole Dairy Grist, click the button below.