Is Too Much Overstocking Costing You Money?
Last fall milk prices hit record highs. Now they are about $9.00/cwt less. That's a dramatic price swing, and one that will require you to plan how your dairy will weather this downturn.
Some producers respond to low milk prices by milking as many cows as possible to maintain cash flow. Others may trim the herd to reduce cost and focus on the most productive cows. While each producer must select their own plan, it is important to understand the ramifications of each decision and that there is an optimum profit per stall somewhere in between.
A lot of research has been done on the effect of overstocking in the milking herd. Most has been short term studies. But what about overstocking for a longer term?
Albert De Vries, associate professor of dairy science, University of Florida, sought to answer that question. De Vries and his team looked at overstocking during an entire lactation. Their goal was to find the economically optimal stocking density for lactating dairy cows housed in pens with freestalls measured in maximum profit per stall.
They also examined quantitative relationships between stocking density and milk production, milk quality, fertility and health. Since higher stocking densities can more severely affect transition cow health, transition cows were excluded from the study.
The Starting Point
The researchers used existing data to establish a typical daily time budget for lactating dairy cows – 3 to 5 hours eating, 10 to 14 hours lying down, 2 to 3 hours standing / walking in the alley, and 0.5 hours drinking. This leaves 2.5 to 3.5 hours per day for all milkings.
From there a literature review revealed the following:
- Significant overstocking appears to reduce feeding activity, alter resting behavior and decrease rumination (Grant 2011).
- Each 1 hour of lost lying time results in a milk loss of 3.7 pounds per cow per day (Grant 2011).
- For every 10 percent increase in stocking density over 100 percent, milk production drops. Fregonesi et al (2007) showed milk production decreased by 1.25 lbs/cow/day and Bach et al. (2008) showed a milk production loss of 1.15 lbs/cow/day.
- First lactation cows commingled with older cows will experience greater milk production declines from overstocking.
- The milk production of lame cows is more negatively impacted by overstocking than that of healthy cows.
- Observations in large commercial dairies in the Midwestern U.S. show that conception rate decreases by 0.1 percentage point for each 1 percentage point of overstocking (Schefers et al 2010).
Previous research has shown that stocking density does affect cow behavior, health, milk production and reproduction. However, clear, direct, economic consequences have not been quantified.
To overcome this lack of conclusive economic analysis, De Vries set up a herd budget spreadsheet that mimics daily movement of cows through lactations until they are culled or otherwise leave the herd. Input values were selected based on actual conditions in the U.S. over the last several years. The default milk price was set at $20.41/cwt. Fixed cost was set at $2/stall/day. Variable cost was set at $2/cow/day.
In the analysis, De Vries assumed that stocking densities over 100 percent had a linear negative affect on milk production. Each 10 percent increase in stocking density within the pen resulted in a milk production decrease of 1.10 lbs/cow/day, 1.54 lbs/cow/day or 1.98 lbs/cow/day respectively.
Overstocking also led to a negative linear effect on reproduction. The probability of conception was reduced by 0.1 percent per each 0.1 increase in cows/stall in all scenarios.
Lower milk production reduced dry matter intake, and therefore feed cost. Lower probabilities of conception resulted in longer days open, increased culling for reproductive reasons, and therefore changed herd demographics including the resulting revenues and costs.
For comparison, the researchers used the input values to determine economic performance at 100 percent stocking density – one cow per stall in the group pen. The sensitivity analysis showed that optimum stocking density – as determined by maximum profit per stall – is very sensitive to changes in milk production and price.
At 100 percent stocking density milk production in each pen was 71.2 lbs/cow/day and profit per stall was $500/year. In comparison, at a milk production loss of 1.54 lbs/cow/day the optimum stocking density becomes 122% and the profit per stall per year is $543. The chart below shows the effects of milk losses of 1.10, 1.54 and 1.98 lbs/cow/day on profitability for each 0.1 percent increase in cows/stall.
The researchers also varied the price of milk from $18.14 to $22.68/cwt in the herd budget analysis. $20.41/cwt was the default. Higher milk prices increase the profitability of each additional cow and therefore encourage overstocking. For example, with a milk price of $22.68/cwt, a stocking density of 140% increases the profit per stall to $680 per year, despite the decline in milk production and other parameters. When milk prices drop to $18.14/cwt the optimal stocking density returns to 100%. At this price, overstocking was not profitable.
This scenario shows that less overstocking is a better economic plan when milk prices are decreased or feed prices have increased.
From the scenarios that we have ran, De Vries says, it is clear that the economically optimal stocking density is very sensitive to changes in price and production that affects the revenues and costs that vary with the number of cows.
Remember, some overstocking is profitable under certain economic conditions in the U.S. And there are situations where no overstocking is the most profitable option. The key is to know your business, run the numbers and determine the optimum amount of overstocking that delivers the maximum profit per stall for your dairy.
This article was adapted from Albert De Vries' paper "Crowding Your Cows Too Much Costs You Cash." You can read it online at: http://wcds.ca/proc/2015/Manuscripts/Chapt%2020%20-%20de%20Vries.pdf