Dairy Grist
CENTRAL & ATLANTIC EDITION A PERIODIC NEWSLETTER PRODUCED BY GRAND VALLEY FORTIFIERS VOLUME 24, ISSUE 1 | SPRING 2022
Dear Friends, As we headed into March 2022, two years after the pandemic related restrictions began to impact many aspects of our lives, it was heartening to witness the lifting of restrictions province by province and seeing daily activities moving back towards some assemblance of pre-COVID normal. This being said, Agri-Business and the economy in general seems to be moving further and further afield from pre-pandemic norms. For the foreseeable future, gone are the days of cheap commodities, cheap fuel, cheap food and historically low interest rates. With all of the supply restrictions, interruptions and delays of many inputs in many industries, we have moved from “just in time” inventories to rapidly expanding “just in case” inventories with as much focus needed on order fulfilment as it is on cost of ingredients. Accordingly, this issue of the Dairy Grist is focused on “tips and tricks” to save money on farm, minimize purchased feed costs and the benefits of benchmarking and really knowing the key financial performance indicators of the dairy operation. Truly harnessing on-farm technology and the data that comes from it will be a key driver of profitability as margins tighten in the days ahead. Our newly expanded ruminant team (with the joining of forces with Valley Nutrition in BC, AB and SK) are dedicated to working together with producers to maximize the value of forages, protein supplements, and mineral and vitamin premixes during these ever changing and newly challenging days in the dairy industry. We trust that you will benefit from an idea or perspective that is shared in the articles below and allow one of our Dairy Specialists or Nutritionists to discuss them further with you. Sincerely, Ian Ross, President & CEO, GVF group of companies
DAIRY FARMERS SHOULDN’T AVOID BENCHMARKING
by: RICK HAMILTON, CPA, CA, MNP Partner, MNP LLP
T
he pressures affecting dairy farm profitability are growing, especially with recent developments surrounding the COVID-19 pandemic and concessions made in trade agreements. Financial benchmarking is a tool that helps dairy farmers make better business decisions by giving them concrete information about their operations — and how they compare to others in the industry — year after year. A benchmark is not as much a ranking tool as it is a method to help evaluate and direct business decisions. I like to break the benefits down into three main areas — profit, trend and focus. Profit: It’s never all about the money but in business, profit is generally a good place to start. Dairy farmers don’t compete with each other, but they do compete for resources. Being more profitable than your neighbour may mean, for example, that you have the opportunity to buy additional land and grow your operation. A benchmark can take out unpredictable variables and show the impact of effort and management on a per-unit basis. Are you generating a reasonable profit for the size of your operation on a per-unit basis? If not, why? And secondly, does it matter? The only two things you must give are time and money. If your efforts do not generate a return, then over the long run, are you making good use of your time? It is okay to give up some profits to devote your time elsewhere, but how can you make an informed decision if you don’t know what you are giving up?
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Trend: One of the greatest benefits of using benchmark data versus historical averages or targets is that you can watch for trends. To be truly effective, benchmarking should look at more than just production parameters. You need to include items like machinery expenses, financing, and that profit line at the bottom of the income statement. This is important because you can’t make improvements in these areas over the short term; you have to think long term, which requires understanding where you fit in with regard to the rest of the industry, as well as what’s happening in your operation each year. Understanding year-on-year trends can motivate dairy farmers to make improvements in the right areas. For example, if you discover your labour costs are higher than those in the top third of the benchmark, you can start exploring the reasons behind that. Maybe higher labour costs are okay because that’s just the way your farm is built, or maybe there are improvements you can make to lower labour costs over time, which will increase profitability. Focus: Focus is the final piece, after you understand how you compare from a profit standpoint and the trends you are on. A farm financial statement is full of numbers—it’s easy to get caught up focusing on something
Markvale Holsteins, Beachville, Ontario
Ian Ross, President & CEO | David Ross, VP & CMO Mark Bowman | Jeff Keunen | Josh Devos | Kathleen Shore, Ruminant Nutritionists Mat Schwenker, Layout Editor
that isn’t important. With benchmarking, if you aren’t hitting the profit target, then you can go back to see where the problem might lie. Are you short on revenue? Do you spend too much on inputs versus what you get in return? Is it costing you too much in operating costs or overhead? It might not lead to an easy solution, but at minimum it will give you more certainty in how you deploy your management skills. If you are one of the most profitable dairy farmers, does it change your perspective on how you approach growth? Dairy farmers are all trying to play the same game but, ultimately, no two dairy farms or farmers are exactly alike. By utilizing benchmark information, you can see what things make your farm successful, how you can continue to achieve that in the future and the areas in which you can implement improvements to create even more success. n
About the author
Winter Barley Winter barley has not been widely used for forage in Ontario, in part because it is the least winter hardy of the winter cereals. However, newer varieties have improved winter hardiness. Barley matures earlier than winter wheat, which makes establishing a crop to follow it easier. Winter barley should be seeded about a week before the optimum seeding date for winter wheat to ensure that it has time to establish a healthy root system before winter. Winter Wheat Winter wheat is not nearly as popular as rye or triticale as a forage crop, but it may be an option in some situations. Livestock find it very palatable, but with its late maturity it can be difficult to get a second crop established after forage wheat.
Rick Hamilton has provided accounting and consulting services to businesses in SW Ontario for more than 25 years, with a focus on the agriculture sector. He can be reached at 519-286-2821 or Rick.Hamilton@mnp.ca
WINTER CEREAL FORAGE
by: CHRISTINE O’REILLY OMAFRA Forage & Grazing Specialist
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inter cereals are gaining popularity as a forage crop in Ontario. Typical quality and yield data make it easy to see why:
• Crude protein: 16.1-16.5% • NDFd (48h): 57-73% • Total Digestible Nutrients: 60-64% • Yield: 5.0-9.0 tonnes DM/ha (4,410-8,034 lb DM/acre) In addition to being high quality and high yielding forages, winter cereals are ready for harvest in the early spring, when forage inventories are lowest. Being able to fill a gap in forage supply with home grown forage at a time of year when hay prices are strongest is a big advantage. Winter cereals also act as a cover crop on fields that are in annual crop production by keeping the soil covered over the winter. Selecting the right species and implementing good agronomy practices are critical to successfully producing winter cereal forage.
Differences Between Cereal Species
Fall rye Fall rye in the most winter hardy of the winter cereal species. It has been successfully established in Ontario as late as November, but yields are reduced with late seeding. Fall rye prefers free draining soils. It can tolerate lower soil pH than other winter cereals. Fall rye matures earlier than any other cereal. In southern Ontario, rye typically reaches the target maturity for forage harvest between May 10th and 20th. This means that forage rye must be seeded in fields that can carry equipment traffic early in the spring. Winter Triticale Triticale is a hybrid between rye and wheat. In many ways, it is intermediate to its two parent species. Winter triticale matures about 10-14 days after fall rye, but before winter wheat is ready for forage harvest. It can be a good fit on soil that is not fit to carry equipment as early as rye requires. Triticale is very palatable to livestock.
Agronomy Yield potential of most winter cereal forage crops is maximized when seeded on the optimum seeding date for winter wheat, which can be found at www.omafra.gov.on.ca/english/crops/field/news/ croptalk/2019/ct-0919a4.htm . However, rye can be successfully established after silage corn harvest. Where available and conditions permit, apply manure ahead of seeding. Seed winter cereals at a rate of 110 kg/ha (100 lbs/acre) and at 2.5 cm (1 in.) depth, or deeper to seed into moisture. For phosphorus and potassium fertility guidelines, see Chapter 4 of OMAFRA Publication 811: Agronomy Guide for Field Crops. Remember to account for nutrients from manure when calculating fertility requirements. Apply 55-80 kg/ha (50-75 lbs/acre) of nitrogen at green-up in the spring to encourage tillering and increase forage yields. Winter cereals should be harvested between flag-leaf and early boot for high-quality forage. Cut the crop at the optimum maturity stage and wilt to the target moisture for ensiling or baleage. If the cereal shows signs of regrowth, tillage or a burn-down to terminate the cereal will prepare the field for the next crop. Often the spring planting season conflicts with winter cereal harvest. When this occurs, the best course of action is to stop planting, harvest the forage, and then resume planting. Winter cereals can very quickly progress through the maturity stages where they have highest quality. Once the head starts to emerge, forage quality declines very rapidly. It is very difficult to replace digestible fibre in a ration, but much easier to replace the energy from the grain crops if planting is very delayed. Conclusions Winter cereal forage crops create an opportunity to double crop, which can lead to higher forage production per acre over the year. They provide the same benefits as cover crops in an annual crop rotation, as well as good quality forage for the herd. Talk to your nutritionist so that a properly balanced ration can be formulated, and necessary samples taken for analysis before feeding it. When introducing a winter cereal forage into the animals’ diet, like any other new ingredient or dietary change, introduce it gradually to allow the rumen microbes time to adapt to it and avoid digestive problems. n
Dairy Grist
with MARK BOUSFIELD Dairy Specialist, Grand Valley Fortifiers
health, production, and increased BF test. The most positive advantage to feeding more forage is lowering purchased feed costs. I have seen savings ranging from $0.15-$0.30 per cow a day. In my opinion, planting winter forages is a great fit for dairy producers. It allows your operation to have extra inventory of high quality and digestible feed on land that would be dormant in previous years. When working with producers that have been double cropping land, the results have been very positive. n
Using Winter Forages in Dairy Rations
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or the past few years, the dairy and beef producers I work with have been growing more winter forages. The most common of these has been Winter Triticale and Winter Rye. Today, I would like to talk about some of the benefits and potential drawbacks from growing these early season forages. The most asked questions I receive on these two forages are, which ones should I plant, and which ones will yield the best for my operation? Answer: it really depends on the soil type you have. Both forages yield well in all soil types; however, in sampling both forages, the triticale holds its protein level better than the rye silage, which drops rapidly after peak maturity. There is a short harvest window to maximize both quality and quantity of these forages. Ideally, harvest should happen when the plant is in flag leaf stage. This is where your soil type comes into play. In my travelling area (Niagara, Haldimand-Norfolk) producers deal with mostly heavy clay. For a crop to be planted after corn silage in mid-September and harvested generally in mid-May, the clay is not always ready for planting and harvesting equipment, and in a wet year, the clay will be less forgiving and harder to find a good window for field work. Triticale has a longer and slightly later harvest period in the spring, so on my wetter heavier soils, I have seen more of it planted The main benefit to growing and feeding winter forages is getting increased yield from the land than you currently have. As land prices increase and availability becomes scarcer, it becomes critical to maximize the output of your cropland. Double cropping with winter forages allows you to grow enough quality forage for your animals, while also giving you the possibility to grow some cash crop to help diversify your operation. Both triticale and rye grow very thick, covering the soil like a mat. This helps reduce weed pressure through the late fall and early spring, improves soil organic matter and reduces the level of soil erosion, helping producers keep their soil healthy and productive for generations to come. Most producers in my travels will plant corn for silage or grain (high moisture or dry) or soya beans, depending on their rotation and forage needs. Both rye and triticale yield very well, with producers reporting 2.03.5 tonnes DM/acre. I suggest either chopping and ensiling at 33-38% DM in either bunk, tower silo, bag, or pile. These forages are hollow, so I find it takes extra time packing in bunks or piles as it seems to act spongy. I have also seen it made as balage, however, if you are wanting to feed these forages in a TMR then it is best to be chopped ahead of time as the mixer takes a long time to chop appropriately. These forages ferment well and smell almost sweet once fermented. Winter forages are not just for heifers and non-lactating animals. They can work very well for your lactating cows as well when they are chopped at the correct maturity. Originally, I saw producers growing it as extra heifer feed or insurance feed for the operation. However, with the excellent yields, crude protein in the 14-20% range and high NDF digestibilities, I have seen winter forage introduced to the lactating rations to help extend the other forage supplies on farm. We can easily balance rations with a blend of legume, corn silage, and triticale or rye. This allows producers to be able to push more forage into the diet while maintaining optimal
with BRAD WHYTOCK Dairy Specialist, Grand Valley Fortifiers
Q
We are struggling to look for areas to save money on our inputs this year. What areas come to mind for you as a Dairy Specialist on the road, as well as running your start up dairy? All input costs are going to be really up for 2022, so we need to question every dollar we are spending. The most important thing we can do is do our best to make the best forage possible and feed it to the most important animals on the farm. Forage quality is not just about protein and starch but really digging into the digestibility of our forages. Pushing hard on harvest timing for hay crops/cover crops/corn silage etc is where the journey to more or less purchased feeds comes from. In addition to harvesting considerations, we need to make sure we are planting the right corn for our farms to maximize the milk/tonne so we can feed much forage in our diets. If you were to “skimp” on anything in your milk cow ration, what would it be to reduce purchased feed costs?
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A simple place to start is by asking what am I buying and why? With rapid quota growth a few years back, producers pushed thier rations harder to try to fill those requirements. Maybe we added something to our ration to help with a “bottle neck” on our farm that we no longer require, maybe you were struggling with reproduction issues and added additional minerals or vitamins to the premix to help with that. These additional products can add up and we can often forget what we have added and why. As prices climb it is always smart to evaluate and determine which key additives are still necessary for your performance goals. Short term, we can look at reducing protein in the ration. This is something that is easily done on farm buy pulling 250 grams of protein blend from the ration and seeing if it has a change in milk production and performance. Remember, cows don’t like change so make small steps. There is also the option of looking at products like urea to reduce protein cost on farm.
grandvalley.com
Q
We are filling quota efficiently but looking at other areas of our dairy farm to decrease costs. What do you see out there that most producers could do to decrease costs? Managing inventories on farm is a great way to reduce costs, we all know that raising more heifers then we need can be a big draw on the bottom line. The number of heifers required is different for every farm based on a number of factors, but in today’s fresh cow market it is hard to make a profit selling fresh animals so raising just enough for your farm’s requirements is best for bottom line. Feeding more home grown feeds; for the past number of years we have been blessed, here in Ontario, with cheap starch and protein sources, which lead to an increase in complete feeds delivered on farms because of its convenience. Getting back to storing feed on farm and grinding your own grains is a fast way to save a lot of money on farm. We have seen a large increase in the number of farms feeding cobmeal which can be put in a bag, pile or tower silo and is a cheap and easy way to reduce need for purchased starch in the ration. Bottom line, being efficient does not have to mean being cheap nor does it mean that production will be sacrificed. ■
GLANCE AT THE MARKETS
by: BRIAN GONDER VP & COO, GVF group of companies
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ver the past year and a half, we have had many different factors affect the market, from the pandemic, to a natural disaster in BC, an environmental improvement shutdown in China (due to New Years and the Olympics), to now a war in Europe. We continue to face factors that affect many different facets of the market. Below are a few of the main factors that we have seen challenge the market over the past several months which helps provide clarity on the difficult supply chain situation.
Phosphates – China’s export ban Phosphates are increasing dramatically in the market due to China’s ban on phosphate exports through June 1, 2022. As we get close to planting season, the demand will continue to increase and will also cause prices to swell. Dicalcium phosphate (dical) suppliers around the world have been put on ingredient allocation which has pressured feed and premix companies – as we know this is the primary source of phosphorus in animal diets. This limitation has driven the Canadian government to grant feed companies permissions to lower levels below Table 4. While those levels are not harmful in the short term it is definitely something that is being watched closely as purchasers work closely with nutritionists. The upcoming planting season, and uncertain Global Soybean Meal and Wheat supplies are adding to the pressure over the next few months.
Palm Fats – Effects of Russia’s supply of oil At the time of this article, the war between Russia and Ukraine continues to be a major concern. As sanctions continue to build against Russia, oil supply continues to tighten causing increased prices on all Vegetable oil-based products. Oil has recently hit a 10-year high, which has seen a Palm Oil reaction to those highs, as well. While CPO supply can still be fulfilled from other countries, the increased price will drive Palm Fats, until sanctions on Russia are removed.
Shipping container and trucking price increases Over the past several months we have seen shipping containers and trucking prices increase two-to-three-fold as the demand for products continues to increase. Currently in North America, there are 9 loads waiting to be shipped for every one load shipped. Many of these increases
have been due to port backups and natural disasters. With Chinese New Year, and the Beijing Olympics behind us, there is hope that the supply chain will improve over the coming summer months.
Inflation – Everything from key ingredients to water bottles Across Canada, we have seen inflation affect almost all products and services. Canada’s consumer price index for 2021 was over 5% for the first time since 1991. Many products throughout different industries have increased by 5,10, 15 or even 20%. We work to continue to limit these increases while they continue to affect all aspects of the supply chain. While feed prices have been a difficult hurdle for all producers, with no softening over the past year nor in the short term. There is hope as we see restrictions lighten in Canada and in other places throughout the globe. We also see things such as an increase in ethanol production which means a higher production of distillers. As manufacturing moves forward to meet consumer demands inevitably, we will see an improved supply of co-products for the animal feed industry! n
Thought for the Day Challenging days draw us closer to God. We are all living in challenging days, some more so than others. In this passage Paul reminds us that followers of Christ are not promised a blissful life but rather hardship and trial, which in turn draw us closer to God who has not promised to shield us from it but to carry us through it. Be encouraged as we enter spring 2022, God is in control. Romans 5:1-5 - NIV “1Therefore, since we have been justified through faith, we have peace with God through our Lord Jesus Christ,2through whom we have gained access by faith into this grace in which we now stand. And we rejoice in the hope of the glory of God. 3Not only so, but we also rejoice in our sufferings, because we know that suffering produces perseverance; 4perseverance, character; and character, hope. 5 And hope does not disappoint us, because God has poured out his love into our hearts by the Holy Spirit, whom he has given us.” “Paul tells us that in the future we will become, but until then we must overcome. This means we will experience difficulties that help us grow. We rejoice in suffering not because we like pain or deny its tragedy, but because we know God is using life’s difficulties and Satan’s attacks to build our character. The problems that we run into will develop our perseverance – which in turn will strengthen our character, deepen our trust in God, and give us greater confidence about the future.” 5: 3,4 commentary - NIV Life Application Bible published by Tyndale House Publishers