Dairy Grist
WESTERN & PRAIRIE EDITION A PERIODIC NEWSLETTER PRODUCED BY GRAND VALLEY FORTIFIERS VOLUME 2, 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 Grand Valley 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
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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
Did you know: Calves born in the Fall and to Heifers are more likely to earn lifetime productivity awards!
About the author 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 Photo credit Amanda Kerr, Grober Nutrition
CHEERS TO THE UNDERDOG: THE CALF!
by: KATHLEEN SHORE Ruminant Nutritionist, Grand Valley Fortifiers
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alf nutrition has been a smaller part of what producers worry about on their farms and what nutritionists pay attention to. However, the last 15 – 20 years research has evolved from the importance of feeding calves beyond 4L/day to understanding that we are setting up the lactating herd for success in those first 60 days. Bottom line, we all should spend more time in the calf barn! The calf is born weak and very susceptible to disease and infection. Knowing we must feed them higher amounts of milk in order to provide the energy they need for maintenance, growth and immunity is well founded. Cornell has led the way to showing us that by feeding them well throughout the calf stage means milk production in 1st, 2nd and beyond lactation is higher. This has been validated by many researchers and now many farms in a practical setting. Further to that, Dr Mike Van Amburgh reported that high milk production is not significantly related to genetics so on farm feed/management programs will highly influence heifers’ lifetime productivity. Understanding how to feed calves correctly to improve immunity is key. Sickness in young animals is not only common, it is expected with their immature immune systems. Feeding them colostrum has been touted for many years as key to getting calves off to a good start. Further evaluation finds that colostrum is involved in gut health (development of the villi) and building a stronger foundation for digesting the nutrients in their feed. The calf also expends less energy when digesting colostrum, which begs the question: Should we feed colostrum beyond Day 1? Yes is the answer (that doesn’t just mean the first milk, this includes milk into the first few days of lactation). Feeding colostrum for its immune benefits within the first 6 – 24 hours is still critical; however, understanding that the nutrition within colostrum/transition milk is a tool toward stronger, healthier calves makes the milk produced during the first few days of lactation even more valuable. The next step to feeding them is managing their health during this critical time and managing how we feed them. Grouping calves is a great way to socialize an animal that is more comfortable in a herd, however it can mean extra health challenges. Grouping animals does not mean
a large number of calves, 2 calves in one pen is considered a group and calves in this setting do exhibit great “play behaviour” which is an indicator of strong welfare. Calves should exhibit play behaviour – it is not about the calf being “happy”, it is about the calf exhibiting behaviour that is natural to them and an indicator that their environment is optimal for growing. When calves are not fed enough milk, even if they have the room, this “play behaviour” will be reduced. Dr Margit Bak Jensen from Denmark comments that when one calf in a pair has a health event (even if it is not critical) the health and behavior of the companion calf was also affected – further proof that play behaviour is important to observe in calves to validate that the environment is ideal. Grouping calves in pairs also ensures that competition for feed is not as fierce. Eating is a learned behavior in calves. The concern with too many calves and too few nipples goes beyond growth concerns it teaches them to fight for their feed. Dr Trevor DeVries reports that this will stay with them beyond the calf pen and heifers will continue to slug feed even when they have space and it is TMR being offered. In our continued support for the Underdog, some top points for improving the quality of the heifer that comes out of the calf barn are: 1. Feeding colostrum beyond day 1 for nutrition and gut health benefits. 2. Genetics is not an impediment to lifetime milk production, calf nutrition and management are. 3. Grouping calves in pairs to improve social environment and reduce competition for feed is important for good feeding behaviour beyond the calf pen. n
with STEPH MURPHY Dairy Specialist, Grand Valley Fortifiers
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ith tightening on-farm margins and the recent quota restrictions, producers are looking for ways to increase efficiencies on their farm and reduce cost. Here are some thoughts/ideas that I have been discussing and implementing on the road over the last few months.
Dairy Grist 1. Reviewing the current feed additives in your feed with your Dairy Specialist to ensure that the correct additives are being used for any issue that may be on farm. It is always good to re-evaluate additives and discuss the ROI on any extras in the ration. Be cautious removing additives that give you short term cost reduction but long term decreased income over feed costs or increased health challenges. Quoting some industry experts, some of the “no brainers” to always keep in the ration are monensin and sodium bicarbonate. There are also additives that make sense during heat stress seasons, such as yeast, plant extracts, extra potassium and sodium. At the same time, don’t forget to take some of these extras out when the condition or situation has been dealt with. 2. Review your current feed. Pelleted feeds are costlier than the same feed as a mash. Is a pellet necessary? Bringing in prepared feeds such as supplements and complete feeds offer convenience. Would your feeding regime and storage allow you to break down the individual components and bring them in separately? Often there are better ways to bring in the same feed stuffs in a less expensive manner. Looking at your ration now, are there ways to buy fewer by-product commodities in such as wet brewers, when you already have enough of your own forages and grains? Is there a way to feed more of your better forages and less of the lower quality forages to make milk easier and less costly? 3. Making top quality forages to reduce the amount of purchased protein and/or energy. NDF 40 50 As we know, high forage diets NDFD 30hr 55 70 are possible when your forages RFV 150 100 are of high quality. It starts by RFQ 175 150 having healthy soils, great crop genetics and harvesting at the ideal time. With a high forage diet, we can feed less concentrates and more of your own home-grown feedstuffs. Not only are high forage diets less expensive, but they also make milk much easier than a low forage diet. Above are some benchmarks to use for excellent quality alfalfa and grasses. ADF
Alfalfa
Grasses
30
30
4. If you are filling your quota, review the option of taking palm fat out or reducing it. Palm fats are an excellent way to increase fat test, and thus fill more quota. But if you don’t need to fill extra quota, perhaps this is an opportune time to remove it from your ration. Removing palm fat alone can reduce cost per cow per day by $0.30-0.75 cents. Many producers say they see an effect on reproduction performance by leaving a fat in the ration. Perhaps feeding a lower level or a different rumen protected fat source that doesn’t affect fat test is a better alternative? 5. Keeping a good pregnancy rate, which will lead to low days in milk. The target should be for a herd average of 150 days in milk for optimum performance and production. A good 21 day pregnancy rate to aim for is 23 to 25%. How this is accomplished on your farm can be an entire article itself. Certainly there are many aspects that can improve fertility. What we do know, is that most of your success or lack of success starts in the dry
cow program. Make the dry cow/transition area of your operation a priority. Healthy cows, a solid reproductive program working routinely with your vet and using sound nutrition makes repro success occur a little easier. 6. Maintain an appropriate number of replacement heifers on farm. Utilize genomic testing on calves to help determine the bottom end of your herd that could be sold as a young calf. Breeding the bottom 10% of the milking herd to beef will also help keep control on the number of replacement animals on farm as well as improving the genetics of your herd. 7. Focus on longevity in your herd. A mature cow (3 plus calves) will produce 15 to 20% more milk than a fresh 2 year old in her lactation. By having cows productive in your herd for many lactations, that leaves you with excess heifers to sell when markets are strong. Two markets exist for cows. Fresh cow market and cull cow market. Make it your priority to fill the fresh cow market and not the cull cow market! 8. Currently with high cull cow prices and the ability to buy fresh cows for less than you raise them, makes this a good time to improve your herd. If you have been wanting to improve genetics in your herd now is a good time to cull some problem cows and purchase some younger fresh cows. Being an opportunist is reacting to opportunities. With low cattle prices, what a great time to “retool“ your herd by culling out the problems and bringing in healthier, more productive cattle for not much more money than you would get for the cull cow that you are sending out. n
A 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.
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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
In January, this year Grand Valley Fortifiers was honored to purchase Valley Nutrition, a western Canadian dairy and beef nutrition company actively serving producers in British Columbia, Alberta, and Saskatchewan. While the team of Valley Nutrition staff will begin operating under the Grand Valley Fortifiers brand, they will continue offering the same customer focused expertise and quality products, produced in the Langley, BC plant, that they have become well known for. We are also excited to have our Fortified Nutrition Limited Dairy and Beef Specialists, Vicki Wiens, Gilles Chappellaz, and Lisa Wiens Simanton, begin serving producers under the Grand Valley Fortifiers brand. This will create a single unified dairy and beef nutrition brand across Canada. Our Fortified Nutrition Limited brand will continue to market swine and poultry nutrition products in the provinces of Alberta, Saskatchewan and Manitoba along with serving producers in Montana. Please join us in welcoming the knowledgeable and experienced Valley Nutrition staff to our team as together we work to serve dairy and beef producers innovatively and well. Advanced Animal Nutrition for Improved Human Health
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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 “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