Share

Advanced Cash Flow Program Helps Producers Understand Their “Numbers”

Posted: January 13, 2015

Extension Dairy Team offers workshops on Advance Cash Flow for those who previously have completed cash flows for their operations.

The Penn State Extension Dairy Team has been working with producers across the state to tie together the economics with cropping strategies, forage quality, feeding management and cost of production through a program called "Know Your Numbers."

Starting in 2013, dairy producers who have completed cash flows in previous years were eligible to participate in the Advanced Cash Flow program of "Know Your Numbers." These advanced cash flow workshops will be offered again in 2015, beginning in February, to custom groups of producers who have completed a cash flow program in the past. Participants will evaluate last year's cash flow with actual numbers and develop a plan for the coming year. Another part of this program is sampling corn silage for a complete analysis, manure for fecal starch and milk for milk urea nitrogen at two different time points throughout the year. Forage and feed management practices are captured and will be evaluated along with the cash flow plans. 

This is the second year of the advanced program being offered to qualified producers to evaluate trends in forage quality, costs and performance. Information related to cropping management and forage quality, detailed information on production practices along with their financial information was and is being collected.

Producers involved with the program have their corn silage, manure, and milk tested in the fall and again in the spring free of charge. The results are reported back with interpretations. Between the fall and spring sampling, producers will complete their 2015 cash flow projections as well as review 2014 actual numbers.

With dropping gross milk prices and the availability of the new Farm Bill Margin Protection Program, it is even more important for dairy producers to know their numbers to work with extension and other farm advisors to prepare.  For producers who have not participated in past programs, basic cash flow workshops are scheduled in March. The extension dairy team can be contacted for more details: contact Rebecca Connelly at raw43@psu.edu.

The advantage of collecting detailed information on farms is trying to examine trends related to cropping practices, hybrid selection, feeding management, nutrition plus many others. Insights can be gleaned on what might be occurring based on a big picture assessment. For example, herds completing their cash flow plans in 2013 were divided into groups based on their cost of production. The herds with the lowest breakeven gross milk price/cwt of $14.22 milked 69 cows averaging 70 pounds and cropping 174 acres. Their direct crops costs (seed, fertilizer, chemical and custom hire) averaged $595/cow.  The herds with the highest breakeven gross milk price/cwt of $25.61 milked 76 cows averaging 58 pounds and cropping 206 acres. Their direct crop costs averaged $872/cow.

It is difficult to pinpoint what the bottleneck may be on the farm or why cropping costs are out of line or why forage quality is consistently low unless expenses are itemized and can be related back to management, according to Extension Specialist Virginia Ishler

The data from 2013-2014 has been analyzed and there were some interesting observations. Corn silage harvested in 2013 tended to have very low fiber digestibility. Most experts would have expected production as well as cost of production to suffer. However, this was not the case. The herds showing the highest cash surplus fed the lowest quality corn silage based on fiber digestibility. These herds adjusted their diets adequately to compensate for this and they also fed the highest amount of corn silage dry matter. The herds that suffered on performance and cash surplus actually fed the highest quality corn silage. The problem was they had limited inventory and fed the lowest amount of corn silage.

Ishler said, "Through the years of the Penn State Extension Dairy Team program "Know Your Numbers," the underlying issue 75% of the time involves forage quality and/or quantity. There are many factors that hinder making improvements. Labor, equipment, adequate land base, proper cropping practices to optimize yields, balancing yield criteria with quality criteria and many others affect how a solution can be implemented.  Until the big picture is examined, it is a guessing game on what is causing the problem and if changes are made, it can be difficult to determine if they are helping."

For more information on the advance cash flow workshops being offered in February, 2015, contact  Virginia Ishler at vishler@psu.edu or call 814-863-3912 for more information.