USING WHOLE FARM ASSESSMENT TOOLS TO IDENTIFY STRATEGIES FOR CHANGE TO INCREASE DAIRY FARM PROFITABILITY

The recent economic downturn in milk prices has caused moderate to severe financial distress on a significant number of dairy farms in both Pennsylvania and across the country. However, there is a segment of dairy farms that are maintaining high levels of profitability in the current environment. These farms are better positioned to deal with the wide variability in milk prices that have occurred over the past 15 years and the more recent increases in input costs because of sound management decisions based on information that links production measures to financial indices. Decision making tools, like the PA Dairy Tool and the Income Over Feed Cost Tool, can help producers determine where bottlenecks to higher levels of profitability exist within their operation. To date, more than 200 Pennsylvania dairy operations have had the PA Dairy Tool run on their farm. Preliminary data from across a variety of herds using the PA Dairy Tool showed estimated losses of $495 per cow; $77,309 per herd and $6.4 million total with 82 herds. This project is designed to first, gather data from at least 50 dairy farms over two years using decision tools; second, analyze that data to determine which farms are high profit (>4% ROA) and how five key areas contribute to high profit; third, determine best management practices for each of the five key areas with high profit farms through personal interviews; and last, use those profit proven best management practices to show marginally and unprofitable herds specifically what changes to make in order to improve overall profitability. The strategy sets that are developed will be communicated to dairy producers through ongoing extension programs, a webinar series and through articles in newsletters.