Grazing for Dollars

Researchers Study Link Between Production Factors and Profitability

Managed intensive rotational grazing (MIRG) has many benefits. It's proven to increase forage production and forage quality in pastures. As well, farmers using MIRG indicate satisfaction with their quality of life. Used effectively, rotational grazing can also reduce cost of production.

But, can you be a grazier and remain profitable? Or will milk production drop, along with your profits.

So far, this issue has only been addressed through anecdotal evidence and by making conclusions that combine research results from several sources. No grazing research project has made a direct link between production factors and profitability.

The Great Lakes Grazing Dairy Financial Summary project is hoping to address this gap. Ten U .S. states and the province of Ontario are co-operating in a three-year project to create a database of actual farm financial and production data. This will provide grazing dairy financial benchmarks to help farm families become successful and sustainable.

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The group's first task was to define a MIRG dairy farm. The farmers participating in this project can be described by the following statements:

• Dairy cows are moved to fresh pasture at least every third day;
• Farmers attempt to harvest 30 per cent of annual forage needs by grazing;
• Dairy farming is the primary farming enterprise. This means either gross milk sales are 85 per cent of the gross farm income or that milk sales and dairy livestock sales combined are 90 per cent.

Preliminary results compare the average of the 39 participating dairy graziers with the performance of the top third and the bottom third, using basic cost per cow. Basic costs are essentially all the cash and non-cash costs except interest, labour and depreciation. The 13 graziers with the lowest basic cost are in the top group while those with the highest basic cost are in the bottom group.

Table 1 provides selected measures from the first year's report. The average basic cost for the top group is $1,179 lower than the bottom group. The top group enjoys a $1,301 advantage over the bottom group for net farm income from operations per cow.

When we compare individual basic cost per cow items between these two groups, a few items stand out:

• Purchased feed is $422 less for the top group;
• Repairs and maintenance are $131 less for the top group;
• Renting equipment and custom hire are less for the top group;
• The combined categories of supplies, other livestock expense and other farm expense are $107 less for the top group;
• The bottom group is lower in three categories: fertilizer and lime, seeds and plants purchased, and farm insurance.

These results are preliminary for a couple of reasons. We plan to add about 75 more farms to the project database for a total of 110. Secondly, many additional financial comparisons are possible. Ontario results could be compared to individual states or to all states and to conventional, typically confinement, farms. With a large enough number of farms, we could also study additional data sorts such as by herd size or milk production per cow.

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Would You Like to Participate?

The Great Lakes Grazing Network Dairy Financial Summary project is still actively seeking dairy graziers. Any Ontario dairy farmers interested in participating are encouraged to contact Jack Kyle at 705-324-5855 or John Molenhuis at 613-475-9472.

This article appeared in the April 2002 Ruminations column of the Ontario Milk Producer.

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