dairy cows feeding

Two tips to help increase the profitability of your dairy farm

Two tips to help increase the profitability of your dairy farm

Synopsis
3 Minute Read

Higher interest rates, fluctuating market prices, and the rising cost of equipment are just a few of the factors squeezing the profit margins of Canadian dairy farmers. However, you still have control over your operations — and, as a result, most of your costs.

These two tips can help you increase your operational efficiency and manage your costs effectively:

  • Improve return over feed
  • Reduce equipment costs
Senior Vice President, Agriculture, Director Livestock Services
Business Advisor, Agricultural Services

You may be paying more to keep your dairy operation running and receiving lower returns for your hard work. Higher interest rates, fluctuating market prices, and the rising cost of equipment are just a few of the factors squeezing the profit margins of Canadian dairy farmers. How can you ensure you’re getting the most from all the effort you’re putting into your operation?

While many factors in the marketplace are out of your control, you still have control over your operations — and, as a result, most of your costs. Taking the right steps to improve your operational efficiency and manage your costs can help your dairy farm thrive in today’s uncertain marketplace. These two tips can help you get started:

1. Improve return over feed

Feed is typically the biggest expense on a dairy farm — and providing nutritious feed to your milk cows is necessary to increase the quantity and quality of their milk. While it’s easy to keep your focus on your milk cows, it’s equally important not to overlook the rest of your animals.

You may have a significant number of young stock or dry cows on your farm that require feed but are not contributing to your operation’s bottom line. Additionally, caring for these animals takes time, effort, and labour away from other areas of your operation.

Assess the number of animals on your farm that are consuming feed versus the amount that are helping to pay your bills. If you have a high number of young stock that you don’t intend to use for milk production, it may be beneficial to consider selling or culling some of these animals to increase your return over feed.

It is also important to analyze your breeding program. You may end up with a one-to-one ratio of young stock to cows without careful management — which makes it crucial to set goals such as how many heifers you want to bring into the herd each year. This allows you to make adjustments to reduce the amount of excess animals and improve your return over feed.

2. Reduce equipment costs

Equipment costs can easily spiral out of control without careful management. While it may be appealing to own your own equipment, it’s important to remember that equipment costs include more than just the purchase price. It also includes the cost of fuel, maintenance, and repairs. Additionally, time is valuable — and the time your team spends operating that equipment might be better spent focusing on other areas within your operation.

Conduct a thorough analysis on each piece of equipment before you purchase it to understand whether the returns will outweigh the overall costs. It may be more cost effective to rent the equipment when you need it or hire someone to come in to do custom work on your operation. Additionally, changing the practices on your farm to reduce the amount of equipment you need can also help decrease costs and improve the profitability of your dairy farm.

Serving the agriculture industry

Agriculture — it’s one of Canada’s core industries. It has also always been one of MNP’s key areas of focus. We have invested more time and resources into understanding agriculture than any other accounting or business consulting firm in Canada.

Take the next steps

Taking the right steps to increase the efficiency of your operations and manage your costs can leave you with more money to invest in the future of your farm. Review where you can control the costs in your operations to get the most out of the effort you put into your business.

For more information, contact a member of MNP’s Agriculture team. We have a range of experience regarding all aspects of agricultural business — from primary producers through to food and beverage processors.

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