Appearances can be Misleading

We often hear the expression "the grass is always greener on the other side of the fence," but appearances, for the most part, can be misleading. It's best to corroborate a situation before jumping to conclusions. This is especially the case when looking at production and profitability data from dairy companies.
Some believe that a first impression is often the right impression. This may be true for many cases, but a little analysis and context are required before making a final judgement. For example, let's look at the price of milk on your pay statement: is it really more profitable to produce milk at $85/hL than it is at $80/hL? Not necessarily! However, what we do know is that for every hectolitre you produce you will get $5 more. Consider a quota of 50 kg/day, at first glance it may appear to be a gain but may very well turn into a significant loss. With a few calculations the final revenue may easily be $10,000 less. It all depends on how much fat and protein are in the milk you deliver, how many hectolitres you produce yearly, how much of your share of the quota is used and the fall milk bonus payout you receive.

For a herd that is primarily made up of Holsteins, is it more profitable to produce milk with 4.4 kg/hL of fat than milk with 3.9 kg/hL? Again, not necessarily! Protein content also has a significant influence on total revenue. If your milk has 3.9 kg/hL of fat, you could deliver, for that same quota, more protein for which the price per kilo is essentially the same as that of milk fat. In fact, the total solids produced will have a huge impact on your final payout. These factors will have a much greater significance on your farm's total revenue than a $1/hL drop in feed costs.

A Disturbing Turn
At this time, when looking at statistics supplied by the Fédération des producteurs de lait du Québec, we realize that the fat content of milk is rising. Yet, the provincial quota has not been entirely used. This also means that less milk is being produced, thus fewer total solids, including protein. This year we are experiencing extremes: on the one side, more than 800 producers exceed the 10-day tolerance limit every month and a portion of their milk production does not generate any income. On the other hand, several dairy farmers produce much less than the permitted amount and well within the 30-day tolerance limit. This translates into a significant loss of revenue for all parties involved.

The price of animal feed remains high, which may push more and more producers to reduce the quantities they serve. This method may turn into a trap and serve as a distraction if, in return, the herd's performance is also lowered and less milk is delivered. What is needed is a way that maximizes production as well as the components in the milk to reach 100% of the production quota and get the best revenue possible. That way the grass will be greener on your side of the fence and appearances won't be misleading!

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