Rock bottom milk prices and drought years benefit the dairy sector by forcing businesses to analyse forage inventories and ration blends, says a Mid West dairy business consultant.
Addressing the Total Dairy seminar in Gloucestershire, UK, yesterday, Matt Lange of AgStar Financial Services used the years of 2009 and 2012 as examples of when US producers were forced to learn important lessons.
Many US producers started to appreciate the importance of feed inventories when crops failed in 2012, pushing feed costs to new heights.
He said some clients beat the rest to forage supplies before price escalation because they knew ‘to the day’ when feed would run out.
This forced farms to firstly consider supplementation and also got farms thinking about how much shrink there was in feed, he told TheDairySite.
“This has driven better feed management and inventory management in the US,” said Mr Lange, who is worried by complacency in a good year.
“Complacency scares me – the industry has times that are good and we get complacent,” he added.
In 2009, the challenge came from low milk prices and Mr Lange said many businesses learned that profitability couldn’t be spared by simply removing feedstuffs from the ration.
Ration modifications of this kind typically did the industry ‘a disservice’, compounding profit issues by lowering milk production when there was already loss of margin, he explained. It also led to many of Mr Lange’s Mid West-based producers seeing lower milk yields as cows felt the effects of different diets.
“When 2009 passed and margins started to improve, it took longer for those herds to get back to where they were.
“Many people found out that pulling stuff out of the ration was not the answer.”
Source – The Dairy Site