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Is Milking Two or Three Times more Profitable during Low Milk Prices?

By Faith Cullens
 
Times are tough in the dairy industry. Margins are slim and labor is short. Many farms are considering cutting out the third milking shift in an effort to save money on labor, but is this the best financial decision for the dairy?
 
Unfortunately, determining the optimal milking frequency is not a simple “if X, then Y” situation. Every farm has a different standard for what makes the best financial situation including factors, such as milk production, management level, labor availability and pay rate, milk price, barn space, and parlor availability. Most scientific studies comparing twice a day milking (2X) to three times a day milking (3X) were conducted 30 to 40 years ago when cows generally produced 45-75 lb/hd/d. Researchers commonly reported a 10-20 percent increase in milk yield with 3X milking. A 1995 review of 19 reported studies (Erdman and Varner, Journal of Dairy Science) concluded that there is a fixed 7.7 lb increase in milk yield regardless of production level. Milk composition and reproduction responses were varied in these studies.
 
Based on my recent conversations with producers, veterinarians and nutritionists, the assertion of 7.7 lb/hd/d response does not hold true today. After reviewing data from 6 Michigan producers that recently switched either to 3X milking or back to 2X, I am comfortable predicting a 10-20 percent production response in most circumstances. That means for a herd producing 90 lbs of milk/cow/day on 3X milking, a 9-18 lb milk loss would be expected when switching to 2X. Even at today’s low milk prices, that is difficult to justify financially. However, in some situations, adequate labor is not available to milk the cows another shift and there is no choice.
 
In order to analyze the impact milking frequency might have on your herd, I suggest working through a partial budget. Partial budgets include educated estimates for negative factors that increase cost and decrease income compared to positive factors that increase income and decrease cost. To run a partial budget, there must be some baseline assumptions.
 
Assumptions for switching from 2X to 3X milking
 
Increased Costs 
  • Let’s assume that labor is available at a rate of $15/hour, feed cost is $0.10/lb dry matter (DM), feed intake will increase 1 lb DM for every 3 lbs of incremental milk gain, ‘other’ costs associated with milk production (hauling, wash, utilities, dip, capital retains, advertising) total $1/cwt.
Decreased Income 
  • Decreased income could account for a potential drop in components with increased production. Component prices for the MidEast Federal Milk Marketing Order in September 2018 were $2.5442/lb fat and $2.0029/lb protein.
Increased Income 
  • For increased income, milk sales should increase 10-20% at $15/cwt pay price. There is the possibility the somatic cell count could decrease, particularly in high producing cows when milked three times daily. Conversely, adding extra time that teat ends are exposed to high vacuum could put more stress on the teat ends, potentially decreasing milk quality. For these examples, we will not consider a change in milk quality premium.
Decreased Costs 
  • Decreased costs could potentially include less mastitis treatments if going to three times daily milking. However, this is farm and production level dependent and, therefore, we will not factor it into the example.
Scenario 1
 
This scenario uses data from a farm milking 400 cows one year after they switched from 2X to 3X milking. At 2X milking, cows were producing 82 lb/hd/day. Labor was available to add a milking shift and the parlor was in use only 12 hours per day.
  • Increased Cost: Milking shifts were shortened from 6 hours to 5.5 hours for two milkers, resulting in 9 more worker-hours/day when adding a third shift. Feed consumption increased 2.4 lb DM/cow/day, and other costs ($1/cwt) associated with milk production increased.
  • Increased Income: Going to 3X milking increased milk production by 7.2 lb/cow/day and did not affect milk component percentages.
  • Decreased Income: There was no decrease in income associated with increasing milking frequency.
  • Decreased Costs: There were no decreased costs associated with increasing milking frequency.
  • The net profit for this 400-cow dairy to switch from 2X milking to 3X was $62,500 annually.

Increased Cost

 

Increased Income

 

Labor + 9 hr/d

-$50,000

Milk sales + 7.2 lb/cow/d

$158,000

Feed + 2.4 lb DM/cow

-$35,000

 

 

Other $1/cwt

-$10,500

 

 

Decreased Income

 

Decreased Cost

 

 N/A

 

N/A

 

Total:

-$95,500

 

$158,000

 

Net Scenario 1                   +$62,500

 

Scenario 2A
 
In this scenario, the farm was milking 1500 cows. However, they could not always get all cows milked three times daily, so they switched to twice daily milking for nearly a year. At 3X milking, the parlor was in use 23 hours a day (wash 1 hour) and milk production was at 87 lb/cow/day. Twice-daily milking would give the parlor downtime, put less pressure on employees, and potentially could make room for more cows to be milked since this farm was expanding.
  • Increased Cost: There were no increased costs associated with reducing milking frequency.
  • Increased Income: There was no increased income associated with reducing milking frequency; milk component percentage did not change.
  • Decreased Income: This farm experienced a milk production drop of 11 lb/cow/day when they went to 2X milking.
  • Decreased Cost: The labor savings was 24 worker-hours/day and feed intake dropped by 3.6 lb DM/cow/day.
There were other factors not included in this calculation, however verified by farm records including an 8 percent increase in mastitis and an increase of 30,000 SCC. When this herd went back to three times milking, they recovered the lost 11 lb/cow/day milk, and again did not see a change in component percentages. The net loss on this farm to switch to 2X milking from 3X was $516,000 annually.
 

Increased Cost

 

Increased Income

 

 N/A

 

N/A

 

Decreased Income

 

Decreased Cost

 

Milk sales -11 lb/cow/d

-$904,000

Labor -24 hours/d

$131,000

 

 

Feed -3.6 lb/cow/d

$197,000

 

 

Other $1/cwt

$60,000

Total:

-$904,000

 

$388,000

 

Net Scenario 2A -$516,000

 

 
Scenario 2B
 
To take this scenario a step further, the farm was able to put more cows through the parlor when only milking twice a day, prompting them to wonder if it would be more profitable to milk 300 more cows 2X.
 
Another partial budget is needed to determine if this is a financially sound decision. We are assuming that there is already space on the farm to house the extra animals, land to grow the feed, and will not consider manure storage/hauling, reproduction, or raising replacements.
  • Increased Cost: To add 300 cows to the herd, there is cost associated with purchasing the cows, or opportunity cost from not selling their excess heifers. We will assume springers are purchased for $1000 each over 3 years and will enter the herd producing 70 lb/hd/day. To add 300 cows to the herd, 500 animals must be purchased to offset a 30% cull rate and to supply replacements in year two. This will cost the dairy $500,000 over three years. The new animals will consume 55lb of feed (DM)/day and take an extra 6 worker-hours per day to care for them. Another cost associated with increasing the number of milking animals is marketing and hauling the additional 32,000 cwt of milk annually.
  • Increased Income: Milk sales from the 300 added cows is projected to be $1,150,000/year. Additionally, with a larger herd, cull cow income will increase by 90 culls annually at $400/hd.
  • Decreased Income: In this scenario, the original 1500 cows dropped 11 lb milk/hd/day to 70 lb/hd/d, which decreased income by $904,000/yr.
  • Decreased Cost: From the original scenario of converting from 3X to 2X milking, labor savings amount to $131,000/yr, feed savings is $197,000/yr, and other cost savings ($1/cwt) are $60,000/yr.

Increased Cost

 

Increased Income

 

Purchase 500 animals @ $1000:

-$500,000/3 years

Milk sales on 300 new cows 70 lb/hd/d

$1,150,000

Feed 55 lb/hd/d:

-$602,000

90 cull cows @ $400/hd

$36,000

Other $1/cwt

-$77,000

Decreased Cost

 

Labor 6 hrs/d

-$32,000

Labor 24 hours/d

$131,000

Decreased Income

 

Feed 3.6 lb/cow/d

$197,000

Milk sales on 1500 cows -11 lb/hd/d

-$904,000

Other $1/cwt

$60,000

Total Year 1-3

-$1,781,666

Total

$1,574,000

Total Year 4+

-$1,615,000

 

 

Net Scenario 2B

 

Year 1-3

-$207,666

Year 4+

-$41,000

 
In these scenarios, there is no financial gain to milking cows twice daily instead of three times, nor by adding more cows to the operation. If the farm can better allocate resources to reduce the milk loss on the original 1500 cows, then it is possible to reduce the negative impact in a situation where there is no choice but to go to 2X milking. Another option, if the farm can manage it, would be to milk low-producing, late-lactation cows 2X and all other cows 3X.
 
Various factors can be changed in these examples (e.g. milk price, labor rate, milk yield, components) to project the estimated outcome of your farm switching from 2X to 3X, or vice versa. It is important to be realistic, and to consider the bottlenecks on your farm that would impede the full potential benefits of increased milking frequency.