Identify Bottlenecks to Higher Dairy Profitability

When dairy producers try to assess the profitability of their business, it can be difficult to pinpoint which specific elements are negatively impacting the bottom line.  To help consultants and their clients better understand and overcome these bottlenecks to profitability, Penn State’s Dairy Extension and Dairy Alliance have created the Profitability Assessment Dairy Tool (PA Dairy Tool), giving a whole-farm view to better identify key weaknesses.

Using benchmark information to help producers identify the areas of greatest financial loss as well as areas of greatest opportunity to improve the bottom line, the PA Dairy Tool has been in development for three years and has been tested on 100 plus Pennsylvania farms. The Tool helps identify priorities for change, begins the process for eliminating the most costly bottlenecks, and demonstrates concrete ways to increase profitability. Through a technique known as “drill-down,” the Tool helps consultants break down the larger picture into progressively smaller parts to determine exactly where the key weaknesses are and which components need to be addressed.
 
Dairy Extension and Dairy Alliance have designed a series of workshops for consultants to gain hands-on experience with the PA Dairy Tool. Attendees will visit a farm where the tool has been used, and learn how the Tool assessed the dairy’s financial health. Participants will “drill-down” to the bottleneck limiting profitability on that farm.

According to Dr. Gabriella Varga, distinguished professor of animal science, who worked with the team to develop the Tool, there is no other program like the innovative PA Dairy Tool available.  “The value of the Tool,” Varga said, “is that it pinpoints the area of greatest financial loss to the business, and then helps detect the greatest bottlenecks. Providing an objective picture of the whole farm, it identifies and prioritizes specific areas where changes can be implemented and the bottom line improved.”

She said the impetus for developing this comprehensive tool was to develop a statewide program that could utilize the wealth of expertise in extension across the state and throughout the University, as well as to help producers better understand the bottom line of their operations.

Those who have used the PA Dairy Tool are enthusiastic about its potential.  Leslie Yoder, vice president of marketing, Homestead Nutrition, Inc., said, “The Penn State Profitability Assessment Dairy Tool lets us look at a producer’s overall situation. Using the tool eliminates the bias of just looking at things from one perspective. It helps us move beyond any pre-conceived assumptions to get a more complete view of what’s happening on the farm. The tool shows the costs of the bottlenecks, which makes it easier for producers to see what problems are costing them, and how much they need to invest to fix them.”

Tom Nauman, nutritionist, Hoober Feeds, Inc., added, “What makes the PA Dairy Tool different is that it puts everything together – finances and production, all in one place. Also, it helps to pinpoint the underlying problems causing financial difficulty on the dairy. Sometimes these aren’t obvious until you use the PA Dairy Tool.”

Drill-Down Workshop Schedule

Reproduction Drill-Down Workshops

• Jan. 22 & 29, 2008 – Blair County Cooperative Extension, Altoona, PA
• Jan. 17 & 24, 2008 – Allensville Planing Mill, Allensville, PA

Precision Feeding Drill-Down Workshops

• Feb. 12 & 19, 2008 – Rustic Lodge, Indiana, PA
• Feb. 13 & 20, 2008 – Farm and Home Center, Lancaster, PA
• Feb. 14 & 21, 2008 – Mifflin County Cooperative Extension, Lewistown, PA

Workshop instructors will be dairy educators from Penn State Extension, as well as faculty and staff from Dairy Alliance, Penn State’s Departments of Agricultural and Biological Engineering, Dairy and Animal Science and Veterinary and Biomedical Science.

Details of the workshops, including online registration, program agendas and brochure can be found at www.das.psu.edu/dairy/bottlenecks. Or, for more information, call toll-free: 888-373-7232. Registration is currently underway. The fee is $40 per person per workshop.