Bigger herds provide lower production costs

In addition to bulk purchasing savings, larger herds offer more flexibility in scheduling labour and more marketing opportunities

by TREENA HEIN

Average herd size is rising in most provinces except Quebec, reports Jack Rodenburg, dairy production systems program lead for the Ontario Ministry of Agriculture, Food and Rural Affairs.
“On average, the cost [of production] per litre in every study I have seen is lower on larger farms,” notes Rodenburg.

This is the case at Stanton Farms in Ilderton near London, operated by Laurie and Sandy Stanton and their four children. They milk 750 cows at their one-year-old facility, which is designed for expansion to 2,000 animals. “We’ve had this planned for 15 years,” Stanton says. “We feel this is the size of herd that it’s going to take to be competitive.” He believes that “it won’t be that many years until we’ll be considered average” in terms of herd size.

Stanton says that bulk purchasing provides the most savings. “We buy commodities in tractor-trailer and truckload amounts, which is significantly cheaper than buying by the tonne or bag.”

He adds that their large herd has also allowed for a significant investment in costly equipment that helps provide a high quality product. Their “instant chiller,” for example, reduces milk temperature to less than 2 C before it enters the tank.

Larger herds also mean more opportunities to market cattle and supply fresh cows to other producers. Stanton, whose operation has involved breeding for decades, says, “Genetic improvement is all about numbers. We want to be a successful embryo export business and this type of operation supports that.”

John and Linda Walker milk 800 cows at J&L Walker Farms in Aylmer, south of London. (John’s father, John M. Walker, milks 450 cows at his farm down the road.) Walker says that their dairy herds grew gradually over the years, mostly as a result of the monthly auction they have operated since 1962. “The milking operation was derived from sales and export,” he says. “Leftover cows joined the herd.” Nowadays, however, mainly because of the BSE crisis, “the dairy has gotten a lot larger than the sales business,” says Walker.

In addition to these benefits, large herds also mean a large roster of employees to call on, providing more scheduling flexibility. “The bigger you get, the easier it gets to give one person one job,” Walker observes. “A lot of guys prefer that.” However, a role as manager rather than worker doesn’t mean it’s any easier to go on vacation. “You’re on-call 24/7,” Walker says.

The growth of large herds is boosting quota prices. Every producer bidding on quota, large or small, says Rodenburg “is adding to the demand side of the equation.” In addition, concerns over manure disposal can increase with large herds. “We try to be a leader,” Walker says. “When Nutrient Management came out, we were one of the first to try it.” While the Walkers sometimes market their manure, they have enough land to utilize all of it.

Not everyone can expand, Rodenburg says. “In many parts of Ontario, it may be difficult to find building sites that will permit dairies bigger than 300 or 400 cows under the minimum distance separation regulations,” Walker notes.

However, for his part, he says: “I have five children, three of them boys. I don’t think we’re going to stop [expanding] – as long as we enjoy it and as long as we don’t get too overwhelmed with government requirements.”

However, Rodenburg, for one, isn’t certain a super-herd will be needed to stay in the dairy game.

“As labour costs go up and as new precision management technologies that focus on automation become more available, there are opportunities for family-size operations with 150 to 200 cows working with family labour to improve their productive efficiency and perhaps remain competitive with larger herds.” BF