DAIRY PRODUCTION PLANNING

Dairy producers need to be well prepared when approaching potential creditors with applications for loans. There is only one opportunity to create a good first impression. A well organized business plan is simply a method of communicating that your business is well organized. Dairy production planning include: Milk production planning, financial planning, human resources planning and marketing planning. All of these activities need recording of the activity. The business play is about time. It conveys the business history and present situation. It discusses opportunities for the future and presents scenarios that have been discussed as options for implementation, including projections of profitability and risk sensitivity. It gives financial officer’s information to base their estimations of the future repayment capacity and their risk assumption. The business plan need well recording system not only in production and financial matters but also of human resources, and marketing.

Major Management Areas
Milk production records including pounds of milk, fat percentage, protein percentage and somatic cell count are integral parts of any dairy management record system for groups of cows and are best for individual cows. Also, feed records should be for each group or cow and include feed inventory records. Reproductive records should include calving, breeding and fertility data as well as date of birth, date of all estruses or heats, breeding dates including the sire used and results of veterinary checks including pregnancy checks. Health records should include all vaccinations, all diseases the animal has had and the somatic cell count data from the analysis of the monthly milk records. Reasons for culling animals and problems on a specific day should also be included in the records. Financial records should include information as listed in Table V.1. Records should include the price of the milk per hundredweight and allow manipulation of the data to calculate costs per hundredweight of milk as well as the various financial analyses shown. Financial records are now beginning to be used extensively in production testing programs as well as in programs for consultants and veterinarians. These summaries of financial records can provide a comparison which indicates where herds may best make improvements as compared to similar herds across the state. Also, records now allow dairy producers to project what an individual cow may produce in the remainder of her lactation and a financial analysis can indicate the financial results of culling her. In turn, this may indicate whether it is more profitable for the manager to cull her, keep her or cull another cow... In other cases, these records may project his cash flow for the next month, year or other period of time using reasonably valid assumptions of
Future prices and yields

The production plan
A dairy farm production plan should address all relevance issues around: land, buildings and equipment, feed and milk production, herd management, expansion and construction. It wills emphasis those areas most important to the dairy farm for the period being planned. Dairy farm is undertaking a complex production plan which includes maintaining current forage and milk production and herd’s health while constructing new facilities and introducing more cattle. In addition, it is need to know how to site buildings, soil and water, drainage, detail information on new technologies being employed, breeding and health protocols, waste management and other environmental concerns. The production plan is highly integrated with the financial plan above.

1. Land, buildings and facilities
It is included the facilities for milking, keep the feed and ingredient (silo’s system). Sites aspects are very important regarding the government’s regulations as well as sufficient land, manure storage and water supply.

2. Equipment
When establish or expand a dairy farm, is important to prepare the equipment as being required as the product to be sold. If it is possible to discuss with the person at the same business to see what equipment they use or talk to suppliers of equipment and get their feed back what required. When obtaining cost information, be sure that freight, installation, warranty services and taxes are included or excluded from the price quoted. It is important to check on lead times for delivery once the order placed.

Table V.1. Financial report of dairy business

Table V.3

3. Materials and supplies

For a new operations. It is needed to research the material requirement in much the same way as the need. To do this properly, it likely need to prepare detailed lists for the product planned to grow or produce and then calculate the inputs needed. Keep supporting information on how to calculate this information on file in the informal business plan for future use

Table. V.2. Material and supplies examples

Description	Annual Requirement	Total Cost $	Suppliers	Order lead time
Crops supplies		17,000	Grower coop	Pickup
Feed grain	450 tonnes	100,000	Top feeds	½ day
Mineral and supplements		12,000	Top Feeds	1 day
Fuel/oil	23,000 litres	11,500	Valley oils	1-2 days

4. Production Targets

Production goals are an essential part to increase the profitability of dairy farms. Since the success of attaining these production goals is subject to uncertainty, three sets of projections will be created. They will include :

1. A ‘pessimistic” scenario
2. A ‘most likely” scenario
3. An “optimistic” scenario

Table V.3. Production forecast for next three years

	Optimistic			Most likely			Pessimistic
Year production à	Y 1	Y2	Y3	Y1	Y2	Y3	Y1	Y2	Y3
Grass forage (DM) tons/acre	6	7	7	5	6	6	4	5	5
Corn silage (DM) tons/ acre	8	8	8	7	7	7	6	6	6

From the herd record, farmer may see a real condition of their herds without planning as below:

Table V.4. Real milk production records* and it’s improvement program

	Year 1	Year 2	Year 3	Year 4	Improvement
					Y 1	Y 2
Rolling herd average . milk (pounds)	19,991	17,561	15,256	12,002	15,000	19,000
Rolling herd average . % fat	3.5	3.5	3.5	3.5	3.5	3.6
Rolling herd average . % protein	3.3	3.3	3.3	3.2	3.3	3.3
Peak milk (pounds) (all cows)	80.3	77.0	67.8	57.4	75	80
Days dry	67.9	83.7	74.3	93.1	75	60
Somatic cell count (x 1000)	405	383	523	492	400	250
Freshening interval (pregnant cows) - months	15.0	15.2	15.2	15.3	15	14.5
Percent heats reported	37.8	32.5	31.0	22.6	30	40
Average services per conception (milk cows)	3.5	2.6	2.8	2.4	2.4	2.1
Percent cows left herd	33.0	26.2	32.7	24.2	30	30
Income over feed costs per cow per year ($)	1947	1699	1598	1127	1600	1800
Cows in milk (%)	90.3	85.5	84.9	78.3	80	90
Predicted transmitting ability of all service sires (%)	94.4	85.3	83.8	69.6	80	90
Rolling herd average . milk (pounds)	19,991	17,561	15,256	12,002	15,000	18,000

Pennington, 2005*

Production Strategies

It will be needed to carefully research and thoroughly understand the product planned to produce, the production system used as well as how to avoid the problems. This information’s can then be used to develop plans for optimizing yields and profits through appropriate production and labor management activities.

The following flow charts show the strategies that the sample dairy farm will use to reach their production goals. The most likely scenario values are the figure in this chart:

Table V.5. Production Strategies Example

Area	Targets	Barriers	Response
A. Milk Production	Cost/ liter competitive with Aus by 2010	Feed Cost	Forage analysis & Ration balancing
			Compare with other farms Make vs. Buy
		Labor Cost	Efficient use of labor
		Debt	Debt Reduction
B.Manure Handling	Confirm to law in 1 year	Identify problem and practice	Develop and adopt waste management plan
C. Grass Forage	6 ton DM/ acre	Water, nutrient, weather	-Irrigation - Manure/fertilizer/Slime -6 year plantation
D. Corn Silage	7 ton DM/acre	Water, nutrient, weather	-Hybrid Choice -Irrigation -Weed control - Manure/fertilizer/Slime
E. Young Stocks	24 mo. Age to 1 st calving 600 kg weight	-Nutrient -Management -Health	-Growth charting -Herd Health

Ministry of Agriculture, Fisheries and Food of Province