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News Release: A strategy to promote revenue and cash flow

06/13/2019

Alpharetta, GA (February 28, 2019)

Dairy farmers in the Federal Milk Marketing Orders (FMMOs) are encouraged to increase the volume of milk, butterfat, and milk protein their herds produce. Increasing all three will increase revenue and cash flow, according to independent consultant John Geuss. Geuss recently discussed the FMMO pricing structure and the impact of components on revenue and cash flow during the Western Dairy Management Conference.

In the FMMOs, the announced Class III milk price is based on 3.0 percent milk protein, 3.5 percent butterfat, and 5.7 percent other solids.  Component levels above these rates provide incremental revenue and cash flow at the announced price rates for these components.  Additional milk per cow may also add to revenue and cash flow.

One of the time-proven management tools for raising all three – milk yield, milk protein, and milkfat —  is properly balancing the amino acid levels in rations. Doing so results in rations that more fully meet the nutrient requirements of dairy cows, according to Dr. Brian Sloan, Global and North and Central America Regional Business Director, Adisseo.

“Typically methionine and lysine are the first limiting amino acids in rations,” says Sloan. “Because they are in short supply, they can limit an animal’s production and performance.”

Increasing the level of these amino acids in the ration while maintaining the right ratio of lysine to methionine results in production increases. A compilation of carefully measured trials shows an average increase of  0.18 percentage point in butterfat, an average increase of 0.14 percentage point in milk protein, and a 2.0 pound increase in milk volume when the amino acid levels are balanced properly.

Balancing amino acids also provides long-term benefits to health and reproduction. Fewer metabolic diseases occur at transition, breed backs become more timely, and more pregnancies reach full term. Typically, the combined benefits of amino acid balancing outweigh any incremental change in feed costs for a net increase in revenue and cash flow. For these reasons, daily supplementation with limiting amino acids is becoming as common as daily supplementation with vitamins and minerals.

Increasing herd components and milk volume are key for individual dairy farmers to increase their personal farm-gate Class III milk price.  By increasing butterfat and milk protein yields, dairy farmers increase revenue and cash flow. Increases in butterfat alone do not maximize revenue and cash flow.