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60 THE RURAL VOICE
Dairy
Bigger cows for
bigger profits
By Mike Relf
Business Management Advisor
The 1993 Dairy Progress Report
put out by DHI states that milk
production increased 24 per cent
while average herd size only
increased by five per cent in the past
10 years. The results from the
Ontario Farm Analysis Project
(OFMAP) shows net income per cow
increasing with greater productions.
Charting Profit and Production per Cow
In the past, increases in profit
were largely due to increases in
production and in market price. In
the future you are likely going to
have less control over the revenue
part of your operation. However,
each of you have full control over
your production costs and being
efficient at what you produce is a
competitive advantage.
The first step in becoming
competitive is to know your cost of
production. OFMAP can be your
key to identifying your costs and
putting you in the driver's seat. By
using OFMAP as a management tool
you can identify areas in your
operation that can be modified to
increase your profits just by
decreasing your costs. If you look
closely at the chart above you will
notice that there seems to be a jump
in net income per cow around the 70
hL mark. At first glance one might
think the jump in net income is due
to increased sales of breeding
livestock. However this is not
entirely the case. The 65 hL group
generated $63 of revenue per cow
compared to the 70 to 80 hL