LIC | Slashing costs: Saving the business, or prolonging the pain?


Slashing costs: Saving the business, or prolonging the pain?

In a low payout climate, targeted cost savings are inevitable, and are indeed prudent business practice.

But there’s a fine-line between a business expense and a business investment. Cutting costs everywhere may keep the wolves from the door, but when fat is mistaken for muscle and bone, the pain can be severe and long-lasting. Jair Mandriaza-Munoz, LIC reproduction solutions advisor, argues reproductive investments should not be compromised. 

Farmer Dan Brice of Mangakino (north of Taupo), recently experienced first-hand the difference between a discretionary cost and the value of a long-term investment. Herd testing was the case-in-point.

Once the shock of the low cashflow year was absorbed, Dan, a sharemilker, needed to take the pressure off the platform. To do this he had to decide which cows to remove from his herd, and he realised he needed hard data to make an informed decision. 

Once herd test results came through, he easily identified a handful of cows that were producing a mere 1kg MS/day – among a herd that was peaking at 2.1 kg MS/cow. The passengers were gone and farm efficiency received a small boost.

Using the same herd test data, Dan was delighted to confirm the high performance of animals that were the result of his breeding policy. “Proven high genetic merit animals with high reliability of indexes deliver higher performance and profitability, as well as market value,” he said.

Reproductive performance was a focus during his second season (on this specific farm), a job that included about double the number of milkers than his previous job. Dan’s decision not to intervene early with non-cyclers, in the interest of cost-savings, was one he regretted. During his previous job, he was able to achieve an 82% six week in-calf rate. For the second year running, this measure came in at a disappointing 69%.

He felt the choice to do delay intervention had ruined his chance at progress. Not only did he significantly narrow his reproductive choices, he missed out on days-in-milk (despite achieving the same 6 week in-calf rate), because the 3 week in-calf rate was down on the previous year. 

There was however some bright news. Dan’s six week in-calf rate was achieved on the back of half the intervention used in the previous season. Another upside is that, thanks to the weather, feed availability has been good. Production is ahead of last year, and the year’s target is now within reach.

Use of short gestation semen to tidy up the end of mating has helped him tighten his calving interval by at least seven days, with a 10-week calving interval to look forward to next season.

 

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