What a difference five years makes. Five years ago, I wrote a column about our feed and other costs for February 2013. Back then, I priced our corn fed to the cows at $7.30/bushel, corn silage at $56/ton, and wet haylage at $125/ton. In January of this year I used $3.30/bushel corn, $32/ton corn silage and $75/ton haylage. Our mailbox milk price in 2013 was right at $18.80, and in January 2018, our mailbox price was $14.44. Five years ago, we made $.47 cwt. after all costs, and this year we lost $.27.
    Early in 2013, our feed cost/cwt. on milk cows only was a whopping $9.29/cwt. This year, our feed cost on milking cows only is $6.54/cwt. Our cows averaged 85 pounds per cow per day with a 3.75 percent butterfat and 3.07 percent protein. Our dry cow and heifer feed costs run $1.70/cwt., and five years ago that cost ran $2.79/cwt. Our total feed costs per cwt. of milk shipped is $8.24/cwt. Five years ago, it was $12.08. I always wonder if other businesses and government agencies could operate with such wild swings in costs and income.
    Probably the biggest surprise to me when looking at the numbers was a slight drop in non-feed costs. Non-feed costs include labor, electricity, insurance, repairs, etc., but not debt payments or depreciation. We went from $5.25/cwt. five years ago to $5.04 this year. Granted, we are shipping 35 percent more milk because of expansion, but our labor bill has almost doubled from $2-$3 higher wages and adding 3-4 people. Possibly the differences could be the one-month snapshots, where a $15,000 repair happened five years ago but not this year. Otherwise it maybe proves that the more cows you milk the more efficient you are. That could be another article all by itself.
    I have not included depreciation in any costs because that is non-cash. Instead, I like to use monthly principle and interest payments. Five years ago, we were right at $1/cwt., and now we are at $1.43/cwt. I’m sure my readers are asking how a barn that is five years older can have higher payments. No, we did not refinance and take out a second mortgage. In the last year, Joe and I have added 600 new stalls, and totally redid 1,400 older stalls. We have almost doubled the holding area square footage and are in the process of installing a new crowd gate that is gentle on the cows. All the ventilation fans in both barns are brand new, new curtains are thermostat controlled, and we have new hydraulic doors to drive into the barn. We repainted the 17-year-old offices and bathrooms, put in all new lights and fixtures, and even the office heat and air conditioning work now.
    Some of you might be asking how does this work, especially when the future months look bleak for dairy prices. Well, it kind of doesn’t work, especially when we didn’t contract any milk for those months (Feb.-June) earlier when it was profitable. One factor that changes the numbers quite a bit is when I add back in cull cow sales. In 2013, the value of selling cull cows and bull calves added $1/cwt. to up the profit to $1.47/cwt. This past January, cull cows and bull calves added $.87/cwt. to bring a $.27 loss to a $.60 gain. Also, as we look to potential losses in the months going forward, the dairy will just not pay Joe or myself for all of the feed raised. We can keep track of what is owed, be our own banker so to speak and pay it later when we return to profitability. This works well on a limited basis for a short period of time, but eventually we need that money for farm payments, rents, input costs and machinery payments.
    This article took a lot of thinking and research to write, however, it was a great exercise for me to see the bigger picture of our dairy. I need to keep examining that picture on a monthly basis, but I know I won’t because it’s way more fun to go cut alfalfa. Everyone’s situation is different so running your own numbers is crucial to making good decisions.
    Vander Kooi operates a 1,800-cow, 4,500 acre farm with his son, Joe, and daughter-in-law, Rita, near Worthington, Minn. Send him feedback at davevkooi@icloud.com. Follow him on Instagram, @davevanderkooi.