UNIVERSITY OF CALIFORNIA COLLEGE OF AGRICULTURE AGRICULTURAL EXPERIMENT STATION BERKELEY, CALIFORNIA DAIRY MANAGEMENT IN CALIFORNIA ARTHUR SHULTIS BULLETIN 640 August, 1940 CONTRIBUTION FROM THE GIANNINI FOUNDATION OF AGRICULTURAL ECONOMICS UNIVERSITY OF CALIFORNIA BERKELEY, CALIFORNIA CONTENTS PAGE Introduction 3 The dairy enterprise as a part of the dairy farm 4 Dairy-enterprise-efficiency studies 5 Explanation of terms 6 Dairy districts in California 9 Irrigated valleys 15 San Joaquin Valley 15 Imperial Valley 21 Coast counties 22 Humboldt County 23 Sonoma and Marin counties 25 San Luis Obispo County 28 Southern California 28 Los Angeles 29 Riverside and San Bernardino counties 33 San Diego County 33 Mountain valleys 34 Lassen County 34 Dairy-enterprise management 37 Production per cow 38 Breeding 38 Effect of feeding on production 39 Culling 40 Price per pound of milk fat 42 Net stock income per cow 42 Replacements 43 Source of replacements 45 Replacement costs 45 Bull-service cost 45 Cost of raising dairy heifers 46 Herd composition 49 Computation of net stock income . 52 Total expense per cow '. . 54 Effect of size of herd on expense and net income per cow 54 Effect of size in manufacturing-milk dairies 54 Effect of size in market-milk dairies 57 Effect of feeding on expense per cow 59 Dairy feeds and feed costs 60 Comparative costs of producing dairy feeds 62 Relation of feeds used and production 63 Computing feed requirements and costs 66 Labor costs 71 Facility costs 74 Depreciation 74 Interest on investment 75 Miscellaneous costs 78 Analysis of the dairy enterprise 78 Standard of costs 83 Standard of costs for market milk in the San Joaquin Valley 83 Standard of costs for manufacturing milk in the San Joaquin Valley 85 Standard of costs for market milk in Sonoma and Marin counties 87 Standard of costs for manufacturing milk in Sonoma and Marin counties . 87 Estimating cost of production for an area 89 Summary 93 Acknowledgments 94 DAIRY MANAGEMENT IN CALIFORNIA 2 ARTHUR SHULTIS 3 INTRODUCTION Dairying is the most important single agricultural enterprise in Cali- fornia in value of its products and has the widest distribution. The 1935 Census of Agriculture 4 showed 60,565 farms reporting 595,364 cows kept for milk in 1934. This is an average of 9.8 cows per farm reporting, or more than twice the national average of 4.7. However, only 40.3 per cent of the 150,360 farms in California reported cows milked as compared with 76.9 per cent of all farms in the United States. Farms with one or two cows kept mainly for domestic use are included in the above figures. Farms are not classified by type in the 1935 Census of Agriculture, but the 1930 Census 5 enumerated 15,179 farms in California which reported 40 per cent or more of their income from dairying. Roughly, these may all be classified as dairy farms. They comprised 11.2 per cent of the farms in the state at the time and were exceeded in number only by the fruit and poultry classifications. The 15,179 dairy farms reported 427,683 cows and heifers over two years of age kept mainly for milk production, or an average of 28.2 head per farm. These dairies produced 90 per cent of the whole milk and 70 per cent of the cream sold from California farms in 1929. These figures indicate that dairying in California is concentrated on a smaller number of farms with more cows per farm ; hence, it may be considered more highly specialized than in the rest of the United States. The high degree of specialization and efficiency to which dairying has been developed in California may be further illustrated by the fact that in recent years California has led all other states in both number and percentage of dairy cows on test in dairy-herd-improvement associations, or cow-testing associations as they are more commonly called in Cali- fornia. On January 1, 1937, 12.6 per cent of the dairy cows in the state were on test. This amounted to about one sixth of all cows on test in the entire United States. This state is also leading in production per cow. Estimates by the United States Department of Agriculture Bureau of Agricultural Economics" based' on the 1935 Census of Agriculture give 1 Received for publication January 11, 1939. - Paper No. 88, the Giannini Foundation of Agricultural Economics. a Extension Specialist in Farm Management and Associate on the Giannini Foun- dation. 4 United States Department of Commerce Bureau of the Census. United States Census of Agriculture, 1935. vol. 3:263. 1937. 5 United States Department of Commerce Bureau of the Census. Fifteenth census of the United States, 1930. Agriculture, vol. 4:903. 1932. 6 United States Department of Agriculture. Yearbook of Agriculture 1935:603. 1935. [3] 4 University of California — Experiment Station production per cow for California in 1934 as 6,550 pounds of milk, or 249 pounds of milk fat, while the same estimates for the United States are 4,030 pounds of milk, or 158 pounds of milk fat. The highly specialized nature of dairying in California has not, how- ever, resulted in a uniform type of dairy farm. The wide distribution of dairying over the state in areas with different climates, feeds, and cost levels naturally results in a wide range in kinds of dairy farms and in methods of dairying. Also, its products sold — market milk, manufactur- ing milk, churning cream — result in variations in costs and production methods. Even in a small area where producers are selling the same kind of product and using the same kind of feeds, there is a lack of uniform- ity in the organization of dairy farms. Some are small with practically all labor, both in feed production and in the dairy, performed by the oper- ator. Others are large, employing specialized workers for the different kinds of field and dairy jobs. On some dairy farms more feed is produced than can be utilized by the dairy herd, the surplus being sold or used for some other livestock enterprise. On others just enough feed is grown to meet the needs of the dairy herd, whereas in still others practically all feed is purchased. In the latter case dairying becomes a manufacturing process where purchased raw materials are processed into the finished product. Any study of the management of dairy farms, therefore, must separate the common functions for analysis and comparison. This may be accomplished by breaking down the dairy farm into the dairy and other enterprises of which it is composed. THE DAIRY ENTERPRISE AS A PART OF THE DAIRY FARM The dairy enterprise, or the business of producing milk and raising vary- ing quantities of dairy stock, is common to all dairy farms. Associated with this enterprise may be one or more, such as hay, pasture, and miscel- laneous other lines of crop- or livestock-production enterprises. The separate consideration of each of these enterprises is essential to an in- telligent attack on management problems. For example, a dairy-farm unit as a whole may be unprofitable in spite of an efficiently managed dairy herd because of high-cost feed production. In such a case, move- ment of the dairy enterprise to a better farm for feed production might be the remedy. On the other hand, feed might be produced economically, but profits from that phase might be lost in an unprofitable dairy enter- prise. In this case the remedy would be either to build up the dairy or to eliminate it entirely and market the feed through other channels. A computation of profit or loss for each separate enterprise requires the segregation of income and expense for each enterprise and charges and credits between enterprises. Hay produced on the farm and used by Bul. 640] Dairy Management 5 the dairy herd would be credited to the hay, or feed-growing, enterprise and charged to the dairy usually at farm value, which is the amount per ton realized if the hay were sold. Manure produced by the dairy and hauled to the fields for crop production should be credited to the dairy and charged to the fields or crops receiving it. Income from sales is segre- gated as follows : income from dairy products and dairy cattle would naturally be credited to the dairy enterprise, whereas hay sold from a crop enterprise would be credited to that crop. Feed, fuel, dairy supplies, milkers' wages, and many other direct dairy expenses can be charged entirely to the dairy enterprise. Taxes, rent, electric power, and some labor will each have to be allocated among the different enterprises on the basis of service or use. The annual summarization of accounts on an enterprise basis not only discloses the sources of profits and losses but provides an opportunity for further study of the individual enterprises with a view to making them more profitable. If each enterprise is made profitable, then the farm business or dairy farm as a whole will also be profitable. DAIRY-ENTERPRISE-EFFICIENCY STUDIES The Agricultural Extension Service, in its endeavor to help dairy farm- ers in their management problems, has been conducting efficiency studies on dairy enterprises for the past fifteen years. This enterprise approach has resulted in the compilation of a considerable body of detailed infor- mation which would not be available if entire farm units were studied. An average of 90 dairy-enterprise records annually have been made in a number of dairy counties, which resulted in the completion of about 1,000 detailed dairy-enterprise records since 1925. Although records on only the dairy enterprise were obtained in most cases, some efficiency studies smaller in scope have been made on hay, pasture, and silage enter- prises. A group of dairymen in a single county who are participating keep records on their dairy enterprises for a period of a year. The local repre- sentative of the Agricultural Extension Service — the farm advisor or an assistant farm advisor — provides blank forms, helps take the annual in- ventories, and receives and checks the monthly reports of income and expense. At the end of the record year, which may or may not be a calen- dar year, an annual record for each cooperator is completed in the local agricultural extension office with the help of an extension specialist in farm management. The completed records are then averaged by groups, and a mimeographed report is prepared and issued from the local farm advisor's office. These reports make available current local information on labor and feeds used, as well as costs, income, and profits. The confi- dential nature of each individual record is preserved, but the local indus- 6 University of California — Experiment Station try in general obtains considerable interesting and useful information from the published reports. The individual cooperators, in addition to obtaining a detailed record and analysis of their own enterprises, receive assistance in comparing their results with those of similar local enter- prises in order to discover changes in management which should make for higher net returns. The purpose of this bulletin is to make available some of the informa- tion on dairy-enterprise management which can be gleaned from the records obtained in these studies. The participation in such a study is voluntary, and therefore, the records may not represent a true cross section of the entire industry : good, fair, and poor dairies are not neces- sarily included in the same proportion in which they occur in the district. Probably some dairies in this study are above the average in efficiency, since participation would be more readily expected of dairymen with above-average managerial ability; in interpreting data given in this bulletin, this fact must be kept in mind. EXPLANATION OF TERMS An understanding of the terms used in this bulletin is essential in order to correctly interpret and apply the material given and the conclusions made. Average Number of Cows. — The size of a dairy herd is expressed in average number of total cows (both dry and milking) in the herd for the year. It is usually computed by averaging the cows on hand on the first day of each of the twelve months. A heifer becomes a cow and is thereafter counted as such as soon as she has her first calf. Since the cow is the producing unit, all materials used, costs, and returns are shown on a cow basis. Animal Unit. — In addition to cows, most dairy herds contain bulls, calves, and some heifers being raised for replacements. In order to obtain a single figure which better represents the entire herd in terms of feed requirement than would the number of head, the animal unit, which is defined as a cow or mature-animal equivalent in feed requirement, is used. The following factors, based on the relative quantity of feed con- sumed, are used in converting the number of head to animal units : bulls, 1.00; calves under three months, 0.25 ; calves, three months to one year, 0.40 ; heifers, one to two years, 0.70 ; heifers from two years of age until they have their first calf, 0.75 ; and cows, 1.00. The average number of animal units in the herd is the average for the year for both cows and other stock and is used to show the size of the herd from a feed-consuming standpoint. The animal units per cow show the relative amount of addi- tional stock in the herd. For example, 1.2 animal units per cow indicate Bul. 640] Dairy Management 7 that there was in addition to the cow 0.2 of an animal unit of other stock in the herd. One could roughly assume that total feed consumption per cow in that herd would be 1.2 as great as for a single cow. Total Digestible Nutrients. — Nutrients are those parts of a feed which are digested and utilized in growth, production, and the maintenance of life. The total digestible nutrients include all of the digestible organic nutrients — the protein, carbohydrates, and fats, with the latter con- verted to a comparable basis. The total digestible nutrients for each feed may be computed, and the quantity obtained from a number of feeds of varying analysis may be added to obtain and compare the total digestible nutrients per cow. Pounds of Milk Fat. — The unit of production and sale of milk and cream in California is the pound of milk fat. This term is used in all pub- lications of the State of California in place of the older and more widely used "butterf at" because of its adoption in state laws ; the advantage is its greater technical accuracy and its lack of confusion with butter. M ilk fat produced is the total amount produced and includes that fed to calves or wasted as well as that which is sold. This figure is available only for herds in a cow-testing association. Milk fat sold is that actually sold plus that used in the home which is included along with the sales as an income to the dairy enterprise. Prices per pound of milk fat sold in- clude income from skim milk sold or used for other enterprises on the farm in order to make prices comparable whether whole milk or cream is sold. Prices are figured at the ranch after all marketing charges have been deducted. Manufacturing-Milk Dairies. — Dairies selling churning cream or whole milk for manufacturing purposes are classified as manufacturing- milk dairies. Market-Milk Dairies. — Milk produced under the sanitary require- ments for market milk and market cream is considered as market milk. Dairies which sell over half of their total milk for market milk or cream in a year's time are classified in these studies as market-milk dairies. Milk and Milk-Fat Income. — Income from milk fat, milk, and skim milk sold and the value of such products used in the home or for other enterprises on the farm, constitutes the milk and milk-fat income. Income from milk sold is figured at the farm with hauling charges deducted. Milk fed to calves within the dairy enterprise is not included as an income, since returns for it are received through the calves raised. Net Stock Income. — The maintenance of a dairy herd involves the raising or purchase and the sale of dairy stock. Where dairy-stock sales plus any increase (or minus any decrease) in the inventory value of dairy stock exceeds the cost of stock bought, there is a net stock income. 8 University of California — Experiment Station Where the reverse is true, there is a net stock cost, which is an expense rather than an income. Herds for which replacements are purchased, rather than raised within the dairy enterprise, will usually have a net stock cost because sales will amount to less than purchases. Where a net stock cost occurs, it may be considered to represent the cost of making necessary replacements less the value of dairy stock produced within the enterprise during the year. A dairy enterprise in which young stock are raised for replacements will usually have a net stock income because sales will exceed purchases. A net stock income may be considered as the value of all dairy stock produced in the enterprise during the year less the cost of making the necessary replacements. Total Income. — In addition to milk and milk-fat income and a net stock income, if any, total income as computed on a dairy enterprise also contains some miscellaneous income, most of which is usually from manure. Total Expense. — In dairy enterprise-efficiency-study records total ex- pense is composed of the following items as charged or allocated to the dairy enterprise : Feed cost : the cost or farm value of all feed used, whether purchased or raised on the farm. Hired labor : the cost of hired labor. Operator's and family labor : the value at prevailing wage rates of the actual labor performed. Miscellaneous costs : taxes, repairs, insurance, dairy supplies, electric power, automobile use, veterinary service, cow-testing dues, fuel for sterilization, etc. Depreciation : that part of the original cost of buildings and equip- ment which should be charged to each year of business in order that the entire cost of such facilities may be absorbed by the business during their periods of usefulness. Interest on investment : prior to 1935 computed at 6 per cent on the average investment for the year as shown by inventories, and since then, at 5 per cent. Net stock cost, if any. Net Income. — The term net income is a general one used to cover profit, or earnings, measured at any point or with any cost groupings and is the difference between income and expense. Several income terms are used in this bulletin which are measures of efficiency based on different segregations of expenses. Such groupings serve different purposes. These terms are defined in the following sections. Net income as determined by an individual's own accounting system is called net profit. In personal accounting, it is usual to include interest Bul. 640] Dairy Management 9 actually paid on indebtedness as an expense, but it is not customary to include interest on the owner's investment, and sometimes no allowance is made for the operator's actual labor. Hence, the net profit thus com- puted would seldom be equal to any one of the following measures of net income. This figure is not shown for dairy-enterprise records, being a matter of individual determination. Management Income. — Management income is the amount by which income exceeds all costs of production (including the operator's actual labor and interest on investment) except management. It is the difference between total income and total expense, as defined above. If expense is greater than income, a loss indicated by a minus sign occurs which may be interpreted as the amount by which income fails to cover all produc- tion costs. It is probably the best single measurement of the over-all efficiency of the enterprise. Labor Income. — Management income plus the value of the operator's and family labor is labor income. It is the amount the dairyman receives from his dairy enterprise for his labor and management and is sometimes called labor and management income. To dairymen who do their own work it is the most significant measure of net income. Farm Income. — Labor income plus interest on investment is farm in- come. It is the total amount the dairyman receives from his enterprise above all costs except the value of his own and family labor and interest on the investment. It is his total reimbursement for his management, labor, and use of capital. Interest on borrowed capital, payment on principal of such debts, and living expenses must come out of this sum. Where the dairyman has no debts and does not include the value of his labor or management as expenses in his personal accounting system, the net profit thus computed would be the same as farm income. Capital and Management Income. — Management income plus interest on investment is capital and management income. It is the amount avail- able to reimburse for management and the use of capital after all other costs have been met. For the dairyman who hires all labor it is the most significant measure of net income and, if he were out of debt, would equal or approximate the net profit shown by his personal accounting system. DAIRY DISTRICTS IN CALIFORNIA Methods of dairying vary considerably in different parts of the state, largely because of the feeds used and their costs. There are probably four major types of dairying which are sufficiently localized to warrant a rough division of the state into four main dairy districts from the stand- point of climate and type of feeding. Figure 1 shows the general location of these districts along with the location of dairy cows as taken from the 10 University op California — Experiment Station 1935 Census of Agriculture. Within each district there are smaller areas or subdistricts with different characteristics as well as many individual dairies which are different from the prevailing type in the area. The four main districts are as follows : 1. Interior irrigated valleys — San Joaquin, Sacramento, Imperial, and similar small irrigated valleys in the warmer part of the state. Dairy Districts 1. Irrigated valleys 2. Coast counties 3. Southern California 4. Mountain valleys Each dot = 1,000 cows All but 3 counties have over 500 dairy cows Fig. 1. — Dairy cattle on California farms as reported by the 1935 Census of Agriculture, and approximate geographical location of four types of dairying. Location of dots within counties is only approximate. Dots were located by reference to an unpublished map prepared by the Office of the State Land Use Planning Specialist — California, United States Depart- ment of Agriculture Bureau of Agricultural Economics. 2. North and central coast — coast counties from Del Norte on the north to San Luis Obispo on the south. 3. Southern California — Santa Barbara County south to San Diego and including the western portions of Riverside and San Bernar- dino counties. 4. Mountain valleys — scattered small valleys in the northeastern part of the state where winters are severe. Bul. 640] Dairy Management 11 Differences between and within these districts are illustrated by the differences in seasonality of milk production on manufacturing-milk dairies. A study of creamery operating efficiency shows the range in average daily milk-fat receipts by months to vary considerably by dis- tricts. 7 Table 1 presents data from this report for some of the districts. The San Joaquin Valley creameries show the least variation in milk-fat TABLE 1 Seasonal Variation of Daily Milk-Fat Eeceipts at Creameries by Districts, 1931 Coastal district Interior valleys Mountain district Humboldt County Middle coast counties Northern Sacramento Valley San Joaquin Valley Imperial Valley Siskiyou County Number of creameries 3 4 1 6 1 2 Monthly averages in terms of an annual average of 100 32.9 29.6 81.7 149.1 162.1 149.7 133.9 122.5 109.9 95.4 76.4 52.6 105.3 133.8 165.0 181.4 158.7 111.0 62.3 41 2 36.4 48.2 68.8 91.0 77.8 82.6 100.8 115.2 111.8 108.9 104.3 102.5 97.2 100.7 97.8 99.3 91.7 95.3 107.2 106.2 104.6 105.3 104.2 104.0 100.2 96.9 93.7 90.6 110.7 105.5 115.6 115.6 113.6 112.2 91.9 84.3 82.2 83.9 90.0 95.2 85.5 85.9 91.4 113.4 125 127.6 July 117.6 107.3 103.5 89.8 78.6 73.9 Maximum range lowest to highest month with annual average of 100 Range. 132.5 145.0 37.4 33 4 53.7 Source of data: Tinley, J. M., F. H. Abbott, O. M. Reed, and J. B. Schneider. Creamery operating efficiency in California. Univ. of California Giannini Foundation Mimeo. Rept. 41:15. 1935. receipts throughout the year followed by Sacramento and Imperial val- leys. The range in monthly receipts is slightly greater for Siskiyou County, which is an example of the mountain district in the northeastern part of the state. The greatest seasonality of production is shown by the middle coast counties — Sonoma to San Luis Obispo — although Hum- boldt County has almost as wide a range between low and high months. Ranges in volume of production from month to month are closely related to climate and feeds and are wider where there is greater dependence on natural grass pasture as in the coast counties. 7 Tinley, J. M., F. H. Abbott, O. M. Keed, and J. B. Schneider. Creamery operating efficiency in California. Univ. of California Giannini Foundation Mimeo. 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This resulted in a higher feed cost per cow for the former, or an average over the eleven years of $95.70 as compared to $78.65. More labor was also reported in the market-milk herds, which showed an an- nual average per cow of 136 hours in table 2 as compared to 110 for the manufacturing-milk group. This resulted in average labor costs of $44.26 and $34.37 per cow, respectively (the sum of the items for hired and operator's and family labor shown in the last columns of tables 3 and 4) . Cost per hour of labor was almost the same — $0.32 and $0.31. Mis- cellaneous costs averaged $6.41 per cow higher in the market-milk group, most of this difference arising from the cooling of the milk and other measures necessary to meet the higher sanitary requirements for the product. Depreciation on buildings and equipment is also higher by $1.98 per cow for the same reasons. These cost differences, however, rep- resent past history on small sample groups of both kinds of dairies and should not be taken as current cost differences. Later, in the section "Standard of Costs," schedules for each kind of dairy will be developed to provide a more useful method of estimating current cost differences. The net incomes shown in tables 3 and 4 were good in 1928 and 1929. The drop in prices that appeared in manufacturing-milk dairies in 1930 and reached very low levels in 1933 seriously reduced net incomes, how- ever, and resulted in negative management incomes from 1931 to 1934, inclusive. The year 1936, because of good prices and high net stock in- comes, was a very profitable one for the manufacturing-milk dairymen participating in the studies. It was probably higher than would have been shown by a larger and more representative sample. The higher feed costs and lower production and net stock incomes reduced net incomes in 1937, although the price received for milk fat was the same. Feed costs re- mained high in 1938 and, in spite of higher net stock incomes, these dairymen showed a minus management income largely because of the lower price of milk fat. These net-income figures over the years show that manufacturing-milk dairymen in the San Joaquin Valley, with their relatively fixed costs, are subject to fluctuations in net income be- cause of price changes brought about by national changes in the prices of dairy products. They feel the competition from lower cost areas all over the country more than do their neighbors who sell market milk. The changes in prices and net incomes for market-milk dairymen shown in table 3 are not so violent as those shown for manufacturing-milk dairymen, although net incomes were very low during the depression years of low prices. The year 1932 probably shows net incomes to be some- what lower than would have been the case had a more representative 20 University of California — Experiment Station TABLE 5 General Summary of Dairy-Enterprise Records on Manufacturing-Milk Dairies in the Imperial Valley, 1928-1933 1928 1929 1930 1931 1932 1933 6-year average 16 38.6 1.4 * 254.2 14 35.8 1.4 246.1 14 30.0 1.4 274.0 16 33.3 1.4 16.0 252.3 14 36.8 1.5 224.1 10 38.1 1.5 13.1 223.3 14 Average number cows per record Animal units per cow Per cent of cows sold during year Pounds milk fat sold per cow. 35.4 1.4 0.0 241.2 Dollars per pound of milk fat sold 0.53 0.43 0.53 0.37 0.43 0.42 0.28 0.31 0.30 0.29 0.21 0.26 39 35 Management income .... 0.10 0.16 0.01 -0.03 0.01 -0.05 0.04 Dollars per cow Net stock income Miscellaneous income 27.62 1.75 135.36 24.58 0.97 131.68 24.39 1.41 105.77 14.28 0.07 70.95 7.71 1.91 67.69 9.18 0.62 47.32 17.96 1.12 93 13 Total income 164.73 22.83 4.80 3.08 41.46 157.23 8.73 4.64 0.24 47.77 131.57 23.85 5.51 0.17 43.46 85.30 17.12 1.96 0.58 34.84 77.31 12.60 3.95 0.34 23.42 57.12 13.07 1.75 1.69 24.56 112.21 16.37 3.77 Silage and green-feed cost — 1.02 35.92 72.17 17.75 26.76 7.93 2.43 10.45 137.49 27.24 54.00 37.69 64.45 61.38 12.22 23.77 7.23 2.29 10.39 72.99 9.98 29.59 4.46 1.58 10.69 54.50 4.64 21.44 3.03 1.52 7.78 40.31 7.72 9.50 8.36 3.61 6.65 41.07 6.09 10.65 3.32 2.43 4.95 57.08 9.73 Value operator's and family 20.28 Miscellaneous expense 5.72 2.31 Interest on investment 8.48 117.28 39.95 63.72 50.34 74.11 129.29 2.28 31.87 12.97 42.56 92.91 - 7.61 13.83 0.17 21.61 76.15 1.16 10.66 7.81 17.31 68.51 -11.39 - 0.74 - 6.44 4.21 103.60 8.61 28.89 Capital and management 17.09 37.37 Dashes indicate data not available. Bul. 640] Dairy Management 21 sample been obtained, although the low net stock income and inability to reduce costs as fast as prices fell were somewhat typical of market- milk dairies that year. The price received by the market-milk dairies was again low in 1938, but the dairies keeping dairy-enterprise records that year were very efficient ones with good net stock incomes ; consequently, they show a fairly good management income. National prices of dairy products do not exert so much influence on market-milk prices as on the prices of manufacturing milk. Their effect on market milk comes only through the tendency of manufacturing-milk dairymen to shift to market-milk production and, therefore, to increase the surplus of market milk which must be sold at manufacturing-milk prices. During the eleven years of records in the San Joaquin Valley, a number of manufacturing- milk producers cooperating in these studies shifted to market-milk pro- duction. One or two, however, shifted back to manufacturing milk in 1936 when they felt the price differential was not wide enough to cover the additional costs of market-milk production. Imperial Valley. — Although dairying in Imperial Valley is different from that in San Joaquin Valley in many respects, it is similar in one im- portant respect, namely that dairymen rely largely on irrigated alfalfa. In the Imperial Valley, however, alfalfa is largely pastured, whereas in the San Joaquin Valley alfalfa is fed as hay. The greater heat in the Imperial Valley is also something of a production handicap, the low point of the usual seasonal production coming in the late summer and early fall. The fact that more of the feed is in the form of pasture, which is more bulky for the amount of nutrients it contains, limits the nutrients that can be consumed by a cow and, consequently, results in lower production per cow. This does not mean higher costs necessarily, because the lower cost of feed in the form of pasturage results in very economical produc- tion. The milk fat sold per cow by the manufacturing-milk herds in the Imperial Valley was 241.2 pounds (table 5) as compared to 283.8 (table 4) for the manufacturing-milk herds in the San Joaquin Valley. Al- though costs are not strictly comparable, the Imperial Valley dairy- enterprise records show slightly lower costs in the years 1928 to 1933 when the studies overlapped. Because of the relatively difficult task of producing high-quality mar- ket milk and because of the high cost of transporting it to Los Angeles, there is little market-milk production except for local use in the Imperial Valley. There is some production of market cream, however, for shipment by truck to San Diego. Dairymen in this valley largely raise their own replacements and some additional stock for sale in the Los Angeles or San Diego milksheds. Some additional calves from these milksheds are also raised in the Imperial Valley. 22 University of California — Experiment Station Much of the dairying in the Imperial Valley is not permanently located on a particular farm to the extent that it is in most other areas. Many of the dairymen own their own herds but very little else in the way of equipment and move from farm to farm to utilize the three years or so of alfalfa in the rotation on land used for truck crops. Little or nothing is usually available in the way of buildings for such mobile dairies. A temporary shelter and row of stanchions owned and moved by the dairy- man are sometimes his only equipment. Only where dairies are more permanently located is there much chance for the production of market milk. Although dairying in the Imperial Valley declined considerably during recent years because of low milk-fat prices from 1931 to 1934 and because of the tuberculosis-eradication program, the reasonably moderate water cost and land values will, doubtless, continue to provide pasture and hay at low enough cost to make production of manufactur- ing-milk and churning cream profitable in this area. COAST COUNTIES Counties along the coast from Del Norte on the north to San Luis Obispo on the south have specialized in dairying since long before the advent of irrigation made possible the growing of alfalfa and the inten- sive dairy development in interior valleys. The coastal district is char- acterized by mild winters with a relatively long, natural grass pasture season. Although there is some irrigation in a few coast-range valleys, the main reliance for feed is placed on the natural grass pastures and annual hay crops made possible by the fall, winter, and spring rains which are usually more adequate and better distributed than in the in- terior of the state. The critical period of from three to six months is from the time feed dries up in the summer until green feed is again available the following season. The time of year this gap in natural grass pasture occurs, its length, and the way it is met by other feeds varies somewhat from north to south. In Humboldt and Del Norte counties in the north, where rainfall is very heavy and winters are cooler, pasturage is later in developing and its use begins in early spring and lasts till fall. During the winter months cattle are fed hay and root crops. The hay used is usually oat, clover, or mixed hays. Farther south, along the Mendocino coast and in Sonoma and Marin counties, pasturage can be used earlier and forms the bulk of the roughage from December to July. During the fall months roughage consists largely of oat or oat and vetch hays, dry pasture, some shipped-in alfalfa, and some silage or other late green or soiling crops. Still farther south in Monterey and San Luis Obispo coun- ties, where rainfall is less and the climate is warmer, the natural grass period is a little earlier and shorter. Bul. 640] Dairy Management 23 Where manufacturing milk is produced in the coastal area, dairymen breed their cows to freshen at the start of the natural feed period and seldom attempt to maintain high production through the dry-feed period. Thus, their production is highly seasonal. In some extreme cases they "milk their cows when the grass is green" with average lactation periods as short as six months. Where that procedure is followed, the dry cows are maintained on dry pasture. That dairying in this area is highly sea- sonal is shown by figures on creamery receipts in table 1. The greatest variation for any district appears in the middle coast counties which were represented by creameries in Sonoma, Marin, and San Luis Obispo counties. Humboldt County shows almost as great a range, but its period of heavy production is later in the year. Humboldt County. — Dairying in Humboldt County has long been highly developed. The oldest dairy-herd-improvement association in the United States is at Ferndale and has been giving uninterrupted service in testing cows for production since 1909. A large number of purebred herds, purebred-bull campaigns, and early and continued specialization has resulted in dairy stock of high quality. Part of the high production per cow must, however, be attributed to favorable feed conditions result- ing from soil and climatic conditions. Dairying is located largely in coastal-valley bottoms where heavier and better distribution of rainfall and cool summers result in a long, natural pasture season. The quality of pasture is good as is the quality of the clover, oat, or mixed hays fed for roughage during the period when pastures cannot be used. Carrots, mangel- wurzels, and other root crops are widely used in heavy amounts during the fall and winter months when pastures are too dry to provide enough succulent feed or are too wet to be used. Grain and other con- centrates are not produced locally. Consequently, since they are rela- tively expensive, they are used less than in most other parts of the state, as shown in table 2. A dairy-enterprise-efficiency study was conducted in Humboldt County during the four years, 1929 to 1932, inclusive. A brief summary for those dairies selling manufacturing milk or churning cream appears in table 6; data on manufacturing-milk dairies in San Luis Obispo County are also shown in table 6, but period averages are not comparable since they are not for the same years. Table 6 shows the size of the Humboldt County dairies cooperating in the study to have averaged 35.8 cows for the four years ; the greater part of the labor was performed by the operator and his family. Most of the herds contained 20 to 30 cows, but a sufficient number of larger herds were included to bring the average up to about 36 cows. The animal units per cow were low at 1.2 as compared to other districts and indicate the raising of scarcely enough calves for herd maintenance. The percentage 24 University of California — Experiment Station OS CO O CD OOOOmON h& ri" > i-l OCOi-H -"CO I > »o i-l 00 -f OS CO OS CM I t~~ T— CM i-H CO (M CO ft .3e «» ^ ft « 8 §^"S "2 " * " £8.3 8,* OG§o| S So' 5,3 kc -q dc o © OOCN •<*> kO oo o o COO kO -^ do CO o US i*> oo US o l>- CO COCO oo © o 0.22 0.32 -0.10 os cm CM CO oo CO o ? cooo ■vt" CO oo o o US •**> oo o 4 e a. e z > < 1 t a £ c E C a £ a b a P oe IS i O O CM T-lOr-H CM iooo r- co CO CM rtOOOtOQO ©CM CM -H CD as cocowrt co oo com c1°S CM OO 00 CM lO US CO CO kO Tj" kO CM 00 o OOCOi-" CD i-< CO CO i*< OO O CO O O CM co i-l i*l 00 US i-l t~~ CM ij< 00 CM 0O -*i 1*1 CM OOrtlOO oo OS CO -*" OS © tNioeo CM OO s OS OS CM CM co US CO it" CO»-" o lijt^mo) CO o o co o o to CO IflrlDO OS CO 00 •* O CD NHOHOO 8 CO TJ< t-i CM i>- r~ us us COOO CM i-l CO CM CO CD CDkO CO US CM o rlCOif OS CO i*> 1*1 us US CM CO OOOh o o O 00 COOO OS t^- i*l ^" OS OO lO CM COCO >o US US OO OO 00 CO •"*" OS OSOO CM i-l o "* i** J^i*" CO o CO co r^ us co co o OS i~ CO O CM 1*1 i*< CD ost^ oo 00 Ul f~ CM OMHO OHOJH CO US O^f CO O CM rtlONTttCO CM CD CM CO-**" 0O CD i-l OS -Wl OS CM-* CM co CD L^- ooi*. CM i-l CM i-l oo VOUJlOH CM i-l CM CO CM i-l CO CM -^" OS ■*ooo co coooo us i*i "5 CO "*i CD »-l US -*t" CM t- i*i US Tt" CM CD US o OkO cooo NrHO" COOCM CO CO O-^" CM CM i-H CM i-H O i— l LO CO US OS 1 CM t-- CO t— CO-* CM OS CM t^ OSOCN 00 CM t^ CM CO >0 kO COCO oo CD CM kO O0 0O CM OO tjh CD CM CO CM CM 1*1 »-i ooco OS >o cooo NON os 1 CM O CO CO CM i-l CM i-H CO CM O0 ■«*! •■* OS co t-OrtOS 1 OOCOO 00 00t~ 3 CM kO OO kO 1*1 CM OS CO o o CD t~- OS t-- t-~ O t— CM i-l CM CD kO ITS CM CM OS OO CO i-H 00 OU3N to OS OS OO O CM i-H CM CM oo OS CO CM CO CD CO CM i-i OS Tt'NOOO i—l CO CM kO 00 00 CD CM CO CM CM as lOOWN co i— l OS i— l kO i-( i-H co ko as o CO 00 t^ OS oo CM CO CM CO t^ 1*1 i—i !-H OO | 00 00 CO OS CM CM CO OS as OS kO kO kO CO CN i-l US ■*t" Oj r~ CM 1*1 CD kO CO a 8- = 5 Cu O "" s b •is » u *? a 03 W .2 o~ c3 WOOiP-l E CD II S^Oh Bul. 640] Dairy Management 25 of cows culled and sold, however, was lower than for most other groups. Since falling prices during the period in which the study was conducted were against any tendency to expand the herds, stock raised in the dairy enterprises was at a minimum. The local prices received for cull cows and veal calves were particularly low at the time. The opportunity to sell surplus dairy stock is probably less in this county than in the San Joa- quin Valley or in the coast counties farther south; consequent^, net stock incomes would normally be somew T hat lower. Costs per pound of milk fat sold are about the same in Humboldt County as in the other areas for the same time and product. Any local advantages due to better feed conditions or normally higher production per cow appear to have been absorbed by the feed costs in the form of higher charges for pasture, hay, etc., or, in the last analysis, higher land values. This would be expected in any locality because local soil and climate are factors influencing the value of land and its rent and, hence, the cost of production of feed or crops grown thereon rather than the net incomes from livestock enterprises. There are not so many crop and other enterprises competing with dairy farming for land in Humboldt County as in the San Joaquin Valley ; therefore, continued low prices for manufacturing milk would not result in much shifting from dairy- ing to other enterprises but would rather tend to reduce land values and rents and, consequently, feed costs, which would allow for a downward adjustment of the costs of production in the dairy enterprise. The dairy business in Humboldt County may, therefore, be considered fairly stable and permanent and one that can hold its own in competition with other districts all over the United States. Dairy enterprises will, of course, suffer severely from low prices as in 1932 (see table 6), but such periods cannot last indefinitely because prices will improve or costs will be ad- justed to income or both. Sonoma and Marin Counties. — The Sonoma and Marin county area of the coastal dairy district is represented by dairy-enterprise-record averages for eight years for market-milk dairies in table 7, and for five years, for manufacturing-milk dairies in table 8. Dairying in this area is more frequently found on rolling hills and coastal benchlands than on the fertile bottom lands of coastal valleys as in Humboldt County. Rain- fall, although usually adequate to produce a good season of grass pasture or a good crop of oat or oat and vetch hay, is not so heavy, nor is it dis- tributed over so long a period as in Humboldt County. The pasture sea- son starts earlier in the winter but does not continue so late in the sum- mer. Feeds to supplement or replace pasture are not so readily grown in Sonoma or Marin counties ; therefore heavy production per cow re- quires more costly supplemental feeding. Market-milk producers, be- 26 University of California — Experiment Station 5>g OO > i O co OS Ttc OS OO HOiHOSil HI t~ CM -I— t~- »o I OO o a 5 o g IN H 3 > fi

< I I a £ c e. _p r o s a b a p S en co r^ CO 03 i-l 00 OOOOIN (Nooiom "* eo o >o OO CO •f CM OO CO CO ^ ir^co co •"fUDOOO COOO .-h oo OS CO Tf •-! •^1 OS *< IC r-l OS CO co t- -en oo CO~H OS 1*1 to co o co o^ CO CO CM 00 O i*l CM i-H »0 CM i-l c-i OtJiiOO) co co co co 00 lO oo CD O if 00 o >C o-*i t-ocoo as CO i-l CO -* CM O OS O i— l 0O OS CO O o CO 1*1 w Tfi O O CM CM CO i-l SO |J3 ■* ■* h lO CM i-l 00 OOHK) i-H CM CM CM t- CO ■* CM OO O 3 eoOoiH CO CO if CN1 CO O- OS OO CM (DOOlON oo co co •<*< moo CO cm OcOOi-H 0 "5f oa -* CM CO i-l ujiooo OS i-l CM CO os c-i CO CM CM i-l CO iO CM >0 CM US o CM i-l r-l b- lO o 0«3 s.s £S£ K>SQ> o o B J) i « CS I Ufa b 5 C c^ 03 ^ IS i-s r\ C3 Bul. 640] Dairy Management 27 TABLE 8 General Summary of Dairy-Enterprise Eecords on Manufacturing-Milk Dairies in Sonoma and Marin Counties, 1928-1932 Dollars per pound of milk fat sold Dollars per cow 1928 1929 1930 1931 1932 5-year average 25 48.5 1.3 237.4 15 49.4 1.2 * 241.0 13 40.7 1.3 26.6 270.0 12 55.1 1.3 12.3 241.7 3 61.6 1.3 235.9 14 Average number cows per record Animal units per cow Per cent of cows sold dur- 51.1 1.3 0.0 Pounds milk fat sold per 245.2 0.57 0.46 0.59 0.44 0.52 0.39 0.39 0.39 0.28 0.30 0.47 0.39 Management income. . . 0.11 0.15 0.13 0.00 -0.02 0.08 25.31 0.39 136.06 21.21 1 43 143.16 28.39 1.82 140.70 11.96 0.76 94.72 8.69 0.11 66.50 19.11 Miscellaneous income 0.90 116.23 Total income 161.76 22.50 32.90 6.07 22.04 165.80 21.57 34.01 6.17 17.53 170.91 30.33 33.64 5.03 19.61 107.44 19.64 21.75 5.25 19.81 75.30 19.81 18.66 3.25 12.05 136.24 22.77 28.19 Silage and green-feed cost . . 5.16 18.21 83.51 10.61 19.39 6.54 3.46 12.02 135.53 26.23 45.62 38.25 57.64 79.29 8.47 16.29 0.23 5.05 13.15 88.61 3.81 19.03 6.38 4.90 12.13 66.45 6.25 13.21 5.49 4.92 10.59 53.77 1.85 8.56 4.93 2.79 7.60 74.33 6.20 Value operator's and 15.30 Miscellaneous expense 5.91 4.22 Interest on investment 11.10 128.48 37.32 53.61 50.47 66.76 134.86 36.05 55.08 48.18 67.21 106.91 0.53 13.74 11.12 24.33 79.50 - 4.20 4.36 3.40 11.96 117.06 Management income 19.18 34.48 Capital and management 30.28 45.58 Dashes indicate data not available. 28 University of California — Experiment Station cause of the nature of the demand for their product and because they receive higher prices, do more of this higher-cost feeding and, conse- quently, secure heavier production per cow. Although the periods cov- ered by record averages for the two groups shown in tables 7 and 8 are not identical, the production, feed, and labor used, as shown in table 2, may be taken as representative of the differences between the two kinds of dairies. The manufacturing-milk producers had an average sale of 245.2 pounds of milk fat per cow for the five-year period, whereas the market-milk men sold 296.0 pounds per cows over the eight-year period. Costs under assumed uniform feed prices are presented later in tables 28 and 29. The proportion of feed from pasture, which is the lowest cost source, is greater in the manufacturing-milk group and thus makes possible the lower feed cost per pound of milk fat in spite of lower pro- duction per cow. The use of 127.3 hours of labor per cow in the market- milk herds as compared with 68.7 in the manufacturing-milk herds is accounted for by the difference in labor involved in meeting sanitary requirements, extra supplemental feeding, and in the additional milk obtained. San Luis Obispo County. — Farther south along the coast rainfall is a little less and winters are warmer with the result that pastures start earlier in the fall and dry up earlier in the spring. Dairy-enterprise records were obtained in San Luis Obispo County for the three years 1928-1930, and a summary of these records appears in table 6. Herds averaged 48.9 cows and were rather large, even on farms operated by a single family, but lactation periods were short and the heavy labor of the milking season was offset by a period in the late summer and early fall when there was practically no labor, the cows which are not then in milk, being allowed to shift for themselves on the dry hills. The amount of hay fed per cow (approximately 1V4 tons) shown in table 2 is the low- est for any group. Although considerable grain is produced nearby, most of the concentrates used for dairy feeding have to be shipped in from a considerable distance and hence are expensive and not used in large quantities — the average use being 422 pounds per cow. Silage or green feed fed averaged over % ton per cow, some herds receiving consider- ably more and some none at all. The rest of the feed — well over two thirds of the total digestible nutrients — was obtained from pasture. SOUTHERN CALIFORNIA Dairying in southern California is devoted entirely to the production of market milk, although when production exceeds the effective demand, the surplus is utilized for manufacturing other dairy products. This area agriculturally is characterized by high land values and high water costs. Bul. 640] Dairy Management 29 Dairying in the immediate vicinity of Los Angeles is largely a dry-lot, or manufacturing, process utilizing purchased hay and concentrates produced elsewhere. There are, of course, some small fields used as temporary pastures, and some truck- or field-crop residues are pastured or fed, but such feeds are relatively unimportant and their use is largely a matter of salvaging what would otherwise be wasted. Farther out from the citrus and urban areas there are some dairy farms upon which a considerable part of the roughage is raised in the form of alfalfa hay, green feed, silage, and pasture crops. This type of dairying is illustrated by the Riverside and San Bernardino group of dairy-enterprise records appearing in table 9. San Diego County also contains just about enough dairying to supply its market-milk requirements, the city of San Diego being the main market. Dairymen in that area, although utilizing some local-grown green feeds and temporary and natural spring pasture, de- pend on shipped-in hay and concentrates for most of the feed. Los Angeles. — A very important type of dairying is that done around the Los Angeles metropolitan area, which is referred to as "dry-lot" dairying. This term is applied to the practice of keeping cows in corrals and feeding them almost entirely on purchased feeds produced outside of the immediate vicinity. The operators thus need to own or rent only an acre or two of land for buildings and corrals or feed lots. The build- ings usually consist of a milking barn, milkhouse, and perhaps a shelter shed in the feeding or holding corral. Many of these small places are rented, since it is easy for the dairyman to move his cows and dairy equip- ment. Frequently there are small fields nearby that can be rented or pastured for a short period. Some of the fields are used for green-feed production, which thus makes possible some improvement in the feeds used by including some succulence. Where dairies are located in truck- or field-crop areas, they can also purchase and use such crop residues as cull lettuce, beet tops, and some temporary pasturage of fields after or between crops. Although the dairy-enterprise records available to illustrate this type of dairying are too few to be considered representative, they do show rather typical characteristics. One of the most important differences from other types is in the purchase of replacement cows rather than the raising of them. Thus, averages in the last column in table 9 show 1.0 (it was actually 1.04) animal units per cow and a net stock cost of $18.53 a cow instead of a net stock income of from $10.00 to $20.00, which is usual where stock is raised. Since calves are not raised in these herds, little attention is paid to the quality of the bull, and bulls are sometimes only kept during the parts of the year when needed to breed those cows that are being kept over for another lactation period. 30 University of California — Experiment Station table 9 General Summary of Dairy-Enterprise Eecords on Market-Milk Dairies in Southern California, 1928-1930 and 1936 Riverside and San Bernardino counties Los Angeles 1928 1929 1930 3-year average County 1936f 21 53.5 1.2 368.4 11 49.1 1.2 348.6 5 70.6 1.2 34.3 360.9 12 57.7 12 359.3 3 Average number cows per record Animal units per cow Per cent of cows sold during year 54.8 1.0 27.4 405.0 Dollars per pound of milk fat sold 0.89 0.71 0.95 0.72 81 0.62 0.88 0.69 0.61 0.58 0.18 23 0.19 0.19 0.03 Dollars per cow Net stock income Miscellaneous income 4.55 18.78 327.26 17.67 22.19 332.62 36.78 20.80 291.75 19 67 20.59 317.21 0.00 5.22 245.48 350.59 74.63 50.80 39.60 8.82 372.48 84.09 42.41 44.37 5.49 349.33 104.25 50.80 8.62 3.78 357.47 87.66 48.00 30.86 6.03 250.70 88.70 46.42 0.72 0.98 173.75 57.90 11.88 18.60 5.52 18.52 0.00 176.36 59.80 8.34 19.08 7.58 19.23 0.00 167.45 48.62 19.35 24.38 5.54 17.04 0.00 172.55 55.44 13.19 20.69 6.22 18.26 0.00 286.35 71.12 84.31 89.38 102.57 136.82 40.17 Value operator's and family labor 16.35 16.20 2.92 6.97 18.53 286.27 64.32 76.20 82.84 94.72 290.39 82.09 90.43 101.32 109.66 282.38 66.95 86.30 83.99 103.34 237.96 12.74 29.09 Capital and management income Farm income 19.71 36.06 * Dashes indicate data not available. t The data for Los Angeles County are not comparable with the average for Riverside and San Bernardino counties, being for a different period. Bul. 640] Dairy Management 31 Production per cow is high in this kind of dairying, as indicated by the sale of 405 pounds of milk fat per cow in the three herds for which records were obtained and by the high production per cow shown by herd-improvement associations. In 1938 the average production per cow for the 7,943 cows on test by the Los Angeles County Cow-Testing Association was 425.6 pounds of milk fat. This high production is at- tained through the heavy feeding of concentrates in addition to the usual amount of good alfalfa hay. The hay used in the area is largely trucked in from Imperial Valley, Antelope Valley, and San Joaquin Valley where land values and water costs are more favorable to its pro- duction than in the area around Los Angeles. About 5 tons of hay, 1% tons of concentrates, % ton of green feed, and a very small amount of pasture are shown in table 2 to be the feed used per cow. In some herds concentrate feeding is said to go above 2 tons per cow for the year. Since feed, particularly alfalfa hay, costs more in this area than in areas where it is produced, the cost per pound of milk fat is bound to be higher. The question frequently arises regarding the relative economy of pro- ducing milk for the Los Angeles metropolitan area in the feed-growing areas and hauling the milk a considerable distance as compared with hauling the feed to the vicinity of Los Angeles and producing the milk there under dry-lot-feeding conditions. The answer to this question will indicate the future of dairying under the high-cost conditions in the vicinity of Los Angeles. More is involved than a simple comparison of the costs of transporting the feed or transporting the milk. Irrigated pasture, which is the cheapest kind of feed in Kern, Tulare, and Im- perial counties cannot be transported. Some of the concentrates, how- ever, are as cheap at Los Angeles as in the interior valleys, although the average cost of all is higher. Wage rates, and hence labor costs (Janu- ary, 1939), are a little higher in this area than in the more distant com- peting areas. Miscellaneous costs also are apparently higher in the Los Angeles area. The cost of production per pound of milk fat shown by the three Los Angeles records for 1936 was $0,575. In Kings and Fresno counties the same year, costs shown by market-milk dairies averaged $0,338 and $0,416, respectively, the former really being for market cream. Tinley 8 estimated the cost of hauling milk from Kern and Tulare counties at around $0.08 to $0.10 per pound of milk fat in 1936. If the only difference in feed costs were $6.00 a ton in the cost of alfalfa hay (assuming that feeds used were the same in both areas and concentrate costs were the same) then the difference for 5 tons of hay would be $30.00 per cow, or about $0.10 per pound of milk fat, if 300 pounds per cow 8 Tinley, J. M. Price factors in the Los Angeles milk market. Univ. of California Giannini Foundation Mimeo. Eept. 48:30. 1936. (Out of print.) 32 University of California — Experiment Station pL oo O ^ O l-H Oi 3 B A o • fl S O r^co oo 00 o o CM ifS CO iC oo O o CM CM t>- CO OO o d r- i-H CO >o oo CO o o-* CO if od CD o oo' CM o ? oo r-- t-co OO d t-H CM OSOO oo OS o o OO CM 00 OS do 1*1 o ? s e e a b e a > < \ a s e a a b CC C l aoirt OS CD rf lit CM "0 if 00 OS 0O iHM© if CM CO CM CM o OOOOO'O* t- NHJmO OO if 00 0OCM CM ,_, cq ,-h CM CO CO "0 CM C> O) . 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IS - 3.40 18.40 i-H OCO OSOO «ooo r-H N OS CO 55.59 4.33 3.08 5.12 pq 00 so 0.05 25.96 3.60 4.74 8.97 3 -25.50 0.46 -16.53 9.43 i-HOCM »0 ©i-H «OOCM If CO if 17.72 0.00 6.64 9.37 co CO 0.00 27.72 5.41 9.71 9.08 us CO US 00 -38.02 -10.30 -28.94 - 1.22 coos U50N HOOti 69.80 30.46 0.79 0.82 6.68 38.75 7.41 11.82 4.73 4.17 7.72 ■ OiO CD 'MON CO lO CO< ' OO © lO OO ©CM-H OOON ~ O «5 -cf as co CO 55.10 7.00 0.61 9.41 CM 6N 8.32 26.66 7.14 6.11 15.46 OO us CO 1.72 28.38 17.18 43.84 •>*i-l CO NON 1-1 If US CO 50.50 8.72 1.02 14.71 us as 20.77 11.05 12.05 7.10 13.03 US as co CO 26.10 37.15 39.13 49.30 (NOON CO© H cm as oo oo CM COl-H CO £ i-l OO OO if i-H i-l uo osiocm as OOOCDN CO CM 00 if 00 CO i-l CM CO H OS CM t~0 CM I-H I-H CM 00 00 oo oo ~H CM CM CO if CD if CMOi-H if ouo as us 39.53 11.30 2.20 19.12 us 28.71 5.74 15.53 7.22 12.51 CO CO 17.58 23.32 30.09 31.38 NOO as oco NOO i-H CO CO CO co s 45.66 7.39 0.58 13.07 o CO CO 17.21 11.90 8.54 7.05 11.98 CO CO CI 25.28 37.18 37.26 49.16 tooo NO* HON i-H If co 00 us CO CM Oi-H USOOOS llJlflOH CO w as CM co 16.65 13.79 14.81 6.76 13.43 CO cs 1- 10.88 24.67 24.31 38.10 CDOCO CO oco lOOCO CO t— as CM CM 53.53 16.17 1.16 16.78 If CO co 20.14 14.24 8.40 6.93 17.04 OS CO us 58.10 72.34 75.14 89.38 a . oi8^ Jig 211 III o hi- "cl-t3 -21 WoX OOPL, 31115 t3 cuij 2 g £ 9 a « si-si ill I J-s&s Bul. 640] Dairy Management 37 silage and green feed is also small, being practically none in some cases and considerable in others where silos are used. The amount of feed ob- tained from pasture, although difficult to estimate, is given in table 2 ; the estimate for the manufacturing-milk group is 4,000 'pounds of total digestible nutrients per cow, that for the market-milk group, 3,761 pounds. In table 11, however, the average pasture cost for the five-year period for the market-milk group is $14.71, or almost double that for the manufacturing-milk group ($7.65) ; this probably means that a larger proportion of the pasture was the higher-cost alfalfa or irrigated-meadow type, while in the other group the larger proportion was on low-cost adjacent ranges. In any event, hay constitutes the bulk of the feed during the four or five winter months, and hay and pasture are used in varying proportions during the seven or eight months when some pasturage is available. The costs of market milk and of manufacturing milk are fairly com- parable, as shown in table 11, since the records were in the same area and for the same period. The difference in net cost per pound of milk fat was $0,054. The relative efficiency, however, was lower in the manufacturing- milk group. At the end of the five-year study in Lassen County, it was estimated that under uniform price and cost conditions and with com- parable efficiency in production, market milk would cost $0,085 more per pound of milk fat than manufacturing milk. 9 DAIRY-ENTERPRISE MANAGEMENT The profitableness of any farm business depends considerably upon its management. Good management in the dairy enterprise consists largely in making the proper managerial decisions in the selection of stock, feeds, and equipment, and in carrying out these decisions in an expeditious and economical manner. Analysis and summarization of the many dairy- enterprise records over the last fifteen years have provided many illus- trations of the relation between certain practices and net income. Some of these factors are more important than others and will be discussed separately as the four primary factors which determine net income per cow in the dairy enterprise. They are the production per cow in pounds of milk fat, the price per pound of milk fat, the net stock income per cow, and the total expense per cow. Each of these primary factors may exert an influence on one or more of the others also, but together they deter- mine net income. Production times price largely determines the income from milk — the main product. This plus the net stock income, or the in- 9 This difference in cost was arrived at by the construction of standards similar to those in a later section in this bulletin. For more detail, consult: Brown, T. S. The fifth annual report of the Lassen County dairy management study. California Agr. Ext. Serv. p. 1-14. 1936. (Mimeo.) 38 University of California — Experiment Station come from the production of dairy stock, makes up the total income. Total income less expense gives net income. There are many secondary factors which also affect net income, but they do so by affecting one or more of the above factors. PRODUCTION PER COW Comparison of several hundred dairy-enterprise records shows that high production per cow is usually associated with high net income. Low pro- duction per cow is usually associated with low net income, but there are cases where low production obtained by the use of low-cost pasture results in a greater net income for the dairy enterprise than would be the case if higher production were obtained by more expensive feeding methods. The obtaining of increased production per cow may therefore be said to increase net income per cow in so far as this higher production is attained without increasing costs per cow more than income. There are three main methods by which average production per cow in a dairy herd may be increased — breeding, feeding, and culling. Breeding. — Inheritance of the capacity to attain high production among dairy cattle is so generally accepted that no effort has ever been made to compare production and net income for groups of dairy enter- prises having different breeding programs. The use of animals from high- producing strains for raising replacements is largely responsible for the high production per cow in most of the high-producing herds in these studies. Among continuous records over a period of years are many cases where a progressive improvement in production per cow is noted as a result of a program of selection and breeding. Although a slow process and one which becomes more difficult as higher levels of production are attained, dairymen can certainly expect to secure higher average produc- tion and greater net income with a good breeding program than they can without it. Another way in which breeding can influence production is in the reg- ularity and length of lactation periods. Where feed is adequate, lactation periods of ten to eleven months once a year for each cow are generally considered to result in highest production. A ten-month lactation period results in cows' being in milk about 83 per cent of the time, which is about the average shown by dairy-enterprise records in most counties. Occa- sionally, however, individual records show cows to be in milk as low as 60 per cent of the time with a corresponding annual reduction in produc- tion per cow. Carelessness and lack of control in breeding, Bang's disease, or other breeding troubles are usually responsible. The keeping of breed- ing and calving records would either eliminate such troubles or lead to their discovery and correction more promptly. Bul. 640] Dairy Management 39 Breeding may also influence production by distributing calving and production throughout the year or to make it seasonal in order to take advantage of feed and weather conditions. The seasonal trend in the price of the product, the influence of seasonal climate on production, and seasonal variations in feed available should all be considered in order to select the best yearly cycle of breeding and production. Because of the customary practice of paying a fixed price for market milk over a long period, there has been little incentive to market-milk producers to adjust production seasonally, although they do strive for rather stable produc- tion throughout the year. Manufacturing-milk prices are largely based on butter prices in Cali- fornia which are affected by production and demand conditions all over the country. Hence, they tend to have certain seasonal fluctuations — high in the late fall and winter and low in the spring. Feed conditions in the San Joaquin and Imperial valleys are such that cows freshening in the fall can produce heavily through the higher-priced winter months and receive another impetus to good production in the spring. When the hot days and flies of late summer cause a decline in production, lactation can be allowed to cease. In these localities at least, seasonal production could be arranged to get more of the year's total production in the late fall and winter when butter prices are higher and allow cows to be dry in late summer when climate is unfavorable to milk production. In 1936 a study was made of the relative merits of fall vs. spring freshening of dairy cows in the San Joaquin Valley. 10 Using cow-testing records of individual cows freshening in different months, the conclusion was reached that fall freshening might be expected to result in 15 per cent more production per cow and 20 per cent more income from the sale of manufacturing milk. Effect of Feeding on Production. — Feeding practices influence profits in two ways — through their influence on production per cow and on feed costs per cow. The latter will be discussed under "Effect of Feeding on Expenses per Cow," pages 59-71. And since there is considerable litera- ture in book and bulletin form on feeding dairy cows from the standpoint of obtaining satisfactory production, the former will not be discussed here. It need only be said that proper feeding is important. Breeding may be said to determine a cow's inherent ability to attain high production, whereas feeding determines the extent to which this potential produc- tion is realized. Among enterprise-efficiency-study records completed there are occasional examples of improper or inadequate feeding limiting production, as in the case of the Lassen County herd mentioned on page 10 Sullivan, Wallace. A comparison of spring freshening and fall freshening of dairy cows. California Agr. Ext. Serv. p. 1-13. 1937. (Mimeo.) 40 University of California — Experiment Station 35, but there are probably more individual cases where cows are fed more extravagantly than is necessary to enable them to attain their most profitable level of production. Culling. — The removal of low-producing cows from a herd immedi- ately increases the average production of those that remain. This is called "culling for production." Culling is also done for other reasons. The sale of tubercular cows, now mandatory in market-milk herds, and in most counties in manufacturing-milk herds as well, might be called "culling 1 for disease." The elimination of cows with Bang's disease or any other disease or injury is also a form of culling. In market-milk herds there has also been some culling for quality of milk, such as for color, total solids, and even low milk fat. The first step in culling is to locate the cows to be culled. The testing of cows for production and quality of milk by a professional cow tester, usually cooperatively employed through a herd-improvement association, appears to be indispensable to a pro- gram of breeding and culling. Practically all of the high-producing herds and many of the profitable low-producing ones are on test. Culling to be profitable, however, should be done intelligently. It in- volves more than simply locating the cows and disposing of them except in cases where, because of disease, immediate disposal is mandatory. Where replacements are not available, culling might reduce income more than expenses. An exaggerated example of this would be when cows were on abundant pasture so that the elimination of a few cows would not ma- terially reduce feed costs for the herd. Labor and facility costs for a herd are seldom reduced by a small reduction in the size of the herd. Hence, it may sometimes follow that a low-producing cow need not be culled so long as her production is paying her direct feed and other costs unless there is a better cow to take her place. The production level necessary to meet the direct costs for feed and other variable costs which would be reduced by a cow's removal might be called the "immediate culling point." A cow below this point is certainty a cull and calls for immediate removal, since her disposal will reduce costs more than income. Then there is an "ultimate culling point" — the average production which must be attained by the entire herd if income is to cover all costs. This is easily computed by dividing the price received per pound of milk fat into total expense per cow. Dairy-enterprise records show that it varies widely from herd to herd and from year to year with differences in feed costs and milk-fat prices. It should be computed on the most recent applicable cost information for the herd in question, using the current milk-fat price. Any cow with production above the immediate culling point and below this ultimate culling point should be culled only Bul. 640] Dairy Management 41 when the room or feed is needed for a cow or heifer that offers promise of being a better producer. In the belief that consideration of these two culling points will be helpful to the intelligent dairyman in improving his net income, four examples of their computation are presented in table 12. In these examples labor was treated as a variable cost, although TABLE 12 Computation of Culling Points for Certain Annual Costs Using Assumed Prices San Joaquin Valley Sonoma and Marin counties Market milk Manufactur- ing milk Market milk Manufactur- ing milk Cost in dollars Operating or variable costs:* 73.05 38.70 67.32 28.50 79.53 35.70 62.00 27.00 Total current operating costs Less — netstock and miscellaneous income. 111 75 11 30 95.82 16.00 115.23 10.90 89.00 15.00 100.45 31.10 79.82 21.05 104.33 30.40 134.73 50 74.00 Miscellaneous, depreciation, and interest. 21.30 Net total costs of milk per cow Assumed price per pound of milk fat 131.55 50 100.87 0.40 95.30 0.40 Pounds of milk fat per cow- Immediate culling point — amount which must be sold to meet net operating costsf . Ultimate culling point — amount which must be sold to meet net total costsf 201 263 200 252 205 270 185 239 * Costs are taken for herds with average sale per cow of 275 pounds of milk fat from tables 26, 27, 28, and 29. t These culling points are figured on sales; therefore production would have to be about 5 to 10 per cent higher to take care of losses and milk fed to calves. if a reduction in the size of herd would not reduce the labor cost, then it should be moved down into the other group. Since selling price per pound of milk fat is used, an allowance should also be made for the discrepancy between production and sales, which is usually 5 to 10 per cent. This is done by adding the estimated percentage to the computed culling points. Culling low-producing cows from a herd is one of the important man- agement practices which improves net income in the dairy enterprise. It is profitable to cull any cow when a better one is available to replace her. 42 University of California — Experiment Station Hence, the availability of an adequate number of worthy replacements is necessary to profitable culling. These replacements must be purchased or be coming* along as heifers raised in the herd as a result of a good breeding program. Culling contributes toward a better breeding pro- gram by removing poor parent stock, and a breeding program provides the better replacements necessary for culling. PRICE PER POUND OF MILK FAT The price the dairyman receives for his product obviously exerts a big influence on his net income. When price is low, as in 1932, it is impossible for most dairymen to show a profit unless costs also drop proportionately, which is seldom the case. This factor is largely beyond the control of the individual dairyman. All he can do to improve his price is through the quality and kind of product and the seasonal distribution of his produc- tion. If he can obtain a larger proportion of his year's production in the late fall and winter months when the price of milk fat is usually higher in price, he will naturally obtain a slightly higher average price. Some- times a dairyman can select a marketing outlet that will bring a better price for his product. Marketing programs resulting from collective action of dairymen or control by government have in many cases im- proved the price received, at least temporarily, but a discussion of these programs is beyond the scope of this bulletin. NET STOCK INCOME PER COW Except in the dry-lot dairies most common around the outskirts of Los Angeles, dairy enterprises usually include the raising and sale of varying quantities of dairy stock. In some herds only enough superior heifers are saved and raised to obtain the necessary replacements, while in others, all heifer calves are raised, either to sell or to expand the size of the herd. In some manufacturing-milk herds (usually those selling churning cream) , some calves are raised and sold for veal. In purebred herds most of the calves are raised for replacement, expansion of herd, or for sale as breeding animals. Net stock income is only an indicator of the value of the stock raised during the year. It is not the net income from stock raised, since expenses of its production have not been deducted, these expenses being inseparable from the costs of milk production. It is called net stock income because it is really the net value of the stock raised over and above the value of stock consumed or used up in milk production through death losses and sale of cull cows at prices below their cost. It varies widely with different herds, and in dairy-enterprise records, it has been observed to influence net income. Usually the higher the net stock income, the greater the opportunity to make a profit, although as with Bul. 640] Dairy Management 43 high production, if this high income is obtained at too high a cost, it con- tributes to a loss rather than a profit. In some cases, such as in the dry -lot dairies around Los Angeles, where raising stock would cost more than the stock was worth, it would be more profitable to have a net stock cost. Even in such a herd, however, the net stock cost should be kept as low as possible. Dairy-enterprise records in the San Joaquin Valley are drawn upon to illustrate net stock income and the various factors that determine it. Records obtained since 1932 are used, since they carry more complete detail on prices of stock bought and sold. In table 13 market-milk and manufacturing-milk records are shown separately by groups having different ranges in net stock income per cow. The items entering into the computation appear at the bottom of the table, while prices per head of stock bought and sold and head per cow raised, sold, and in the herd, are shown so that their relation to the size of net stock income in the different groups may be noted. As net stock income increases in each kind of dairy from a net stock cost in the first group to net stock incomes of over $30 a cow in the last group, there is an upward trend in all of the following factors : per cent of cows purebred, milk fat sold per cow, net head raised per cow, animal units per cow, price per head of cows and other stock sold, and increase in stock inventory per cow. These are the main factors influencing net stock income. The more and better the stock raised, the better the net stock income. Replacements. — The maintenance of a herd of milking cows with satis- factory production requires the replacement of one out of five (or about 20 per cent) of the average number of cows each year. Table 13 shows death losses among cows in both the market-milk and manufacturing- milk dairies to vary from 0.013 to 0.030 head per cow, or 1.3 to 3.0 per cent. Sales, most of which would be culling for disease or production, varied from 0.150 to 0.345 head per cow, or 15.0 to 34.5 per cent. The 34.5 per cent was in the manufacturing-milk group which had a net stock cost and was higher than usual because of tuberculosis eradication which was taking place at that time. Averages of estimates of dairy cattle for the entire United States 11 over the ten years, 1929 to 1938, show 0.215 heifers under one year of age and 0.200 heifers one to two years of age for each cow over two years old. This is about 1 heifer in each age group to 5 cows and indicates a usual replacement of about 20 per cent. In fact, replace- ments follow this figure so closely that any deviation in proportion of heifers to cows is used to forecast an increase or decrease in the number of cows in the immediate future. 11 United States Department of Agriculture. Agricultural statistics 1938:336. 1938. 44 University of California — Experiment Station gS o ° co oj cm i-< -*t< oo CM O +-' OS co C au t— >C ■>* CO ~ «5 o CM CM r- CM o 2 03 c o> O oo co oo NOHN P CD °o ID a 2 o N050"0 CD a CM o O a; -a o > o ° CO 03 OO ■>* OO CM GO CO «*< CM CO cd O ■+-> OS oo 9» t-H lO OS -^ r-l ^ H OS CO e@ 03 -c o ■*■* OS ©os fl °os' *~I og ^-1 y< •& CM CM lO «— ' OS *< CO ■*)< OC CM «NOCOCD OO ICJ O CO lOOMOOfi O OHNN'- OC c o ooooc c co co ec lO t^oooosic ©* OC o TfcoNinoc 'J ^* OO c o ooooc c o »c OO COCDiOHlC CN l> O co CO O ©©CM^HO 1^ eo oo c O OOOOO c OO ifl t— lOCONOsa O t^- >0 ->*< CM o< O CM C-l O O CM CO CO CM cc OO c O OOOOC c P o GO Tio CO <— I OO -*f CC OH O OHHIMO cc so oo o O OOOOO o CO TfOSCMOOCC o OCM ^) O O O CM CM O p ~* oo o O OOOOO c rt 3 >1 03 r three m ? months to two ye p . c c a c 2 c CD c ei.« a s C U c pq V ^ OWN t^ CM t^ •o osoo •*f CO ° u ° (D a> o > > > <« 17.91 10.56 20.94 1.53 1.20 0.00 oo CO CO NlOOOMO 00MOt!o ■>* O «M O CM 7.62 3.03 12.92 4.85 4.76 0.00 CO CO 5.57 2.90 3.83 6.25 1.38 0.00 CO 6.64 1.98 0.00 4.42 0.88 4.89 CD a o o (3 31 o " It t E U si .2 a si &c S"" o U C :j J* a c E c a C e :3 |i 5 g M ^ c O +: OO c s\ CD 8*- (3 i—i ! j i GE J- a c 3 > .2 1 g CD 6 CD c c a z c e. c c c a *- a co co i b8 O -i 9 Bul. 640] Dairy Management 45 Source of Replacements. — Table 13 shows that even in the San Joaquin Valley some replacement cows are purchased. The number of cows needed per cow for a simple-average replacement for the five market-milk groups was 0.225 and the cows bought per cow were 0.066, or about one third the number needed. In these groups there were, however, 0.116 heifer over two years of age and 0.281 heifer one to two years of age per cow which would be more than enough to make the usual replacements, although the distribution of these heifers in herds was probably such that some herds would still have to purchase replacements and others would have a sur- plus to sell. In the manufacturing-milk groups in table 13, more stock was raised per cow and more heifers were on hand than for the other kind of dairy. It appears that both market-milk and manufacturing-milk producers in the San Joaquin Valley attempt to raise all their replace- ments but occasionally have to buy a few cows, and that many of them raise a surplus to sell. This is likewise true of most other dairy districts where the bulk of the roughage is produced on the dairy farm. Replacement Costs. — The replacement of around 20 per cent of the cows in a milking herd each year is not without its cost even though it may be hidden by a net stock income where replacements are raised within the enterprise. The cost may be almost as great where they are raised as if they were purchased, although the cost of raising them has seldom been kept separate from other dairy-enterprise costs in the studies in California. Physical requirements for feed may be computed at proper feed prices and other expense items allocated in order to obtain approximate costs. Table 14 presents three examples of such computed costs based on dairy-enterprise records. Costs would begin with the addi- tional cost of a good herd sire. Bull-Service Cost. — The cost of bull service is likewise a part of the total costs of the dairy enterprise and has not been segregated from other costs, although the study and comparison of individual records provide enough data for estimating costs for certain assumed conditions. This cost may well be considered in two parts : (1) the cost of the bull and (2) the cost of his care, feeding, and maintenance. The former cost is rather variable from herd to herd ; the latter may safely be assumed to approximate the average animal-unit cost of feed, labor, and facilities in the herd. The latter cost may be considered as part of the cost of milk production, namely, thatf of getting cows to produce milk, whereas the cost of the bull itself may be considered as chargeable to the calves raised. The validity of this procedure lies in the fact that if no calves were saved, as in some dry-lot dairies, any bull bought at beef prices and sold later for only a little less would do for service, and the cost of bull service then would be almost entirely that of feeding and care. At the other extreme, 46 University of California — Experiment Station a high-priced bull used in a small herd for only a few years would result in a high bull -depreciation charge against each calf raised in addition to the costs of maintaining the bull. The cost of caring for the bull in the San Joaquin Valley may be esti- mated from the costs per cow about as follows : feed, $65 ; labor, $10 ; miscellaneous, $5 ; depreciation on pen and shelter, $10 ; interest on in- vestment, $10 ; or a total of $100 a year. These are not reported costs but represent approximately what would be arrived at by arbitrary alloca- tion of all costs in the dairy enterprise and are based on the assumption that the bull is kept in a separate pen all the time and is fed little but hay. Perhaps costs in different herds might vary from a low of $50 to a high of $150 a year for maintenance alone. But if the bull did cost $100 a year for maintenance and served an average of 20 cows, the cost per cow would be $5, which is the part suggested as being chargeable to milk production. The average ratio of bulls to cows shown by all records used in table 13 was 1 bull to 18 cows. With cost variations and differing ratios of cows and bulls, this maintenance charge could easily range from $1.50 to $15 per cow. It would be cheaper to hire bull service for the very small herd, if milk production were the only purpose, than to maintain a full-time bull. Most ordinary grade herds in dairy-enterprise studies report the own- ership of 1 bull or more, and the purchase of a young- unproved purebred bull for replacement purposes from time to time. Hence, such herds have, in addition to the cost of maintaining the bull, a capital outlay which has to be recovered from the calves sired. A fairly common price to pay for a yearling bull during the last ten years was $200. If the bull were used for four years and then sold for beef for $40, depreciation would be $160, or $40 a year. If 10 heifer calves (which is probably the maximum per bull) were saved each year, this bull-depreciation charge alone would be $4 a calf. In higher-producing or purebred herds with more valuable bulls, higher charges would occur. This charge could range almost nothing in some herds to as high as $30 a calf in others. It is not difficult for the dairyman to estimate his bull costs and allo- cate them to milk production and breeding stock raised, and it is highly important that he do so in order to avoid the error of selling a calf for less than the breeding cost alone. He might also discover excessive bull- service costs and make such changes as are necessary to reduce them to a more reasonable figure either by buying his bull service or by a change in purchase and replacement procedures. Calves discarded or raised for veal should not be considered as sharing any of the cost of bull service. Cost of Raising Dairy Heifers. — The cost of raising heifers, in addi- tion to the bull cost, is composed of feed, labor, and miscellaneous items. It will vary with feed prices by years and by districts and with the age at Bul. 640] Dairy Management 47 which the heifer first calves and becomes a cow. Heifers of larger breeds may require six months longer to reach maturity than small ones. In order to illustrate the method of computation and to illustrate probable cost differences in the various districts, table 14 has been prepared. Quantities of feed used are based largely on Farmers' Bulletin 1723 12 and Extension Circular 107. 13 The prices used in computing the cost of feed are estimated typical prices for three areas : Lassen County, the San Joaquin Valley, and for the dry-lot area around Los Angeles. The latter was included not because calves are raised by that method but to show why they are not raised. Quantities of feed and prices are shown so that the reader may use table 14 as a guide in estimating his own costs. The computed costs shown in table 14 are not represented as being factual, or true, costs, but they are doubtless reliable enough to show the relative costs of raising heifers in the three areas. Lassen County dairy- men, with their low-cost pasture, can probably produce two-year-old bred heifers for about $60, or two-and-a-half -year-old ones for about $75. This would indicate an opportunity to raise a surplus for sale in deficit areas, such as in the Los Angeles milk shed. In the Lassen County ex- ample, the prices of whole or skim milk used were those which normally prevail in dairies selling churning cream. In market-milk herds the cost of feed for the first six months is higher, and if whole milk and calf meal were used, it would be almost as high as in the Los Angeles example. The low cost for the remainder of the period, however, still gives the Lassen County market-milk dairyman a low total cost for a bred heifer. Computed costs in the San Joaquin Valley are based on the use of both whole and skim milk at values which would probably prevail in a manufacturing-milk dairy. They show total costs low enough to encour- age the sale of bred heifers or cows when prices are around $100 or over. In market-milk herds where more valuable whole milk would be used, costs would probably be enough higher to discourage raising surplus heifers for sale but would be low enough to make it economical to raise replacements. Under the dry-lot feeding conditions around Los Angeles, the total cost of raising heifers is shown to be prohibitive or much greater than the prices of dairy cows delivered in Los Angeles. Similar costs could be computed for all the other dairy districts in the state. They would prob- ably show that it is economical for market-milk dairymen to raise their own replacements in all districts except around Los Angeles. Costs in manufacturing-milk herds in all districts would probably be low enough 12 Shepherd, J. B., and Fred W. Miller. Feeding, care, and management of young dairy stock. U. S. Dept. Agr. Farmers' Bul. 1723:1-32. 1934. 13 Mead, S. W. Raising dairy calves in California. California Agr. Ext. Cir. 107: 1-24. 1938. (Out of print.) 48 University of California — Experiment Station TABLE 14 Calculation of Cost of Raising Dairy Heifers in Three Areas* Lassen County Amount in pounds Costs in dollars San Joaquin Valley Amount in pounds Costs in dollars Los Angeles (dry-lot conditions) Amount in pounds Costs in dollars Basic figures used in computing costs Whole milk Skim milk Calf meal Concentrate mixture Hay Pasture per animal-unit month 100 100 100 100 2,000 500] 1 40 0.23 4.75 1.70 7.00 1.00 100 100 100 100 2,000 500] 1.80 0.29 4.00 1.60 10.00 2.50 100 100 100 ,000 2.40 0.00 4.00 1.80 15.00 00 First six months Second six months 250 1,600 65 175 350 180] 716] 3.50 3.60 3.10 3.00 1.22 0.50 250 1,600 65 175 350 180] 716] 4.50 4.65 2.60 2.80 1.75 1.00 400 220 265 550 714] 9.60 Skim milk 0.00 8.80 Concentrate mixture Hay 4.77 4.13 0.00 Feed: total digestible nutrients or costs 14.92 6.00 1.50 17.30 6.00 1.50 27.30 6.00 Housing and other costs 1.50 22.42 24.80 34.80 Hay 1,600 600] 1,400] 5.60 0.00 1.20 1,400 700 ] 1,400] 7.00 0.00 3.50 2,000 540 1,405] 15.00 9.72 0.00 ' Feed: total digestible nutrients or costs Labor (Lassen , San Joaquin , 5 hours; Los Angeles, 6.80 1.50 2.00 10.50 1.50 2.00 24.72 3.00 Housing and other costs 2.00 10.30 14.00 29.72 {Continued on next page.) * The data in this table are not from actual cases but are arbitrary calculations based on liberal feed requirements with costs computed at assumed prices for the locality. Feed prices and other costs were calculated from dairy-enterprise records. Feed requirements were taken from: Shepherd, J.B., and Fred W. Miller. Feeding, care, and management of young dairy stock. Farmers' Bui. 1723: 1-32. 1934. t Pounds of digestible nutrients (see page 7 for explanation). Totals include pounds of total digestible nutrients in the other feeds. Bul. 640] Dairy Management TABLE 14— (Continued) 49 Lassen County San Joaquin Valley Los Angeles (dry-lot conditions) Amount in pounds Costs in dollars Amount in pounds Costs in dollars Amount in pounds Costs in dollars Six months of third year Total cost at different ages Second year Hay 2,400 M00t 8,600] 8.40 0.00 5.00 13.40 3.00 6.50 2.75 2,000 2,600] 8,600] 10.00 0.00 13.00 6,000 800 3,600] 45 00 Concentrates 14.40 Pasture 0.00 Feed: total digestible nutrients or costs Labor (Lassen, San Joaquin, 10 hours; Los Angeles, 20 hours) 23.00 3.00 7.00 3.25 59.40 6 00 Housing and other costs Breeding cost 7 50 4 00 25.65 36.25 76 90 Hay 1,400 1,700] MOOt 4.90 0.00 3.50 1,200 1,800] 2,400] 6.00 0.00 9.00 4,000 600 2,450] 30.00 Concentrates Pasture 10.80 0.00 Feed : total digestible nutrients or costs Labor ( Lassen , San Joaquin . 5 hours; Los Angeles, 10 hours) 8.40 1.50 3.50 15.00 1.50 3.75 40.80 3.00 Housing and other costs. . . . 4.00 13.40 20.25 47.80 Cost at birth, bull service. . Cost at six months of age. . . Cost at one year of age Cost of bred heifer at two years 5.00 27.42 37.72 63.37 76.77 5.00 29.80 43.80 80.05 100.30 5.00 39.80 69.52 146.42 Cost of bred heifer at two and one-half years 194.22 t Pounds of digestible nutrients (see page 7 for explanation). Totals include pounds of total digestible nutrients in the other feeds. to warrant the raising and sale of surplus heifers whenever such heifers, or the good cows which they replace, can be sold for $100 or more. In 1936, Los Angeles dairymen were paying a little over $100 for their re- placement cows. Herd Composition. — Dairy herds vary considerably in the proportion of cows, bulls and calves and other young stock which they contain. 50 University of California — Experiment Station o * M tt Cd lO r-i W ^ ^ fti PQ 5 < w H H hJ Ph Pm 1 d 1 ,g 'cd -1— o its g-2 © O © © © O 1 c > o ... 11 »i o o o o o 1 «- C ft "3 » uo «■ ) ... .S o u 03 C 1^ O O O O O O C ) CO o o 'C 09 03 «-i © o o o © «- o co d o »o > < w 35 «r n OTfl I -_ ++ © 0! 3 5S 7 ? co o o o o o . c . £ 0) c3 O «9 W O O O G > . ... G w 3 cc . 03 fl CO o g g ig | o o o o o o c . O rH O O O O i- a _o ls-i— ->*1 !« s^ O O OS 00 T-C T- a t3 o '8 s cm © o co oo o —i 51 Hi > w »o "^ '-' J CO O O iff O lO O G o c CM n OC OC s«« C ol^ a° <; <°^ P CO c «J in S O "5 O i« i« G IC O O i % ■+J C & M ® 5 J3 c 0) h 8 a >i c -^ 0) C ,c X T S a 4 ft g M M a> '3 §-ft^ - 3 £ J2 p « T3 g; §1 ° c a> a J E II 1 si 3 o o Egwoo 3 O !5 •* "S c PC c C C w R ^ < 73 -5 . > § - sal ^ co c3 eS co "2 co"0 §• -sis » a^s •2 -s.al S ^2 2 .2 Slf^ I 23:3 ^ o t, >. ? .|15 -2 * § s2 J3 o O "OO i o o CM :S § gg g <°2 ^h co oo »-< gg g ^2 OOOmS 3^ to co tn*0-i "m ° -o-o-o « « £ co 3 3 3 -5 £ O O O C O oo s o gg m o o g o "0 CO 00 QO -r r~ ^ i« rt 3 mo s m OO -if o» CO o> m CM CO o os in o -* om OO^Ji CO T* O C35 -■ p O CM Ui in oo oo m oco CM CM r- co in _ oo in 00 •**! N CO C6 00 oo OCO m CM m oo OO co co OO om CM CM o GO m ■* 00 CO § g OO O CM OO CO CD r-H -r -* CO CO t- CM ,H CM o> CM Tfl^H •>*> 50 5"* US m CO O s?g 3 co CO r~ O CO t^CM o o oo O oo m CM in o OO r- CM 0< 5 • m in oo O CO »n m Tj< CM CM •«*< CO CO CM t~T-l CM •H CO ^ CM CM COcM oo m CM CO CO t^O •* ^* co 40.50 4.50 1.60 16.00 62.60 35 40 10 70 7 10 10 40 126.20 10.60 o co 37.00 1.50 1.00 17 50 57.00 34 50 10.00 7.00 10.00 118.50 10.40 o CO o 03 "5 gs -2 fi 1^8 i £ S « o WO 1^5 3 cS en coPh o O O fl - 3Iq 2 e s o . is : &1 Bul.640] Dairy Management 83 STANDARD OF COSTS Since only a few dairy records were obtained in any one area in any year, cost averages, which are already historical, are not so serviceable in checking management or costs as a schedule of quantities which can be computed at current or average prices. One of the purposes of these en- terprise-efficiency studies has been to show how much of the various feeds, services, supplies, and equipment are needed in dairying or may be economically expended. Figure 3 presented a picture of actual feed utilization by cows at different production levels as obtained from a few hundred dairies in the San Joaquin Valley. Figure 4 presents the labor- utilization trend. Similar trends (not included in this bulletin) were plotted for other districts and for other expense items and were used in computing the probable costs for various items at different production levels. Tables 26 to 29 present schedules of costs at different production levels for market milk and manufacturing milk in two districts. These computed schedules are called "standards of costs" to distinguish them from actual record averages. Such standards are not expected to be applicable to all dairies or to remain applicable for several years. Their greatest value will be to serve as guides in formulating more appropriate standards for local or changed conditions and for herds at certain known levels of milk-fat production per cow. Hence, these standards are pre- sented in detail in tables 26 to 29 for the reader to use in preparing a standard more applicable to a particular dairy. Quantities of feed and hours of labor are given in each standard so that the reader may readily calculate costs with any other set of prices. Standard of Costs for Market Milk in the San Joaquin Valley. — The market-milk standard shown in table 26 is constructed in such a way as to eliminate all variations in inputs or costs from causes other than pro- duction per cow. Small influences of size of herd are eliminated by calcu- lating costs for a herd of about 50 cows. The variations in feed required for herds with varying proportions of stock other than cows are elimi- nated by assuming the raising of replacements only and the herd compo- sition as shown in the second example in table 15 for this practice and size of herd. Net stock income is assumed to vary only slightly because of the higher price that would be received for stock sold from higher-pro- ducing herds. The basic method of computing net stock income is illus- trated in table 16. The feed used is obtained from figure 3, and enough additional feed was provided to take care of the bulls and young stock in the herd. Hours of labor are obtained from figure 4 and reduced from 5 to 10 hours to make them apply to machine-milking. In order to reduce inputs to costs, prices of feed and labor are assumed at levels which are 84 University of California — Experiment Station to t— co"0 o as oo "5 O >o CM -*o r~ IO coco •"*< I— 1 OO IN CO CM CM CO CO CM o CM tO lO oo if5 o >o as as CM CD _ ■^ I-H CO CM cm t— CO r~ lO oo OO OS O OS lO OS"0 f~ t^ rj Tf i-H •f f~ t^ CO CM r~ CM 3§ O CM oo l« o r~ o t^ »o co ■f* t^ CO to ^«o to to § - o CM oo °°. CM lO t- a> -sPO co co t^us **o o> to ■>*< CM e* to CM i«o O CO CO o co oo 1Q "OO f^ i« U0 T^O CM "* t^ N UO oo o t- OiO o o o >o •*o m "■*< 1— 1 •o Wo o3P4 8 "2 Si CM «•- 3 •^ «^H 8Sc*g.9 3 8 -J S a b-3 S 5" a 111 a sa 3 Bul. 640] Dairy Management 85 believed to approximate closely long-time-average prices for the area. At any given time costs can be recalculated using actual prices. Mis- cellaneous, depreciation, and interest costs, although largely based upon trends shown by records, are adjusted to the particular conditions as- sumed and to levels which would insure adequate facilities. The quantity of milk fat sold per cow allows for the usual amount of milk lost and fed to calves, which is about 15 pounds per cow. Hence, actual production per cow is 15 pounds higher than that sold per cow, whereas figures 3 and 4 are based on production per cow as determined by cow-testing records. Costs per cow are shown in table 26 to increase materially with in- creases in average production per cow. Production increases obtained by the higher inputs result in lower net cost per pound of product sold, since costs decline from 54.0 cents in the herd averaging 200 pounds of milk fat per cow to 44.3 cents in the 450-pound herd. The decline in cost is not great after 400 pounds of milk fat sold per cow is reached, because production beyond this point requires a considerably greater substitu- tion of concentrates for lower-cost roughages than at lower production levels. These figures apply to herd averages and not to individual cows and allow for overfeeding at higher production levels. The efficient utili- zation of feeds and facilities is average for records in the area. Hence, more efficient management and the feeding of individual cows according to production might be expected to result in lower costs than appear in this standard. Also, the use of a higher proportion of pasture and a lower quantity of hay would reduce costs below those shown in these standards. Standard of Costs for Manufacturing Milk in the San Joaquin Val- ley. — Since most of the manufacturing-milk herds in the San Joaquin Valley are small, particularly in recent years, the standard of costs in table 27 is computed for a 25-cow herd. Also, since most of such dairies raise practically all the calves for sale as veal or as breeding animals for other herds, the herd composition assumed is that shown in the first ex- ample of table 15 and the net stock income is computed as in table 16. The feed inputs assumed are not based on the average feeds used, as shown in figure 3, but on special trends obtained from records reporting a larger proportion of feed from pasture. In recent years when manufac- turing milk has been selling for a much lower price than market milk, producers of the former have reduced their costs by a greater utilization of pasture. If San Joaquin Valley dairymen are going to profit from the production and sale of manufacturing milk and churning cream in com- petition with low-cost areas all over the country, they will have to use low-cost feeds. This kind of dairying in Wisconsin and other middle western states is based largely on pasture for about six months of the year. Dairymen in the San Joaquin Valley, because of the mild winter 86 University of California — Experiment Station SS «3 CM ■«»< O ■* «o ft o tn co CD ft -d to -1-3 03 •o J4 a o s 3 CO o Ph lO CM CM CM CN CM CM 0»rt e CO CM ic r~- t^ CO CM fr^ •■* CD ifl -* CM «C CO "<*< OS •H COCO -' CM OO CO iO i/3 o oe >o CO l-< CO CO ^ CM OO o ■"»< CO CN i -1 CO CO ** 1M OO o CO 00 coo o CO CO "« "9 S?g o co o CO i-H r— so !-• CO CM OS oo EC CM OS •**> CD »OtN OO or -^ i-l "9 CM co OO o « iOi-r OS t- iO i -1 Tf.1-, CD gs o OOi-t OCM ^ i-H to 3 H s 3 2 o -3 w Ssl) (/ -3 c " - s o cS o o a a 3 3^ mT -a a 2 T3-DT3 J s c AC .g ft | 3 3 o o s .9 p. PhPh - o JO o o CO 1HCN o CM o fiOCOCO CM CO CM o 1 - 46 50 2.04 10.85 97.19 41.40 14 90 6.70 13.00 OS O r-C OO CO i-l CS CO so 41.85 1.68 11.37 91.80 39.00 14.40 6.50 12.30 o O O »n Tf Y-C CD <-H o «o CM K5 O o O CO § oooo o O o CM OS CD CO ottos'* IQ OS ,_, CO ■f CNHO O CO o Ifl co CM l^ CO i-l i-l 5 wo 4 (NO OO CI CD CM t-- OS eo CO co CO IO CO CM US OS CD o so •1 CM -< 18.60 0.00 15.05 57.65 33.00 12.00 5.50 9.50 117.65 10.00 CD |-~ O 2«£cj*>S « § 3 0) 3 S 5 O r= C3 WU ctjPh (-, ft 3 X O » 3-3 C5 ra b SS ^ 3 *j 3 O co 3 3 . o o 2 - S '*" «4H Bul. 640] Dairy Management 87 climate, may well utilize their advantage of pasture for ten months of the year through irrigation. Since more calves are assumed to be raised in the manufacturing-milk herd, the sale of milk fat per cow is assumed to be 20 pounds per cow less than the actual production. The larger number of animal units per cow also increases the feed used per cow, and the costs shown for a certain average sale of milk fat per cow in table 27 are not exactly comparable with those shown for market-milk dairies in table 26. Costs of manufac- turing milk, as computed in this standard, vary from 34.0 to 40.8 cents per pound of milk fat sold. As production per cow increases, costs per cow also increase, but the higher production results in a lower cost per pound of milk fat sold up to 425 pounds. Production above this point would increase the cost per pound of product because of the higher pro- portion of concentrates needed. Standard of Costs for Market Milk in Sonoma and Marin Counties. — The Sonoma-Marin-dairy district is different from the San Joaquin Valley in that a much greater use is made of natural pasture, and since irrigation is seldom available, there is no irrigated pasture or home- grown alfalfa hay. This results in a greater use of concentrates in order to obtain better production from the available roughage, and in a lower use of alfalfa hay which is shipped in and hence is more expensive than in the San Joaquin Valley. Table 28 shows a standard of costs based on market-milk-dairy records in Sonoma and Marin counties. The feed prices used are higher for hay and concentrates but lower for pasture than in the San Joaquin Valley. Labor inputs in Sonoma and Marin counties are shown to be lower than in the other area, probably because herds tend to be larger and because the age and concentration of dairying in the district has attracted and developed highly skilled workers. Since herds in this area tend to be larger, the schedule of costs in table 28 is based on a 75-cow herd. Herd composition is assumed to be that of a herd in which replacements only are raised, with 1.34 animal units per cow. Costs at various production levels are similar to those shown in table 26 for market milk in the San Joaquin Valley. Costs per pound of milk fat sold varies from a high of 53.8 cents in a 200-pound herd to a low of 43.7 cents in a 450-pound herd. Although feed inputs and methods of market-milk dairying are different, the cost of the product is about the same as in the San Joaquin Valley. Standard of Costs for Manufacturing Milk in Sonoma and Marin Counties. — Manufacturing-milk dairying along the coast of Sonoma and Marin counties is somewhat different from the three preceding examples. Being farther from railroads and grain- and alfalfa-producing areas, de- pendence is more largely on natural pasture. In fact, dairy cattle may be 88 University op California — Experiment Station to o o ijj U z tf 1—1 w r — -. E to o M R h1 cj P 3 P o M Ph a Ph u O CO ;H hJ w > * w o h-1 H H U to P w P M 8 E 1h fc M C J R ^ CB to O O OOO 3^-1 IB 01 C0-H O "OT3T3 * o >« WtOOXM CO ■* t^.«5 CM cr t^ >o CO i-C O O O CO CO OOWO CO o ■** O OO CO CM OO O CO O-^Tt" t^ ■»* CO 00 CO ■f CO ■>*< ■* OC lO lO CM >0 LC >n NNNN »o 10-* c e CD « oe o 00 Ol 00 CM O o- OOOO o- o» r^ •»j( m ^fi c 1 C ■<* CO o r~ a OINiOC cr -h^coO' co H or CM +3 a> -ij C h' o o si d a> n o H is ■d ■3S d a .2 "d d "3 s d a. c p o in d o o d J c °^2 g "Oj s d cS rM c S C > | c Ode S3 i a c c K c 1 c a I C.= If if c «■ 1 o 1 £ a c c a o S 3 03 ^ IB si 342 Is o S go CM - o-d N 7J ^ OJ ? &s 8'S 1! •a 9 d*S d^ cs § S -^ ^ c -o--« CV)