Component Efficiency (Part 1)

In this episode of the AK Podcast, Mike Donaldson and Don Sanders delve into the evolving metrics of dairy farming, focusing on the importance of feed efficiency and component efficiency. They discuss the significant shift in the dairy market, where the demand for milk components like butterfat and protein has become more critical than the volume of milk produced. The conversation highlights the economic advantages of optimizing dairy operations and the potential for carbon credits as a byproduct of improved efficiencies. Don shares his extensive experience in the industry, emphasizing the need for dairy farmers to adapt to these changes for better profitability and sustainability.

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Chapters

• 0:00 Introduction to Dairy Performance Metrics
• 3:15 The Shift from Fluid Milk to Component Efficiency
• 5:59 Understanding Feed Efficiency in Dairy Farming
• 9:00 The Importance of Component Efficiency
• 12:12 Economic Advantages of Efficiency in Dairy Production
• 15:06 The Role of Carbon Credits in Dairy Farming
• 18:06 Conclusion and Future Insights

Transcript

Chris  Radke (00:07)
Welcome to the AK Podcast where we explore science and nutrition behind livestock care and management with the best and the brightest in the business. I'm your host Chris Radke, part of the sales team here at Agri-King. And with me today is the Director of Field Services and a Member of Sales Management Team, Mr. Mike Donaldson, Mike how you doing?

Mike Donaldson (00:26)
Very, very well Chris. How's everything in your world been lately?

Chris  Radke (00:29)
I am pretty good. It's been not too cold, so we're doing great in my family. Hey Mike, I'm pretty excited about our guest today, so who do we have and what are we going to talk about?

Mike Donaldson (00:34)
Good.

Well today Chris, we have Don Sanders, a teammate of mine on the Agri-King Sales Management Team. Don has probably done more different jobs in the field than anybody in Agri-King history. Done great work in every step. The thing we want Don to talk about today is something he's pretty passionate about. There have been historically many ways that we track performance on a dairy farm.

pounds of milk per cow per day, percent protein and milk fat, income over feed cost. About 20, 25 years ago, Agri-King was one of the early dairy nutrition companies to start watching feed efficiency and what Don has come to really be a strong advocate for with us is component efficiency, which starts to tie all those different pieces together and is going to be a really important metric

forward. So to start Don, give us a little bit of a rundown about all these things I've alluded to that you've done and we'll then move into today's topic.

Don Sanders (01:46)
Okay, it sounds good. Hi everybody. Really glad to be a part of this podcast. Been with Agri-King for quite a while, over 40 years. Got acquainted with Agri-King by feeding the Nutrition Program even before I was employed by Agri-King. And my employment started with Agri-King in 1984 because our representative that was taking care of our own dairy was retiring and

George DeLong, one of our senior members at that point in Agri-King's staff, asked me if I wanted the job, and I said no. I actually said no for six months. Then I said, oh, maybe I can give it a try and see what happens. And I said, if this doesn't work out, there'll be no hard feelings. So as you can tell, by 40 years, it worked out pretty well. I have two great passions in my life.

The one is people and the second is cows. And I want to get the best out of them, both of those species. That is at all possible. I've had that, I guess, a passion for all my life and encountered many, many great people over the years, many conversations and listening and still trying to understand that cow and that rumen and how it works so well.

because of course we run into some challenges, it's not always the same, it's why we have a job. We're trying to make sure all those little rumen bugs really reproduce and make themselves over again to get the job done in more efficient manner. So I'm just delighted to work in this dairy industry and meet great people and help them out with their cows.

Mike Donaldson (03:39)
Well, as you've been between the time you dairied for yourself and 40 plus years with Agri-King, speak a little bit as you saw people change how they set their goals into things that maybe mattered a little more.

You might even want to talk in the most recent Hoard's Dairyman that I got. There was a one page article advocating that people need to pay attention to pounds of components, not just pounds of milk. That the market's changing without becoming a marketing expert. What is the change in market that's made this so much more important than it used to be?

Don Sanders (04:25)
Biggest change that has happened even though we don't like what I'm going to say is we're down to right around 20% of our milk used for fluid. That used to be the total opposite way back I'm gonna say in the 60s early 70s, 80% of that was going to fluid and now that has changed the pricing structure because people love to eat cheese and of course yogurt and other soft stuff like that so the price now is reflected that

we're getting paid more for a tenth of a pound of butterfat, which right now the average is 30 cents, than we are for one pound of milk. So if you look at the economics of what I just said, it's more important to get another tenth of a pound of fat than it is to get a pound of milk. So I had many discussions with different clients over the years and now they're finally getting it. I said, it's concentrated milk. You pay by the hundred weight for that to leave?

So you're actually saving yourself some money just by increasing your butterfat because you are concentrating it. it's not. the consumer demand has changed. And it is fueling what our dairies are being reimbursed

Mike Donaldson (05:39)
I'm kind of, and I mean, obviously I knew what you were gonna talk about, Don. I knew this was coming. when you say that we're down to 20% of the milk going as fluid milk, it hurts a little bit inside. That's, I I...

I mean, back in the 60s and 70s, was a mark of a poor dairyman where I grew up in Pennsylvania that your milk would go for cheese, not fluid. That was the mark of either poor quality or just, you didn't want anything but your milk in a bottle. That was the only thing that was worth chasing. And that is an awfully big change. You said you finally got people starting to...

grasp that this change is taking place. It doesn't make you behind if you're a dairyman that's still figuring this out, does it?

Don Sanders (06:35)
does not. Not at all because we were entrenched in our ways for a long time and it's something that if you aren't really looking at your milk check you know I know how they are you get the check goes to the bank it's automatically deposited now you see what you and you write and if you're not dissecting it you're not looking at what the value was of the fat or the protein or the fluid. Most people just say in the bottom line what is the milk house?

today mailbox I'm sorry mailbox price

Mike Donaldson (07:10)
one of the things, and I was with Agri-King when this emphasis began of looking at feed efficiency, and you were very much out in front of that. I've kind of been surprised. mean, the monogastric world, poultry, swine, eventually beef.

Don Sanders (07:18)
Yes.

Mike Donaldson (07:33)
Dairy's really the last of the livestock industry to put real value on feed efficiency. And I know we're going to get to component efficiency, that, I mean, think feed efficiency brought into these aspects of production is that current final turn of the wheel to get a really valuable mark. I mean, even now, do you find a lot of people

that don't give much thought to the feed efficiency part

of producing.

Don Sanders (08:05)
sure there's

there's still people that way and there's people there's still some people champions cows eat more get more milk so to speak but that's not really increasing your bottom line if you look at the total pitcher the other thing I want to bring up is whole farm efficiency from the cropping aspect right through the cow to the manure application again and again and you keep doing it over and over but

each of those steps you have opportunity to be more efficient. And when I first heard about feed efficiency, like, okay, yeah, we're gonna feed less and get more, I thought, yeah, right. But when you start to fine tune the rations and get really great quality forages, those cows will actually eat less and give more, which is a kind of amazing thing and what a cow can do. And I got a...

I'll share a short story. Of course, I grew up and went 4-H and showed cattle and we also put little exhibits in our fair locally and I still remember our dairy club many years in that. One of the ones we did one time, the title was The Magnificent Milk Making Machine,

the cow. And she still is that way. Actually, she's so much better than she was.

Mike Donaldson (09:21)
Yeah?

Don Sanders (09:28)
30 or 40 years ago. yeah.

Mike Donaldson (09:30)
Yeah!

Don Sanders (09:32)
And part of that is genetics. And part of that is understanding more and more what it takes for that cow to run at a high level. It's a lot of things, and we'll get into some of them later. But feed efficiency was a little goofy at first, because I thought we were toting to get 60 or more pounds of dry matter intake cows and getting 80 pounds of milk, and I'm saying 34 years ago. But now we're trying to get

you know, 100 pounds of milk, I would say 54 pounds of dry matter, which is actually very good and it can be done. Anyway, I mean, go to the component yet because component of the efficiency, it's the pounds of fat and the pounds of protein

we're going to measure

Mike Donaldson (10:12)
Mm-hmm.

Don Sanders (10:14)
divide it by the dry matter intake. Now, if you were in a chicken business, you would know that down to the hundreds because that's how important it

And if you're in a

Mike Donaldson (10:23)
Right?

Don Sanders (10:24)
business, you'd be down to the 10th.

and you would know how important it is because it's easy in monogastric. It's not as easy when you start adding forage to the situation. It becomes easier because TMRs were invented. By the way, this is not right or wrong, but I just don't remember the first person I heard about was Dr. McCullough out of Georgia. He's the one that actually talked about TMRs and how he put them together.

Some of my clients at that point said, yeah, it's gonna make it just like feeding cows, like you feed hogs and chickens, and they were correct.

Except there's different ingredients in there.

Mike Donaldson (11:00)
Right? Right?

Don Sanders (11:04)
it was a learning curve for a lot of people, and everybody's at a different spot in their life, and there's reasons for them to be there. It's trying to find out where they want to go from where they are presently.

Mike Donaldson (11:19)
while there are, and we'll get to this maybe not till part two, there are some accepted standards of good, very good and excellent. But this is, this.

at the beginning, these are factors, feed efficiency, component efficiency, that are important for a farm to know where they are and not just to aspire to somebody else's number or just begin by comparing with the rest of the world. Is that accurate?

Don Sanders (11:52)
Yes, that's correct.

Mike Donaldson (11:54)
What are,

and like I said, want to try and deal with the why here. What are some of the economic advantages as we see these aspects of efficiency increase? Cause it is, it is still relatively common to.

brag about how much you can shove down their throats and another pound of milk is always better than anything else. when you start adding in these other metrics, like you said, that lays bare pretty fast. More is not always better. But where's the money being made as these aspects of efficiency come in?

Don Sanders (12:35)
It actually comes two different directions. The first ones are that you're getting paid more for the fat and protein pounds that go out the door. So right now that fat is worth 30 cents a point and the protein is worth 20 cents a point. So if you're ready to be at 90 pounds of milk and you increase your butterfat by one tenth, you would be 30 cents but you're not producing 100. That 90 percent of 30 be about 26, 27 cents.

just on that tenth of fat.

we've done

Mike Donaldson (13:09)
Okay

Don Sanders (13:10)
things lately that we have increased fat by two, three, or even four. Then you do the multiplications. And protein in milk is not as easy to move. So it's worth 20 cents per point. Again, if you're at 90 pounds, you're down to 18 cents. But you usually can't move it by a tenth as fast. So I say you cut that in half. So you'd be at 9 cents or 0.05.

Mike Donaldson (13:36)
Okay.

Don Sanders (13:36)
So if you took your

25, 26 cents plus nine, you're about 36 cents per cal per day, which is a large number.

that's

more, which is more and more people pay attention to it. And then the other thing you can add onto that, and then people will really start questioning how you do that, is how do you get them to eat one pound less and give them more? And the only reason that can work is high level of carbohydrate or calories.

in that diet. And of course you can throw more corn at them but that's not the way to do it.

Mike Donaldson (14:12)
Right?

Don Sanders (14:13)
You will be upsetting rumen, your butterfat will go down and all those things. But you need to do it with high quality forages harvested at the right time, the right kind, and make sure the hygiene of that forage is very good. again, that Magnificent Milk Making Machine will be magnificent to you if you do all your little things right and we're not

to all the hows yet, but the why is it can make a significant difference in your income if you get all those things rolled up. The other thing that's gotta be talked about soon, and I don't have a complete understanding, but this carbon credit thing

and whole farm

Mike Donaldson (14:53)
Perfect. Glad you brought that up. Very glad.

Don Sanders (14:56)
efficiency is gonna fuel carbon credits that you'll be able to sell if you are that component efficient.

because it'll be able to be measured.

Mike Donaldson (15:08)
Well, I think it's.

In the farming world, there's times that we see problems that either don't exist or aren't really problems. And I think at times things like carbon credits and the production of greenhouse gas has fallen under that umbrella. It's one more thing making our life difficult. But when you're doing it as a side, almost a side benefit of other good ideas,

And this is almost, it starts being somewhat close to free money or money for nothing. If you're improving your efficiencies, especially across the whole farm. And one of the side benefits is to then be eligible for some of these carbon credit, greenhouse gas reductions. Not that we're, neither Don or I or Agri-King is trying to push and race to embrace a green revolution.

But when it's already happening, it's foolish not to be able to take advantage of that. That be fair?

Don Sanders (16:16)
Yeah, and we are in a green revolution. It all starts with the cow.

Mike Donaldson (16:19)
Yeah. Yeah.

Don Sanders (16:20)
the one that can make that all work. And if you begin to make her more efficient, not only feed efficiency, but also component efficiency at both, work in both sides of that. One more thing that's very important, if they eat less, give more, they'll also have less manure for you to haul or get rid of somehow. So there's another winning part of it.

Mike Donaldson (16:39)
Mm-hmm.

And that should stick with people. The fact that you're with some relatively small changes and not even paying any extra for hauling because you stayed at 90 pounds of milk an animal. The net, the increase in that, you rolled up over 40 cents getting close to 50 cents a cow a day. That should have people pretty interested I think.

That's a, that's a, yeah that's a...

Don Sanders (17:07)
would hope so. I want to back up a little

and just another, I got lots of stories to tell over many years. Feed efficiency was introduced and I've paid attention to several of my clients that were doing the best in feed efficiency. Like if you're 1.8 pounds of milk and I'm just going backwards and I'm not talking about components. But if you've had one pound of dry matter and you were 1.8, I mean you were doing things

I call it, in tall cotton then. And what I noticed were those people, we were trying to measure and educate, but they're the ones that, if the neighbor's farm came up for sale, they bought it.

And the rest of them were trying to chase the other things. And if you were at 1.2 pounds of milk per pound of it, just, those people weren't buying farms. Because they didn't have the money.

Mike Donaldson (18:02)
Yes.

Yeah.

Don Sanders (18:06)
Yeah, and I know it's not all about money and I know it's not all about income, but if you blend them all together, it's the reward you capture.

Mike Donaldson (18:16)
that's perfect. Well, I think,

I say, this is gonna be part one of part two. I think we should have done a pretty good job getting some of you people interested in what part two and how you're gonna make some of these things happen. You've kind of tuned in, tuned in next time type of thing as far as finishing up this why part, Don. Any other observations?

Don Sanders (18:43)
think the why

just to say that...

It's gonna take years to everybody get on this bandwagon. That's just the way it works. There's gonna be early adopters which are already paying attention to it. There's the middle adopters and there's some that just, okay, it's good enough now. I would challenge the people to be early adopters of this because I've seen it work and I've seen, I'm gonna say, what that cow can do if you get everything lined up. And she's gonna reward you in a very good manner if you take really good care of her.

The other cliche statement I'm going to make is, if you take care her, she's going to take care of you. that, it's just amazing what those cows can do.

Mike Donaldson (19:21)
Yeah.

Don Sanders (19:29)
and it'll help your bottom line.

Mike Donaldson (19:32)
Well said, that is perfect. Well Chris, go ahead and wrap up part one. What did you learn today?

Chris Radke (19:38)
I learned that Don has

passion for people and cows, the Magnificent Milk Making Machine from his 4-H years. I love that. Don, I would say that you're one person that when your name is mentioned, because I'm new here at Agri-King, that people just have a really deep respect for you and the things you've done. So I'm super excited about your passion and love your energy and just your love of people

the cows.

Don Sanders (20:03)
Thank you, Chris.

Chris  Radke (20:04)
Alright, if you liked what you heard, if you enjoyed what we were talking about, hit us up on any of our socials and if you have any questions, concerns, or thoughts, you can ask us a question at podcast@agriking.com. Don

Mike Donaldson, thank you so much.

Mike Donaldson (20:22)
Thank you, sir. We'll catch you next time on part two, people.

Don Sanders (20:25)
Thank you, Chris.