What is Low-Overhead Dairy Grazing?
You know what dairy grazing is, but what does “low-overhead” mean and why is it important?
There are three primary types of efficiency that all dairy farms need to strive for: feed efficiency, labor efficiency, and capital efficiency. These are no surprise and most farmers try their best to be feed- and labor-efficient. However, many dairy farmers do not put enough focus on capital efficiency, which is the amount of profit that can be generated from a given value of assets. It can be measured by rate of return on assets (ROA).
Low-overhead dairy grazing operations will have the value of their land and cows (i.e. the revenue-producing assets) represent a much greater percentage of their total farm assets than is the case on traditional dairy farms. Conversely, the value of buildings and machinery will represent a lower percentage.
The goal is to minimize overhead costs per hundred-weight milk sold (cwt). This is achieved through a combination of larger herd size and lower building, machinery, and equipment needs.
Low-overhead dairy grazing farms have a lower total cost structure that allows them to be profitable at lower milk prices and gives the flexibility to consider pivoting to beef or other products if the price gets too low for too long.
How to learn more and/or move your operation in this direction?
The Northeast Dairy Business Innovation Center (run by the Vermont Agency of Agriculture, Food, and Markets with funding from USDA) is funding a project to help advance low-overhead dairy grazing. The project’s primary goal is to help interested farmers throughout the Northeast to do the necessary planning to adopt low-overhead dairy grazing.
If you would like to read more about low-overhead dairy grazing for the Northeast, here are a couple of items to start with:
If you are a farmer who is interested in technical and financial planning assistance for moving toward low-overhead dairy grazing, please email us. The costs of this assistance are covered by the Northeast DBIC. We will work with as many farmers as our resources allow and will prioritize farms based on the potential of the project to be helpful. The technical assistance is provided by farmers with experience farming with low-overhead dairy grazing. Financial planning assistance is provided by an agricultural economist focused on dairy grazing.
If you would like to join a bi-monthly webinar series/discussion group or are interested in joining an upcoming farm tour of low-overhead dairy grazing operations, please email us.