PLAN KEPT UP PROFITABILITY
A three year plan to
maintain profits, house more
cows and ease workload
has been successful on one
farm. Jessica Buss reports
INCREASING output and spreading overheads has maintained profits for the last three years on one Cheshire unit, despite the milk price falling by 5.8p a litre.
Wilf Hogson and sons, Philip and Robert, have maintained profits through planned investment in buildings and facilities to increase cow numbers, a plan which started three years ago.
Wilf explains that in 1997 they were growing about 24ha (60 acres) of wheat a year, so had the land to expand cow numbers at their Oxheys Farm, Rushton, Tarporley. But the buildings were filled to capacity with 110 milkers and 10 dry cows, and the 25 year old 12:12 herringbone parlour was too slow to cope with more cows.
Robert adds that yields were also being restricted by self-feeding silage and concentrate in the parlour.
"Without being able to offer a midday feed we were finding it difficult to improve nutrition."
Wilf also wanted to start cutting-back his hours, and that meant Philip and Robert coping with most outside work on a daily basis and a one-man system for weekends. All investments had to work towards meeting these aims to avoid increasing labour costs.
A low cost route could have led to higher profits, providing overheads were reduced too, according to Philip Clarke, the Hogsons Axient consultant. "But the Hogsons have invested in the farm and kept their options open without profit falling."
Profit has been maintained during the three year plan by spreading overhead costs over a higher output. Although spending on each overhead has remained similar between 1997 and 1999, costs have reduced by 5.72p a litre. Thats almost equivalent to the fall in milk price during the same period.
Most of the farms milk price cut is from the base price, but there is a small adjustment for lower constituent quality, resulting from higher yields, explains Mr Clarke.
Cow numbers now stand at 160 and yields have increased from 6020 litres to 7850 litres between December 1997 and 1999, a total increase in output of 535,792 litres in two years.
Despite losing almost 6p a litre in milk price(see table), the 25% increase in herd size and 30% higher yield/cow has resulted in an extra £1623 a cow gross margin after quota leasing.
Covering low prices
"This gross margin increase from extra output helps cover lower calf and cull prices," says Mr Clarke.
But increasing output has made leasing quota one of Roberts most important tasks. "We are constantly watching the market and trying to spot trends for when quota will be cheapest," he says.
Quota tends to be leased forward or early in the year. "We are looking for next years quota already. With 0.5m litres needed its the farms single biggest bill," says Mr Clarke.
But despite this bill, they believe the farms future in milk is now more secure.
"Every investment has been considered on the basis of creating an easy system for the future, so one man can operate it at weekends," adds Mr Clarke.
The first investment made involved adapting self-feed covered silage barns into a 144-bed cubicle house with a lean-to added on one side for extra width, so that it can incorporate a central feed passage.
Part of the old cubicle shed was then adapted to provide a loose yard for dry cows. Both these give housing for 160 cows in total. Two new silage clamps were also built.
This expansion in herd size was needed before a new parlour could be paid for, explains Mr Clarke. The new 12:24 parlour, completed a few weeks ago, was built in the old cubicle shed.
Its sited behind the old parlour, which now forms a large dispersal yard. "The extra space at the front of the parlour allows cows to get away at their own speed, improving cow-flow," says Wilf.
Milking times had increased with more cows going through the old parlour, explains Philip. "But in winter the new parlour will save an hour at each milking because of pre-dipping; in summer it will save 1.5 hours."
Now the Hogsons plan to improve youngstock housing, to save time and allow heifers from the all-year-round calving herd to be kept in more evenly sized batches.
Overhead costs savings
Power and machinery 1.56
Cow yields are no longer restricted by having to self feed the silage, says Philip Hogson.
Making silage sheds into new cow housing has allowed the Hogsons to increase cow numbers and yields, says Philip Clarke (left). The aim is to reduce labour and allow single manning at weekends.
Change in herd margin (figures to December)
Cows in herd 121 161
Yield litres/cow 6021 7853
Milk price (p/litre) 25.704 19.875
Concentrate price (£/t) 149 112
MOPF (£/cow) 1302 1265
Herd margin (£000) 157 203
Increase in herd margin £46,850
Leasing (6p/litre) £32,147
Variable (£150/cow) £6000
Forage (£78/cow) £3120
Replacement (£92/cow) £3680
Increase in costs £44,947
Extra herd gross margin £1633
(after price cut of 5.84p/litre)