12 September 1997

IMPROVE EFFICIENCY TO OFFSET LOSS

Low milk prices, expected to be down to 20p/litre for many dairy producers by October, coupled with lower calf and cull cow values, will wipe thousands of £ off business profit this year. The question is how best to offset reduced income by improved efficiency.

Much of the technical and business management advice needed to cope with a lower priced litre will be on offer at this years European Dairy Farming Event. For the latest know-how on improving efficiency, visit the Spotlight on Profit exhibit, where the focus is coping with a lower milk price. Speakers at the exhibits forums will highlight the possible implications of the EUs dairy reform and examine the future of milk quotas. Industry analysts will predict that milk prices are unlikely to return to the high levels of recent years.

With tough times ahead it will be important to keep a close eye on cost control. All areas of the business will need re-examining to ensure weak areas are identified.

Dairying experts suggest most producers could shave 2p/litre off production costs – fixed or variable – without difficulty.

As this supplement explains, areas to focus on include feeding management. With a strong £ ensuring cereals and imported raw materials for feeds and fertiliser are cheaper, there is scope to make efficiency improvements.

Plentiful supplies of good quality forage should also help to reduce winter feed costs – as will unseasonal supplies of grass. We explain how best to manage this valuable resource, which, at £10-20/t DM is by far the cheapest way to produce milk. It will be yield from grazing that is important to cut total costs.

Other areas for scrutiny include breeding policy, fertiliser use, quota leasing, machinery and labour, and milk quality. Calving pattern will also influence dairying profits. As FWs exclusive survey shows, seasonality payments are failing to cover the extra costs of producing milk in summer. Spring calving, providing grass use is excellent, is still the most efficient system.

But improved profits into the future will depend on growth as well as improved efficiency. And now, more than ever before, farmers must ensure compliance with quality assurance schemes and tough hygiene standards. Clearly, business success will only be achieved if each farm adopts the most profitable system of milk production based on lower returns a litre, and ensures it is producing clean milk in a welfare friendly manner.

Fishmeal and soya… both can be replaced in the diet of high yielding cows by home-grown proteins – thats according to MDC-funded research at ADAS Bridgets (turn to pS13).