18 September 1998

KEEPING TACKLE COSTS DOWN…

There is more than one way to keep machinery costs low

when measured in pence a litre. Jessica Buss reports

FOCUSING on producing milk with a simple grass silage and parlour concentrate feed system allows overhead costs, especially for machinery, to be kept low.

Mark Pilkington believes milk must be produced for 14p/litre, before rent and finance, for a succcessful future.

Production costs in 1997/98 were 16.2p/litre – before rent finance and quota – for his 69ha (170-acre) Ullacombe Farm, Bovey Tracey, Devon. Simplifying management by block calving cows and increasing numbers to 120 cows this year will see costs/litre fall to 14.5p/litre. Other savings will be made in concentrate prices, and spreading labour and machinery costs over more cows and hence more production.

Power and machinery costs are a key focus. In 1997/98, including depreciation, they were 3.6p/litre, but are forecasted to fall to 3.5p a litre in 1998/99, says Tony Evans of Andersons, Mr Pilkingtons consultant.

Andersons average dairy farms machinery costs were 4.4p/litre last year, including depreciation.

"When machinery costs are over 4.4p/litre the balance between repair and replacement could be wrong. But deciding on whether to repair or replace equipment can be difficult." Machinery repair bills at Ullacombe were high last year because the Bobcat needed a lot of work. Interest and depreciation on a replacement would have cost more than the £900 repair bill.

"But if you havent got machinery it cant break down. Thats where deciding on a machinery policy helps control costs," says Mr Evans.

A simple system fits the farms constraints for buildings and labour. Grass silage is the only forage and it is fed in ring feeders. Using a mixer wagon would cost more on a p/litre basis at the herds current yield average of 6300 litres.

Mr Pilkington uses contractors where possible. About 10 years ago, he tried making silage with his brother. "But the machinery needed means it would have been expensive to keep making silage," says Mr Pilkington.

Instead, his machinery policy is based on what a contractor cant do. He also maintains a good relationship with contractors by paying bills promptly.

The dairy enterprise, therefore, only owns a loader tractor, a Bobcat, which is shared with the poultry enterprise, an old scraper tractor, a car and a slurry tanker.

Thats £35,000 worth of machinery considered necessary for the dairy unit. But to avoid total value of machinery decreasing or repair costs increasing, £10000 a year is spent on replacement on a four-year cycle.

This year, Mr Pilkington will replace his car. The Bobcat will be replaced in the following year. When its time to replace the loader tractor, he will find one that is three to four years old.

"Few producers can warrant new tractors. When its time to change one, I look for a machine that will do the jobs I want with low repair costs. Thats not necessarily the cheapest tractor or the most expensive," says Mr Pilkington.

"It also pays to look after equipment and service it regularly. Repairs should be done promptly to avoid costs rising. This year we will spend some time and money on preventative maintenance for the old scraper tractor."

MACHINERYPOLICY

&#8226 Decide what machinery is needed.

&#8226 Service machinery regularly.

&#8226 Budget and schedule replacements.