21 March 1997

Look around for ways of saving

STOCK tightly at turnout and make enough silage for the winter, suggests Genus Management director, Tom Kelly.

"If you do not change direction you will end up with £100 a cow less profit," says Mr Kelly. But he accepts that demand for feed will fall, lowering its cost, as will demand for feeder wagons, tractors and parlours. But any capital purchases must be justified by labour or input savings, he warns.

He also believes that, despite the lower milk price, quota leasing costs may not reduce. "Although producers can afford less, the demand will increase and many will raise output to compensate for lower milk prices."

These marginal litres from leased quota have been responsible for £5000 to £6000 of many producers profits. When all other costs are paid, they will continue to profit from extra production.

, making 6-7p/litre from leasing at 10p/litre, says Mr Kelly.

"Smaller producers with 40 or 50 cows will also be hit by higher transport charges and may face milk prices below 20p/litre," he says. These producers will not all leave dairying unless they can retire, and will find a way forward, he adds.

But he predicts the number leaving milk production will increase from the 700 a year over the past few years.