31 October 1997

Profit monitoring keeps quality in the front line

SIMPLICITY and quality are the watchwords at Loseley Park near Guildford, Surrey.

From the management of the dairy herd to the packaging on the renowned range of dairy products, this is what the company strives for.

In fact, the Loseley name ecompasses three separate businesses – Loseley Park Farms, Loseley Ice Cream and Loseley Chilled Products.

The farming operation, which is still 100% owned by the More-Molyneux family, is currently based around 200 Jersey cows producing just over 1m litres of 5.7% butterfat milk a year. This is picked up daily by Milk Marque and delivered to the chilled products plant nearby on the estate.

"We try to keep everything as simple as possible," says farms director Andy Marshall. All the main operations – AI, calving, milking, feeding and housing – are contained in one large building. The estate owns all its own quota, so does not need to worry about the leasing market. All the effluent from the manure and silage clamps is collected and pumped out to the fields via a fully automated irrigation system. These are just a few examples.

The emphasis is also on profit per cow, says Mr Marshall. "Just focusing on margin over concentrates tells us very little. What we really need to know is how much each cow is generating for the business at any one point in time."

To achieve this, he adopts a total cost approach, allocating labour, machinery, interest, depreciation and maintenance as well as concentrates and other variables to each cow. Last milk year profit came to about £500 a head.

A full bank reconciliation is carried out on a simple spreadsheet at the end of each month. "We know that in October the cows will not be making any money because we have had to pay the silage bill. But next month they will be back in profit and that will go towards upgrading the milking parlour.

"This is one of the main lessons I have learnt from working as a consultant in the Americas. They are constantly monitoring profit, looking for cash generation for reinvestment. If there is no cash, then they go into a holding pattern until there is."

Such a holding pattern may soon have to be adopted at Losely. For, even though the return for Jersey milk continues to eclipse that from black-and-white cows (Milk Marque was still paying 27p/litre in September), the herd will be affected by this years price slump the same as any other. Between £30,000 and £35,000 will come off the bottom line.

Farm costings from Bibby are still used, but mainly to keep tabs on yield from forage and general cow performance. "Producing high quality milk from home produced forage – now that is profit," says Mr Marshall. To emphasise the point he points to costings that show concentrate fed per litre of milk produced ranging from just 0.13kg to 0.18kg during the summer months, rising to 0.23kg in September when the cows came in.

Margin over purchased feed still came to 24p/litre last month, with 163 litres a cow coming from forage, or 58%. The target is for 65% of milk output from forage during the whole year.

Cows are bred to increase forage intake, explains Mr Marshall, going for taller and deeper cows than the traditional Jersey. "Dry matter intake is now 22kg a day, pretty close to some black-and-white herds."

High forage content also helps produce a yellower, creamier milk, which suits the processing side.

Originally Loseley milk went into all Loseley products, explains partner, Michael More-Molyneux. But icecream was hived off in the mid-1980s and is now produced by Tudor Dairies at Alton, Hants – though the family still has a shareholding and retains rights over quality.

But Loseley milk does still go into the 3.5m litre a year chilled products plant, combining with supplies from other Channel Island herds to produce a range of yogurts, cottage cheese and cream.

The fact that, since market deregulation in 1994 it is no longer possible to tell exactly which farms that milk has come from is a particular gripe, as quality is so important to the operation.

"Service to customers and quality of product has always been our motto," says Mr More-Molyneux. "I know its easy to trot those lines out, but we have picked up an enormous amount of business over the years due to the poor service and quality of others."

As the dairy market continues to develop, those watchwords will assume even greater importance.n

Dry stock and heifers are kept close to the main house at Loseley Park Farms near Guildford, Surrey, to boost the image with visitors.

Andy Marshall (centre) discusses herd performance with foreman Martin Ralph (right) and general farm worker Jason Ambrose.