19 August 1997

Profits not margins are the key, dairy men told

By Jessica Buss

and Emma Penny

DAIRY producers should concentrate on profit figures, rather than margins.

According to Axients Mark Woodall, margin/litre figures now reflect individual milk buyers prices, rather than providing a meaningful indication of financial performance.

His advice comes as producers at this weeks European Dairy Farming Event sought ways to minimise the impact of the latest drop in milk price.

Mr Woodall suggests that increasing yields by milking more cows, buying quota, and making better use of forage – particularly grass – will help maintain profit/litre.

"On a high concentrate ration, it is better to increase cow numbers than feed more cake. A standard Axient Milkminder costed herd of 112 cows would have to increase cow numbers by about 10 to compensate for the 2p/litre price drop."

Buying rather than leasing quota should also be considered, he says. "This option does depend on how heavily borrowed the farm is, but it will help to buy at least a proportion of quota required."

Better use of forage, particularly grass, will bolster profits, he advises. "Conserved forages cost four times as much as grass on a dry matter basis. It is easier – and far cheaper – to go out with a spinner and apply more fertiliser for grazing rather than make silage."

Over-reliance on buffer feeding in spring and autumn is also affecting profits. "Some cows are receiving all their DM intake from buffer feed, which means they are not being challenged."

Andersons consultant Greg Beeton, based in Bury St Edmunds, says that despite more forage in store this year, by-products are good value and can partially replace forage or concentrates in cow rations.

This could leave a cushion of forage in store for next summer or save on this years concentrate costs depending on how the by-products can be used.

Current prices for brewers grains at about £16/t make them a cheaper feed than grass silage which can cost £23/t freshweight to produce at a similar dry matter. Staggering payments for grains may reduce the effect on cashflow of buying in feed now, he adds.

"Brewers grains may fill some of the concentrate role in diets for lower yielders giving 20 litres or less." Brewers grains are higher in energy than grass silage and each kg fed will reduce silage intakes by less than 1kg. When fed to high yielders brewers grains cannot be used totally as a concentrate replacer but could be used to save forage for next summer, he adds.

Brewers grains and pressed pulp could also be used to reduce the cost of rations for heifers over about six months old, says Mr Beeton. For example, a 420kg heifer at 18-19 months old would gain 0.72kg a day on 4.5kg of straw, 16kg of brewers grains and 1kg of a low protein concentrate or cereals.

MAINTAINING PROFITS

&#8226 Profit/litre vital.

&#8226 Increase cow numbers.

&#8226 Better use of grass.

&#8226 Consider by-products.