Report reveals why top 10% are top 10%
By Philip Clarke
THE top 10% of dairy farmers are in it for profit; the bottom 10% are in it "because their families have always done it".
That is one of the findings of a new report from Genus*, which examines the results from 250 farmers using its Farm Business Accounts and assesses the reasons for financial success.
"The top farms have a level of management that gives a business clear direction and prevents the danger of being side-tracked, or valuable resources being wasted," says Genus product manager, Mark Woodall.
As such, the top 10% made an annual profit of £74,138, while the bottom 10% suffered a £17,561 loss. Top farmers were then able to invest £10,000 more back into their businesses and take another £10,000 in private drawings.
Controlling overheads was one of the key differences, with the best farmers making considerable savings in power and machinery costs and in finance charges.
Power and machinery costs were reduced by having a structured maintenance plan, employing skilled labour, shopping around, increasing stocking rates to achieve economies of scale and eliminating surplus capacity.
The top 10% did spend proportionately more on skilled labour but this is seen as a key factor behind the 50% extra output.
In terms of variable costs, the report reveals little difference between the two groups, except that the top 10% paid a bit more for feed to secure the quality.
They also paid more for semen, showing a willingness to invest in genetic merit. This contributed to the higher income from calves, although "astute marketing" was just as important.
*Profits in Dairying – an Analysis is available free to farmers from Genus, Westmere Drive, Crewe, Cheshire CW1 1ZD or from local service centres. *