19 September 1997

SURVIVABILITY WINS THE CUP

By John Burns

BY next year a third to half of dairy businesses will be recording a loss, and it will be the same in the arable sector, predicts John Allen, ADAS dairy business development manager.

Speaking at the presentation of the Devon Milk Cheque cup to Steve and Valerie Beer of Horwood Barton, Monkleigh, he said this years candidates had been judged on survivability in the face of declining milk prices.

On the ADAS Business Performance Index – covering profit, return on capital, financial stability, cover for private drawings, and business growth – the Beers business scored over 70. This meant it would be in a good position to take advantage of the exciting opportunities ahead.

Part of the strength of the business was its contract to sell milk to Parkham Farms, a local farmhouse cheesemaker, currently one of the most profitable in the country and therefore a strong buyer. That extra price for high protein milk was very important, said Mr Allen, especially if it could be combined with growth in milk sales. He was convinced the correct medium-to-long-term target for survival in the face of declining milk price was to increase milk output. Opportunities to do so would undoubtedly arise as more and more milk producers decided – or were forced – to give up. Many forecasts had proved to be incorrect. But not the one predicting growth in herd size. It had proved correct to date and the continuing upward trend was inevitable, said Mr Allen.

Mr Beer agreed that the obvious way forward for their 130-cow Holstein Friesian herd would be to increase milk production by keeping more cows and/or increasing yield a cow. But the cost of quota was a major deterrent. He would be looking for areas where technical performance could be improved, but had reservations about making major changes to his feeding system which gave him high protein milk for which he was paid a good bonus.

His feed cost a tonne was already low because he used home-grown cereals and mixed his own rations. And while he felt the amount of concentrates fed might look rather high, and litres a cow from forage would be considered by some to be low, they had to be seen in context.

He suggested that he could soon improve both figures by making his wheat into whole-crop silage instead of harvesting it as grain and feeding it as concentrates.n

Milk cheque cup winners Stephen and Valerie Beer – with their ADAS consultant David Budd.


PERFORMANCE DETAILS

ADAS Milk Cheque results: Year to Mar 1997

Average milk yield 7465 litres

Average milk price 27.205p/litre

Milk value £2031/cow

Butterfat 4.13%

Protein 3.49%

Yield from forage 2353 litres

Concs fed 2.6t/cow

Purchased feed cost £352/cow

Margin over purchased feed £1679/cow

Home grown forage cost £266/cow

Margin over all feed costs £1413/cow (18.93p/kg)

SURVIVING LOWER PRICES

&#8226 Increase output/cow.

&#8226 Increase herd size.

&#8226 Technical efficiency.