Management Matters: Organic farming makes good business sense

Organic milk has been leaving the bulk tank at Clinton Devon Farms Partnership for 12 months and farm manager George Perrott is satisfied that the decision to switch from conventional production was the right one.

“We only ever made that decision based on hard economics rather than for any emotional or environmental reason and, for now at least, the economics stack up.”

Analysis of the first 10 month’s milk cheques (March to December 2009) show that, while yield has declined to about 6500 litres a cow, milk revenue has held up well.

“Our contract with Dairy Crest guarantees us a full organic premium on the first 75% of our predicted deliveries, with the remaining 25% paid at a conventional rate,” explains Mr Perrott. “But since yields have slipped back from 7500 litres to 6500 litres, we’re getting the premium on almost all our milk.”

Most of this is produced from grass or home-grown forage. “With hi-pro organic soya costing about £580/t last year, it made little sense to buy any in and push for extra litres.”

Looked at in more detail, it is seen that the 250 autumn calving cows achieved an average milk price over the 10-month period of 33.1p/litre, giving a total milk income of £440,000.

After deducting a total concentrate cost of about £109,000, the margin over concentrate – including all home-produced cereals, minerals and dairy cake – equates to 24.87p/litre.

The figures for the spring calving herd are similar, with an average milk price of 33.08p/litre and a margin over concentrate of 25.1p/litre.

“Based on an average yield of 6500 litres, that gives a margin of more than over £1630 a cow, which compares well with most conventional herds,” says Mr Perrott.

And with the cows no longer being pushed for maximum yield, they are under less stress, which leads to noticeable savings on maintenance, veterinary and replacement costs.

The two herds, which are based at separate sites, continue to pick up volume and every-other-day collection bonuses, though both are slightly over the 250,000 cell count threshold, incurring a 0.5p/litre price penalty.

“We are trying to find a homeopathic solution to this problem, sending samples of milk from high cell count cows to a firm called Crossgates Bioenergetics, which has developed a nosode preparation for us.

“This is then fed back to the cows via the water trough in the hope it will boost their immune systems. It is too early to tell if it is working, but it’s not a major cost, so is well worth a try. In the past we would have simply turned to expensive antibiotics.”

The switch to organic has also caused milk proteins to slide as the cows are receiving fewer cereals in their diet, but this has been compensated by an increase in butterfat to more than 4%.

management matters 
Although George Perrott is committed to organic farming he doesn’t think it alone holds the key to solving the world’s long-term food supply problems.


Mr Perrott says he and his staff are fully committed to organic food production. But he takes issue with those who suggest organic farming holds the key to solving the world’s long-term food supply issues.

“Having had first-hand experience, there is no doubt that organic farming incurs a significant yield penalty,” he says.

To prove the point, Mr Perrott has looked back at production figures for the past four years, covering the transition from conventional to fully organic. This shows that the volume of milk sold off the farm has, in fact, risen from 2.91m litres to 3.16m litres – though this has only occurred because of the increase in cow numbers from 350 to 500.

At the same time, the tonnage of all cereals and pulses sold has dropped from 3029t in 2006 to just 769t in 2009. Mr Perrott reckons that, on average, crop yields have fallen to just 3.4t/ha (1.37t/acre).

At the same time, total fuel use has dropped from an estimated 47 litres/acre to 39 litres/acre, spread over the 2500 acre holding. “That’s a saving of just 10 litres/acre for a loss of about 2200t of cereals,” says Mr Perrott. “Of course, we have also saved considerably on fertilisers – we are no longer forking out for 300t of NPK – but the fact remains, the farm is not nearly as productive as it was before we went organic.

“Organics is a niche market and we are supplying it because it makes us a profit. But there is no way it can feed the world. Also, I believe that, longer term, consumers will place more emphasis on local food rather than organic. If that happens, we may focus our attention on that.”

But for now organic farming remains the foundation at Clinton Devon Farms Partnership and getting in the last of the winter crops has been the priority.

Crop rotation

The farm is set up on a six year rotation, starting with a three-year grass/red clover mix. For the first two years, this is used for grazing and silage, and then as a mulching crop in year three to build up nitrogen levels.

This is followed by one year of wheat, one year of oats and one year of triticale, before reverting to grass/clover.

Last week some 20ha (50 acres) of wheat variety Deben was drilled – the last of the winter wheat. That leaves just two fields of triticale to go to finish off the winter-sown area.

The next drilling will take place in late March with 65ha (160 acres) of spring oats, 55ha (137 acres) of spring wheat and 58ha (143 acres) of spring triticale going in.

In total, there will be just over 283ha (700 acres) of cereals harvested this year. Of this, some 81ha (200 acres) of oats will go for wholecrop silage, leaving 202ha (500 acres) of wheat and triticale in the grain store.

This will equate to about 1000t of cereals, with half retained for feeding the farm’s own dairy cows and the other half sold to a neighbouring organic dairy farmer, milled and delivered.

“The general rule with organic cereals is ‘half the yield for double the price’, with savings to be had on input costs. Against this, we have to factor in the year’s mulching crop – so effectively we are spreading three years of arable income over four years of land use.”

Mr Perrott is hoping for a yield improvement this year to nearer 4.9t/ha (2t/acre). “We did get 7.4t/ha (3t/acre) from one field of organic wheat last year, but that was exceptional,” he says.

“What we have learned is that timing of slurry application is crucial. In our first year of conversion we put slurry on the wheat ground early on, and again in February, and the crop looked great coming out of the winter. But then it got to growth stage 34 and just fizzled out.

“Really there is no point in applying it until March or April, when the crop needs it. The problem, though, is not having enough slurry storage.”

With this is mind, plans are under way to construct a new central slurry store by 2012, with umbilical distribution around the farm. More immediate investments, however, will be two new tractors planned for the spring and a new dribble bar to go on the back of the slurry spreader.

Sheep preparations

Meanwhile, preparations are being made for the lambing season, which gets under way next week.

The breeding flock has shrunk from 1300 to 1100 over the past year, as Mr Perrott has sold off a number of older ewes. “We recently got £73 a head for 30 cull ewes, which is pretty much what we paid for them as two-tooths,” he says.

“With organic two-tooth ewes at more than £100 a head last year, we’ve not bought in any replacements. This means we have not bought in any disease either and, with older ewes, we should have a more trouble-free lambing.

“But we can’t shrink the flock any more, as this will increase the level of fixed costs per lamb. Also, we definitely have a place for sheep in our system, to graze off the steeper ground and the red clover, and because they compliment the cattle grazing, helping reduce worm problems. We will probably buy in more replacements this year, but not at today’s values.”

The last of the old crop of lambs was sold just after Christmas to a new buyer in south Wales. These made £88 a head – not the best price of the year, but still yielding a useful profit.

“There is no doubt that 2009/10 has been the most profitable year ever for our sheep enterprise, even though we have not sold everything to the organic market. When conventional lambs have made more money, we’ve sold to that market instead.”

This demonstrates again that, while organic farming is the mainstay at Clinton Devon Farms Partnership, the management is prepared to be flexible to achieve the best financial outcomes.

Switching from conventional to organic


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