Block calving switch causing dairy cashflow issues

Dairy farmers must consider the cost and potential impact on revenue before switching to a block calving system.

That’s the message from Ainsley Baker, a consultant at Kite Consulting.

Recently, Mr Baker says he has dealt with a number of struggling businesses wrongly encouraged to switch to a grass-based, block calving system with lower output.

He says of these, many didn’t consider the significant cost of switching from year-round calving, or the potential effect of such a move on cashflow.

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As a result, many have been left worse off financially by the break in serving as part of the transition, with lower lactating animals and fewer calves to sell.

Less able to cover the overheads of the business, underlying business issues worsened, he says.

“I’ve come across businesses that have got into financial trouble because they didn’t think it through properly before changing the calving pattern,” says Mr Baker. “New systems were adopted without being properly planned out.”

He says many changed their calving pattern after hearing or reading success stories.

“Many thought it would make them more profitable,” he says. “But what works well on one farm might not work on another.”

Right advice

When “done right” block calving – whether in spring or autumn – can be beneficial to a business, Mr Baker admits.

For established dairy farms with the right infrastructure, the block calving concept is a “sound” decision, he says.

“There’s nothing wrong with those systems,” he says. “It is about whether it is right for you.”

Before making a final decision, Mr Baker recommends farmers:

  • Look at the potential impact on cashflow
  • Speak to their milk buyer
  • Speak to a consultant
  • Speak to their bank manager

“Whatever you decide to do make sure you cost it out and plan it properly,” he says.

Mr Baker says simply not serving animals for a period of time can “cause no end of problems”.

Instead, he suggests farmers either split the herd and transition gradually, or buy in new animals.

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“Some people will sell their whole herd and buy in a new one that better suits the new block system. Others will gradually switch their calving pattern.”

Whatever approach farmers decide to take, Mr Baker urges caution.

“Many dairy businesses already have additional debt at the moment as a result of the low milk price, so it is even more important to plan such a change. People can’t afford to lose any more money can they? They can’t afford to take on more debt.”