Putting a benchmark on efficiency to raise profits

With increasing pressure on profitability, it is more important than ever that dairy farmers and their staff work efficiently.

And according to consultant Edward Lott, Kite Consulting, addressing labour use is just as important on family run units as it is on farms that employ staff.

“It is essential that everyone on a dairy unit works efficiently so that jobs get done in a timely way and tasks are completed effectively.

“After all, when time is saved costs are reduced and herd performance and quality of life improved.”

Importantly, working more efficiently can also improve profitability. “People get hung up on how many litres you should be producing a man, but the reality is there is a huge range of performance.

“A benchmark that is often thrown around is that you should aspire to 1m litres a man, but the herds in the top 25% for profitability among Kite’s clients have labour efficiency ranging from 500,000 litres a man through to more than 1m litres. And there is no point achieving 1m litres a man when that person has to work 100 hours a week and never have a holiday.”

An alternative benchmark is the number of litres produced for every man-hour, as this allows for more acceptable working hours. Kite’s top 25% clients are averaging close to 300 litres an hour a man and Mr Lott suggests that this is a realistic target, which can deliver profit and sustainable working hours.

“No one wants to be working every hour of the day and if you can find ways of achieving the same in less time then that has to be a good thing.

“If you employ staff then it will reduce costs and even if you have all family labour, spending less time outside means you can spend more time with the family or on off-farm activities.”

To identify where improvements can be made in terms of labour efficiency, Mr Lott recommends a complete review of current working practices as a good place to start.

“Farmers should review, in detail, the running of the farm over a typical week,” he suggests.

This review should include a look at the jobs undertaken, how long they took and who was involved. Doing that will help to identify pressure points on the farm and then action can be taken to reduce bottlenecks and improve workload.

“On most farms people are working harder than ever and it is not sustainable in the long term. If you are not careful, mistakes get made or jobs get left and then things can start to go wrong. The key thing is to look at each and every task and consider how you can simplify it.”

This is not about changing production systems, but about making the practical application of the system you operate as simple as possible, Mr Lott stresses.

“It might mean re-scheduling certain jobs so that more people are available to complete them rather than one person struggling by themselves.”

It also important to reflect on how each task contributes to herd performance and cow welfare. “There may be some jobs that have become part of routine over time, but are actually not adding any value.

“There may equally be other things that are not being done that could be added without taking a lot of time and could deliver real benefits.”

Mr Lott also suggests farmers consider how a job is done. It might be that investment is required to make a task simpler, or that using a contractor may make more sense. It may even mean employing more staff.

“Absolute staffing levels are not the be all and end all. Many of Kite’s top 25% clients would cite that being a half a man overstaffed improves the efficiency/profitability of the unit.

“I believe this is because it allows the farmer just that bit more breathing space to increase cow care and make good business decisions, thereby increasing profit.

“Investment can certainly help in some instances, but it is important to avoid knee-jerk buying decisions that ultimately don’t deliver real savings.”

As well as carefully considering the workload on your farm, Mr Lott recommends that people look at other farms for ideas as well. “Often the easiest way to come up with new ways of doing things is to look at your neighbours’ farms and see how they approach a problem.”

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