2p/LITRE OFF COSTS – AT A STROKE
MOST dairy businesses can knock 2p /litre off production costs without difficulty.
So John Easterbrooke told a conference run by Easterbrooke and Partners, in Blandford, Dorset. The difference between high and low profits is down to individual items that vary from farm to farm. These could be fixed or variable costs.
"When profit is under pressure, find the weak links and attack them," says Mr Easterbrooke.
The least profitable farm costed had a high quota leasing cost at 5.4p/litre, but its profit at 1.7p/litre is 8.8p/litre lower than the most profitable, with no leased quota.
This lower profit was caused by higher machinery costs and slightly higher variable costs including feed and forage. Vet costs on the low profit farm were half that of the high profit farm – indicating that lower vet costs could be a false economy. In contrast it was the high profit farm that had high labour costs. Both farms had similar outputs, above 7000 litres a cow.
However, Mr Easterbrooke advised against improving efficiency in margin a litre at the expense of output. Feeding less concentrate could decrease herd margins and damage cashflow.
"Producers mustnt lose sight of the major target to sell more milk." Start by ensuring milk income is optimised over a 12-month period.
His colleague, Rosalind Gough, pointed out that for their costed farms the difference between the top and bottom milk price was over 2p a litre for milk sold to the same buyer each month. This difference in price was irrespective of the buyer.
Differences arose from milk fat and protein composition, bonuses for Bactoscans, cell counts, co-op membership, farm assurance and varying deductions for haulage. Know what is available from your buyer, she added.
MINIMISE THE FEED COSTS
FOCUSING on margin a litre without production would reduce profit, according to nutrition consultant Mike Tame. The aim must be to minimise feed costs to produce to the quota available.
Cow diets need energy from various sources – starch, sugar and digestible fibre – and protein from degradable and undegradable sources. For diets high in maize, correct mineral and vitamin supplementation is needed.
These diets must allow animals to realise their genetic potential. "There is no point feeding a cow capable of 50 litres for 30 litres. She will milk regardless of how you feed her and meet the energy gap by mobilising energy reserves." To bridge that 20-litre gap she would lose 3.75kg of liveweight a day, and risk ketosis, poor liver function and infertility, explains Dr Tame.
But the feed must be targeted to cows that need it. Concentrate is often fed to the wrong cows, he says. No one feeding system is ideal. When feeding a total mixed ration when there is a wide range of yields, cows must be split into groups to avoid under or over-feeding.
The easiest way to target feed is in the parlour but then concentrate is given in two large feeds which is not good for rumen function. Out-of-parlour-feeders offer concentrates little and often but can be difficult to use in summer.
Monitor concentrate use on a regular basis, he advises, and react as needed. And to ensure feed costs are minimised compare the feed value and cost of both concentrates and forages.n
John Easterbrooke… most dairy businesses can knock 2p/litre off production costs.