Act early to qualify for best premiums
QUALIFYING for any available premiums will be imperative given the fall in milk price and reduction on net profit.
Speaking at a seminar on dairy profitability at the Royal Agricultural College, Cirencester, Tim Dee, director of the colleges centre for agri-business, urged producers to view quality aspects of milk as attributes for which purchasers would wish to pay a premium.
"Opportunities for increasing price through improved or higher quality milk are becoming more important," he said. For example, under Milk Marque pricing from Apr 1 the premium for milk under 50 Bactoscan and 150 somatic cell count had moved from zero to 0.4p/litre.
"The quality bonus of 0.4p/litre equates to an increase of 0.1% on protein, or some 10% extra profit assuming a 4p/litre net profit."
Milk Marques producers achieving these Bactoscan and cell count bonus bands consistently over a rolling 12-month period would earn a further 0.2p/litre – making a total 0.6p/litre premium available for hygienic quality.
Other purchasers motivated producers to a greater extent, he said, and were introducing quality assurance schemes for which premiums could be available (see p48).
"For those who satisfy the required stockmanship standards there will be a premium available, which will be worth at least as much as the hygiene bonus and the two combined will be worth over 1p/litre – for some producers that equates to 30% of their net profit."
Mr Dee advised producers to evaluate the costs and returns available for different quality premiums. "Rank those premiums in order of attractiveness and "achievability", then ensure the standards required to meet them are met." Quality criteria were about qualifying early and better than other producers, he said. *