Buy in spring, sell in autumn – one solution?
Buying dairy cows in spring
and selling them all in
autumn could be an option
to help smaller herds
out of financial trouble.
Emma Penny reports
ARE you milking 50-60 cows and wondering how to boost profits? One consultant has a radical suggestion – milk double the number of cows from April to October, then sell them and find another job, perhaps outside agriculture, in winter.
Its a radical change, but one which Chester-based Strutt and Parker partner Keith Thomas believes could work for some producers.
"Producers who dont want to re-invest in their business, but dont yet want to give up could consider this option. It is a bit of lateral thinking, looking at what might be feasible, and I admit that it wont suit everyone."
He says that for smaller farms being seriously squeezed this system should help flush out overheads and increase profitability.
"At some point, the economics will take a turn for the better. But it might be in five years time. Nobody knows. Are you prepared to make a loss until then? This system is about adapting to the current financial climate to maximise your assets.
"Its a ruthless and clinical option to help move businesses forward in the current climate. If, in two or three years time, the milk price improves or cow values rise, you can easily revert to full-time dairying again.
"Nobody likes change, and theres a level of peer pressure, too. But if we were running a nuts and bolts factory and changed to making screws because they were more profitable, nobody would bat an eyelid."
For producers, perhaps aged about 55, currently milking 50-60 cows with no borrowings and a reasonable rent, farming for only part of the year avoids the winter slog and can boost off-farm income earnings through winter, suggests Mr Thomas.
"Some farmers have skills they can use off-farm to generate income, or could spend time renovating buildings to let or using workshop skills."
But from April to October, cows become the full-time occupation. "Milking double the number of cows through summer off grass and some concentrate means the business will run at full capacity, at high stocking rates, but as its only for about six months, its manageable. Most parlours have some spare capacity, and milking in summer is less laborious.
"Theres no silage to make, so all grass can be used for grazing. Slurry is unlikely to be a problem. Labour is less of a concern and more available in summer, and cow health tends to be better during summer months."
Its a more flexible system driven by economics, says Mr Thomas. Managing grass, quota, cows and the milking parlour for maximum output over summer only will cut input costs, boosting returns. Grass can also be let for grazing over-winter, again providing income.
"Winter milking costs most, with high labour, feed and feed storage costs. Its hard to get good labour, and a relief milker is expensive, but milking for six months of the year – and through the summer – is a more bearable thought for producers farming on their own," he says.
However, Mr Thomas admits that running a seasonal herd isnt for producers who have any emotional ties with their cows. "Youve got to have no emotional attachment to them because you need to sell them before winter."
But pay too much for cows and youre sunk…
RUNNING a summer milking system is low cost, but its success relies on buying cows in spring at the right price.
Chester-based Strutt and Parker partner Keith Thomas suggests that at current values – and with so many dispersal and production sales – buying cows shouldnt be too great a concern.
"But its vital to buy cheaply; the whole system breaks down if you pay too much for cows. They have a dramatic effect on profitability.
"Buying a cow for £400 and selling her for £250 in autumn means shes just cost £150 to milk over summer. But if you pay £750 in spring, the losses are just too big."
He suggests using cows currently on-farm as a base, but buying the same number again – effectively doubling herd size. "Buy the number which will fill your quota, perhaps with a small amount of leased quota, through the summer period."
Acknowledging buying that number of cows can appear to be daunting and time-consuming, he suggests that planning could help. "Look at the vendors or sale centres round the UK, and plan to buy over a number of weeks. The alternative is to nominate a buyer who will undertake to supply 120 cows of the quality you require."
However, Mr Thomas warns that because cow price has such an effect on the systems profitability, its best to avoid being too specific. Although acknowledging that its best to buy in cows with a known health status, he warns that being too stringent can mean cows are too expensive.
"Opt for slightly aged cows so they have persistent yields, and for those with records suggesting they are capable of giving 6500-7000 litres – theres no point running the system with 5000 litre cows. Also, look for those which dont have particularly high cell counts or hygiene concerns."
Cows bought in April should have calved, as the system doesnt involve having any youngstock on-farm. "Most cows shouldnt be served on your farm either, as that will depress yields. If there are some particularly good cows or heifers, it may be worth AIing them, but it adds to costs and management time."
Throughout summer, cows should be fed as normal, with grass as the predominant feed. "Because youre grazing all grass and not making silage, consider alternative feeds for buffer feeding – moist feeds such as brewers grains tend to be cheaper than silage anyway."
But with increased stocking rates, a good fertiliser policy is vital, says Mr Thomas. "You will have to manage grass better. As grass starts to ebb away in late summer, perhaps consider selling some cows to help maintain production. But be alert, and manage grass well."