FREE CLINIC FOR BUSINESSILLS…
FREE CLINIC FOR BUSINESSILLS…
DO you want to know exactly how your business is performing? Want to know how you could do better – or where to go next?
Then come to the Milk Development Council/farmers weekly and FWi Cost Clinic at the European Dairy Farming Event. Designed to improve business performance, the free clinic, staffed by expert consultants, will help identify strategies for survival and growth of your business.
Making the most of the Clinic and the advice it has to offer does involve some homework; consultants will be best able to identify areas for growth and improvement if you know your production costs/litre. This means filling out the table on this page and taking it along, or using the spreadsheet on FWi (www.FWi.co.uk), which is available in the management area, and is called Benchmarking Farm Profitability.
While admitting that obtaining precise figures for each cost might be tricky, MDC finance co-ordinator and Andersons dairy consultant Tony Evans says working out cost/litre has two major benefits.
"The first is that you can identify strengths and weaknesses. Each business has varying strengths and weaknesses – for instance, a pedigree herd will have quality stock, but may also have to bear recording fees and higher vet costs. Analysing cost/litre allows you to see whether this stacks up financially.
"Cost/litre also allows consultants and producers to identify where the opportunities are for taking the business forward; it may pay to expand on strong areas instead of fighting weaknesses."
It is also useful for bench-marking your business, to see how well you compare with similar units. But Mr Evans cautions that when comparing businesses on a cost/litre basis it is necessary to compare like with like, and on an output basis, year with year.
"Looking ahead and comparing historic costs of production will show that many businesses may not now achieve the profit level required on a 17-18p/litre milk price," warns Mr Evans.
"In this case, its necessary to re-set bench-marking targets to produce the required profit. However, historic benchmarking is an excellent tool for identifying current performance and areas that need action."
According to Mr Evans, it is essential that variable and overhead costs, including long term depreciation, are all addressed in this process. But he advises only including costs that have been incurred. Only include actual cash payments or receipts plus any valuation change. Dont distort your true results by making up labour costs for your time or theoretical rents.
Where you cant work out precise figures, try to allocate them roughly between variable and overhead costs."
• The MDC/farmers weekly and FWi Cost Clinic is located in the farmers weekly pavilion (stand no M48), opposite the Spotlight on Profit marquee.
CHANCETOQUIZFARMMINISTER
HAVE you got a burning question to ask the Minister of Agriculture?
Or do you want to find out more about organic dairying and whether the price premium will still be there once youve converted? Or do you want to know more about TB in cattle?
Speakers at this years Spotlight on Profit forums at the European Dairy Farming Event on Sept 22 and 23 will tackle all those issues and more. Running in the Spotlight on Profit marquee, on the corner of Avenue M and 6th street, opposite the farmers weekly stand, the forums feature six speakers, tackling very different subjects (see panel). Speakers will give short, sharp presentations, with plenty of time allowed at the end of each slot for audience questions.
Nick Brown, Minister of Agriculture, will kick off the Spotlight on Profit forums at 11am on Wednesday. He will be followed at 12 noon by Milk Marque chairman Poul Christensen speaking about Marketing milk to your advantage. United Milk chairman Richard Ashworth will speak about Maximising income from milk production at 2.30pm, followed by Gareth Rowlands, co-founder of Rachels Dairy, on Adding value – what limits the organic market?.
On Thursday, Brian Jennings, chairman of the NFUs animal health and welfare committee, will be asking whether we are doing enough to tackle TB. At the time of going to press, other speakers are yet to be confirmed. *
Benchmarking farm profitability
ANNUAL PRODUCTION
Litres produced/year ………
Livestock units/ha ………
Dairy area (ha) ………
Litres produced/ha ……….
INCOME £ p/litre
Milk ………. ……….
Stock sales less purchases ………. ……….
Other dairy income ………. ……….
Valuation change ………. ……….
TOTAL INCOME ………. ……….
EXPENSES
Purchased feed
Cow feed and minerals ……….. ………..
Calves and replacements ……….. ………..
Total purchased feed ……….. ………..
Variable costs
Vet and med ……….. ………..
Breeding/AI/milk recording ……….. ………..
Fertiliser and lime ……….. ………..
Seeds and sprays ……….. ………..
Straw, silage additives, plastic ……….. ………..
Parlour consumables ……….. ………..
Parlour service and maintenance ……….. ………..
Total variable costs ……….. ………..
Labour costs ………. ………..
Power and machinery costs
Repairs and spares ……….. ………..
Leasing on vehicles ……….. ………..
Fuel and oil ……….. ………..
Electricity ……….. ………..
Tax and insurance ……….. ………..
Contractors ……….. ………..
Total power and machinery costs ……….. ………..
Depreciation
Plant, machinery and vehicles ……….. ………..
Buildings ……….. ………..
Total depreciation costs ……….. ………..
Overhead costs
Water ………… ………..
General insurance ………… ………..
Office, phone and bank charges ………… ………..
Advice and professional fees ………… ………..
Miscellaneous and subscriptions ………… ………..
Property repairs and maintenance ………… ………..
Council tax ………… ………..
Total overhead costs ………… ………..
TOTAL EXPENSES ……….. ………..
PROFIT (before rent and finance) ……….. …………
Quota leasing costs ………… …………
Interest ………… …………
Rent ………… …………
TOTAL PROFIT ………… …………
Fill this in, cut out and bring along to the Spotlight on Profit Cost Clinic on the FARMERS WEEKLY stand at the EDFE.
Spotlight on profit forums
Sept 22
11am Nick Brown Address by the Minister of Agriculture.
12 noon Poul Christensen Marketing milk to your advantage.
2.30pm Richard Ashworth Maximising income from milk production.
3.15pm Gareth Rowlands Adding value – what limits the organic market?
Sept 23
12 noon Brian Jennings Are we doing enough to control TB?