How to calculate an improved milk price

14 December 2001




How to calculate an improved milk price

By Richard Allison

WITH more than 100 milk contracts on offer and price varying by 3p/litre with the same buyer, many producers are not obtaining the best price.

One of the DEFRA-funded Knowledge Transfer projects aims is to provide options to achieve maximum price by enhancing milk quality, said ADAS Bridget Drew at an AgriVision seminar.

"There are two main types of contract – liquid or constituent based, depending on whether milk is for the liquid or processing markets. In the UK, liquid sales are 6.7bn litres, about half of all milk produced."

Cheese and milk powder production accounts for the majority of the processing market, 5.1bn litres annually. Processors require milk with high solid contents, therefore, pay on a constituent basis, said Prof Drew.

"When reviewing your contract, the first factor to consider is whether it suits the production system. If not, then either find a contract to suit your production system or modify the ration to change composition."

Prices in constituent contracts are based on milk fat and protein content. Fat payments vary widely between 0.8p/litre and 2.5p/litre for each %, she explained.

"With milk protein, the effect is greater with each % increase equating to an additional 3.8p/litre. With this variability, some producers are receiving up to 3p/litre less than neighbouring units with the same buyer."

To help producers review the options, ADAS are launching a milk price calculator early next year, said milk cheque manager Ian Powell. "It will be available at the ADAS interactive web-site.

"The calculator contains more than 100 different milk contracts and is a good starting point to compare prices. Change milk composition and the new price is calculated."

Changing milk composition by using different feeds is one way to boost milk price, said Prof Drew. "Feeding more concentrates increases protein, but fat % can fall. This reduction in fat tends to occur when the concentrate to forage ratio exceeds 50:50."

How you feed concentrates also affects the degree of milk fat depression. This depression is greater with three times/day feeding compared with feeding concentrates in a mixed ration, she explained.

"Changing protein % is more difficult than fat. Feeding more metabolisable protein generally increases milk protein, but the effect can be seen as an increase in protein yield or concentration.

"Research at ADAS Bridgets found the best strategy was to feed rumen bypass starch and protein, increasing milk protein by 0.5%. This suggests careful matching of feeds can boost milk price."

With high forage systems, its more difficult to change milk composition. The best strategy is to maximise rumen fibre digestion by increasing the intake of high quality silage, said Prof Drew.

Changing milk protein % through dairy cow feeding is more difficult than manipulating milk fat %, says Bridget Drew.

MAXIMISING PRICE

&#8226 Liquid or constituent contract?

&#8226 Feed to enhance milk price.

&#8226 Fat easier than protein.


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