Plan now to keep profit losses down after selective cull
By Emma Penney
PRODUCERS facing herd losses from the cohort cull should examine restructuring options to minimise profit loss.
Tony Evans, dairy partner with farm business consultants Andersons, says there are three options for producers, depending on whether the land is eligible for IACS payments.
"Even if cull compensation runs at a reasonable level, producers still face losing their annual gross margin – about £1300 a cow – and the compensation is not likely to cover the subsequent reductions in the milk cheque.
"Replacing culls will take time, and producers should consider options for generating revenue during that period."
On farms where land is eligible for IACS payments, producers should consider growing more crops and leasing out quota. "This will mitigate the loss of an animal to some extent, and the income from the crop, IACS payments and leasing spare quota – even at 9p/litre – will help reduce losses," says Mr Evans.
The options for producers with no land eligible for IACS are to either rent land out on an annual grass let or to make more forage.
"A grass let is easy in beef and sheep areas, and will generate £80-£100/acre. The option to increase forage is only viable where stocking rates are tight or if you going challenge the herd with forage and turn it into money," he warns.
• If land IACS eligible consider cropping.
• Could let out non-eligible land.
• Only make more forage if you are going to challenge your herd with it.