RWN News Digest

Lifting milk output through improved nutrition can result in dramatic improvements in profitability

Strategies for Dairy Farming Profitably

There has been much discussion of late about the best route for dairy farms to follow.  

We are increasingly seeing those farmers who are committed to staying in the industry investing in improved farm infrastructure as well as rapidly improving their levels of efficiency and output in order to ensure their future prosperity. 

Whilst there is risk in deciding to do anything 
the greater risk is always in doing nothing 

Those farmers who choose to accept new ideas based on the results of sound research and who manage their farm as a business will stay ahead of the game and will prosper as others are left behind. 

Consider the following:
1).    Do you manage your farm as a business? Has "paperwork overload" been allowed to get in the
        way of planning your business? Do you know the cost levels in your business? Are your
        purchasing decisions based on quantifiable return on investment or do you buy purely on price? 

2).    Is your total output high enough? The biggest factor effecting profit on dairy farms is milk
        output. Milk output controls money coming into the business. Since labour is the biggest cost on
        most dairy farms, litres of milk per person is a useful benchmark. 
        
       300,000 litres per man at 25 p/litre = £75,000 but after costs even if you achieve a profit of 
       5p/litre, 300,000 litres only equates to an income of £15,000 before tax. Not a lot if you work 
       a 90 hour week.

A sensible target might be 500,000 litres per man, some herds 
are achieving 750,000 litres plus 

3).   Could your system be simplified to allow an increase in cow numbers with the same labour?
       Simplified feed systems and automation of routine tasks can dramatically reduce labour costs.
 
4).   Are your cows producing over 9000 litres of milk? The cost of keeping a cow is typically
       between £1600 and £2000 per cow per year in the UK.

Most herds in the UK could lift yields to over 9000 litres within 2 years 
by improved nutrition

The argument for lifting yields goes something like this: 

Assuming 100 cow herd with costs of £1680 per cow and allowing 10 p/litre to cover marginal feed and milking costs on additional litres.

Yield / Cow                              Profit                                        Profit
                                          (Milk Price 24p)                       (Milk Price 28p)   

   7000                                      Zero Profit                                £28000

   8000                                       £14000                                     £46000

   9000                                       £28000                                     £64000

 10000                                       £42000                                     £82000

 

At 28 p/litre an increase of 1000 litres / cow is worth over 
£18,000 additional profit per 100 cows
5).   Have you set a target increase in yield? What timescale have you allowed? 
       How will you monitor it? What steps have you taken to meet your target?
 
6).   Could more efficient use of home grown forage or alternative feeds contribute towards
       achieving your target increase in yield at a lower cost?
 
7).  Do you have access to the nutritional expertise and advice as well as the quality and range of 
     feed inputs necessary to achieve your target increase in milk output and profitability? 

If the answer to all these questions is ‘Yes’, then you will probably have a very profitable business especially as milk prices recover in the future as a result of reductions in total UK milk output.  

Once you sit down and do some basic calculations it soon becomes clear that attempts to reduce variable costs such as feed inputs, forage additives etc. for most dairy farm businesses actually reduces profitability

Lifting milk output through improved nutrition can result in dramatic improvements in profitability. 

Richard Webster Nutrition Ltd offers a full nutritional support package to our customers Free of Charge, along with the most extensive range of high quality feed inputs available.

Working together for a more profitable future

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