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Milk Matters By Christine Pedersen


Senior Dairy Business Consultant The Dairy Group


www.thedairygroup.co.uk


Prospects for Milk Producers Increasing UK and EU milk production is putting downward pressure on milk price. There is now an expectation that interest rates will rise further in 2018 (and possibly at a faster rate than in recent years). These factors, combined with uncertainty over Brexit mean we can expect continuing volatility in the dairy sector. Analysis of the 2016/17 total cost of production (based on actual


accounts from specialist dairy farms) was reported in December 2017. The average cost of production in 2016/17 fell by 0.5ppl to 29.6ppl. Compare this to the average UK farm-gate milk price over the last 5 years of 28 ppl – even if you add approx. 2.8 ppl to the milk price to take account of stock sales and other outputs, the average producer retained a modest average 1.2 ppl profit. Of course, the 5 year average farm gate milk price masks the differential between various milk contracts (up to 5 ppl) and also price volatility. Over the last 5 years the rolling 12-month average farm gate milk price has peaked at 33 ppl (back in Autumn 2014) and troughed at 22 ppl in 2016. As a consultant, my role is to help clients through challenging times and to make the most of the opportunities that are available.


Feeding Feed is the single biggest cost of milk production and reducing feed costs one of the biggest challenges; target concentrate feed cost should be less than 8 ppl. Everyone involved in dairy cow nutrition knows how much forage can impact on feed costs and how much milk production can be affected by different silages. Previous data analysis has shown a strong correlation between milk from forage and cost of production. The data showed that, for every additional 1,400 litres utilised per forage hectare, the average farm saw a decrease in total cost of production by 1p/litre. This highlights the importance of producing and utilising forage in any system, irrespective of milk yield. AHDB Dairy released some KPI’s for milk output from forage per


cow in November 2017: KPI


Milk output from forage (litres)


Good >4000


Average Poor 2600


Spring is also a good opportunity to review silage quality on farm, identify areas for improvement and the impact any improvements might have on profitability. Moving from 25% dry matter, 10.5 ME, 14% protein to 30% dry matter, 11.5 ME, 16% protein grass silage for a 30-litre cow could push milk up by 2 litres and drop concentrate feed rate from 0.31 kg/ litre to 0.25 kg/litre. The net effect of this is 73p per cow per day or £154 per day for the average MCi costed herd (211 cows) or £30,800 over a 200-day winter feeding period at 28 ppl milk price. I, like many others was fortunate to attend one of the recent Gordie


Jones webinars (speaking in UK at a series of AHDB events). Gordie is a well-known vet and nutritionist from Wisconsin and a partner in Central Sands Dairy managing 3,500 cows. He has what he refers to as ‘Golden Rules’ for dairy production, the key one for me being to identify ‘the bottlenecks’. Every dairy has some areas that can create bottlenecks; cow comfort, lameness, fertility, feeding, forage quality, dry cow management and time all cited as issues that can constrain dry matter intake and eat up the profitability of the business. Identify which bottleneck is having most impact and tackle that one first. This sounds like sound advice for any business.


Staff Issues The press is full of news about staff shortages when the UK leaves the EU. DEFRA has decided to re-open an enquiry into the labour situation faced by those working in agriculture, horticulture and food production and a recent RABDF report says that “EU labour is critical to the UK dairy sector”. Compounders will be aware of dairy producers’ concerns about recruiting, retaining and managing staff which is one of the biggest challenges many producers face. For some, increasing the level of automation may be the solution – or part of it. The possibility of grant funding combined with the challenges of recruiting and retaining staff has led to increased interest from milk producers in Automatic Milking Systems (AMS). The Countryside Productivity Scheme (CPS) (the deadline for


applications is 3rd December 2018) offers grant funding of 40% with a minimum grant rate of £35,000 for eligible items for projects to improve farm productivity, including milking robots. The scheme is competitive (the submission of an application is no guarantee of grant funding) but of course, if applications are successful, the applicant still has to fund the remaining 60%. Whilst the incentive of grant funding is tempting many to commit to AMS, this should not be the sole factor considered; as with any capital investment it requires careful appraisal. In many situations, the installation of AMS will not bring about the expected benefits if changes to layout and/or housing, slurry handling and feeding system are not made. For some producers, an increase in the level of automation without


<2400


Source: AHDB Dairy Much of the focus in recent years has rightly been on grazing


systems and making the most of grazed grass. The vast majority of dairy herds are also heavily reliant on conserved forages, particularly grass and maize silages and to maximise milk from forage, the aim must be to utilise these to their full potential. A regular review of forage requirements for the coming 12 months based on expected livestock numbers and forage dry matter intake, reconciled with forage stocks and planned forage production allows producers to plan ahead for any potential shortfall by increasing forage area, purchasing additional forage or forage substitutes or in some cases, reducing the number of livestock. Late Winter / early


PAGE 12 MARCH/APRIL 2018 FEED COMPOUNDER


going as far as installing milking robots may help alleviate some staffing issues. Items such as heat detection systems, auto-calf feeders and automated foot baths etc. may also be eligible for 40% grant funding (up to £12,000) through Countryside Productivity ‘Small Grants Scheme’. For others, the use of contractors for specific operations such as foot trimming, heat detection and AI may reduce the number of full-time employees and relief required. However, in most cases a core workforce with the necessary skills and aptitude to work with dairy cows (i.e stockmanship skills) is still necessary. At a time when competition for employees on farms is likely to become even fiercer, dairy producers should be encouraged to develop management skills and practices to help them recruit, retain and manage staff.


Comment section is sponsored by Compound Feed Engineering Ltd www.cfegroup.com


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