Milk Matters


By Christine Pedersen Senior Dairy Business Consultant The Dairy Group


christine.pedersen@thedairygroup.co.uk www.thedairygroup.co.uk


OUTLOOK FOR DAIRY BUSINESSES IN 2023 Following announcements of price reductions from milk buyers, a very good period for dairy farmers seems to be coming to an end. One might hope that feed prices are going to come down in concert, but based on the current outlook for cereals and proteins, readers will know it seems unlikely. Although the prices of wheat and barley have reached low points relative to last year, there is continued uncertainty around supply. Soya and rapeseed meal values continue to react to crop conditions and weather. Assuming a milk price of 40 ppl and feed costs of 35 ppkg, a milk


to feed price ratio of around 1.1 is a possible scenario this summer. The graph below shows the variations in this ratio for the last 10 years. A ratio of 1.1 was last seen in the summer of 2016:


some farmers have yet to have contracts renewed at current prices. We anticipate total overheads to be up about 1 ppl on last year at 20 ppl. After family labour at 3 ppl and before grants, subsidies and other


income, the average UK dairy producer appears to be in a break-even position in 2023 at a milk price of 40 ppl. The start of the 2023/24 financial year sees my colleagues and I revising forward cash flows to help dairy producers understand cash needs and peak borrowing requirements taking into account likely tax liabilities from the year ending March 2023.


GOLD CUP FINALISTS We are delighted that our client Rookhaye Estate was a finalist in the 2022 NMR RABDF Gold Cup awards. Consultants from The Dairy Group support the business by providing nutrition, business management, parlour operation and building design advice. The key performance indicators are shown in the table at the bottom of the page: What is the key to their success?


Team work: Rookhaye Estate is a mixed dairy arable farm with the whole team focused on achieving the goals for the dairy enterprise and the attention to detail needed to achieve outstanding performance. Meet the team! (from the left Martin, Liz, Paul & George).


However, the ratio alone can be misleading. Whilst 40 ppl/35 ppkg


(2023) and 22 ppl/19 ppkg (2016) both yield a ratio of 1.1, there is a large difference in margin over purchased feed. At 35 ppkg and a feed rate of 0.35 kg/litre, the cost of concentrate is 12 ppl in 2023 yielding a margin of 28 ppl. In 2016, at the same feed rate, the margin over purchased feed was just 16 ppl. Milk to feed price ratios are interesting but as shown here, they don’t tell the full story. Fertiliser prices are expected to be down 1 ppl relative to 2022/23,


and we are expecting total variable costs to be around 22 ppl, down by 1 to 2 ppl on last year, leaving a gross margin of 23 ppl after livestock sales of between 4 and 5 ppl are included in total output. There is very little scope for fixed cost reductions in 2023/24 due


to inflationary pressure. Fuel and oil may ease back slightly. Electricity costs are still expected to rise on average relative to last year since


Litres produced annually SCC


Bactoscan Herd £PLI


Average concentrate use Average purchased feed cost Pregnancy rate Average age at 1st


calving Margin over purchased feed PAGE 20 MARCH/APRIL 2023 FEED COMPOUNDER


Cow health and welfare: This is a priority and healthy cows are productive, profitable cows. Health, fertility and production parameters are reviewed frequently. Significant investment in buildings and facilities means cows are doing what cows should do: being milked, eating and drinking or lying down. The dairy enterprise has developed protocols so that the whole team has a clear focus on detail and the delivery of top results. Genetics: The farm has always had a key focus on genetic improvement, with the herd now in the Top 10% of UK Holstein herds. The farm started genomic testing dairy heifers two years ago which has allowed the selection of the elite heifers, with the surplus being sold. Forage production: Forage production fits well with the arable rotation, with maize and grass leys providing break crops for winter wheat. Forage


1.8 million litres @ 4.33% butterfat & 3.39% protein 146 8


£228 (Dec22) 0.38 kg/litre 11.9 ppl 26 %


25 months £3,424/cow


11,094 litres per cow 2 x milking


Top 10% UK Holstein herds. 3,233 litres from forage


12-month rolling average to Dec 22


12-month rolling average to Dec 22


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


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68