Milk Matters
By Christine Pedersen Senior Dairy Business Consultant The Dairy Group
christine.pedersen@
thedairygroup.co.uk www.thedairygroup.co.uk
FARMING FOR THE FUTURE The government recently released a document “Farming for the future - Policy and progress update” giving more details on the government’s agricultural policy reform plans as we move away from the Common Agricultural Policy (CAP) and direct payments. As expected, direct payments in England (BPS payments) will be phased out over a seven-year transition period (2021 to 2027). As announced in September 2018, Direct Payments will be
reduced with higher reductions initially applied to amounts in higher payment bands. For the first year of the transition, 2021, Direct Payments will be reduced by up to the following percentages:
Direct Payment Band * Up to £30,000
£30,000 - £50,000 £50,000 - £150,000 £150,000 +
Reduction Percentage % 5
10 20 25
* For example, for a direct payment worth £40,000, a 5% reduction would be applied to the first £30,000 and a 10% reduction would be applied to the next £10,000 so a £40,000 BPS claim would be reduced by £2,500 in the first year.
The reduction percentages will be increased over time until the final
payments are made for the 2027 scheme year. The Environmental Land Management (ELM) scheme is the government’s proposal for a system to replace direct payments. ELM will pay farmers and land managers for managing their land in a way that will deliver against key 25 Year Environment Plan goals. The latest Defra proposal is for a three-tier approach aimed at encouraging environmentally sustainable farming at a farm, local and landscape level. ELM will pay farmers for: clean and plentiful water; clean air; protection from and mitigation of environmental hazards; mitigation and adaptation to climate change; thriving plants and wildlife; beauty, heritage and engagement. The scheme is still in the design stage and subject to consultation
and pilot testing. The new scheme is expected to be available from 2024. Defra will continue to offer the existing Countryside Stewardship agreements in 2021, 2022 and 2023 and report that Countryside Stewardship will put farmers in the best possible position to join the ELM scheme. Farm sustainability grants are expected from 2021 which are likely to include equipment, technology, infrastructure and enhanced animal health and welfare. The shift from direct payments towards a series of schemes that will
be based on paying “public money for public goods” means agriculture is facing another period of uncertainty and change. Dairy farmers are already under significant financial pressure with milk prices paid below cost of production for many. External factors such as the weather,
PAGE 20 MARCH/APRIL 2020 FEED COMPOUNDER
pressure of climate change and consumer attitude to livestock products and the potential impact of the coronavirus on world trade and global demand for dairy products add to the list of challenges faced. As a species, we generally dislike change so although the temptation might for farmers to carry on doing what they have been doing, taking control of their business strategy helps them dictate the speed and direction of change. We encourage farmers to focus on the things that are within their control and a good starting point is to carry out a SWOT (strengths, weaknesses, opportunities and threats) analysis. For many farms the financial year starts on 1st
April which is a really good time to review the
past year, identify opportunities and to look at the plan for the year ahead. With the limited options to change milk buyer, a review of the current milk contract can reveal opportunities to improve milk price through improved milk quality and possibly seasonality, especially as some milk buyers have increased their spring milk price penalties. Some farmers might be considering bolder strategy moves, for example moving to block calving - does it make sense for that particular business, especially in relation to the infrastructure for cow housing, calving yards and calf rearing? Options should be carefully costed to allow a clear strategy for the next 5 years to be established.
SPRING DECISIONS Decisions made in the spring set the tone for milk production and profitability for the next 12 months. I make no apology for mentioning milk from forage again; increasing milk from forage is a key element of lowering production costs and should be the target for all dairy producers. The best performing herds are achieving over 4,000 litres per cow milk from forage compared to around 2,800 litres per cow for the average herds. Increasing milk from forage includes grazing as well as conserved forage and relates to both quality and quantity. Grazed grass is consistently the cheapest feed available on most
dairy units and can offer opportunities for significant concentrate and conserved forage savings. Rotational or paddock grazing is the most effective way of presenting cows with a consistent supply of quality forage and can be set up initially at low cost with electric fencing. Maximising productivity and utilisation are critical components of
successful grassland management. The maxim “if you don’t measure it, you can’t manage it” rings true with grazing which should be measured and recorded on a weekly basis to check growth and make decisions about grazing allocations. Grazing samples can be easily taken and quickly analysed to give nutritionists accurate information to use in ration formulation. Providing sufficient, high quality forage for buffer feeding or when
cows are housed is another key factor for maximising milk from forage. For both grass and maize crops, planning ahead to maximize potential crop yields and quality means that the importance of correct crop nutrition and pest and weed control should not be underestimated. Soil samples should be rechecked every four years to determine pH, P, K and Mg levels and planned lime and fertiliser applications adjusted accordingly based on crop requirements. Nutrients supplied through organic manures and slurry must also be taken into account when calculating artificial fertiliser applications.
Comment section is sponsored by Compound Feed Engineering Ltd
www.cfegroup.com
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