Milk Matters By Christine Pedersen
Senior Dairy Business Consultant The Dairy Group
www.thedairygroup.co.uk
Business challenges for 2019 There are a number of key business challenges facing dairy farmers this Spring. At the time of writing, Brexit negotiations are still on-going and the publication of No Deal tariffs set by the Government should be of concern to all in the UK dairy industry as they provide an indication of post Brexit trade policy. The UK currently exports 938,000 tonnes of raw milk (mainly to Ireland), 190,000 tonnes of cheese and 126,000 tonnes of milk powder, with the UK Government announcing export tariffs of 63%, 40% & 79% respectively. These tariffs would effectively make exports uncompetitive leaving this product on the UK market with the obvious impact on UK farm price. One thing is clear, that whilst it is important to understand the wider economic environment, farmers should be encouraged to focus on the things that are within their control: Milk income is obviously important to a dairy farming business. There are currently few opportunities for producers to switch milk buyer but there may be opportunities to improve milk price within existing contracts. Producers can influence milk price by examining the detail of their milk contracts and implementing measures to “exploit” that contract to maximise milk price. Hygiene and constituent payments should give producers a clear signal of what their buyer wants and offer an incentive for producing that. Cost of production is also very important! From our own database, the average cost of production in 2017/18 was 30.9ppl (including rent, finance and family labour), with the top 25% 3ppl lower at 27.9ppl. Our forecast for the year ending 31/3/19 is for the average cost to increase by 2.7ppl to 33.6ppl mainly due to increases in feed, bedding and forage stock decline. With most accounts ending 31st
March, now
is a great opportunity to benchmark technical performance and cost of production. Cash is king and having enough cash is critical to maintaining business control. Running out of cash means that control is effectively passed to someone else – usually the bank. With the current uncertainty regarding the impact of Brexit and the usual uncertainty about the future milk price there is a real need to understand the cash needs of the business and peak borrowing requirements. Some will say there is no point due to the uncertainty, whereas I believe it is essential. A forward cash flow will aid decision making with regard to capital investment, machinery replacement, loan repayments and finance requirements.
Optimising the balance of energy and protein I, and colleagues who provide dairy cow nutrition advice are all Feed Advisor Register (FAR) members. As many reading this column will
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know, the most recently-completed training module linked nutrition and feeding management with environmental impact, focusing on Phosphorus, Methane and Nitrogen. Using a professionally formulated diet to match the nutrient content of the feed to the requirements of the animal at different production stages is also a key point of the Code of Good Agricultural Practice (COGAP) for reducing ammonia emissions. Having juggled forage stocks this winter, the mild Spring weather
means many producers have been able to graze at least a proportion of their herd earlier than they would usually. Grass sample results so far have been high energy and high protein – averaging 12.5 ME and 24% crude protein. This graph from AHDB Forage for Knowledge, shows average grass crude protein levels for 2018 compared to average, seasonal results. Grass crude protein levels are typically around 25% in early April, declining to around 20% as the season progresses.
Balancing high protein levels in grazing can be challenging,
especially in herds where intakes of grass dry matter, and therefore protein are high. Bulk tank milk urea results can be used to monitor the utilisation of dietary protein – if cows are unable to utilise protein, excess is excreted via urea (there is an energy cost associated with the process). Given the high levels of protein in early spring grazing, it’s no surprise that reported bulk tank milk urea levels can increase beyond the target range of 200 – 300 mg/kg (0.20 – 0.3%) in spring. Furthermore, various studies have shown that higher or more degradable crude protein diets reduce conception rate in dairy cows. For producers targeting a reduction in feed costs, savings may be made by taking full account of grazing intakes and grass quality and reviewing appropriate levels of both protein and total supplementation. Monitoring milk quality and managing diets to optimise the balance of energy and protein makes sense for cows, business and the environment.
Lessons from America … I have been fortunate enough to visit Rosy Lane Holsteins, Wisconsin, USA a couple of times over the course of my career and attended one of the recent, AHDB Dairy facilitated events ‘The five non-negotiables
Comment section is sponsored by Compound Feed Engineering Ltd
www.cfegroup.com
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