Milk Matters


By Christine Pedersen Senior Dairy Business Consultant The Dairy Group


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


EU citizens, Brexit causes further uncertainty for the employer, employees and their families. Employees who are EU citizens can apply to the EU Settlement Scheme to continue living in the UK after 30 June 2021. DEFRA has issued more guidance about the Agriculture Bill that


As I look back now at my June column for Feed Compounder, it’s hard to believe what a difference the weather over the last couple of months has made to forage stocks. The drought last year left many producers with severely depleted silage stocks but grass growth rates in 2019 have mirrored a more ‘typical’ growth curve and grass silage stocks have been replenished with good 3rd


and 4th cut grass crops. Generally, the


yield potential of maize crops looks promising which should take the pressure off forage shortages for most producers this winter. Accounts for March 2019 year-ends are now available for many producers and the financial effect of the drought last year is apparent with lower year-end forage valuations and higher feed costs feeding into reduced profits and higher costs of production. Our own cost of production analysis indicates that the average total cost of milk production (including family labour) has risen to 33.5 ppl. The cost of production has risen by 13.2% in the last 2 years with feed costs up by 26%. Feed and forage costs typically make up about 1/3 of the total cost of milk production so it’s no surprise that as consultants, we frequently review and challenge feed and forage costs with producers as part of an overall strategy to reduce the total cost of milk production. When you consider that the UK rolling average milk price has been around 29.5ppl, you can understand why we are focused on reducing the cost of production – even after adding in calf and cull cow sales which typically add approximately 3.0 ppl, the average producer made a loss of just over 1.0 ppl last year after family labour. As ever, grass silage analysis results are mixed, the reported


‘average’ results hiding a range of dry matter, fermentation and nutritional analysis. For producers targeting a reduction in feed costs, savings may be made by maximising intakes of appropriate forages and reviewing appropriate levels of both protein and total supplementation. As the autumn progresses and the emphasis moves from grazing to feeding conserved forages, we will be reviewing forage quantity and quality with producers. For producers with plentiful supplies of forage, we will be conducting dry matter intake audits to review whether cows can be challenged to consume more forage. The top 10% of our MCi costed herds are producing more than 4,000 litres from forage – milk from forage is a Key Performance Indicator (KPI) for profitable milk production. Two main stories have dominated the press over the summer –


Brexit and Climate Change. As I write this, Brexit uncertainty continues and once again I find myself discussing Brexit contingency plans with clients – the key inputs considered being feed, fertiliser, seed, chemicals, veterinary medicines and fuel. For many farmers employing


PAGE 20 SEPTEMBER/OCTOBER 2019 FEED COMPOUNDER


was introduced into Parliament a year ago but has yet to be passed by Parliament. The Agriculture Bill sets out post EU agricultural policy - how farmers and land managers will be paid for “public goods” in future such as better air and water quality, improved soil health, higher animal welfare standards, public access to the countryside and measures to reduce flooding. The planned launch for the new Environmental Land Management (ELM) scheme which will be a mechanism for paying farmers and land managers for providing environmental benefits is now 2024. There will be a gradual transition from the current, direct payment


subsidy system which will be phased out over 7 years in England, starting in 2021. In the first year, the biggest reductions will be applied to the higher payment bands as follows:


DIRECT PAYMENT BAND* Up to £30,000


£30,000 - £50,000 £50,000 - £150,000 £150,000 or more


MAXIMUM REDUCTION 5%


10% 20% 25%


* For example, for a claim worth £40,000, a reduction of up to 5% to the first £30,000 and up to a 10% reduction to the next £10,000 will be applied. Source: DEFRA


Defra is considering various other options including ‘delinking’


Direct Payments from the requirement to farm the land and offering a one-off lump sum payment in place of any future Direct Payments. Defra plans to consult on the detail of these changes but the earliest that payments would be delinked or a lump-sum payment be made is 2021. Both of these options may help provide more opportunities for new entrants if existing farmers see these payments as opportunities to retire from active farming. Climate Change has been almost daily news with Greta Thunberg,


Extinction Rebellion, fires in the Amazon, Greenland’s rapidly vanishing glaciers, private jets, agriculture (in general) and cows (in particular) regularly hitting the headlines. At ground level, we know from experience that farming and food production is extremely vulnerable to changes in temperature and rainfall, as well as increasingly frequent extreme weather events. Producers have become more flexible in their response to the weather, taking opportunities to graze cows and when they arise rather than sticking to traditional turnout dates. As a direct result of experiences over the last couple of forage growing seasons, producers are re-calculating their forage costs, asking about ‘drought-tolerant’ crops or varieties and reviewing their forage options in a bid to help their businesses become more climate resilient and resource efficient. Agriculture is currently responsible for about 9% of the UK’s


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


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