The resilience of the farming sector and the people within it is like no other, and is something we should all be proud of, rising to the challenges thrown our way time and time again. More often than not, these challenges are from factors external to your business e.g. weather, milk markets, a global pandemic etc. and a lot of time is spent discussing these external factors and their undoubted impacts on farming businesses.
External factors aside, the key question must to be, how many dairy businesses take the time to really assess the factors within their business that they can control, and how can we, as a team improve efficiency, resilience and margins? If not, why are we not challenging this? And how do we go about it?
Understanding costs of production, what value for money the business is getting from purchased goods and how are the farms own resources, namely forage, being utilised must all be considered. But where to start?
Key considerations:
Monthly dairy costings – understanding current performance is key
Benchmarking – understanding the performance of similar systems
Setting targets – where do you want your business to be
Delivery – a strategy to help deliver your set targets
Ongoing appraisal – monitor costings, performance etc.
Kingshay recently released their Dairy Costings Focus Annual Report 2020, providing a great benchmarking tool focusing on different systems, areas, herd sizes etc. Some of the results are staggering, with the top 10% generating 4,449 litres from forage, some 3,136 litres more than the bottom 25%. This is directly linked to a feed rate of 0.23kg/litre for the top 10%, rising to 0.38kg/litre for the bottom 25% of producers.
But what does this mean for your business?
The table below explores how greater utilisation of forages and increased feed efficiency play a role in overall feed costs for the herd despite increased feed costs per tonne, assuming 150 cow herd and 8,500 litre annual average:
Feed Price (£/t) Feed Rate (kg/litre milk) Feed Costs (£/cow) Feed Costs (£/herd) Difference
265 0.25 563 84469 –
255 0.3 650 97538 13068.75
245 0.35 729 109331 11793.75
235 0.4 799 119850 10518.75
225 0.45 861 129094 9243.75
How do I get started?
As part of our ongoing commitment to the dairy sector , Davidsons Dairy Tech team offer a complementary monthly costings service, tracking herd performance and seeking to maximise the individuality of each farming system and importantly your milk contract.
Time spent understanding your business and your aspirations is key, and devising a delivery strategy that can be monitored and challenged regularly will reap the rewards.
As we approach winter 2020 and rationing of your herd for the winter months is being considered, is now a good time for you to start asking the questions?
James Bendle