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Back to Basics: Guidelines for Profitable Dairy Farming

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Back to Basics: Guidelines for Profitable Dairy Farming Michael Verner 25 January 2011 Outline Where we are today Does milk from forage matter? How important is feed ... – PowerPoint PPT presentation

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Title: Back to Basics: Guidelines for Profitable Dairy Farming


1
Back to Basics Guidelines for Profitable Dairy
Farming
  • Michael Verner25 January 2011

2
Outline
OUTLINE
  • Where we are today
  • Does milk from forage matter?
  • How important is feed efficiency?
  • Are there economies of scale?
  • The prospects for 2011 and beyond

3
Feed and fertiliser prices 2000 - 2010
Feed and Fertiliser Prices - 2000-2010
4
The rising cost of production
The Rising Cost Of Production
5
Does milk from forage matter?
Does Milk From Forage matter
6
How weve changed
How weve changed
2000 2010 Change
Herd size 83 129 46
Milk yield (litres/cow) 6000 6710 710
MFF (litres/cow) 3222 1887 -1335
7
The real cost of forage
The real cost of forage
Feed Cash cost (/t utilisable DM) Full economic cost (/t utilisable DM)
Grazed grass 44 (35 56) 80
3 cut silage 76 (69 109) 122
Wholecrop wheat 74 123
Forage maize 77 (72 162) 121
Concentrates 250 254
8
Definition Net Profit (/cow)
Definition Net Profit (/cow)
  • Net profit Output (Variable costs Overhead
    Costs)

Variable costs Overhead costs
Forage Concentrates Vet and Med AI Miscellaneous Machinery running costs Contractor costs Depreciation Property repairs Business costs Miscellaneous Labour Conacre Finance / Interest
9
Milk from forage and net profit
Milk from forage and net profit
2
4
11
22
21
38
2
10
Does milk from forage matter?
Does milk from forage matter?
  • The man with money and grass will not waste the
    grass

11
How important is feed efficiency?
How important is feed efficiency?
12
How weve changed
How weve changed
2000 2010 Change
Herd size 83 129 46
Milk yield (litres/cow) 6000 6710 710
Meal fed (kg/cow) 1250 2170 920
0.32 kg/litre
0.21 kg/litre
13
Milk yield versus meal fed fed
2.5 tonnes 8000 litres
2.5 tonnes 6200 litres
14
Measures that matter Feed rate
Measures that matter Feed rate
  • Example
  • 100 cow herd selling 7,500 litres/cow from 2
    tonnes of concentrates
  • Buys 200 tonnes of dairy concentrate
  • Sells 750000 litres of milk
  • Farm has a feeding rate of
  • (200 x 1000kg) 200000 0.26kg/litre
  • 750000 750000

15
The link between feed rate and profit
The link between feed rate and profit
8
8
17
28
28
8
3
Example farm 0.26kg/litre
16
Feeding Method
Feeding Methods
  • Herds fed concentrates
  • In parlour 300/cow net profit
  • In OOPF 280/cow net profit
  • Via TMR 180/cow net profit
  • (range loss of 300 to profit of 600)

17
Successful TMR feeding
Successful TMR feeding
  • Feeding quality forage(s)
  • Batching cows
  • Feeding to the lowest yielding cow in group and
    topping up
  • Moving cows as yield declines and adjusting
    parlour feeding
  • Calibrating parlour feeders
  • Checking crude protein of ration esp. with
    inclusion of maize
  • Staff understanding

18
How important is feed efficiency?
How important is feed efficiency?
  • Margin is sanity, volume is vanity

19
Are there economies of scale?
Are there economies of scale?
20
Total profit from dairying
Total profit from dairying
Profit from dairying
100 cows
170 cows
15
19
25
20
13
8
Herd size
21
Total profit from dairying
Total profit from dairying
Profit from dairying
Controlled expansion maintain performance
Little expansion regain performance
Herd size
22
Are there economies of scale?
  • Get better before you get bigger

23
The prospects for 2011 and beyond
The prospects for 2011 and beyond
24
The answers!
The answers
  • Does milk from forage matter?
  • Yes - High quality grazed grass and grass silage
    are vital to ensure future profitability
  • How important is feed efficiency?
  • Very Concentrates are the single biggest cost
    on most dairy farms
  • Are there economies of scale?
  • Probably but make sure performance is good and
    then expand gradually, remember profit equals
    margin x volume!

25
What are the prospects?
What are the prospects?
  • Good prospects for milk prices despite volatility
  • Input costs will remain high or further increase
  • Quality forage has an essential role to play in
    maintaining our competitiveness
  • The top 50 of Northern Ireland dairy farmers
    have a profitable and sustainable future

26
Benchmarking whats it all about?
Benchmarking- whats it all about?
  • Do you know what level of profit your business is
    making?
  • Do you know how each category of your costs
    compares to other farmers in Northern Ireland?
  • Do you know what are realistic physical and
    financial performance targets for your dairy
    system?
  • Benchmarking Measure to Manage
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