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Back to Basics: Guidelines for Profitable Dairy Farming . Michael Verner 25 January 2011. 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. Outline. OUTLINE.

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Back to basics guidelines for profitable dairy farming

Back to Basics:Guidelines for Profitable Dairy Farming

Michael Verner25 January 2011


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

Outline

OUTLINE


Feed and fertiliser prices: 2000 - 2010

Feed and Fertiliser Prices - 2000-2010


The rising cost of production
The rising cost of production

The Rising Cost Of Production


Does milk from forage matter
Does milk from forage matter?

Does Milk From Forage matter


How we ve changed
How we’ve changed

How we’ve changed


The ‘real’ cost of forage

The ‘real’ cost of forage


Definition net profit cow
Definition: Net Profit (£/cow)

Definition: Net Profit (£/cow)

  • Net profit = Output – (Variable costs + Overhead Costs)


Milk from forage and net profit

Milk from forage and net profit

2%

4%

11%

22%

21%

38%

2%


Does milk from forage matter1
Does milk from forage matter?

Does milk from forage matter?

“The man with money and grass will not waste the grass”


How important is feed efficiency
How important is feed efficiency?

How important is feed efficiency?


How we ve changed1
How we’ve changed

How we’ve changed

0.32 kg/litre

0.21 kg/litre


Milk yieldversus meal fed fed

2.5tonnes

8000 litres

2.5tonnes

6200 litres


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

Measures that matter – Feed rate

Measures that matter – Feed rate


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


Feeding method

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)

Feeding Method

Feeding Methods


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

Successful TMR feeding

Successful TMR feeding


How important is feed efficiency1

“Margin is sanity, volume is vanity”

How important is feed efficiency?

How important is feed efficiency?


Are there economies of scale
Are there economies of scale?

Are there economies of scale?


Total profit from dairying

Total profit from dairying

Profit from dairying

100 cows

170 cows

15%

19%

25%

20%

13%

8%

Herd size


Total profit from dairying

Total profit from dairying

Profit from dairying

Controlled expansion maintain performance

Little expansion regain performance

Herd size


Are there economies of scale1
Are there economies of scale?

“Get better before you get bigger”


The prospects for 2011 and beyond

The prospects for 2011 and beyond


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!

The answers!

The answers


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


Benchmarking – what’s it all about?

Benchmarking- what’s 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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