UK producers are being urged to carefully manage their outgoings after claims the majority of dairy farmers were unaware of their costs of production.
According to the Royal Association of British Dairy Farmers (RABDF), 60 per cent of UK dairy farmers are unaware of production costs.
Several dairy bodies and consultancies have stressed this is vital to surviving price pressure in the dairy sector.
RABDF policy director, Tim Brigstocke said: “An estimated 60 per cent of dairy farmers are not aware of their true costs of production, according to a consensus of leading dairy consultants, a percentage figure which has not improved over the last 10 years.
“Unless they start to measure production costs and ensure that figure takes in to account family labour and provision for retirement, then they will remain unable to fully understand the true profitability of their businesses."
RABDF said it was vital to know what a milk buyer wanted in terms of volume, profile and constituents. Mr Brigstocke added farmers should have a five-year plan to accurately budget income and expenditure.
Mark Gorst from Advanced Nutrition advised dairy farmers to implement a five-point plan if they did not know their cost of production.
"In the first instance we recommend identifying which variable costs are out of line and tackling the largest bottlenecks which will have an impact," Mr Gorst said,
"Most units have plenty of scope to reduce feed, vet and med which make up the lion’s share of variable costs, approximately 60 per cent.
Reducing the cost of feed per tonne will reduce the cost of production but does this help margins for the long term? Possibly not since it may result in the quality of the product being compromised.
As already mentioned if your forages are good quality and you have more than enough to fulfil your farm’s requirements, then there is a strong case to utilise these more effectively.
Gradually increasing the forage portion of the diet at the expense of concentrate will reduce cost of the concentrate portion. For example increasing the forage portion by 10 per cent from 51 per cent to 61 per cent, then the concentrate feed rate will reduce by 0.07kg/l and margin improve by 1.1ppl. If this exercise is done gradually then milk production should not be affected.
Improving fertility: reduce calving index. Reducing herd calving index 30 days will result in one extra milk cheque per year.
Improving mobility; if your cows have good locomotion they will eat more. Increasing dry matter intake by 1kg per day should result in at least a one litre yield increase.
Reducing mastitis; average mastitis cases in herds are costing 2.3ppl.
We often pay the bills for our veterinary and medicines input but how often do we stand back and look at whether we can reduce the impact of problems on farm and gain more efficient production at the same time?