A successful dairy business is defined by excellent leadership which is constantly making incremental changes to advance all aspects of cow welfare, resource use efficiency and people management.
Increasing price volatility, ongoing regulatory and assurance requirements and the vagaries of the political climate could all prove a perfect storm for those seeking to build successful dairy businesses.
This is according to Neil Adams, managing director of Promar.
In spite of this, he believes dairy producers can thrive by implementing a clear strategy and he suggests there are enormous opportunities for farmers willing to rise to the challenge.
He says: “Dairy farming is like a jigsaw where the pieces are the market, a farm’s working assets, livestock, its land resource and the environment.
They only get fitted together properly if the key individuals who lead, work and support the farm collaborate to achieve coherence.
It is all about unlocking potential.”
Have a look at the current state of your business in detail and ask yourself these four questions:
Mr Adams says for many, expansion has been the key strategy for survival but he cautions this will not be appropriate in every situation, especially if external influences are likely to make this approach more difficult.
“We are already seeing processors in the liquid sector taking steps to halt unbridled expansion.
Irrespective of our future trading relationship with the EU, we will need to meet certain environmental and welfare standards which are likely to become more demanding,” he says.
The theme underlying all these successful businesses is management ability and leadership
Mr Adams is very optimistic about the future of UK dairying and believes there are many opportunities for those farmers who are willing to grasp them.
He says: “The UK is unique because our dairy industry is so diverse, and farmers make it work on their farm by adopting a variety of different systems, whether it is all year round calving within an entirely housed unit or grazing based spring calving.
The theme underlying all these successful businesses is management ability and leadership.
“It is tempting to think there is one magic bullet which is missing, but this is rarely the case.
The really successful businesses are managed by people who are meticulous about everything they do.”
He describes business expansion as ‘a good thing’ as long as farmers manage the risks associated with this growth.
He says: “Growing is one thing but growing profitability is another.
The ambition associated with growing a business is what gets many people out of bed in the morning, but it also keeps them awake at night.
“Establishing the right work/ life balance is very important and having the right people around who are as committed as you are is critical.”
Understanding the market is critical and we advise farmers to be aware of the clauses in their milk contract
Euryn Jones, interim head of agriculture with HSBC UK, says a commercial approach with a ‘strong focus on generating profit and cash’ is fundamental to any successful dairying business.
“Price volatility is an inherent characteristic of agricultural commodities so it is vital to make a farming business as resilient as possible.
Profit defines all successful dairy businesses and the figures show the top quartile to be 1.8 times as profitable as the bottom quartile.”
He adds: “In most cases the factor which drives performance is management.
We urge dairy farmers we work with to calculate and be clear about their break even milk price.
What price do they need to receive for their milk to cover all their costs? “We encourage our clients to plan ahead, draw up budgets and monitor their actual financial outturn against their budget.
They need to understand the variance between budgeted and actual figures and appreciate the causes so they can act upon them,” Mr Jones says.
HSBC UK takes into account a number of factors which any business would need to be mindful of when looking to borrow money.
These might include:
He believes there are several performance indicators which are a good guide as to whether a dairy business is successful.
Mr Jones says: “Feed costs per litre usually reflect excellent forage production and utilisation.
The ability to manage fertility is a major driver of profitability in all systems.
And controlling fixed costs such as power, machinery and labour is another variable which influences profitability.
“There is no one system which is better than another and I see people succeeding with a whole range of approaches.
Understanding the market is critical and we advise farmers to be aware of the clauses in their milk contract so they avoid the penalties and achieve bonuses wherever possible.”
Precision livestock farming techniques, such as activity monitors, can provide an early alert to health problems
Improving cow health and welfare is likely to be at the top of the list of priorities for every progressive dairy farmer.
Jonathan Statham, a partner with the Bishopton Veterinary Group and chief executive of RAFT solutions, describes it as an ‘ongoing team approach’ with vets as an integral member of the farm team.
He says: “We have to consider what a sustainable dairy enterprise looks like in terms of cow health, fertility, nutrition, welfare and environmental impact and focus on root causes and prevention.
“The health issues a farmer faces broadly fall into two separate categories.
The first is single agent infectious disease such as BVD, Johne’s, IBR and TB.
These can affect all herds, irrespective of how well managed they are.
“The second category is multi-factorial management disease including calf pneumonia, mastitis and lameness.
These diseases are complex, farm specific and usually require a range of herd health changes to deliver improvement.
“In order to tackle either type of disease, the first stage is always to establish the health status of the herd by testing and measuring current performance and levels of disease.
Secondly, if the disease(s) is present in significant levels, the next stage is to make a plan for control which may mean eradication or for management diseases, dramatically reducing the level of incidence.”
Mr Statham says tackling disease relies on understanding the balance between immunity in the herd and the scale of the disease challenge.
“Examine the specifics of the farm system and look for patterns of disease.
What are the things which compromise cow immunity? It may be several factors including stocking rate, building design or management of transition period nutrition.
“Some of these may require capital investment, but luckily there are often many things a farmer can do which cost relatively little.
For example, herd health training for staff in relation to procedures such as the milking routine can make a significant difference to the incidence of mastitis,” Mr Statham adds.
Technology offers the dairy farmer considerable scope for improving the early detection of disease in herds.
He says: “Precision livestock farming techniques, such as activity monitors, can provide an early alert to health problems and can enable farmers to target cows rather than relying on blanket group treatment.”
Visit the series homepage for more information