Dairylink: Performance review for 2015, plans for 2016
3rd March 2016
Conail Keown assesses performance for Nigel Corbett, Co Down, and David Brady, Co Cavan.
Nigel Corbett: Major cashflow challenge
Managing cashflow is a major challenge for Nigel, with production costs well above income. Existing debt and the increased cost of producing milk over the winter months are having a negative impact on any cash balances left.
Poor fertility is leading to a spread calving profile and drystock have been eating into profits. While concentrate feed going to these cows has been adjusted down, they are still eating relatively expensive silage and adding nothing to farm income.
Major improvements in fertility are needed on this farm to ensure cows spend longer in milk and less time in late lactation or dry.
While the farm has the advantage of excellent milking facilities, cubicles and slurry storage, this investment must be paid for and current repayments are a major drain on cashflow.
There has been very limited investment in grazing infrastructure, reseeding and soil fertility. Repayment of building loans is putting big pressure on cashflow and is now restricting any ability to address these issues and Nigel's ability to lower cost of production.
In 2015, gross output for the farm came in at £176,061. This includes livestock sales from cull cows and calf sales. Total cash costs for the farm came in at £124,653 for 2015, but remember this does not include capital and interest repayments on loans or personal drawings, bringing the cash cost of production to 17.92p/litre.
A breakdown of the main variable costs can be seen in the graph. Purchased concentrate for the dairy herd accounted for the most significant costs on the farm at £57,710 (8.29p/l), including all purchased minerals and concentrate fed to heifers. Chemical fertiliser for the year accounted for only 1.99p/l.
Nigel is focused on key areas within the production system which can improve profitability. The plan is to hold current level of production, but push profitability through improved fertility, better grass and grazing management and improving milk solids.
Ultimately, lowering purchased feed is the key challenge. More feed is needed from the land block around the farmyard. Nigel is targeting an improvement in milk components to increase output. Cow numbers can increase slightly, but grass quality and quantity on the grazing platform will limit stocking rate.
David Brady: Improving output
David Brady is milking 80 spring-calving cows and has invested heavily over the past two years in grazing infrastructure and drainage of the main grazing platform.
A key driver for David is to increase the grass growth on the farm, with an area of rented land earmarked for improvement this year.
The land is on a long-term lease with only 15% ryegrass currently in the sward, so reseeding and drainage work are required to improve this area.
In 2015, gross output for the farm came in at €177,427. This includes livestock sales from cull cows and calf sales.
Total cash costs for the farm came in at €118,976 for 2015, but remember this does not include capital and interest repayments on loans or personal drawings, bringing the cash cost of production to 26.62c/litre.
A breakdown of the main variable costs can be seen in the graph.
Purchased concentrate for the dairy herd accounted for the most significant costs on the farm at €28,124 or 6.29c/l, including purchased minerals for both dairy cows and dry cows. It also includes purchased feed for replacement heifers.
Lower-than-normal contracting charges for 2015 are explained by silage stocks from the previous year carried forward. This allowed reduced contracting charges for 2015.
Machinery running costs for the farm are higher than average due to a significant amount of land improvement work carried out using owned farm machinery.
David has plans to develop efficiencies further within the system of production already established on the farm.
With the quota restrictions limiting sales in past years, more output can be achieved on this farm this year and into the future, but it must be efficient and contribute to farm profitability.
The plan is to reduce the current level of additional meal feeding by 25% and push output through improved fertility, better grazing management and improving milk solids.
David is targeting 450,000 litres from the farm for 2016 at 4.10% butterfat and 3.45% protein (437kg MS/cow) for 2016.
Cow numbers will hold at 80, with a stocking rate target of 2.5 cows/ha on the grazing platform this year.
This article has been reproduced with the kind permission of the Irish Farmers Journal. Please click on the below Irish Farmers Journal logo to be brought to additional dairy articles
