Three ways to address the price squeeze

Rising input prices and milk prices mean dairy farmers need a new approach to profitability. We discuss the three main profit drivers in any dairy farm and how they can impact the bottom line.

Dairy Nutrition
Dairy cows price 720 - ForFarmers UK

Farmgate milk prices may have seen significant improvement this year, but coupled with soaring input prices most dairy farmers are still feeling the squeeze.

In May, AHDB reported average milk price increases of 5.4ppl since the start of the year. Meanwhile, farmers are all too familiar with the increases across feed, fuel and fertiliser prices, estimated to account for around 6.1ppl in additional costs.

The 3 drivers of profitability

“There is a lot of confusion amongst dairy farmers over profitability – how they can make a margin given the unstable prices at the moment,” says ForFarmers Business Unit Director Robin Weening. “We recommend that farmers address the three profit drivers, helping farms identify areas of potential improvement or where investment can have the most impact on profitability,” he adds.

The three drivers are Milk Revenue, Margin Over Purchased Feed (MOPF) and Margin Over All Feed (MOAF) and optimising each of these is worth around £800 cow/year over an average performance, says Robin.

1. Milk Revenue

“This is about doing everything possible to maximise your milk cheque,” he says. “Yield clearly plays a big part in this.” ForFarmers comprehensive costing service through Dairy Herd Manager is a vital monitoring and management tool which helps progressive farmers keep track of their herd’s performance on an ongoing basis, he says. “It also enables benchmarking – comparing your herd with others on a similar system, which many farms find absolutely invaluable.”

Boosting milk solids is a goal for many herd managers. “The premium from higher butterfat and protein is worth reaching for,” says Robin. “Our FatBoost additive is an amino acid based product that can help lift butterfat levels. It works by limiting the negative impact polyunsaturated fatty acids have on rumen bacteria, allowing the rumen to work more effectively.”

Avoiding penalties must also be a focus, he adds. “Minimising cell counts is so important if you want to achieve the best prices. Keeping cell counts below 120,000 is within reach. Our new product Health Protect has shown some amazing results on farms where cell counts were a challenge, both here in the UK and in Holland.”

2. Margin Over Purchased Feed

Improving use and conversion of purchased feed can have a marked effect of profitability. The top quartile of herds are running around £450 per cow per year ahead of average, explains Robin. “Feed prices are such that farmers and herd managers are scrutinising everything they put in front of their cows and we encourage this. It’s more important than ever that every aspect of the herd’s diet brings the results you want and expect.”

The starting point for many is silage and Robin advocates routine silage analysis. “Through SilageManager+ we can give farms an enhanced analysis with highly detailed nutrient information enabling farmers to know exactly what is in their precious forage resources – and what is lacking that needs to be addressed.

“Our Optifeed rationing package can then take this a step further. With the insight into your forage your adviser will finely tune rations to suit the needs of the herd and ensure best performance.” The Optifeed programme can also bring in experts from across the ForFarmers team with input from youngstock or robotic milking system specialists as appropriate, delivering an even more bespoke service with full access to the extensive range of dairy diets, additives and co-products.

3. Margin Over All Feed

Improving forage quality can improve returns by as much as £360 per cow per year, says Robin. “The first step is looking at soil health and improving its ability to produce top notch grass. We recommend soil testing across the farm to identify where improvements are needed and pinpoint any nutritional deficiencies.

“A Nutrient Management Plan (NMP) also includes slurry testing so that farmers know exactly what they are applying.” Not only does this give a clear picture of what is being applied to the land and what is lacking, it also helps avoid adverse environmental impact. “The NMP is basically a written plan, put together by our team of Forage Specialists, which covers how nitrogen, phosphorus, sulphur and potassium will be managed on the farm and ensures that farms are making optimum use of their nutrient inputs.”

The next step is to consider best use of inoculants, he continues. “An appropriate additive reduces dry matter losses and protects the nutritional value of your silage so is an important consideration. “Trials have shown we can lose as much as 25% of the crop’s dry matter between harvest and feeding so it’s important to get this right. Your ForFarmers adviser will suggest the right product for you.”

Once your silage is ready for feeding you want the cow to be able to make absolute best use of it, says Robin. “Here is where a little further investment can pay dividends. Our rumen modifier RumiBest can improve digestion in the rumen and intestine and has shown to add up to 1.3 litres of additional milk from forage.” The product is a combination of plant extracts which stimulate rumen microbes and gut flora, can cost as little as 8p per cow per day, he says. “It can help increase forage intakes and is a good solution where silage is lower in energy than we’d perhaps choose. It’s a great option.