6 ways to maximise your milk contract

Dairy markets might be on the turn, but farmers need to maximise their revenue wherever possible.

This will also help put them in a stronger position for when prices do pick up. A better focus on hygiene and processor needs should help, as well as making use of the best tools out there.   

As part of the Decisions4Dairy initiative, AHDB Dairy lead analyst Chris Gooderham explains how producers can look at milk hygiene and composition to make the most of their contract.

See also: 8 factors driving dairy recovery

1. Cell counts

It seems obvious, but make sure you know your bactoscan and somatic cell count (SCC) requirements in detail.

About £40m or 0.3p/litre was knocked off total payments through hygiene deductions in the previous milk year, according to Genus research.

2. Hygiene penalties

Look ahead to future demands. Hygiene penalties already kick in sooner for those on aligned contracts; some won’t pick up milk above 50,000 bactoscan or 250,000 SCC.

These requirements have been raised in recent years and are likely to get even stricter, as buyers and retailers push for improved on-farm efficiency and performance.

3. Incentives

Find out what your milk buyer is incentivising. Protein will be much more important for cheese makers, but butterfat should be valuable to all processors.

In April 2016, the average manufacturing processor paid about 1.8p per percentage point of butterfat in the milk and more than 3p for each percentage of protein.

This compared with liquid buyers paying 1.6p for butterfat and 0.5p for protein.

4. Customer needs

Focus on your customers’ needs. Analysis of last year’s milk supply by Genus shows many farmers did not receive the maximum payments.

There was a wide range of butterfat levels delivered by farmers, despite it being universally valuable to processors.

On protein, there was also a wide range and little difference in the spread between those supplying liquid buyers and those sending for manufacturing.

5. Calculate cost of change

Weigh up the value of making changes. Farmers need to calculate the extra cost of improving either their milk hygiene or composition on their own farm, and set that against the extra money they might get on their cheques.

6. Data

Use the tools available. AHDB Dairy’s milk price calculator lets you put in your own farm’s data to see what changes can be made to improve the return from your current contract. It is online, along with other Decisions4Dairy information, at dairy.ahdb.org.uk.