6 ways to improve dairy margins to beat high inputs

The current pace of change in the dairy sector is extremely fast, with milk price increases struggling to keep up with rising fertiliser, feed and energy costs.

As such, it is important to maximise margins at every opportunity, says James Hague, head of agriculture at Mole Valley Farmers.

Many tools are available to help producers assess their margins, says Mr Hague.

One is the Kingshay Milk Map, which can be used to model feed and yield efficiencies, with the aim of improving the bottom line.

See also: How maize shredlage aids digestion in dairy rations

Plotting performance

The Milk Map plots purchased feed in tonnes against annual milk yield a cow to monitor efficiency in the utilisation of purchased feeds.

As well as the opportunity to benchmark against other dairy units, users can model any future directions of travel for the business.

Mr Hague says the most efficient farms will be ones which plot at the middle-to-higher end of the map and are finding a balance between purchased feed costs and the subsequent milk yield produced.

For those who come in at the lower end of the scale, there are plenty of opportunities to improve.

Opportunities

“The first question we always ask is: From where you are now [in terms of milk yield], where would you like to be?” he says.

The next consideration is timescale. “The important thing is to have an ambition of where you want the herd to be in a certain period of time.

“We’ve had farmers in the past who have the ambition to go up by 1,500 litres a cow within a year – and it is possible.

“At a time like now when cull prices are pretty good, and the price of a freshly calved cow isn’t horrendous either, the ratio between the two does allow for those herds which are not closed to be able to do some swapping out.”

It is also important to think about what the goal is with regards to bought-in feed, he says.

“There are farmers wanting to use more feed, but there are also those who want to use less. Either approach is fine because the reality is, that to be successful going forward, margin is critical.”

Once a goal is set, there are several areas farmers can review to help improve margins.

1. Quality of purchased feed

A farmer might want to increase yield while reducing reliance on purchased feed, to increase margin over purchased feed.

This could be achieved by using less feed, or by using better quality feed, says Mr Hague. “[This could be a feed that is going to let the forage be burnt more effectively and digested more fully. 4

“Or it might be just a better quality feed which creates a [more] balanced ration for that cow.

“Any purchased feed should be acting as a catalyst to fill any of the gaps that are in the ration to make the whole diet work better.” 

2. Herd quality

As well as inputs, the quality of the herd will greatly affect the performance of even the most efficient feeding strategy, says Mr Hague.

“[From] the top-producing cow in a herd, down to the bottom cow, there is generally quite a spread in performance.”

He advises looking at milk records to see which cows are contributing to the bottom line and which are there as “passengers”.

Heifer growth and development also play a role, with national figures showing heifers are not achieving the longevity and production required during their time in the herd.

If this is the case on farm, he says farmers should consider which stage of the growth cycle is not working as well as it could.

To improve longevity and profitability, consistent growth is important leading up to first calving.

Research carried out by Mole Valley shows that when this is achieved there is the potential for a 20% reduction in rearing feed costs and a 20% reduction in rearing carbon footprint, as well as a £2,000 increase in milk value a heifer over her lifetime.

3. Forage quality and quantity

The key points to consider are whether the farm is growing enough of the right crops, and if it is possible to reduce dry matter (DM) losses and increase quality, says Mr Hague.

“In those areas which are excellent at growing grass, that’s going to be the key crop for those units – let’s make the most of it.”

In areas which are more drought prone, alternative forages and deeper rooting grasses can help to increase the amount of DM/ha.

Reducing losses is a great way to improve margins, he adds.

“When we look at the utilised DM/ha figure on a lot of farms, quite a lot of the lost feed that is grown is a result of DM losses – mainly during ensiling.” Mr Hague says losses can be up to a quarter of the total DM.

4. Ration accuracy

This includes the individual components, the ration formulation and the feed-out of the ration. Accuracy is essential to ensure feed conversion efficiency is maximised.

Looking at dung pats is a good place to start to assess if the ration is working or not. Sloppy or dry consistency, dung dark in colour, or with lots of undigested fibre are often indicators of an imbalance.

5. Animal health

Production diseases can “eat away” at the ambition to improve margins and move up the Milk Map, says Mr Hague. “Managing lameness, mastitis, fertility and digestive issues are all key.”

Improving general welfare will also be beneficial to production, he says.

Making improvements to building design, for example, by adding comfortable mattresses to increase cow comfort, can add up and make a big difference to overall margins.

Good hygiene also increases the potential to maximise margins. For example, by keeping somatic cell counts down, he adds.

6. Herd management

Herd management underpins all these areas. It is vital to ensure the right staff are responsible for the care of the herd, explains Mr Hague, and to keep pace with changes in the industry.

“There is a lot more software and hardware on farm and potentially less labour. New skills are required all the time and it’s important to review this,” he says.

James Hague was speaking at a recent webinar hosted by Mole Valley Farmers.