DairyCo Reports

DairyCo MilkBench+ Report

Controlling costs and ensuring you are on the correct production system for your milk contract are the main messages from the second MilkBench+ Report.  MilkBench+ is an internet-based benchmarking service.  Dairy farmers are able to compare their performance against other farms.  In the latest report, financial results from 315 herds with year ends between December 2011 and June 2012 have been analysed down to net margin level.

Similar to the first report, the results have been analysed into three enterprise types;

• Cows at grass – mainly grass based, usually lower yield levels and mainly block calving
• Composite – maximum use of family labour, mostly year round calving
• High-output cows – usually housed for a greater period, high input costs, high yielding, mostly year round calving but some autumn and multi-block calving

One of the main findings from this report (and the first one – see January 2012 Bulletin) is that total cost of production is the key determinant of profit.  Analysis of the figures reveals four main cost areas:

• Feed and forage variable costs
• Herd replacement costs
• Labour costs (paid and unpaid)
• Power and machinery

According to the report these four cost areas account for a minimum of 60% of the difference in net margin between the top and bottom quartiles of the farms across all three of the enterprise types.  Furthermore on average they account for 68% of the totalcosts of production for all three types.  The report concludes that controlling these four areas will lead to a significant increase in performance.

Further key findings included:

• Average yield per cow is not the main driver of profit
• The correct balance between input use and milk output is important for high net margins
• Milk can be produced efficiently and at nearly any scale from any of the systems

The full report can be found at http://www.dairyco.org.uk/resources-library/technical-information/milkbenchplus/milkbenchplus-report-2013/

Farmer Intentions Survey

The latest Farm Intentions Survey from DairyCo comes after what has been a very challenging year for all in agriculture and it is therefore not surprising that in general there is an overall drop in confidence and an increase in uncertainty about the near future.  Interestingly though, the results from the survey of 1,230 farms across the UK found that dairy farmers were more confident in their own businesses than in the dairy industry, even so confidence over the next five years had fallen compared to last year.  Welsh farmers showed the lowest levels and the largest drop in confidence compared to the previous year.  In general, confidence levels increased with herd size and decreased with age.  The proportion of farmers intending to the leave the industry in 2013 has risen from 7% to 9%, equivalent to 1,100 holdings.  These were more likely to have been mixed farms with smaller dairy enterprises (< 60 cows).

Uncertainty over production and investment levels has risen.  Those farmers undecided on their production levels in two years’ time has increased from 5% last year to 13% this year.  The number of farmers who are undecided on their investment plans has risen to 36% compared to 13% in the last survey.  Those who intend to invest more than £150,000 over the next five years has fallen from 14% to 9%.  The full survey can be found at http://www.dairyco.org.uk/resources-library/market-information/farmer-intentions/farmer-intentions-survey-2013/