Expect to lose efficiency when expanding herd
As the end of the year draws near for those who run a spring calving system, there comes a time when there is a chance to reflect on performance and to plan for the next 12 months.
To do this, obviously a process of evaluation needs to be in place. Many will start by assessing the annual accounts, as a focus on profitability is essential to any business. From this base, using a number of assumptions, the farmer can develop a budget which fits in line with his plan for the farming system next year.
Given the talk from the industry in light of the Food Harvest 2020 Report, and the opportunity that exists for the Irish dairy sector, expansion of a low-cost (grass-based) system is at the forefront of discussion.
While each dairy farmer is having to weigh up his own position in terms of quota, many of those that have an opportunity for expansion -- in terms of the land base -- already have some steps in place that will ultimately result in a rise in milking cow numbers from next year onwards.
Obviously, expansion requires investment. On a farm, this investment is in stock and infrastructure. The cost of this investment is tangible, easily calculated, and the annual service cost of interest and principal on borrowed money can also be easily determined. From your budget for next year you then debate whether this cost of investment is affordable or whether your business is over exposed.
However, the risk in this whole process is that the assumption is based on efficiency. One of the major costs of expansion is the loss of farm efficiency.
While the impact of this expansion on efficiency can be assessed on many different levels and income streams, the most important is milk sales. So you need to pay attention to a few simple key performance indicators -- and one of them is kgMS/kgLW.
So, firstly you need to assess your present position. Most will have done a few quick calculations and determined the milk litres sold per cow. Many would hope to have achieved at least 5,500 litres a cow (1,200ga/cow).