Monday 21 August 2017

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How to calculate the path to a good profitable dairy

Vital statistics you need to know to ensure a bright future

Martin O'Sullivan

Every farmer needs to make a profit. However, not all farmers know just how profitable their system actually is. Over the next four weeks we outline the profitability of the key farm enterprises.

This week, we look at the most profitable enterprise in Irish farming -- dairying.

Firstly, the gross margins for liquid-, spring- and combination-calving systems are outlined. Then we project the profitability for a spring calving herd, depending on whether it takes its bull calves to slaughter.

The same calculation can be done for winter or liquid-milk systems by simply replacing the gross margin per litre figure with the relevant number.

• LIQUID MILK (see table A, for gross margin per cow).
• CREAMERY MILK -- SPRING PRODUCTION (see table B, for gross margin per cow).
• CREAMERY MILK -- WINTER/SPRING PRODUCTION (see table C, for gross margin per cow).
• net profit Projection for a dairy farm in spring milk (see table D). This budget is based on a dairy enterprise producing a 382,000-litre quota from a 70-cow spring-calving herd this year. All calves are sold with the exception of those kept for replacements. The farm carries a total debt of €100,000.
• Net profit Projection for a dairy farm rearing all calves to slaughter (see table E).

This budget is based on a dairy enterprise producing a 382,000-litre quota from a 70-cow spring-calving herd this year. All calves are retained as replacements or sold as finished cattle. The farm carries a total debt of €100,000.

• Net profit Projection for a dairy farm rearing all calves to slaughter or rearing no calves (see table F)

This projection is based on (A) a dairy enterprise producing a 382,000-litre quota from a 70-cow spring-calving herd this year. All calves are retained as replacements or sold as finished cattle. The farm carries a total debt of €100,000. Or (B), the farmer opts to rear no calves for beef production and reduces his debt to €50,000 by ceasing drystock production. It is assumed that a 10pc improvement is achieved in gross margin due to lower stocking and greater emphasis on dairy enterprise.

• Next week, full analyses of winter wheat, barley and oat tillage systems

Martin O'Sullivan is an agricultural consultant based in Carrick-on-Suir, Co Tipperary. The 18th edition of his annual Farmers' Handbook (costs €17 and is available nationwide or at www.farmershandbook.ie) will be published next month

Irish Independent