Make time to check expenses and grass management
Published 15/03/2011 | 05:00
The weather has allowed for excellent grazing conditions until recently and grass is starting to grow. But none of this is the main topic for my discussion groups. Instead it is all about milk quota!
It's a pity that we aren't just free to dairy farm, focusing on the fundamentals of the biological system that we run rather than how the potential impact of quota needs to be factored into the business until 2015.
Ultimately, it is what it is and it needs to be considered and dealt with appropriately. However, it also surprises me that given these talks about quota and constraints on business size and turnover, how little attention has been focused on the one element that each farmer has control over on a personal level. I refer, of course, to farm working expenses and cost control.
It's only been two years since we were calving cows into a market that was returning only 20c/l, which had serious effects on cashflow right up until end of last year for some.
The mantras of cash being king, price volatility in the commodity market, and capitalising on the good times to build a buffer fund for a downturn, have almost been forgotten. I can already see the hypothetical belt slackening now that the co-ops are committed to 33c/l.
But think about how often you've heard that Ireland's competitive advantage is that we are a "relatively low-cost milk producer". To qualify as a low cost operator, you need to be retaining at least 45pc of your turnover after farm working expenses and a wage for management. This shouldn't include your SFP either, so you can see that the bar is set quite high. So low-cost doesn't just happen because of where Ireland is located geographically. It also requires a series of well-thoughtout decisions.
So given these statements, if I was reviewing your spring farm management, taking into account your average pasture cover, demand for pasture and the level of supplementary feeding, forthcoming pasture growth and percentage of the farm milking platform grazed, would I be challenging you about the level of supplementary feed you were offering the cows at present or not? Do you even know the answers to these questions?