Friday 30 September 2016

Weighing up the costs of extra milk

A look at the pros and cons of investing in additional milk production this autumn

Brendan Horan

Published 07/10/2015 | 02:30

Weighing up the costs of extra milk production this autumn
Weighing up the costs of extra milk production this autumn

This issue revolves around extending lactation by supplementing the herd with additional high quality feed to produce more milk this autumn.

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For the purposes of comparison, we'll ignore whatever base level of supplements are required to normally stretch the grazing season to November and close off the farm with the correct winter grass cover.

Most people who are thinking about milking on this autumn justify it by pointing to the response to concentrates - the extra litres of milk produced per kilo of concentrate fed.

This may well boost cashflows at a time when hefty 2014 tax bills are looming, but it should be more about a net profit benefit rather than just a revenue stream.

To figure out what exactly the extra litres of milk would be worth after all costs have been taken into account, let's look at this on the basis of additional milk solids (grams MS) per kg of extra feed.

In research trials, the average response to additional concentrates is in the order of 80g of MS per kg of concentrate fed. This is despite the widespreadbelief among farmers that every extra 1kg of meal will yield at least two additional litres of milk yield.

It is also a fact that the responses are typically highest at grass in autumn due to the reduced grass quality that is associated with higher grass covers and longer regrowth intervals.

However, we also know that even a response of just 80g MS is rarely, if ever, realised on farms.

Teagasc dairy specialist, George Ramsbottom, has shown that only two-thirds of the research trial response is actually achieved on average on commercial farms, resulting in 55g MS (equivalent to 0.7kg milk) per kilo of meal fed.

So we should expect a lower than potential response when deciding whether to supplement to extend lactation this autumn.

A quick calculation based on these figures would suggest that a farmer could supplement his cows with meal in the autumn if the cost of a kilo of meal was less than the value of 0.7 litres of milk. For example, at a milk price of 28c/l, meal needs to be cheaper than €175/t for it to be a profitable exercise.

Hidden Costs

However, this would assume that there were no additional hidden costs involved with supplementary feeding.

In separate analysis of milk production costs in Ireland, Britain and New Zealand, it was found that for every €1 spent on supplementary feed, total costs increase by anywhere from €1.20-1.60.

The first additional 20c is accounted for by additional variable costs such as the additional labour required in the parlour and costs of running the parlour.

These can be the only additional costs involved if the farmer takes a day-to-day approach to whether it makes sense to feed meal.

An additional 40c worms its way in when farmers adopt a so-called strategic approach that is more long-term and becomes embedded in the farm set-up.

These costs are more associated with reduced grass utilisation, increased farm mechanisation, capital, maintenance and other costs associated with keeping milk cows indoors.

Any extra milk solids produced by supplementation need to pay for the additional feed along with the non-feed labour and parlour costs.

So how much can a farmer afford to pay for his meal in this scenario?

Based on an average response of 55g MS/kg meal, the rule of thumb figure for day-to-day supplementation (additional cost of €1.20/kgDM fed) is that feed costs need to be 5pc of milk solids values, and 3.5pc for a longer term scenario.

The €4 per kilo milksolids is most relevant for the autumn.

Back to the original question: should farmers contemplate milking on later this autumn?

Aside from the very real challenge of efficiently supplementing animals to milk on in autumn due to grazing inefficiency, currently even high solids autumn milk prices are heading towards €4 kg/MS, and so €200/t is the breakeven price for additional supplementation. Given such low milk prices and inability to source nutritious supplements to complement grass (nevermind grass silage), I believe the best advice has to be for farmers to:

Build grass supply on the farm this autumn to extend the grazing season and lactation for as long as grass supplies allow while retaining the target closing cover (500-600kgDM/ha depending on the farm). This typically involves the use of 200kg of feed supplementation with a nut;

Identify and remove empty animals early to reduce stocking rate and further extend the grazing season;

Body condition score the herd and dry off thin and young cows promptly from October onwards so as to minimise the requirement for purchased supplements for thin cows from now until next spring;

Avoid extending lactation on silage/concentrate-based diets during a period of low milk prices.

Dr Brendan Horan is a Teagasc researcher in Moorepark, Co Cork

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