Dairy veterinary costs up by 26pc since 2007
With many farmers having completed a profit monitor or an equivalent this winter, it is clear that keeping a tight control on the operating costs of the farm is fundamental in achieving a farming system that is highly profitable. More importantly, this delivers the required amount of free cash to pay the tax bill, service your debt, and pay yourself.
On reviewing the costs with all of my groups this year, it is clear that within the variable costs there have been noteworthy increases, especially in the cost of fertiliser and contracting, as well as vets and animal medicines. With the majority of spring calving herds now in the midst of calving, it's timely to consider the issues and costs associated with animal health.
In the last number of years my discussion groups have been looking at a simple breakdown of animal health costs into vet and medicine, and the costs associated with disease prevention -- which are mainly associated with vaccination. Disease prevention has received increasing attention, especially where farmers have experienced significant costs associated with clinical symptoms such as ill health, reduced fertility or production losses due to being hit by diseases such as IBR and BVD, since these have become more prevalent within the national herd.
In recent years the opportunity to take routine bulk milk samples has provided important information with regard to the level of disease within each herd.
This information can help tailor the vaccinations to suit a herd's disease profile, as the right vaccination programme is not a 'one size fits all' situation.
It was interesting to look at the average costs of animal health last year. Veterinary and medicine costs were at 1.29c/l and disease prevention at 0.52c/l, equating to a total cost of 1.81c/l or 3.5pc of gross farm income. In comparison, in 2009 the total cost of animal health was on average 1.63c/l and in 2007 it was 1.41c/l in a year when the milk price was fairly comparable to the high milk price received last year.
The results of our studies show a 26pc increase in average medical costs from 2007 to 2011. This equates to a 5.5pc increase per year, yet there was no real increase in the milk price between 2007 and 2011 -- and we also experienced one of the lowest milk prices in 2009. As dairy farmers, we have limited influence on the milk price we receive, but we do control what happens within the farm gate.
It's very true that circumstances can dictate spending and a bad year or unforeseen circumstances can blow a well-thought-out budget out of the water. However, being fully aware of the cost, monitoring the cashflow and costs throughout the year -- as well as taking some time to shop around, buying only what's needed rather than all that's desired -- are fundamental to a profitable farming system.