How to grow your profits by maximising grass efficiency
January is generally the best month to review the financial performance achieved in the previous season for a spring calving dairy system.
The highs and lows are still fresh enough in the memory to allow clear thinking on why inputs, outputs, income and expenses were what they were.
After all the woes of 2018 you might be tempted to skip this process, but I can't stress how important it is to assess the impacts of a challenging year in preparation for future years rather than basing targets and projections on a good year.
For example, I wrote in January 2013: "2012 is likely to have a financial hangover on a number of farms, and many of us are now wondering what fortunes 2013 will bring?
"Considering the winter feed supply one can only hope for a dry spring with strong growth, so there are fingers crossed all around the country."
We know what happened after that, and those statements are as true now as they were then.
We need to know whether the farming system in place is sustainable - given the product price, input prices and weather -when compared to others.
Repeated cash surpluses are an important part of any business.
It's essential to have your figures as accurate as possible and follow it through so that your figures match the cash surplus (or deficit) you have on hand.
Essentially, the more time you put into this exercise, the more you potentially get out of it.
Reviewing your current position from the previous year is an essential step in creating a plausible plan for the year ahead, especially in relation to cash.
Cashflow projections must be the ultimate aim, especially if you are carrying debt associated with the bad year, be it in the form of overdraft, merchant credit or short-term loans.
Obviously, the hope will be to pay these off from the potential cash surplus in 2019, but this may limit the potential to spend money in other areas of your farming business.
So where to start? I always start with the most tangible items, which is how much milk was sold, and for how much. I also focus on the expenses: how much feed was fed and the cost of the feed.
Having spoken to numerous farmers on this issue, many at this stage would be familiar with how much milk solids cows have produced this year, but it's surprising how many have avoided totting up how much meal has been eaten per cow.
If you have been brave enough to look at this figure, don't be surprised when it exceeds 1,000kg/cow.
If it's greater than 1,500kg/cow, you are certainly not alone - many cows have eaten this much across the country.
So when looking at these figures, even though the process is far from complete, farmers start to draw conclusions.
The initial conclusion is that cows have milked well this year, which they have. In reality, was there much choice to do anything else? Possibly not.
However, are there farmers considering a change in system and potentially feeding substantially more in future? I'd expect so. But is it more profitable?
Depending on the circumstances, I would say it's unlikely.
If you monitor what grass you grow regularly and look at the annual tonnage grown, many farmers will find they have lost around 3tDM/ha because of the wet spring followed by a prolonged summer drought.
I couldn't help but compare this to 2012, when a similar figure was also lost in wet areas.
This year an extra 750-1,000kg/cow of meal has been fed in some cases.
If considered at three cows per hectare, meal alone has replaced 1.9-2.6tDM/ha of this lost grass, which leaves 1.1-0.4tDM/ha to have been replaced with forage.
At 25pc dry matter, this only equates to potentially 6-2 bales of silage per hectare or 2-0.7 bales per cow at 3 cows/ha.
Many have fed much more than this, and as we often find with increasing levels of purchased feed and forage, wastage mounts alongside a reducing feed conversion efficiency, as a result of diminishing margins of return.
While this is a very basic example, it suggests that when the analysis of your accounts is complete, I would be surprised if you don't conclude that for 2019 the aim must be to maximise grass grown and grass utilised per hectare, rather than focusing solely on kgMS/cow supplied.
Mary Kinston is a discussion group facilitator and consultant, and farms with her husband in Co Kerry. Email: email@example.com
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