Dairy profits took a 28pc hit from last year's extreme weather events

Quality: The most recent data shows that dairy farmers tend to jump from system to system. What's driving profitability is not necessarily the system but the quantity of grass they are using, says Teagasc dairy specialist George Ramsbottom.
Quality: The most recent data shows that dairy farmers tend to jump from system to system. What's driving profitability is not necessarily the system but the quantity of grass they are using, says Teagasc dairy specialist George Ramsbottom.
Margaret Donnelly

Margaret Donnelly

The more inputs dairy farmers buy in the less grass they use, which impacts on farm profitability, according to the latest figures from Teagasc.

This was shown to an extreme in 2018 when a 10-week drought hit the country, says Teagasc dairy specialist George Ramsbottom.

"In the eastern side of the country, we had a tremendous drought that needed 10 weeks of feeding, and even longer in parts. That impacted in feed costs with 1.5-2t/cow fed by the worst affected farmers and there was probably forage bought-in too. So, there was a huge impact on the cost of production," Mr Ramsbottom explained.

"If you look at average feed costs for 2018, it was €412/cow, and in 2017 costs were €231/cow - that's due principally to the effects of drought."

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Gross output declined because of the fall in milk price between 2017 and 2018. The large increase in feed costs of €181/cow is reflective of the reduced grass growth of 2018.

The increase in cost of production (€613/ha) was greater than the change in gross output (€35/ha decline). So while feed usage and milk production increased, the net profit declined by 28pc (€648/ha).

He said it highlights the difference between high input and low input systems.

"People that fed a low proportion of purchased forage, is considered low input. But the most recent data would say that farmers tend to jump from system to system and what's driving profitability is not necessarily the system but the quantity of grass they are using.

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"When grass usage goes down, costs rise as inputs rise, and the impact is lower profits as grass usage goes down. It's harder with higher inputs to utilise the same quantity of grass per ha, and typically it declines as the purchased inputs per cow go up. The key message for dairy farmers it to use as much grass as you can."

On a positive side, he said, milk production was up 18kg so yield wasn't effected too much by the drought, but it was bought milk. "Cows had to be fed to keep them going."

The figures show that while cow numbers increased by 5p, this group of farmers reported a 10pc increase in total production of milk solids. This was achieved through a combination of increased cow numbers and increased production per cow.

Spring Milk Producers

The high profit spring milk producers were larger scale (10pc larger herds), more intensively stocked (14pc higher stocking rate) and consumed 1.6 t DM/ha more grass (19pc more) in what was for many a very dry summer.

They produced 38kg more milk solids per cow (8pc higher yield) of higher fat and protein content and 244kg more milk solids per hectare (24pc higher) by virtue of their higher milk solids yield per cow and their higher stocking rate, according to the Teagasc figures.

Gross output of the top quartile was €1,266/ha greater than the average spring milk producer as a result. Variable costs were €11 lower per cow but €244 higher per hectare by virtue of their higher stocking rate. Meal costs were slightly higher on the high profit farms (€16/cow).

Fixed costs were €56 lower per cow but €30 higher per hectare for the highest profit quartile.

Overall net profit was €300 higher per cow and €992 higher per hectare (64pc higher) than the average spring milk producer who completed the Profit Monitor.

Winter Milk Production

In contrast to their spring milk counterparts, the high profit winter milk producers were similar in scale (2pc smaller herds) but more intensively stocked (12pc higher stocking rate) and consumed 1.1 t DM/ha more grass (13pc greater), the figures show.

They produced 37kg more milk solids per cow (8pc higher yield) of higher fat and protein content and 228 kg more milk solids per hectare (20pc higher) by virtue of their higher milk solids yield per cow and their higher stocking rate.

Gross output of the top quartile was €1,288/ha higher than that of the average winter milk producer as a result. Variable costs were €14 higher per cow and €294 higher per hectare by virtue of their higher stocking rate. Meal costs were marginally higher (€32/cow) on the high profit farms, the Teagasc figures show.

Fixed costs were €63 lower per cow but €15 higher per hectare for the highest profit quartile.

Overall net profit was €306 higher per cow and €981 higher per hectare (57pc higher) than the average winter milk producer who completed a Profit Monitor.

Grass utilisation and profit

Compared to the average spring milk producer, the top 25pc of producers utilised 2.3t more grass per hectare (27pc more).

They produced 4pc more milk solids per cow (18kg more) but by virtue of their higher stocking rate produced 24pc more milk solids per hectare (245kg more).

Purchased feed cost was 8pc lower per cow (€34 per cow lower) with 4.1t grass dry matter used per cow compared to 3.8t grass dry matter used per cow on the average Profit Monitor farm.

Overall farm net profit was W616 higher per hectare on the top grass use farms (40pc higher).

 

Winter Milk Production

In contrast to their spring milk counterparts, the high-profit winter milk producers were similar in scale (2pc smaller herds) but more intensively stocked (12pc higher stocking rate) and consumed 1.1t DM/ha more grass (13pc greater), the figures show.

They produced 37kg more milk solids (8pc higher yield) of higher fat and protein content and 228kg more milk solids per hectare (20pc higher) by virtue of their higher milk solids yield per cow and their higher stocking rate. Gross output of the top quartile was €1,288/ha higher than that of the average winter milk producer. Meal costs were marginally higher (€32/cow) on the high-profit farms, the Teagasc figures show.

Fixed costs were €63 lower per cow but €15 higher per hectare for the highest profit quartile. Overall net profit was €306 higher per cow and €981 higher per hectare (57pc higher) than the average winter milk producer who completed a Profit Monitor.

 

Grass utilisation and profit

Compared to the average spring milk producer, the top 25pc of producers utilised 2.3t more grass per hectare (27pc more).

They produced 4pc more milk solids per cow (18kg more) but by virtue of their higher stocking rate produced 24pc more milk solids per hectare (245kg more).

Purchased feed cost was 8pc lower per cow (€34 per cow lower) with 4.1t grass dry matter used per cow compared to 3.8t grass dry matter used per cow on the average Profit Monitor farm.

Overall, farm net profit was €616 higher per hectare on the top grass use farms (40pc higher).

 

Spring Milk Producers 

The high-profit spring milk producers were larger scale (10pc larger herds), more intensively stocked (14pc higher stocking rate) and consumed 1.6 t DM/ha more grass (19pc more) in what was for many a very dry summer.

They produced 38kg more milk solids per cow (8pc higher yield) of higher fat and protein content, and 244kg more milk solids per hectare (24pc higher) by virtue of their higher milk solids yield per cow and their higher stocking rate, according to the Teagasc figures.

Gross output of the top 25pc was €1,266/ha greater than the average spring milk producer as a result. Variable costs were €11 lower per cow but €244 higher per hectare by virtue of their higher stocking rate. Meal costs were slightly higher on the high-profit farms (€16/cow).Fixed costs were €56 lower per cow but €30 higher per hectare for the highest profit quartile. Overall net profit was €300 higher per cow and €992 higher per hectare (64pc higher) than the average spring milk producer who completed the Profit Monitor.

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