Farm Ireland

Saturday 16 December 2017

How much do top dairy farmers make when they pay themselves?

Ciaran Moran

Ciaran Moran

Teagasc recently published its analysis of dairy profit monitor results for 2016. For the first time Teagasc has included an own labour charge (for the farmer’s own and unpaid family labour).

This is a welcome development as it recognises that farmer’s labour input (and that of other unpaid family members) is required and rewarded for the milk produced, according to Tom O’Dwyer, Head of Dairy Knowledge Transfer with Teagsac.

On spring milk dairy farms the estimated own labour efficiency is greater for the top 25pc (4.1 hours less worked per cow) than for the average farm.

After adjusting for own labour the most efficient farms generated €811 more per ha than the average farm.

Source: Teagasc
Source: Teagasc

Among the other highlights on spring milk farms from this years results is that the top farms generated a gross output of €4,402/ha compared to €3,471/ha on the average farms, a difference of 27pc.

The higher output on the top farms reflected a combination of both higher stocking rate (14pc higher) and higher output per cow (9pc higher milk solids output per cow).

Output per ha on the top 25pc of farms was 226 kg milk solids per ha or 23pc higher than on the average farm (9546 kg per ha). This is as a result of a higher stocking rate (+0.33 LU per ha) and higher milk solids yield per cow (+ 37 kg per cow).

Average spring milk dairy farms had lower variable costs than the top farms at €1,367/ha versus €1,496/ha.

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However, as a percentage of gross output they accounted for 39pc on the average farms compared to 34pc of the output on the top farms.

The gross margin was €2,904/ha on the top spring milk farms which was 38pc or €800/ha higher than those on the average farm.

Source: Teagasc
Source: Teagasc

The biggest variable cost on spring milk dairy farms in 2016 was purchased concentrates and forage accounting for 34pc or €448/ha of total variable costs on the average farm.

The average spring milk dairy farm in 2016 generated a net profit of €1,043/ha compared to €1,827/ha on the top 25pc of farms.

Profit monitor results also show that dairy farms where more than 80% of the diet is composed of grazed grass or grass silage generated a 15pc greater net profit of €1,125/ha compared to €957/ ha on the grass poor farms.

Meanwhile, on a regional basis compared to the overall average, spring milk dairy farms in Cork had this highest gross output of €3,928/ha compared to an average of €3,471 per ha.

Source: Teagasc
Source: Teagasc

The higher output in the Cork region reflects the higher output per cow (443 kg MS) and per hectare (1,067 kg MS).

The North West region had the lowest total variable cost per hectare of €1,260 reflecting lower stocking intensity; Cork had the highest variable costs at €1,531 per hectare.

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