Farm Ireland

Tuesday 16 January 2018

Majority of farmers not up to speed on production costs

The majority of farmers do not have a true grasp on the cost of their production system, warned Gareth Davies from Ireland Genetics UK.

Mr Davies who travels extensively throughout the UK where he markets semen from EBI bulls from NCBC, said all farmers can instantly tell him how many litres their cows are delivering but few can provide the finances.

"The majority of farmers I come across do not have a true grasp of their cost of production. That absolutely amazes me. To me farmers are manufacturers," he said.

"If you were in any other form of manufacturing business you would go bust if you didn't know your cost of production."

He pointed out there was no such system that was a profitable system. "It is the management of the system that makes it profitable," said Mr Davies.

"Whenever I go on a profitable farm it has got nothing to do with the system, it has everything to do with the team that is running the system."

At the conference, Teagasc financial management specialist, Kevin Connolly, said farmers must maximise revenue but have a clear awareness of the cost of generating that revenue.

He said farmers often focused on the cash that was coming in over the winter months but they must also examine the outputs. Mr Connolly urged farmers to get to grips with their finances by carrying out a monthly cash flow budget on either paper or a computer to get a clear view of their finances.

Also Read

In the UK, Mr Davies explained there were 57 different milk contracts in operation, with those on a supermarket aligned contract working in a far stronger and better paid industry.

"It is very much anti-spring milk in the UK, there is no doubt about it," he said, as he described how some farmers struggled to get milk contracts in certain areas.

He said that just because a farmer is in a winter milk production system does not mean they have to produce massive volumes per cow.

Mr Davies pointed out that some of the most profitable winter milkers that he is dealing with produce less than 8,000 litres.

"What they do is they'll calve them in a tight block, they'll feed them well during that winter period to get a good peak of lactation, they'll get everything served by late February so everything is back in calf and then mentally they just turn into spring calvers. They don't keep pushing them," he said.

"If you want to make it pay then fertility is the name of the game," he said, adding a milk price cannot be maximised if a farmer cannot get cows back in calf in time.

"If you want to be in peak production at the end of November to get your maximum milk price, then you want that cow calving in September so she is hitting her 100 days in milk and she is throwing out the litres."

Indo Farming