Most costs on dairy farms have risen rapidly in recent years.
While milk prices were satisfactory, dairy farmers were able to cope with these price rises, but will be under pressure to deal with them as they face into 2015, and the prospect of a 25% or greater cut in the price of milk.
Unfortunately there is little room for cutting costs on most farms. Instead, spending more on certain aspects of dairy farming will be most helpful to farmers.
By far the best way to overcome high costs is to make best use of our natural resources, which is our potential to grow grass and have healthy cows that are capable of efficiently converting this grass into milk.
While we have made great strides in developing efficient cows, our efforts at making best use of our grassland fall well short of potential.
Surveys over the past few years indicated the vast potential for increased production that can be got by making better use of our grassland.
For example, the average utilisation of grass on Irish dairy farms, according to the National Farm Survey (NFS), is 6.6 tonnes of dry matter per hectare, while the utilisation in Moorepark is around 12 tonnes per hectare.
Utilisation close to or even exceeding this figure is also being achieved on some top farms, but perhaps not in a bad weather year, when growth and utilisation are poorer on all farms — and disastrous on wet land.
Utilisation of 11 to 12 tonnes of grass dry matter (which is worth about €2,500) may not be achieved on all types of land. But most farmers could increase grass production and utilisation by around 50% through reseeding, proper fertilisation, good facilities and appropriate stocking rates.
Over 50% of dairy land is seriously deficient in lime, P or K. Lime deficiency is reducing the effectiveness of P, K and N by over 50% on some farms.
Unfortunately, many farmers find it difficult to afford to bring their soil fertility up to the proper levels. But neither can they afford not to do so.
It is essential for farmers to plan their financial situation carefully for 2015.
With the opportunity for increasing milk production, we are likely to see a vast improvement in grass management and growth, with more appropriate stocking rates to best utilise the extra grass.
The start of the New Year is a good time to assess any business, especially farming.
This involves looking back and looking forward, and examining farm records to assess physical and financial performances over the past few years.
Looking forward to 2015 may not be such a pleasant task, but it has to be done.
Don’t forget that the longer term prospects for dairying are good, so be prepared for the good times.
In order to carry out these tasks properly, you need good records and information and guidance regarding the likely road map for dairying in the years ahead.
In the context of dairying, the Teagasc dairy profit monitor is the ideal tool to examine your performance and compare with targets.
Unfortunately, only about 5% of dairy farmers use the Dairy Profit Monitor and only a minority has any reasonable type of management accounts and records.
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