Advice for dairy farmers: Use profit monitor to set realistic targets

The net 2015 profit margin per hectare on the top 25% of dairy profit monitor farms was €2,278, compared with an average of €1428.

No doubt some of the variation is due to land type, but it is largely due to farm management.

Net margin represents returns on labour, capital invested and land.

The results come from 1,400 farms. The top 25% (ranked by net profit per hectare) had a stocking rate of 2.5 cows per ha, compared with a 2.2 average.

Milk yield per cow averaged 5832 litres in the top group, compared with a 5,489L average.

The top group also had a superior milk solids percentage. Most of these results are similar to other years.

Feed cost is by far the biggest cost throughout all groups, at about 35%.

There was a big variation in output and profitability per hectare, due to the significantly higher stocking rate of the top 25%, and higher output per cow, resulting in 23% higher milk solids production by the top group.

Herd size was similar for both groups (114 versus 106). Grass utilised on the top farms was 11.4 tonnes per ha, only 9.4 tonnes were utilised on average. The cost of replacing lost grass utilisation has a very significant effect on profitability.

If we examine the dairy profit monitor data in more detail, the net profit per hectare of the bottom 10% is less than one third of that achieved by the top 10%.

Total variable costs per litre milk are a very useful measure of performance.

The top group is generally more than twice as profitable as the lowest group.

What can be learned from participating in profit monitoring?

Firstly, participating farmers are generally in local groups which meet regularly to discuss all aspects of farming.

Experts on different aspects of farming are often invited to attend. On a regular basis, farmers can not only compare many aspects of their performances with local groups, but also with farmers at national level.

This helps them to set realistic targets for their farms.

Unfortunately, there are still a lot of farmers who keep no records of any value to help them with the management of their farms.

Even basic management tools such as milk recording and adequate AI usage are ignored by a lot of farmers.

Despite a huge effort by Teagasc over the last decade only a very small minority of farmers use dairy profit monitoring,or other useful management account systems.


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