- The next 12 months will be tough, but plan now;
- Cut costs from now;
- Sell more efficiently produced milk and animals;
- Nitrogen grows money;
- Build up grass now to make €2.80/cow/day later on;
- No meal feeding – unless...;
- Some pointers from Moorepark Open Day.
Tough 12 months ahead – plan now
We have been here before, in 2009. How did you survive it? What did you do to get through it? In hindsight, what else should you have done? Answering these questions will help you plan through the implications of the 8-10c/L drop in milk price over the past year. For a 70-cow farmer, it represents a loss of €35,000 in income from 2014.
Do you know what is going to happen financially on your farm during the next five months? Yes! Pretty much! Milk cheques will be down 40 per cent (approx) on last year, unless you are milking more cows. Costs may be a bit less, particularly if you are challenging all spending. All told, you will be in a tight financial bind, mild to serious trouble?
You will have a tax bill in October/November. You will require a big 'lump' of money to pay it. I predict that this will be a serious challenge for most dairy farmers as they won't have set any money aside for it. Will banks allow you to write that cheque if your account is under pressure? I doubt it! Immediately, go to your accountant and ask him to give you an approximate estimate of your tax bill for the year. For the next three-to-four months, put aside a reasonable amount of 'savings' in a special account for this purpose.
Living expenses must be met. Who else has to be paid big sums of money? Make a list, and don't let credit cards, etc. get out of control.
Review where you are financially by doing a cash flow for the remainder of the year. You will be in a position to know what you can or cannot spend.
Some people in banking tell me that cash flows/overdrafts of dairy farmers are not now under too much pressure but they predict that, because of milk price decrease and cash availability next spring, from February to May, farmers will be under serious financial pressure;
It has been suggested that banks will restructure loans and possibly take interest-only payments;
Teagasc has a one-page document called "Is your farm financially fit?" to help you identify your financial position – it is simple and effective. Use it. On the Teagasc web page there is a Cost Control Planner and a Household Budget Planner, both of which will help you to plan your way through the remainder of 2015. At the end of the year, do the Dairy Profit Monitor;
You must pay your outstanding bills so that you can make the real plan. Ask yourself: 'Can I cut costs more?'
Cost cutting from August to December
Simple advice – don't spend money on anything that doesn't give a productive, profitable return this year. Most farmers won't be able to afford the cost of a 'bag of cement' (Haughey's yardstick of being broke). Batten down the hatches for the next 12 months.
Where can you save? Get two or three quotations on all jobs/items/services you deem necessary, and then assess which to go for.
When it comes to insurance, many farmers have made savings of €200-600 by getting quotations. In terms of other expenses, such as car, electricity and phone:
Petrol/diesel and service costs are huge and, no doubt, can be reduced. Too many farmers have too many family vehicles because, like the whole country during the Celtic Tiger, we all over-spent;
Electricity – decide for yourself how you make reductions;
Phone – ah yes! How many in your house? The payment of all of them comes from one source – the cow. You will be told by children, 'it's my own money.' Times have changed and everyone in the household has to take cuts.
Banks will be sympathetic and understanding if you are upfront with them – have a plan and explain your predicament.
Show the bank that you can pay your way out of this cash-flow problem by a longer-term loan and your commitment;
They may be able to offer you interest-only payments;
You must talk to the bank. Ignoring them means more and more letters (maybe solicitors' letters) will arrive. Every letter instils anxiety and fear – so take steps to avoid;
You should have a financial plan or, at minimum, a five-year outline plan to show them.
In most cases, you can't justify any.
There is no way you can afford a new car, tractor, diet feeder, slurry equipment, digger, etc.;
Buildings – forget about them, only maintain existing ones as cheaply as possible. If your single farm payment (SFP) is under threat, consider all the options available to you before making capital investments you cannot afford.
Advice on this is risky, but 'drawings' in some situations have been driven by the 'Celtic Tiger syndrome', and are out of control.
The whole family needs to sit down and be made aware of how difficult things are for your family;
Tell them how much money you are likely to get from every 50-cow herd's milk (€30,000 for remainder of year). Shocking! And list the bills to be paid;
Ask your family for their ideas, take their suggestions on board, having discussed and agreed them;
Make a commitment on what to do;
Minimise school trips (particularly overseas), go back to home-made sandwiches for lunch, set a limit on pocket money and what it might be used for, no more designer-made clothes, can you afford to have children in boarding school? etc.;
Can pocket money be earned by saving on casual labour?
Children can and should do work before and after school and they will still have plenty of time for study and play.
You yourself must set the example by overcoming any serious spending problems you have:
Variable costs – further down, I have notes on how to reduce these;
Pay your bills to people who have given you a service because you will need them again when 'the going gets tougher'.
Output and sales drive income
Milk sales and animal sales will increase cash income during the remainder of the year:
Abolition of quota gives us freedom on this front. We will produce another 20-30kg of milk solids per cow this autumn. Possibly worth €20/cow, if we control costs;
But don't do it at any cost!
The margins/cow of producing milk until December 1 are €226 where only grass is fed; €161 where grass and meal are fed; and €125 where grass and meal and silage are fed. The margin is €230, €180 and €153, respectively, when cows are dried off on November 1.
You must use this information to decide on your most profitable way to manage the autumn;
Should you sell cull cows early or milk on?
This decision will depend on stocking rate, grazed grass availability, winter feed availability, age of cow, and possible change in cull cow prices. But use the previous financial figures to help you. For instance, if, by selling off poor-performing cull cows in August, you are able to milk on until December 1 on no meals, you will be €46/cow better off, but only €9/cow better off if you have to feed meals and keep silage out of the diet.
Nitrogen grows money
So as to have to buy no meals this autumn, you must grow more grass. Nitrogen (N) grows grass:
1kg N grows 10kg grass dry matter (DM) in August;
10kg grass DM produces 22 litres of milk;
Therefore, every €0.80 spent on CAN gives back €6.60 worth of milk;
Urea is 80 per cent of the cost of CAN and should be used in the next two applications, if 10mm of rain can be expected within 24 hours of spreading.
Remember, daily herd demand outstrips growth rates in August. Therefore, N is required to push on growth; but reducing stocking rates should also be considered, or feeding cheap ration. Sulphur (S) will still improve grass yield in August on light soils, deficient in S by 3-20 per cent. Apply S, and particularly after second-cut silage.
Now is the time to take stock of how much N you have used so far this year relative to what you are allowed to use (see Table 1). Overuse will result in penalties.
Stocking rate/year August September Total for year
Kg/ha organic N Cows/ha (units/Ac) (units/Ac) Kg/ha Units/Ac
155-170 1.82 -2.00 14 164 133
170-180 2.00-2.12 20 192 155
180-190 2.12-2.24 28 216 175
190-200 2.24-2.35 26 20 250 202
200-210 2.35-2.47 28 28 275 223
211-250 2.47-2.94 25 18 242 196
Table 1: Recommended rates of N for different stocking rates.
Study Table 1 and decide what level of N you can use for your own farm in August and September. Farmers stocked at less than 2.24 cows/ha should only put on N once, in late August, over the next two months.
All other farmers should apply 28 units/acre in August. If you have outside farms not requiring the full complement of N, apply more N on the milking platform. Response is much better in early August rather than late August.
This N should all be blanket spread as there are no losses in grass yield for August-September blanket-spread applications.
Build up grass now:
Every day a cow grazes grass, your profit increases by €2.80/cow/day – a very good reason to ensure adequate grass for grazing in October/November. How do you build up grass when, in most situations, daily cow demand outstrips daily growth rates? August is the big month, because it is the last big month of reasonable growth rates (55-65kgDM/day).
Rotation length must be 24-28 days in late August and 30-35 days from mid-September.
The following possible methods to build up grass should be applied:
Reduce stocking rates by taking away calves or cattle, selling cull cows, drying off very poor yielders;
Reduce second-cut silage (particularly if you have enough pit silage);
Introduce meals (expensive option) or feed quality round bales;
Apply more N (stay within your limits) in early August as you get a better response than in September;
Graze out pastures well, as there is a temptation to leave too much after each grazing in August. It is not unusual for farmers to leave one-eighth too much grass behind, which means losing one day's grazing in every eight or nine days;
Set up a 'third-cut graze' bank of grass;
Protect regrowths by not having cattle or cull cows grazing after cows or spending more than 24 hours in each paddock.
It is a very good idea to set up this third-cut graze because:
It brings in a bank of high-quality grass for grazing in September;
It allows you to use 2,000-3,000 gallons (16-24 units N) of slurry per acre on it at 'closing';
It allows you put on 55-65 units of N (discount the slurry N) to cover the six-week, closed-up period and the extra N will grow extra grass which will feed 10-12 cows for one extra day for every acre closed up;
The way you do it is to set aside 10-15 per cent of the farm for this purpose, stocking at 2.9cows/ha for grazing during August;
These fields should be topped or very well grazed out (skinned), leaving no butt. Apply the slurry plus 35-45 units of N per acre and leave for six weeks, and it should result in seven-to-10 days grazing in late September;
An interval of three-to-five days should be allowed between spreading slurry and applying N, so as to avoid losses of N by denitrification;
Allow six weeks between applying slurry and grazing by animals;
If, while this area is closed up, you are running short of grass on the grazing area, you can graze some of this 'closed-up' area;
What this means is a win-win outcome, no matter what happens.
No meal feeding – unless...
In most situations, where grass is plentiful, meal feeding is a recipe to lose money (see Table 2). To help make this decision, look up your Economic Breeding Index (EBI) herd data and it will give the predicted difference (PD) for milk in your herd, which you can use against Table 2.
Herd PD for milk 1kg meal (cost) Milk response to 1kg meal
+150kg €0.24 1.07kg milk (€0.29)
+100kg €0.24 1.04kg milk (€0.28)
+30kg €0.24 0.56kg milk (€0.15)
Table 2: Milk yield response to meal-feeding in July/August.*
*Trial at 4kg meal per cow per day in Moorepark.
Therefore, at present milk and meal prices, poor yielding cows (+30kg) will lose money on meal feeding:
You will lose €0.09 for every 1kg of meal fed. These cows will probably be British Friesian, some New Zealand cows, Jerseys and many stock bull bred cows;
High-yielding cows (+100kg milk) will do a little better than break even (€0.04-0.05);
Soya hulls may be purchased at €150/tonne and should be the meal of choice with good grass.
Keep replacement heifer calves and those in-calf 'moving' so that they achieve target weights by housing:
They must now (August 1) be 30 per cent and 70 per cent of mature cow weight for calves and in-calf heifers, respectively. Animals below target weight should get meal or priority grass. If grass is tight, calves will give a good response to meals, that is 4:1;
Good rotational grazing will facilitate best growth rates and minimise dosing requirements to control stomach and hoose worm attacks;
Watch out for hoose and dose when first calf coughs;
Stomach worms show up as patches of sticky faeces around the 'tail head';
Vaccinate calves for leptospirosis at six months;
Give in-calf heifers their first salmonella vaccine in late August and a second one with all the cows in early September. Absolutely essential!
Reseed in August using the grass Pasture Profit Index (PPI) to choose the variety. Identify poor-performing grass paddocks (use the Agrinet chart) and reseed if poorly performing because of variety. Because they will yield more this autumn and next spring, it will nearly pay for the cost.
Take a week off. Don't count the cost, think of the benefit to your health and mind. Farmers rarely 'treat themselves' to time off and, without knowing it, they pay the health cost. Change your liners now, after 2,000 milkings – this arises on most farms in August.
Milk yield will increase by 4-6 per cent. You will have lower somatic cell count (SCC) levels.
Lame cows must be attended to:
Large-herd farmers should remove the lame cows to a separate 'mob' near the parlour to minimise walking. They could join up with a mastitis 'mob';
Get Farm Relief Services (FRS) to look after hoof-care problems;
Run them through a foot-bath on three consecutive days.
Maintenance work should be done in August/September.
Make a 'to-do' list;
List out 'two-man' jobs;
A lot of this simple maintenance work, such as cleaning, painting work, etc. can be done by family teenagers;
If you are very busy, get some locals to do it, but have the work listed out;
Take all the necessary safety precautions.
Pointers from Moorepark Open Day
Every extra tonne of grass utilised per hectare will result in farm profit increasing by €267/tDM. Therefore, a 30-ha farmer will increase his income by €8,010. Phenomenal!
Soil fertility: high grass yields (16t/hectare) remove extra N (558kg), P (67kg), K (475kg) and S (46kg). The following simplified recommendations in kg/ha were recommended for a SR/ha of 2.5+: Index 1=43(100); Index 2=33(70); Index 3=23(40); and Index 4=0(0). Potash recommendations are in brackets.
The target age of a dairy herd is 4.5 lactations (=18% replacement rate):
For every lactation your herd is younger than target, you are losing 1.5c/L for every litre produced by the herd or €75/cow in herd;
The national average is 3.3 lactations, therefore, we are losing 1.8c/L (1.2 x 1.5) for every litre produced on farm or €6,300 per farm (70 cows) nationally, because the national herd is too young either because of infertility or expansion intentions.
First-cross Jersey/Friesian are €200 per lactation more profitable than Holstein-Friesian. Therefore, for a Friesian first-calver to be more profitable than a Jersey X by a Jersey AI bull with an EBI of €250, that Friesian would need to have an EBI of €450. If that doesn't convince you, what will?
When Jersey X's were stocked at the same weight of animals per hectare, the Jersey X's gave 75kg MS/ha more.
Key components of high-productivity grazing systems are listed below:
Stocking rate (cows/ha) = 2.5-2.9;
Grass utilised (tons DM/ha) = 11-16;
Six-week herd calving rate = 90 per cent;
Milk solids yield per cow = 450kg;
Milk solids (MS) yield per hectare = 1,300kg;
Percentage fluorine (F) + percentage phosphorus (P) = 9+ (my own target, based on NZ farm achievements).
Clover (25 per cent sward content) will increase annual MS by 33kg/cow (55kg in Clonakilty and an extra 2.5tDM/ha – one-year results).
Under-feeding cows by 20-40 per cent for two weeks in spring had no long-term effect on annual production, although MS/cow yield was reduced from 1.76 (100 per cent allocation) to 1.68kg during the two-week 40 per cent deficit period. This may have important implications next spring when, and if, milk price is very low.
Body weight and body condition score (BCS) were back on par with other cows four weeks after going back on full intake capacity.
However, underfeeding for six weeks had a big effect on annual performance. High grass digestibility has a positive effect on grass intake and milk output:
Grass dry matter digestibility (DMD) is highest in spring;
Grass DMD decreases rapidly in autumn as pre-grazing cover increases; less so in spring and summer.
Quality silage will become more important as we endeavour to increase milk output on farm: 76 per cent DMD silage will sustain the same milk yield as 69 per cent DMD silage with 4kg of meal.