Weathering the financial storm on the farm during the Covid-19 emergency

Throughout the Covid-19 crisis there has undoubtedly been turbulence in the market for agricultural produce.

Keeping more heifers than are required for replacements and selling at the point of calving will generate cash but is generally not profitable on commercial farms.

As a result farmers are adopting new approaches because it is important that everything in their power to ensure their business can weather this storm until markets around the world and at home settle once again. 

Mark Scott, Senior Dairying Adviser at the College of Agriculture, Food and Rural Enterprise (CAFRE) said: “At times of poor milk price the once marginally profitable cows within your herd begin costing you money. 

“A cow giving 15 litres and eating 4kg meal when milk is 27 pence per litre (ppl) and meal £260/t has a Margin over Concentrate (MoC) of £3.01 per day.  The same cow when milk is 21ppl and meal is £280 per tonne has a MoC of £2.03. 40kg of silage at £25 per tonne takes another £1 from this or full time grazing another 80p and you are left with a margin of £1.03 – £1.23 per cow per day to cover all other costs.  If this cow is confirmed in calf it may be more economical to dry her off.  If in later lactation and not PD+ she should probably be culled. 

“In times of pressure on margins it is important not to let herd averages hide poor performing cows.  The average yield, fat, protein and SCC of the herd may be fine, however it is important to look at individual cows at the poorer end of the herd.

“These cows will be reducing the overall margin generated by the better performing cows in the herd.  For this reason it is essential to continue, where possible at this time, to milk record throughout difficult financial periods and use the information generated to make better decisions.”

Also, in a period when financial margins are critical to overall cost control, the fertility of livestock is a vital factor.

Mark Scott added: “The importance of fertility at a time of financial pressure is to ensure cows calve and you have milk volume when better prices return.  Fertility monitoring of all animals should continue regardless of milk price and should not be on the list of costs to cut.

“Until the point of calving heifers are a cost to the system with no output.  In order to reduce the overall cost of replacements it is essential to calve heifers at 24 months.  A heifer calving at 30 months could have been in milk for 180 days if calved at 24 months.  Even at an average of 25 litres per day and a milk price of 21ppl the 30 month calving heifer has cost you £945 in lost milk sales.  In addition to this it has been shown through research that heifers calving at 24 months have improved lifetime performance.

“With the rise in popularity of sexed semen and also with many herds tightening their calving pattern there are herds carrying more heifers than are required for replacements.  This can create additional financial burden on the overall business with additional fodder, grazing and concentrate input required for this expanding enterprise. 

“The cost of rearing heifers is considerable and well reared heifers that have been fed to meet their weight gain targets are a significant investment.  For this reason selling heifers to generate cash is generally a bad idea. 

“Although this will produce a lump sum of cash, when costs are accurately calculated this is generally not a profitable option for commercial herds.  Also remember that your heifers have the best genetics on your farm and selling these off, even for one year, will be to the detriment of progress in the herd as a whole.

“Staying on the subject of breeding, after enough cows have been bred to dairy semen to allow for replacements, breeding lower end cows and those which fall outside your desired calving season to beef semen will be a future cash generator.  The value of dropped calf sale becomes much more important when milk price falls so the more cows calving to beef sires the greater this income stream will be. 

“Finally, it is essential to follow the latest advice outlined on the Public Health Agency website, www.public health.hscni.net. The site is updated daily and provides practical advice and important information for you and your family in these very difficult, challenging times.”

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