NI farmers need 26.2p/l to break even

NI farmers need 26.2p/l to break even

NI dairy farms financially benchmarked by local agricultural consultant Jason McMinn need a milk price of 26.2p/l to break even.

Speaking at an online event organised by Ulster Bank, McMinn said that his clients’ average breakeven milk price is currently 1.6p/l lower when compared to the same time last year.

The largest single cost is concentrates at 9.3p/l. It is down by 0.6p/l but it is likely to rise again as prices for soya and other straights have moved upwards.

“Heifer rearing is the next biggest cost. It is 4.3p/l or £1,430 per heifer. Along with the meal bill, this is the cost that varies the most from farm to farm.

“The reason is some people require an awful lot more replacements than others, and some are still calving heifers at 30 months or more,” McMinn said.

Forage costs are down 0.2p/l to 1.4p/l and veterinary costs are static at 1.2p/l.

Variable costs, such as straw, breeding and milking parlour costs, equate to 1.8p/l.

Investments

McMinn said that his clients have been investing more in fertility and breeding in recent years.

This includes wider use of sexed semen, heat detection and AI contractors, and synchronisation programmes.

“When we look at the money that people are spending on breeding, we see it coming out the other end with stock sales and milk yields,” he said.

Cash overheads, which cover the likes of land rent, machinery costs and contractor charges, have been relatively unchanged at 7.3p/l.

Overall, this gives a cash cost of production of 25.2p/l.

Other costs to be added include 3.9p/l for loans and hire purchase, and 2.4p/l for household drawings and tax.

McMinn said that the latter is down slightly this year as household spending has reduced due to the COVID-19 pandemic and associated lockdowns, which has also led to some farmers deferring their tax bills until January 2021.

When basic payment, which is on average worth 2.2p/l, and average livestock sales of 3.1p/l are deducted, it leaves the breakeven milk price at 26.2p/l.

“Meal price looks like it is going to edge up, and the feed price/milk price ratio is getting close to 1:1. We are not in an environment where it would really pay to push on for litres, so feed your cows to take the milk out of them that is efficient,” McMinn said.