January is the usual month for dairy discussion groups to analyse their costs for the year and budget for the year ahead.

The majority of discussion groups use the Teagasc Profit Monitor as the template on which to go on, having inputted all their costs for 2016.

Discussion group meetings are only successful if you come away learning something new. The costs meeting should be treated the same. You want to learn from the farmers that are making the most profit.

For this to happen, there has to be honesty in the figures. Inflating production figures serves nobody, least of all yourself. Including the ICBF co-op performance report in with the profit monitor is a great way keeping people truthful. There is no hiding place in the co-op report; you either sold the milk or you didn’t.

Outdated

When it comes to analysing performance, what format are you going to use?

Using c/litre is out of date – it’s like talking about the price of beef in punts per pound. Every farmer should be talking about costs and output in terms of €/kg milk solids (MS).

This is a great equaliser, as it doesn’t matter how many litres you produce, or how high or low your fat and protein is, as all costs are compared against your total kg MS. This way, base price per kilo of milk solids is all that counts. It’s up to you to produce enough to cover your costs.

The other thing worth looking at is the profit/ha of milking platform. For many farmers, the milking platform is what is most limiting, so comparing costs and output against this is a good exercise.

We all know unpaid labour, tax and capital repayments are not included in the profit monitor. Actual figures for these should be included for comparison within the group. Your adviser can do this for you once you provide him or her with the data.

Some groups are now moving towards putting all costs against the dairy enterprise, which gives you a better feel for how the farm is performing.

So the costs of keeping extra beef cattle, replacement heifers, etc. are all included as costs, as is the income from these enterprises.

Listen to “Dairy farmers "can increase profit by 30%"” on Spreaker.

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