Monitoring the cost of production is a key part of profitable dairying. While benchmarking will give a comprehensive overview of a farm business, more farmers need to monitor real time production costs, according to CAFRE’s Jason McFerran at last week’s dairy event held at Greenmount.

One simple method for keeping a tighter grasp on production costs is to calculate the herd’s profit margin after deducting monthly feed costs (purchased concentrate) from monthly milk sales, better known as margin over concentrate (MOC).

The procedure is relatively straightforward to complete and requires some basic data that all dairy farmers can easily access.

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The first piece of information required is the monthly sales income, which is the net value of the milk cheque. Next is how many cows were in milk.

You then need to calculate the total volume of concentrate used each month and what they cost to purchase.

Subtract the concentrate cost from milk sales and divide by the number of cows in milk to get the MOC per cow.

You should also calculate monthly yield per cow (total volume of milk sold divided by the number of cows in milk) and the rate of concentrate fed per litre of milk produced (milk produced divided by total concentrate fed).

CAFRE are developing an on-line management tool to allow dairy farmers to input the required data and keep a record of MOC each month.

Planned launched date is projected for late February time and the programme will be accessed through your government gateway account used for APHIS online.

Future Herd

Purchased feed is a major cost in milk production. For the Future Herd at Greenmount, concentrates are the single biggest expense annually, accounting for 40% of production costs, according to McFerran. Therefore, it is important that this concentrate feed is utilised efficiently

Calculating the MOC per cow on a monthly basis can be used as an accurate barometer of herd profit.

MOC

In the Future Herd, milk sold during December was 153,685 litres at an average 33p/l giving sales of £50,716 from 165 cows in milk. The average daily yield was 30.5 litres/cow.

Daily milk from forage was 7.6 litres with 0.34kg of concentrate fed per litre of milk produced and an average 10.3kg of concentrate fed per cow.

Margin over concentrate during December was £7.44/cow/day. Updating MOC each month gives a better insight to herd performance and yield response from increasing concentrate levels.