Analysis of performance across 978 conventional dairy herds in Britain by Kingshay dairy consultants has shown that in the 2022/23 milk year, there was a significant widening of the gap between top and bottom 25% producers when compared to the previous year.
The Kingshay analysis focuses on margin over purchased feed – given that it is a good indicator of efficiency within a business (feed is the biggest single cost in milk production) and a relatively simple calculation to do.
In the 12 months to the end of March 2023, spring calving herds produced the highest margin over feed when analysed on a per litre basis (39.71p/l), while all-year round calving, high-input systems delivered the highest margins per cow (£3,203).
However, in grazing-based herds, the average gap in margin over purchased feed from the top to bottom quartile increased from 8.7p/l to 12.9p/l, while in mainly housed herds, the gap moved from £705 to £980/cow.
According to the report authors, it highlights the continued importance of attention to detail, with more potential to improve performance within a system than to switch to an alternative way of producing milk.
Despite the high price of feed, farmers saw margins over feed costs in the last financial year average £2,865 per cow and 33.87p/l, the highest ever recorded by Kingshay.
When compared to the year ending March 2013, margin over purchased feed has virtually doubled; although, it should be pointed out that this margin must cover other variable and fixed costs, which are all significantly up in the last 10 years.
Over that period, the farms using the Kingshay service have grown by 23% to average 217 cows. While yields are up 10% to 8,458 litres per cow, this growth has stagnated since 2020, as farmers have tended to focus on herd health and getting more milk from grass.
Grass growth did suffer in 2022 due to dry conditions, however, the top 25% of herds managed to hold milk from forage at 3,987 litres, and delivered a margin over purchased feed of 36.28p/l.
That compares to an average milk from forage across all producers of 2,776 litres, and margin of 33.87p/l.
When the Kingshay data is analysed by milk yield, the highest yielding herds doing over 10,000 litres/cow have the highest margins per cow, but the lowest margins per litre.
Higher yielding herds did have higher culling rates than lower yielding counterparts, although across all herds, cow health and welfare has improved, with the proportion of forced/involuntary culling at 65% – its lowest level in 10 years.
Among a long list of reasons for leaving the herd, ‘not-in-calf’ was the highest at 15.1%, followed by mastitis at 8.7%, injury at 7% and lameness at 6.7%.
There is a wide range of age at first-calving, with many producers still not meeting the target of 23 to 25 months.
When the Kingshay data is analysed by milk yield, the highest yielding herds doing over 10,000 litres/cow have the highest margins per cow, but the lowest margins per litre
Nearly two-thirds of Kingshay herds calve heifers aged over 25 months, with 18% calving at over 28 months, adding significantly to rearing cost as well as carbon footprint.
Longevity is also an issue, with 50% of cows leaving dairy herds before they have completed three lactations, and fully paid for their individual rearing cost.
Margin over purchased feed is a useful indicator of performance on a dairy farm, but it does not tell the whole story.
As highlighted in the Kingshay analysis, a high yielding dairy herd kept inside will typically deliver the highest margin over feed per cow. However, there are additional costs associated with keeping cows inside, whether related to slurry or the upkeep of machinery, etc.
Analysis undertaken by economists at the Agri-Food and Biosciences Institute (AFBI) continues to show that a medium input system tends to be the most profitable across a range of scenarios.
AFBI systems model
Using their systems model, the AFBI economists looked at a low (6,000 litre cows; spring calving), medium (8,000 litre cows; split calving in spring and autumn) and high (10,000 litre cows; year-round calving) system on a 70ha farm.
At a milk price of 40p/l, concentrate at £400/t and fertiliser at £650/t, the spring calving system produces the highest net profit per litre, but the lowest net profit per farm (£73,972). The highest net profit per farm is in the medium system (£87,583), followed by the high system (£82,285).
Increasing or decreasing milk price by 5p/l results in the high system becoming the most or least profitable.
At 30p/l, the low input system gives the highest farm net profit. If concentrate was £340/t and milk price at 40p/l, the high input system produces a similar net profit as the medium system.