Does it pay to milk on this winter?

Morale among most dairy farmers is at its lowest level in over a decade.

The combination of bad weather, bad milk prices and the introduction of bad policies is a triple blow to farmer confidence. With just over two months left in the year, farmers are asking if it is worth their while milking on at all.

On farms everywhere, cows have had to be housed weeks earlier than planned as land is just too wet to graze.

As a result, costs have more than doubled as silage is 2.5 times more expensive than grass.

Higher costs is one thing, increased workload is another and this is really the crux of the matter for many farmers.

Feeding silage, cleaning and disinfecting cubicles, cleaning cows’ teats and dealing with more mastitis are some of the extra tasks to be done when cows are housed.

The drip feed of bad news around the nitrates derogation and the threat by Government ministers that the derogation could be lost at the next review is as bad for farmer morale as bad weather and bad prices combined.

When all is said and done, 2023 will be remembered as a challenging year for dairy farming in Ireland. The fact that we can make these predictions while it is still October, signifies how low the mood is.

Once-a-day milking was widely used during the last few years of the quota era to reduce milk yield in the autumn.

Typically, milk volumes decrease by 30% when cows are milked once a day and milk solids yield decreases by 20% as fat and protein percent increases.

The big benefits are the reduced workload as the number of milkings are reduced by 50%. This has knock-on benefits in terms of reduced expenditure on electricity and parlour supplies.

Cow body condition score also increases. The downside is higher risk of mastitis and high SCC, so this is something that needs to be carefully managed.

Tables 1 and 2 look at a partial financial budget for a 100 cow dairy farm in November and December this year.

Only milk sales, meal, silage use, parlour running costs and labour are considered.

The analysis looks at the financial impact of milking twice a day and once a day during November and up to mid-December and an early dry-off at the start of November.

There are a number of assumptions used in the analysis.

Firstly, it is assumed that there is no grass in the diet. If there is grass in the diet, then the economics will be more in favour of milking on. It is also assumed that 6% of the annual milk supply is produced in November and December, which is 30,000l for a 100-cow herd milked twice a day and 30% less or 21,000l if milked once a day.

It is assumed that the herds being milked TAD and OAD are fed 14kg of silage and 3kg of meal per day

Milk price has a big impact on the analysis. It is presumed that the milk price received in the twice-a-day (TAD) analysis is 40c/l, while it is 42c/l for the once-a-day (OAD) herd due to higher fat and protein percentage.

It is assumed that the herds being milked TAD and OAD are fed 14kg of silage and 3kg of meal per day whereas dry cows are restricted to 12kg of silage per day, which is probably more than they need given the longer dry period.

This means there will be less silage used where cows are dried off early and this is reflected in a ‘credit’ being assigned to that scenario.

Meal feeding rates are assumed to be 3kg of meal per milking cow/day costing €360/t.

Electricity costs are estimated at €500 per month when cows are being milked and €150/month when there are no cows being milked. Parlour running costs include detergents and supplies and are estimated to cost €38 per cow per year or 83c/cow/week of milking.

Labour costs are included in Tables 1 and 3 but are not included in Table 2.

Where there are full-time employees on the farm they are going to be paid whether cows are milked OAD, TAD, or not at all from November on. So that is a sunk cost.

In my view, owner operators need to put a value on their own time and as the analysis shows, there is €281 of a difference in margin between milking TAD and OAD when labour costs are included.

The difference in margin between milking TAD or OAD and drying off early is greater at €1,544 and €1,263, respectively, where labour costs are included.

It is important to note that the difference in margin would be over €1,400 higher if the value of the silage not eaten was excluded. The difference in margin between the options is much greater when labour costs are excluded.

Table 3 looks at the impact of a higher milk price on the different options.

As expected there is a higher margin and a greater difference between milking and drying off early when milk price is higher .

November and December the least profitable to milk cows

For me, this exercise just lays out how much money is going to be made from milking on this autumn/winter.

The economics are vastly different to last year and farmers need to ask themselves if the additional margin is worth the extra work, particularly if twice a day milking.

The analysis highlights that November and December are the least profitable months to milk cows. It shows that for farmers with a higher cost structure (feeding more meal), or who are tight on silage, or who generate a lower milk price because of low solids, milking on this autumn will probably cost them money.

This is especially true where they value their own time.

All farmers should be asking themselves, what is more important – some more margin or a longer dry period where they can get a good break and recharge the batteries for next season.

In recent years, some farmers, advisers and discussion groups have generated an unhealthy obsession with hitting a target milk solids per cow, such as 500kg MS/cow.

Going to OAD milking or drying off early won’t help to achieve that goal, but so what? It is far more important to focus on margin, not yield.

At this time of year, finding ways to reduce costs is more important than finding ways to make more milk.