Profit

Rising milk prices will only go some of the way towards increasing profitability in 2024.

Yes, feed, fertiliser and energy costs have come down in price compared to this time last year, but what about other costs?

When you include drawings and an opportunity cost of owned land, feed, fertiliser and energy costs make up about 25% of total costs, so they are significant.

Labour, contractor, parlour expenses, breeding and repairs and maintenance are some of the other costs that are unlikely to come down in 2024.

The average milk price in 2023 including VAT was around 36-38c/l, so if the predictions of an average price in the low 40s is correct for 2024 it’s not a massive jump.

On top of this, there are additional costs on many farms as a result of the nitrates derogation changes, with extra land leased or contract rearing costs or fewer dairy cows around.

The point of all this is that farmers cannot be complacent about profitability in 2024.

Last year was the least profitable year for dairy in the last five years.

While 2024 is shaping up to be better, just how much better will depend on dairy markets continuing to improve, decent weather, and lastly but probably more importantly, farmer skill at being able to reduce costs over and above savings in feed and fertiliser.

Nitrates

There is still uncertainty over what the actual N excretion rate will be for dairy cows in 2024 and beyond. As reported in the news pages, a proposal to reduce the excretion rate on farms where low crude protein dairy concentrate is used rests with the minister, and if accepted is set to go for public consultation.

It means that where farmers can prove low protein concentrate was fed, the excretion rate per cow should be reduced from 92kg to 88kg for cows in the middle band, and 106kg to 101kg for cows in the top band.

Between this and changes to the calf excretion rate, it means that the average N/ha will decrease on farms that undertake the low protein measure.

The important thing is that farmers who are currently over 220kg N/ha should work out their figures based on the new proposals before culling cows, contract rearing or taking on extra land. It’ll help those on the fringes, but do little for those in the top band or well above 220kg N/ha.

Straw shortage

Straw is scarce and many farmers, particularly those away from the traditional tillage areas and who rely on traders for their supply, are going to be under pressure this spring. There are alternatives, but few are as good as straw.

Therefore, prioritise straw to young calves. Woodchip (butt chip) is probably the best alternative to straw for older calves or for calving cows. Woodchip is as absorbent as straw but doesn’t have the same cosy factor as straw does.

Some farmers place a layer of butt chip on the floor of the shed and then bed the top with straw, thus using less straw and getting longer out of it.

Other farmers have moved towards using rubber mats instead of straw in calving areas and are very happy with it. This works well once calves are removed from the cow quickly after calving and the area is washed down regularly.