Switching to dairying in a downturn

The last two years have been difficult for the dairy sector with milk price running well below production costs.

Just prior to the downturn in the market, there was a trend of suckler farmers switching to dairying in 2013 and early 2014. Derek Dunn is one farmer who made the move from sucklers to dairying, milking his first cows in mid-April 2014 at Donemana, Co Tyrone.

Years of low beef prices and the change towards area-based direct payments was the main impetus for making the switch to milking cows. Despite the downturn in milk price since entering the sector, Derek is firmly of the opinion that moving to dairying has been the correct decision for his farm business.

There have been plenty of challenges to overcome, but they have forced him to focus on cow performance and production costs from day one.

Changing systems

Prior to dairying, the farm carried 200 suckler cows split evenly between spring and autumn calving. All progeny was finished on farm with males killed as young bulls.

The sheep enterprise was run alongside the suckler herd with lambs also sold direct for slaughter. The spring-calving suckler cows were sold off in late 2013 and early 2014. The autumn herd was retained. These cows would be sold at a later time when the dairy herd was ready to expand. The income generated from the sale of spring cows was used to purchase 45 dairy heifers and cows. Further cows were added as the year progressed. Existing cattle housing was converted to fit cubicles and allow for greater feeding access.

Rather than installing a conventional milking parlour, Derek opted for a robot to free up time to tend to other livestock on the farm. To suit the robot system, cows are housed full-time.

Silage is made using his own equipment, which provides flexibility in managing silage quality.

Lower milk prices slowed the plans to expand the dairy herd and phase out the other enterprises on farm. A second robot was added in 2015 and cow numbers have increased to 120, with 95 cows currently in milk.

Housing is still expanding with the current cubicle house being extended to provide space for 150 cows. Derek sees this as the herd’s limit until the other livestock enterprises are sold off.

Setup costs

Converting the cattle sheds to accommodate cubicles cost £70,000 which included labour. This includes replacing the shed roof and extending slurry storage. Much of the work was carried out by Derek and two farm employees.

The robots are Lely Astronauts and financed over 10 years to ease the pressure on cashflow.

There was a small conversion and extension required to accommodate an 8,000-litre bulk tank, pipe work, farm office and storage which cost a further £30,000. Dry cow and calf-rearing housing was not required as there was adequate housing facilities already on farm for the suckler herd.

Lessons learned

With the downturn in milk prices, retaining the suckler herd and sheep flock has been a lifeline during the past two years, as they provided additional cashflow at vital times of the year.

It has undoubtedly added extra work to the system and there has been greater competition between enterprises for grassland.

But the income generated from beef and lamb sales has enabled the farm to keep expanding without adding large debt levels to a newly established dairy herd. Cattle and lamb sales last summer coincided with the period when milk prices were at the lowest. Milk price went as low as 18p/l. All milk is sold to Lakeland Dairies.

Timing

As regards the timing of his move to dairying, while milk price did not move in his favour, there were other positives. With Sterling strong against the Euro, he was able to source in-calf Friesian heifers from south of the Irish border at a lower cost than he could in Northern Ireland. He was also able to purchase a robotic milking machine at a lower cost in 2014 compared with now, because of the prevailing exchange rate at the time. The second robot was added and more cows were purchased in 2015, again at a competitive exchange rate.

Herd performance

The herd is producing around one million litres of milk annually. Butterfat is around 4.06% and protein levels at 3.3%. Cows are milking three times per day and yielding 9,000 litres per head on three tonnes of concentrate, giving 2,400 litres of milk from forage. Cows are fed to yield at a rate of 0.3kg/litre of milk produced. Cows are calving on a flat profile to suit milking through the robot with around three cows calving weekly at present.

Cows are bred to AI with no more than two inseminations per cow. An Angus bull is used as a sweeper with around one third of the cows served to this sire. Herd fertility is improving. The suckler herd usually had a calving interval around 365 to 370 days. With the dairy herd expanding, it has yet to settle into a routine calving spread, but there was no major slipping in calving dates from second calving cows last year.

Changes to management

Moving from suckling to dairying requires upskilling in stock management, especially for breeding and feeding. Silage quality is crucial to keeping cows milking and getting them back in-calf. Derek makes three cuts of silage annually and is focused on quality rather than quantity.

Heat detection is the other area that Derek has grown in confidence. Using AI in the dairy herd successfully has led him to try more AI in his autumn-calving suckler herd to improve genetics and animal performance in finishing cattle.

Future plans

With the dairy herd set to grow to 150 cows this year, the autumn suckler herd will be reduced to between 70 and 80 cows. The sheep flock will also be reduced.

The farm could carry 300 dairy cows, but Derek is reluctant to take such a step in the short term. Having one enterprise on farm would the simplest system to operate, but it is much more exposed to market volatility. A smaller suckler and sheep enterprise may not generate the returns that a bigger dairy unit potentially could, but they will diversify income streams.

Future growth of the dairy herd is planned, but will continue to be done in phases. The robot system does not lend itself to increases of 10 to 20 cows annually, but rather 40 to 50 cows at a time to justify another milk unit.

Five key lessons for potential new entrants to dairying

1 Attention to detail is important: there is no one key area to focus on, rather a combination of management areas.

2 Watch spending: it is easy to overspend in the setup phase and if you start with a high percentage of heifers, milk production will be lower than a mature herd of cows which affects cashflow.

3 Do your sums: Derek drew up his plans based on an average milk price of 26p/l back in 2013-14 rather than using the spot price at the time which was above 30p/l. Using a lower price helps to control spending.

4 Animal health: keep on top of calf and cow health with full vaccination programmes.

5 Listen to good advice: learn from others and act on their advice as it can shorten the learning curve when switching to dairying.