TAKE A LONGER TERM VIEW

NWF National Sales Development Manager Michael Phillips believes dairy farmers should take a longer term view when looking for ways to drive more profit from their herds. Here he explains why.

Every farmer I meet has a clear plan for the direction of their business. They know what type of cow they want to breed, the basic system they will operate, when they plan heifers will calve and at what age etc. But inevitably things happen that mean the plan is never quite delivered.

They also know they need to keep a close eye on costs and are looking to squeeze an extra penny per litre off costs to improve profitability yet in many cases this often proves difficult to do.

Perhaps it is because we are looking at the dairy enterprise in the wrong way? Making money from dairy cows means managing a complex, long term and inter-related biological process within a fast moving economic environment. This makes management extremely difficult.

During the average life of a dairy cow in this country, from birth to death, milk prices will probably change 12-15 times. So how do you react to this? Short term reactive management may actually knock long term performance. And it need not be short term reaction in response to prices.

Take last autumn for example. To help conserve variable silage stocks, many farmers left late lactation cows out on what looked like plentiful grazing. Unfortunately grass quality was low and the upshot was that cows lost condition, didn’t milk well when they calved in again and were more difficult to get in calf. A short term management decision has potentially affected two lactations.

One of the biggest problems in the industry today is that most measures look at short term issues. Dairy costings are usually based on 12 month rolling figures and management accounts certainly look at a 12 month window.

None of these approaches actually tells you anything about how much the cows in your herd contribute to the business during their lifetime, and surely this is the most important measure? Yet until now one didn’t exist.

NWF Profit for Life provides a totally new way of looking at the financial contribution an animal makes to a dairy farm business by considering the costs and returns an animal will make from the moment it is born and you start to invest it in until such time as it leaves the herd.

It aims to take a long term view of the management system on the farm and then to challenge the basic strategy to identify where changes could be made and is broken down into two phases:

Initial investment the cost of getting a replacement into the herd. On most farms there is no reason why heifers can not enter the herd at an appropriate size at two years old. We have a range of management protocols to help animals hit the necessary targets. Getting replacements into the herd younger can have a big impact on costs.

Maximising the return on investment once the heifer enters the herd the objective is to keep her there as long as possible and to make sure she produces as much as possible. This means taking a balanced approach to yield, welfare and fertility management. It means identifying the reasons why cows leave the herd and then making plans to tackle the main causes of involuntary culling. Once you have invested in an animal do you really want her to be culled at about the time she reaches her potential?

The speed of repayment and how rapidly the cow breaks even will depend on a host of factors:

· Yield how much she actually produces (and how much of the production is actually sold)

· Feed rate are costs kept in proportion

· Calving interval is she getting back in calf quickly and so continuing to produce to a high level

· Dry period when dry you are investing in the cow for the next lactation so dry periods need to be well managed.

We have found that taking a longer term approach really helps focus management. Using national average data for yield, feed rate, heifer calving rate and culling age we have worked out that the average animal in the UK breaks even after 1.37 lactations. In other words it takes this time for the lactation contribution to cover all the rearing costs.

Is this good or bad? The national average data assumes heifers calve down at 27 months. Reducing this to 24 months brings the breakeven point back to 1.12 lactation – a 23% improvement which will lead to an increased lifetime profit.

The average animal will make a lifetime profit of £1312 and will be profitable for 32 months before she is culled as the average cow in the UK completes just 3.8 lactations. Just reducing calving age to 24 months will increase lifetime profit by over £100 and mean she is profitable for 34 months. Multiple this by the average herd size and you have £12,000 extra profit.

The frightening thing is that a significant proportion of cows in the UK will never make a positive contribution to the business. Recent research by Dairy Co shows that 15% of heifers fail to complete their maiden lactation, so probably closer to 17% of animals will leave the herd before they have passed the 1.38 lactation threshold.

Even more concerning is that 14% of heifer calves never make it as far as the dairy herd. They never start to repay their costs so are a real drain on the business.

This prompts questions like how can we increase the proportion of heifers entering the herd and how can we make it easier for them to survive?

Of equal concern is how little time cows, on average will remain in the herd once they are profitable. National average culling rate is 26% but only one in four culls are selected on management reasons such as yield, age etc. The rest effectively select themselves for the usual reasons such as infertility, mastitis and lameness.

On our average herd, reducing culling rate to just 22% would increase lifetime profitability by £330 and give 42 months of profitable production.

No two farms are the same and no farm is genuinely average but what Profit for Life does is starts to highlight where improvements might be made and starts to put a value on the improvements. It takes the focus away from short term reactive management and places it instead on a long term view and may well start to indicate where that 1ppl extra can come from.

TARGETING 24 MONTH CALVING HEIFERS Speaking at an NWF Profit for Life workshop in Shropshire, Frank Wright Trouw Nutrition International Technical Manager John Twigge believes two year calving is a very achievable goal provided growth is carefully measured.

“If you want to maximise lifetime contribution, the sooner you calve heifers down the better, provided they are big and strong enough,” Mr Twigge emphasises.

“Calving at two years old brings huge benefits. It means animals enter the herd sooner and can start repaying the investment you have made in them. It also means fewer youngstock are needed. Calving at 24 as opposed to 30 months brings a 25% reduction in youngstock numbers and saving in land, labour and capital, but in a recent survey only 30% of farmers start breeding their heifers at 13-14 months of age. .”

Mr Twigge quoted recent research which estimates the cost of rearing a heifer at around £1010, excluding the cost of the initial calf and said this can be expressed as 3.5ppl over the productive life of the animal. He argued that with this level of investment it is essential that heifers are managed well.

“With all the benefits that can accrue, it always amazes me when farmers say that heifers get the poorest silage. Equally I find it hard to understand why fewer than 10% of farmers weigh heifers. If you are trying to get animals to achieve the required weight for age targets it is vital to know how fast they are growing.”

Mr Twigge stresses that the first 12 weeks are a crucial phase and recommends a minimum target weight of 100kg by this age. He argues that it is hard for animals to make up any weight which has not been put on in this time. When assessing growth in young calves, Mr Twigge recommends weighbanding animals.

“Weighbanding is a relatively quick and simple process but can quickly give an indication of where checks in growth can occur allowing management to be changed. For example it is not unusual to see growth checks around weaning so a move to more gradual weaning will pay.”

From 12 weeks to calving at 24 months, Mr Twigge recommends a growth rate of 0.8kg/day.

“It is important that animals grow at a consistent rate and aren’t pushed too hard. There is good evidence that allowing heifers to grow too quickly pre-puberty can reduce milk yield in the first lactation as fat cells are deposited in preference to mammary gland development.

“Achieving consistent growth requires careful management, especially when heifers are out at grass given the variable quality and variable dry matter intakes. In many cases it can be beneficial to rear heifers on straw based systems or high dry matter big-bale silage as this allows far better control of feeding.”

To assess growth in older heifers, liveweight is the preferred measure but suggests that measuring wither height can be used to assess weight. New developments in measuring hip width with a large calliper are showing a good correlation to weight. “To calve at 24 months old, a heifer needs to be 124cm high at 15 months old and 137cm high when she calves down.

“Setting realistic targets, measuring growth and adjusting management accordingly will reduce age at calving and the investment in heifers which in turn will increase the lifetime contribution made by the animal,” Mr Twigge concludes.