Dairy
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Seasonability bonus will boost margins
DAIRY farmers across the country have a golden opportunity to boost margins by taking advantage of valuable seasonality bonuses this autumn.
They can do this without any change in their calving pattern and despite the scale of recent feed price rises.
This is the conclusion of an initiative by Dairy Farmers of Britain with Promar to provide members with practical guidance on making the most of seasonality in the months ahead to profit from the highest autumn milk values in recent memory.
"Our seasonality scheme will deliver a bonus of between 8-12 p for every litre produced above members' Rolling Average Production (RAP) base this September, October, November and December," explains DFB regional business manager, Doug Gray.
"Depending on the extent of production over the herd's base, this makes the extra autumn litres worth at least 33p and as much as 37.5p at our current standard litre base price of 25.5ppl.
"Extra autumn litres should be worth well over 30 ppl to the majority of producers this year regardless of milk processor."
He accepts that this may not be sufficient incentive for many dairymen to switch their calving pattern, given the extra costs and hassle involved, not to mention the need to continually account for annual slippage where calving indices average over 365 days.
However, he insists it gives a tremendous opportunity for most to improve margins by producing more autumn milk within their existing calving pattern.
"Unless you run an extreme New Zealand milk-from-grass system, you're likely to have plenty of cows in early to mid lactation from September to December.
Especially so, if you have the virtually year round calving pattern of most British herds.
In which case, there's a huge amount you can do to increase your production.
"Many herds should be able to comfortably produce an extra one litre/cow/day, if not two litres, this autumn and early winter to take advantage of seasonality bonuses.
And even if it's only by feeding more dairy cake, for most herds that's likely to cost substantially less than the extra value of the milk produced."
Andrew Hawkins calculates that average response rates of around 1 litre of milk for every kg of concentrates will mean an extra feed cost of just over 20 ppl for each extra litre at current prices, making it highly cost-effective with the seasonality bonuses available.
3:54pm Wednesday 27th August 2008
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