Break-even milk costs still vital
Beware of little expenses.there is a saying, by Benjamin Franklin, which says a small leak can sink a big ship. John Roche
Dairy farmers are being reminded to keep their farm costs low as the milk payout increases.
One farmer spent $15 to make each kilogram of milk solids and farmers were urged to check their break-even milk flow costs.
About 100 dairy farmers and a few rural professionals received the caution at a Dairynz Farmer’s Forum at Massey University’s Number 4 dairy farm near Palmerston North.
They split into groups to learn more about nutrient use, herd efficiency, homegrown feed sources and new grasses as well as making money from milk.
Dairynz principal scientist John Roche said cow numbers and costs were low after several poor payout seasons.
He said some farmers had reduced herd numbers, but others had not and the national herd had not diminished much.
Costs were lower and farmers needed to keep them at a low base.
Roche said each farm was different, but the range of costs depending on debt was between $4-$7/kg of milksolids.
‘‘The average cost of production not counting debt, is probably $4.50/kg.’’
He said there was a lot of room for improvement on some farms when it came to on-farm costs.
‘‘The improvements that farmers have made as prices fell over the past couple of years, hang on to them.’’
He said some costs had been cut as farmers could not afford them.
‘‘There has been some deferred repairs and maintenance and fertiliser hasn’t gone on some farms.’’
Roche said it was obviously important to grow grass and put fertiliser on, but farmers had to be careful they didn’t let their costs skyrocket.
‘‘Almost 60 per cent of a farmer’s costs are cow costs.
‘‘There are vets visits, AI [artificial insemination] costs and more.
‘‘Although we have costs to run a farm, a huge amount is associated with a cow.’’
He said if farmers were buying outside feed, then they needed to know that it was needed by their herds.
‘‘We have people out there telling farmers cows need an alternative to grass. If they have enough grass, that’s all they need. And to say they need alternatives is misleading and generally untrue.’’
Off-farm supplements could not replace pasture in a profitable dairy farming system, said Roche.
He said there were programmes on the Dairynzwebsite that told farmers how many cows they should have depending on their grass growth.
He said keeping a lid on costs was vital, so farmers had a buffer for their business.
‘‘Beware of little expenses.there is a saying, by Benjamin Franklin, which says a small leak can sink a big ship.’’