Manage what you can control and claw back the milk price
Dairy farmers are used to volatility but the extremes seen over the last three years have been unprecedented, according to dairy commentator Chris Walkland.
The specialist Agricultural Journalist and market analyst was speaking at a recent Mole Valley Feed Solutions event in Sandy Park rugby stadium in Exeter.
He said: “There’s a clear price cycle - we’ve gone down through the depths over the winter and now we’re coming back up the other side but it’s getting increasingly volatile - it’s brutal.”
Lower prices have started to curtail domestic production, bringing supply and demand back into balance - although fat and protein contents are high and global production remains extremely strong. So, what’s the current forecast?
Chris believes the UK’s free trade agreements have played into the hands of importers and the US Dairy Export Council has huge ambitions which could displace the UK’s own exports in future - while Brexit has made trade with the EU increasingly difficult.
He said: “Since Brexit, 16,400 British businesses have stopped trading with the EU - it’s risky, costly and more complicated. UK products now equate to non-EU products.”
Despite the issues, Chris said British dairy exports were performing strongly, adding value to branded domestic production while the demand for whey protein among the health conscious seems unstoppable.
“Arla has pulled some genius moves; buying the Volac factory in Wales alongside the redundant factory next door,” said Chris. “They have 50 to 60 scientists working on whey and they’re brilliant at what they do.
“The Arla price is 3ppl above the rest because of whey and I can see that getting bigger. I think we’ll see greater payments for protein and sustainability measures.”
Meanwhile, our Head of Nutrition Dr Chris Bartram told the audience he believed there were two main considerations for our farmers over the coming months - improving feed efficiencies and maximising fat and protein content to boost milk prices.
He said: “From 2008 to 2025, milk yields increased by 27%, according to Kingshay costings. Over the same time, fat and protein yields increased by 27% and the margin over purchased feed (using the same milk price and feed price) rose by 15%, to £1,804 a head.”
He believes precision nutrition will allow farmers to boost prices further. For example, first cut silage this year averaged 11.2MJ/kg dry matter (DM) of metabolisable energy (ME), versus 10.9MJ/kg last year.
“That will enable cows to produce one more litre per day from forage,” he added, but warned: “It’s not worth pushing for production if your contract doesn’t pay
for the extra.
“But where your contract allows, the economics are still there to feed for the marginal litres.”
Based on a milk price of 35ppl and concentrate cost of £300/t, a farm producing 10,000 litres/cow and feeding 4t/cow (0.4kg/litre) will generate a margin over purchased feed of £2,300/cow. A farm producing 7,000 litres using 2.1t/cow of feed (0.3kg/litre) will generate £1,820.
Feeding calves and heifers higher protein milk powder and concentrates also has a very good return on investment, maximising growth rates at the most efficient time in a cow's life enabling them to calve down earlier.
Chris said: “A Reading University trial showed that increasing dietary protein at a cost of under £4 a calf gave a positive return on investment with only 15 litres more milk required to break even in the first lactation."
“And yields in a summary of recent studies increased from 10,242 litres to 11,511 litres, simply by feeding more protein in the rearing period. So, if you’re still feeding 18% concentrates have a look at 22% protein instead.”
The other key takeaway from the event was the benefits of silage additives, especially after a prolonged summer drought when stocks are being used ahead of winter in many areas.
Additives can reduce clamp losses and farmers should be re-evaluating minerals and specialist inputs in the light of forage analyses.
Chris concluded: “Bringing that all together, alongside payments for carbon efficiency, can help you to claw back up to 5ppl.
“We may not be able to influence the milk price but we can influence input costs and what you get out of them.”
Speak to your local nutritionist or call the Feed Line on 01566 780261 for more information.
