Top tips on Cost of Production from Tony Evans

1. What are my annual profit needs on a per litre sold basis? 

 

2. What were my costs of production per year over the last three years?

 

3. Are my costs of production lower than my profit needs?

 

4. How do my costs of production compare with AHDB data in line with my calving pattern?

 

5. Will I benefit from changing my calving pattern and system of production for the next 20 years or so? ie it is a life changer!

 

6. How much money would I make by changing my time of calving?

 

7. What are the challenges to making such a change?

  • Cash flow impact on delaying calvings in Year 1
    • Use the milk forecasting tool coupled with the milk price calculator
    • Knowledge and disciplines required to manage a new period of calving
    • Possible capital needs to bring about the change eg calving and calf rearing facilities.

 

8. Visit and speak with those that have made the changes I am thinking of making, ie see the benefits and how they managed the changes

  • Talk to your local AHDB Dairy KE officer or consultant.

 

9. Prepare a Business/Action plan (the HSBC business plan and Prices Trust business plan tools can help with budgets). Discuss with all who will be involved, including others on farm and third parties, ie your bank manager and milk buyer, about the proposed changes. These could encompass:

 

  • What physical changes need to be made:
    • When to leave cows open
    • When to start mating again
    • How to manage my grass and grazing
    • Feed supplement levels and type
    • How to manage my heifer rearing
  • Revised working capital needs:
    • Extra cashflow needs through the change period
    • Capital investment required for the longer term benefit of seasonal calving and what capital can be released
    • How this will be funded, eg extra overdraft facility, bank loan or additional capital introduced.

 

10. Implement the Business/Action Plan and measure actual cash progress against the Business Plan

11. Smile, enjoy it and move forward with confidence!