Turning Milk Into Money
UK - The implications of the ‘global economy’ in which we now live have become increasingly apparent to Northern Ireland dairy farmers during the last few months.
29 November 2007
2 minute read
| Cows will eat less silage if fed more concentrates so profitability of increasing concentrate feed levels will be a balance between the cost of the additional concentrates being fed, less the savings in silage cost. |
Compared to last winter, milk prices have increased by over 60% while concentrate feed cost have risen by approximately 40%. These increases can be attributed to a range of factors, including the increasing demand for dairy products in Asia, the continuing drought in Australia, adverse summer weather conditions in Europe, strict EU controls on the importation of genetically modified feed stuffs, and the rapidly expanding bio-fuel industry in the United States. All of these factors are outside of the control of local farmers.
However, according to the Agri-Food and Biosciences Institute of Northern Ireland there is good news, because despite the increase in concentrate costs, the profitability of milk production should be considerably higher this year compared to last year. Given the excellent milk price at present, it is critical that the maximum proportion of this extra income is maintained on the farm this winter. Overfeeding of concentrates to chase marginal litres must be avoided as this can reduce overall profit margins.
The effect on farm profitability of increasing concentrate feed levels will be a balance between the cost of the additional concentrates being fed, less the savings in silage cost (cows will eat less silage if fed more concentrates), compared to the value of the additional milk being produced. AFBI said that assuming a milk price of 30 pence per litre, and a concentrate cost of £200 per tonne, then a milk yield response of approximately 0.5 litres milk per kg additional concentrate fed will be required, just to cover the additional feed costs. However, the milk yield response to concentrate feeding will be determined by a range of factors, including silage quality and cow genetic potential. These are the issues that need to be examined when considering if higher concentrate feed levels make sense this winter.
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