Getting Smaller to Get Better?

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Max Sealy (Chippenham) 

Following on from last’s month’s article about the cost of re-investment and the future impact of that on milk production, one factor we are beginning to notice on a number of dairy farms now, is the proposal to scale back production and cow numbers. 

Over recent years there has been a trend towards more block calving and more efficient forage based systems on some farms, whereas other farms have expanded by increasing cow yields and efficiency.  Neither approach is right or wrong.  Both strategies suit the farm type, labour and objectives of the owner.

However, reducing cow numbers is a fairly new phenomenon, and not something that would have happened in the last 20-30 years in the UK dairy industry, where the trend was to increase herd size.  

Why is this happening?

  • Pressure from current and future environmental legislation, particularly around the need to invest in slurry stores.  A lot of herds have expanded without expanding slurry capacity and are now forced into a position where slurry capacity needs to match herd size.  With reference to the investment in this being hard to justify and tying up dead money in unproductive assets.  An obvious solution is to have less stock. 
  • Labour – with it becoming increasingly difficult to source labour and also for farms trying to achieve a good work /life balance for their staff. A reduction in herd size can ease this situation and make workload, particularly on a day-to-day basis more achievable.
  • Family – it must be recognised that there is a dynamic shift in the objectives of farming families with a number of the next generation looking for other alternatives for their workload.  Whilst dairy may remain the core focus, there are other issues such as work or families in their lives that is very important.
  • Land Use Pressures – A lot of expanded dairies are reliant on other farms for growing forage crops and providing straw and so on.  With a shift towards SFI payments and more environmental land management, then this land may not be so readily available and that poses a risk to the bigger dairy units.
  • Attention to detail – Scaling back from say 600-300 cows gives a real opportunity for concentration on the basics of the job; raising performance, reducing costs such as animal health, fertility, lameness etc., and to be able to focus on a particular system, for example, shift to block calving, or perhaps going the other way and moving to milking three times a day to balance out the working day.

A big note of caution! Whenever these budgets are prepared for this sort of change, it is essential that the costs savings are genuinely made.  Taking off the top line will always affect the bottom line.  These changes need to be carefully planned and thought through, using professional advice, including accountants as there are often opportunities to make some good tax savings, many of which will be important at the moment, including dairy herd size reduction on the herd basis.

As dairying moves into a more dynamic age and the link between on farm production and supply chain costs becomes more transparent, these sorts of discussions will form an important part of future farm policy.  I and my FCG colleagues have got firsthand experience of budgeting and implementation of successful herd size reductions resulting in all of the above benefits.  Contact Max at maxsealy@fcgagric.com or your local FCG Office to explore your options rationally and realistically.  Less Can Be More!

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