Saturday, March 30, 2024

Farmers warned against false savings

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Dairy farmers contemplating lower payouts should do their maths before changing breeding plans this mating season, LIC bull acquisition manager Malcolm Ellis says.
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“The old rule of ‘if you can count it, you can cut it’ shouldn’t apply to a farm’s artificial breeding (AB) investment because of the long-term impact it will have on herd value and productivity,” Ellis, himself a dairy farmer, said.

“In a year like this when the spotlight is on every farm expense, farmers need to consider the real cost of reducing spend in an area that has such a long-term impact on the herd asset.

“Farmers will be running the rule over every farm working expense (FWE) and looking for areas to make savings but their breeding investment is not the place for significant cost cutting.

“Spend on all of the costs of breeding and herd improvement is already pretty trim at 3.4% FWE, compared with big ticket items like feed, fertiliser, and wages which account for 60% FWE.

“A degree of the breeding spend is non-negotiable, therefore any potential savings are marginal in the total scheme of things.

“Such moderate savings will provide slim immediate relief while the long-term cost of a genetically inferior age group of animals moving through the herd is huge.

“Cheaper options cost in the long run.

“The reality is cows still need to get in-calf and farmers need those calves to be high quality replacements for their farm’s future prosperity.”

Ellis warned farmers of the danger of undervaluing herd improvement in their business.

“As farmers we so undervalue genetics.

“I have milked a lot of very good cows in my time but also some poor ones and I believe we totally undervalue the difference.

“With a significant shift in farm production systems over the last decade we are firing enormous quantities of feed at our cows, each kg carrying a set price per kg of drymatter. You want that feed going down the throats of very good cows.

Ellis challenged the old adage of 90% feeding, 10% breeding many farmers were brought up on.

“I acknowledge the value of feeding and nutrition but 10% breeding? You’re kidding me.

“During these times of lower payout, farmers need to maintain ongoing focus on breeding animals whose progeny will be the most efficient convertors of feed into profit, with high BW genetics, so they get the best value from their investment now and are ready to make the most of higher payouts in the future.

“For sharemilkers, their herd is clearly their biggest asset, so it’s even more important they are investing their money wisely to support future growth and progression in the industry.

“Farming has always been a long game and while there’s no denying this year will be difficult, breeding remains a vital component for the future of any farming business.

“A long term outlook and plan has never been so important.”

Ellis said farmers could offset the lower milk price by diversifying their income.

One way to do that was by adding an extra week onto their AB plan because that would provide surplus stock to sell next calving season.

“In a more moderate milk price environment increased stock sales are gold.

“The real pinch from this year’s lower payout will be felt next spring but extra investment into AB this year will provide farmers with more options next year.

“Friesian heifer calves were selling for upwards of $950 each this spring, a demand underpinned by export activity that isn’t going away.

“That 90kg, literally straight out of the shed, makes a straw of semen look more like an investment in diversifying the income stream rather than a farm expense.”

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