A seminar organised by the Farmers’ Union of Wales has provided an opportunity for Welsh dairy farmers to come together and air their views on a recently published AHDB paper which outlines the need for ‘optimal dairy systems’ in the British dairy sector.
Leading the discussions at the Welsh Dairy Show was Gwyn Jones, AHDB dairy board chairman, who highlighted the likelihood the industry will be open to more competition, less support and increased volatility in the future. He emphasised that there will be opportunities too, since the UK was an ideal country for producing milk, due to the climate, structure and the fact that there were good farmers in the sector.
In his talk he stressed that the way forward for the sector was to be inspirational, efficient and prepare for the future.
He discussed AHDB’s recently published approach focusing on two systems – block calving where all cows calve within a 12 week window and All year round calving with no seasonal emphasis on calving.
“Block calving herds typically have lower overall costs of production, can be simpler to operate and can have lifestyle benefits, depending on land suitability, housing and location.
“The best AYR producers can achieve production costs comparable with
block-calving and higher output can bring greater income. But the system can bring complexity making it harder to spot weaknesses in performance,” said Gwyn Jones.
“In Britain, over 80% of dairy farmers identify themselves as all-year-round calvers. This raises a question as to whether this is a conscious decision based on every farmer deciding what is the best system for them, or whether the system has just evolved.”
He emphasised that all production systems could be profitable and could work well, but the important issue was to attain a balance of production from all herds across the sector, in order to meet buyer and processor requirements.
“Many processors desire a relatively flat milk production profile from their milk pool; this does not mean that all farms should have the same production profile but rather that the collective profile needs to be flat.
“This could mean a balance between spring and autumn calving herds. A joined up industry approach would offer flexibility to farmers, whilst still meeting the needs of the processors,” said Gwyn Jones.
Comparing the relevant cost of production and margins achieved from each of the systems he highlighted that according to AHDB, spring calving herds typically achieved an extra margin of 2.4 pence per litre (ppl) above year round calvers. For autumn calvers this was 1.3ppl.
He stressed that irrespective of the chosen system, all farmers should concentrate their business analyses on the full economic cost of production, the return on capital and the profit retained.
AHDB is changing its delivery to showcase and highlight what the best performers are doing under either system and identify the KPIs that are critical to performance.
Additional strategic dairy farms are being recruited to demonstrate best practice and encourage farmer to farmer learning. Farmbench will be rolled out to the dairy sector in the New Year to help farmers understand and compare their full costs of production at both enterprise and whole-farm level.
“We are asking farmers to approach 2019 with their eyes open. The choice of system is down to individual farmers, but what is important is that they understand their current system, hold a mirror up to themselves and make a conscious decision on which system is optimal for them,” said Gwyn Jones.
Responding to the suggestion that the dairy sector should review its systems and management style in order to prepare itself for potential Brexit problems, was FUW Milk and Dairy Produce Committee Chairman Dai Miles.
“Before we change our dairy systems and increase our production, we need to have greater processing capability in Wales. The latest Welsh Government commissioned report on processing in the Welsh dairy sector concludes that processing expansion should be ‘more of the same’ which means more low value cheese production - that attitude is at best disappointing and not in the slightest innovative.”