Examining the costs of winter milk production

The cost of keeping a cow under a winter milk production system has risen significantly since the end of 2021 and farmers engaged in such a system must control costs carefully, those attending the National Winter Milk Open Day in Teagasc Johnstown Castle heard.

Presenting the results of Teagasc analysis, which examined the costs on winter milk herds for 2021 and 2022, while also offering a projection of 2023 costs, James Dunne, Teagasc Winter Milk Specialist, said:

“If you don’t already know your costs, we encourage people to sit down and complete an eProfit Monitor to gain an understanding of where their costs are at. Costs are individual and there is a great variability in costs across farms, but cost control is vital in winter milk systems to retain margin.

“The average cost – which includes variable and fixed costs - of keeping a winter milk cow in 2021 was €1,934. Higher input prices from the end of 2021 on resulted in this increasing to €2,397 in 2022, which is an increase of €463 per cow.

“The costs associated with feeding the cow last year, which includes feed, fertiliser and contractor, accounted for 49% of the total. Ultimately, in terms of the total costs of keeping a winter milk cow, the overall feed budget and how you actually feed your cow is very important. Where farmers can utilise more forage, it definitely leaves increased margins when we look at the bottom line.”

James (pictured above) also provided a projection for 2023 costs on winter milk farms. Based on 2022 levels of performance and input levels, the analysis made a number of assumptions. Firstly, meal costs were to remain at similar levels to 2022, at €407/t. Fertiliser prices were projected to decline by €200/t on 2022 levels. Contractor spend was estimated to remain at similar levels to 2022, while other variable cost increases were predicted in line with agriculture inflation of 8%. Meanwhile, it was also assumed that fixed costs would increase by 4%, on the back of higher electricity, lease and interest rate costs.

“When we look at the figures, the total projected variable and fixed costs for keeping the average winter milk cow for 2023 is actually not that different from 2022, coming in at €2,386.

“Last year, we had a higher milk price which somewhat tracked rising input costs. However, this year, we are seeing a drop off in farm gate milk prices and that is obviously a real concern at farm level with costs remaining tricky,” James explained.

Table 1: Winter milk cost analysis 2021-2023

Focus areas

Although costs are projected to remain high on winter milk producing farms this year, Kay O’Connell, a Teagasc Dairy Advisor based in Johnstown Castle, noted that improvements in margins can be achieved by focusing on a number of key performance indicators within a winter milk herd.

Kay, pictured below, explained: “There is scope to make improvements on many winter milk herds in terms of production and forage utilised. I can’t stress the importance of forage intake and utilisation enough. It doesn’t matter whether you are spring or autumn calving, grass is the cheapest feed we have and we need to maximise the amount of forage in the diet. That comes down to grazing quality grass at covers of 1,400kg DM/ha and making quality silage with a DMD of >75%.”

Data from co-op reports indicated that the average winter milk cow produced 6,107kg of milk and 464kg of milk solids in 2022. This is another area where improvement can be garnered, with Teagasc targeting production levels of 6,428kg of milk and 540kg of milk solids for cows milked under a winter milk system.

“There is a gain to be made by improving your herd’s solids and a lot of that will come through improving your fat and protein constituents to add value and this is done through genetics, the calving pattern and the forage utilised.

“High EBI genetics deliver across all systems. The Teagasc target for a winter milk herd is an EBI of €200. This stood at an average of €117 on winter milk farms in 2022, so there’s scope to improve by focusing on the use of AI bulls with an EBI value of €320, which have a fertility sub-index of >€100, a milk sub-index of >€100, high solids of >35kg and fat and protein of >0.28 and >0.18, respectively.”

In terms of the fertility key performance indicators, she said: “Calving interval, unfortunately, hasn’t changed much over the years. We are still looking at a calving interval of 412 days, versus the target of 370 days.

“There is considerable scope to tighten that up and that can be achieved by having two distinct calving patterns – spring and autumn. It makes sense from an efficiency, management and labour point of view, as you have defined breeding and calving periods.

“With a tighter calving period, you can also manage your replacement heifers more efficiently, which will help with calving at 24 months. Currently, just 50% of winter milk cows calve between 22 and 26 months and moving this to the target of 100% calved will have benefits in terms of farm profitability, emissions and nitrates.”

Finally, on recycling cows from a winter milk to a spring-calving system, Kay said that at a max just 5% of cows should be recycled. Nationally, this figure is closer to 15%. Where this practice occurs, it should only be happening from the winter to the spring to reduce the number of stale days.

Table 2: Physical performance of winter milk herds

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