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Dairy Business Farm Planning

Stage 3.2: stage3_2 (47KB, PDF)

Where do you see the additional money coming from when your plan is complete? It could be extra production from existing stock, less spending (efficiency), increased output from the extra cows or reduced labour (less wages paid).

There may be other savings which are more difficult to quantify. For example, your proposed plan may involve building a new milking parlour. Its major benefit may be to reduce the length of the working day, which is not a direct cash benefit. Similarly other investments may apply to the whole farm rather than just the changes in your proposed plan.

  1. Extra milk receipts sold from existing herd. Longer lactations, a more mature herd, better genetics, investment in grassland (lime, P, K, reseeding) may all contribute to increased production from the existing herd. An extra 100 litres delivered would generate €30 extra receipts per cow where milk price in your plan is 30 cent per litre
  2. Additional cows will produce extra milk. Put a value on this milk based on your current milk solids and predicted milk price. As a guideline use a base price of 28 cent per litre for 3.3% protein and 3.6% butterfat. For each 0.1% rise in protein and butterfat (combined), increase milk price by one cent per litre. Heifers will yield 75% the volume of mature cows, so if additional cows are heifers initially, there will be increased pressure on cash flow (reduced milk receipts) until the herd matures.
  3. If the plan involves savings as a result of expected improvements in efficiency, include as a cost saving over the whole herd.
  4. If paid labour is reduced by your plan, then include as a cost saved.
  5. Extra stock sales e.g. increased calf sales or cull cow sales.
  6. If other enterprises are reduced/ eliminated, there will be a variable cost saving as the cost of keeping the other enterprise is reduced or eliminated. For example, if a cattle enterprise is eliminated and 20 head of cattle are no longer reared, then there is €7,200 (20 head x €360 variable cost/head) less costs incurred on the farm. Use your own figures where available from your Profit Monitor or guideline figures in app4 (PDF).

>> Go to Stage 3.3