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Feed Solutions Update

Dairy Industry Update from Mole Valley Feed Solutions

We at Mole Valley Feed Solutions are working hard to help our existing and potential new feed customers in what is a very difficult market place, particularly for milk production.

Dairy incomes are under severe pressure and have been for longer than we would have predicted, but the world demand for dairy products, whilst still growing, hasn’t grown to the level we would have hoped for. Combined with strong worldwide production, particularly in Europe since the removal of quotas, this has meant the supply: demand balance is still out of kilter.

There are signs that this could be changing later in the year but this can’t come soon enough for many producers. With the amount of dairy product now going into intervention this will take longer to work out.

UK milk production has stayed strong mainly due to:

A good forage production year

More dairy stock on farm as a result of breeding strategies

The need to keep income up to keep cash in the business

Improved breeding and feeding management on farm

The result of this is that UK dairy production remained relatively optimistic in the hope that this situation would be short lived and we’d be in a better position to benefit as we came out of the downturn. Also, because the dairy producers left are very good at their job and able to be more productive and ef fi cient, which in any other industry would be seen as a real success.

Our on farm feed specialists have been working closely with customers and farmers in being positive and fi nding solutions to move forward. This proactive approach has been recognised by farmers as we have gained more market share by coming up with options and solutions to help plan a way through this very dif fi cult period. We will continue to do this and look at every farm situation to assess the best options possible to remain viable as the real crunch time arrives this summer and autumn.

Where to for this next year?

The pressures aren’t going to get any less at least for the short term, and any possibility of improvement later in the year will have to be carefully monitored. There are some areas to focus on:

Making the best quality forage possible to give better rationing options

Making better use of grazing for the right stock

Producing the milk required by the contracts we have

Looking at costs and managing them making sure you’re getting value for every pound spent

Forecasting and budgeting well to make sure the business can trade through this period

Making better quality forage and better use of grazing won’t just happen because we want it to. There will have to be positive actions taken to achieve this - our Feed Solutions specialists and our colleagues in Forage Services can help with making these decisions by providing timely advice and suitable management tools to better inform the decision.

As for milk contracts, these are becoming one of the most important assets on the farm and there are processors now giving notice to those current suppliers who are surplus to their requirements. Sadly this trend will continue.

Processors will look at those suppliers who are doing their best to meet the contract requirements, and those who aren’t will be most at risk of having their contract terminated, so it is crucial to have very good communication channels with your processor.

Good budgeting and forecasting can help make sure you are producing what your processor wants and that you are squeezing the most out of the milk contract you have. Once your budget is in place, it needs regular reviewing and monitoring to ensure you are on track to meet or even exceed it.

Once these points have been addressed, then it’s time to look at what you are spending your money on and that it is representing good value. Make sure it is doing a job for you, and that you are not just continuing with the spend on products and services you always have. Challenge them to ensure they are still relevant.

To help in the short term, we have to again focus on our costs but not just cutting them for the sake of it as not all costs are bad. Feed prices have been lower, the equivalent of 1-2ppl depending on how well you bought last year. However, we just need to target this feed to cows that will give us the best response and return, namely the fresh calvers and highest yielders.

It will be making small savings and marginal  efficiency improvements that will all add up together to give a business return to help you through these tough times. Don’t go looking to save only on the big spend items as this could prove to be harmful in the long term.

Our Feed Solutions specialists are able to advise, guide, inform and monitor actions and decisions made and to be part of your management team as we continue to move forward, It’s tough at present, but still rewarding if the right, well-judged decisions are made.

Source Details

 Mole Valley Farmers Newsletter 624

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