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VIDEO: Monitoring production costs to drive efficiency in dairy

As in many other sectors, dairy farmers are currently facing a difficult time due to the coronavirus pandemic. 

An increase in meal prices and a drop in milk prices means that monitoring the cost of production has never been more important, according to Zara Morrisson, CAFRE dairy advisor.

Dairy margin over concentrates

In this video, Morrison highlights a simple way of monitoring production costs. This is to calculate the herd’s gross profit margin by subtracting monthly feed costs from monthly milk sales, known as Dairy Margin over Concentrate or DMoC.

Zara said: “DMoC can be found within DAERA online services within the CAFRE Benchmarking option. Using this simple DMoC recording system allows you to measure performance on a monthly basis and enables you to manage the herd going forward.”

She says this system is a simple support than can help to make decisions on necessary changes, recognize trends, plan for the future and compare your farm against others.

How it works

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While explaining how the system works, she says the key to successful cost control is to start gathering information at the end of each month.

“To begin, calculate the number of cows in milk and dry cows. Following that gather the total concentrates fed to dairy cows and cost per tonne.”

“Evaluate the milk production, which means the litres sold and the litres fed to calves. Then comes the evaluation of milk quality and finally milk value, minus the cost of transport.”

Zara added: “Next you need to login to DAERA Online Services through the Government Gateway, which can be done on any internet-enabled device. Select CAFRE Benchmarking, followed by Dairy Margin over Concentrate from the list of options available.”

Benefits

The DMoC calculation can provide information such as milk yield, milk from forage, concentrates fed per litre, concentrate cost per litre and concentrate fed per cow per day. 

“A comparison table includes every dairy business, anonymously, that has submitted information and you will be able to view the top performing herds along with the average. Your own business will be highlighted and ranked within the table.”

“This will allow you to compare with others and, as part of a Business Development Group (BDG), your adviser will be able to compare your group separately,” she concluded.

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