Can raising cow numbers hurt farm profitability?

Increasing cow numbers beyond what your farm can carry will severely impact profitability, contrary to the belief that expansion will keep yielding increased profit.

Aware that his message may be unpopular given the current expansion of the Irish dairy industry, Teagasc’s Donal Patton highlighted the danger of being too reliant on bought-in feed at Moorepark ’17 earlier this month.

“I suppose it’s not a very popular message to give to people because people want to continue to grow numbers; but if you’re growing numbers through bought-in feed it’s a risky place to be,” Patton said.

It is a well-known fact that grazed grass is the cheapest source of feed for dairy cows. However, for many Irish dairy farmers hoping to expand, sourcing the additional pasture is an issue at the moment.

Patton discussed a recent four-year study investigating the economic sustainability of two different grazing platform stocking rates (SR):

  • High closed feed system (HCFS) – 40ha milking platform, 124 cows at 3.1 cows/ha;
  • High open feed system (HOFS) – 40ha milking platform, 180 cows at 4.5 cows/ha.

There was no difference in grass utilisation between the two systems, Patton stated – both utilised a round figure of 10t/ha.

“The higher SR system utilised more of its grass as grazed grass and very little as silage. Only about 5% of its winter feed requirement was made up within the farm gate – the rest all came from outside,” Patton explained.

Milk production per hectare was “way higher” at the higher SR of 4.5 cows/ha – 14,190kg/ha versus 22,229kg/ha. However, the increased output was driven completely by bought-in feed, Patton pointed out.

There was none of it coming from extra grass growth or improved grass utilisation.

Milk price fluctuations

Given the price volatility in the dairy industry, the study looked at the two SR systems across different milk prices.

Net profit varied considerably at a milk price of 29c/L. Stocked at 3.1 cows/ha, the farm recorded a net profit of €29,075, while at 4.5 cows/ha net profit dropped to €14,443.

We made about €15,000 less for the privilege of carrying 56 extra cows.

At 24c/L it gets really scary, Patton said. A loss of €3,800 was recorded at 3.1 cows/ha, while stocked at 4.5 cows/ha, net profit was -€34,837 for the low price year.

At an increased milk price of 34c/L, the higher SR system showed only a marginal increase in profitability. Carrying an extra 56 cows increased net profit by €1,806.

“The key message to take from this is the more self-sufficient you are for feed, the less that milk price fluctuation is going to affect you.

“The more feed self-sufficient you are, the more resilient your business is to ups and downs,” Patton explained.

In order to maximise profitability per hectare, Patton advised farmers to make sure that increases in SR are matched by improvements in grass production and utilistation.

Patton’s results reinforce the necessity for Irish dairy farmers to improve pasture productivity to provide additional grass to expand milk production profitability into the future.