The average dairy farm's October milk cheque was 35% lower than what they received for their June supplies.

Farmers are buckling up for a financially tough spring after watching milk prices quickly plummet over the last few months.

Despite being a relatively good year for dairy up until the back end of the year, the average farmer received over €13,000 less for their October supplies than they did for their June supplies.

This reduction in a milk cheque is always expected to some extent as we enter late lactation and production levels drop off.

However, the scale of the reduction was completely unexpected and could leave farmers struggling with cash flow next spring.

If farmers were paid the same prices for their October supplies as they were for their June supplies, they would have only received a 16% reduction in their milk cheques.

That would have been less than half of the reduction that was delivered, with the average farm now down €13,000 rather than the expected €6,000.

Meanwhile, if farmers were paid October prices for their June supplies, their June milk cheque would have been 22% lower (equivalent of an €8,500 pay cut during mid-lactation).

Milk price

The figures above are based on the average herd size of 100 cows, producing an average of 25L/day in June and 16L/day in October.

According to data from the Irish Cattle Breeding Federation (ICBF), the average cow was producing 26.12kg/milk solids (MS) in June, at 3.9% fat and 3.51% protein.

Meanwhile, the same cow was producing 17.38kg/MS at 4.8% fat and 4.12% protein in October.

If we use these average figures over the months since milk prices turned, we can see how significant the reduction is proving to be on gross profit;

June - €37,181;
July - €34,114;
August - €30,961;
September - €26,791;
October - €24,059.

Note that these figures are before any expenditure, bearing in mind that the average cost of production is currently anywhere between 37-41c/L.

A+B-C

It is important to note every farm's milk cheque varies depending on a number of factors, such as herd size, production figures, and co-op prices.

Therefore it is important to use the A+B-C system to calculate how much your own cheques should be, depending on your herd's supply, fat, and protein levels.

You can track how much your co-op is paying in each category by checking out the latest milk price tracker here.

The table above shows the variation in milk cheques from two different farms, displaying how milk solids greatly affects income.

Pushing for solids next spring may be the saving grace you need to stretch your profit margins.