How Irish dairy farmers are paid for their milk has to be a major factor when selecting potential sires for the 2024 breeding season.
Achieving the best price for this milk should be the aim on all farms.
Milk price is talked about in a c/L basic, but it is a little bit more complex than that, with base price set based on meeting certain minimum requirements.
Milk price
The vast majority of Irish dairy farmers are paid on A+B-C systems, which means that they are paid for kilos of protein and fat, but deducted for volume.
When you hear of a base price of 38.1c/L (excluding vat), that is actually determined by price the co-op is paying for a kilo of protein and fat.
Protein Fat Volume adjustment Price c/L Price/kg 7.203 4.746 Conversation factor 1.0297 1.0297 7.4169 4.8869 Protein and Fat percentages 3.6 3.3 c/L 24.476 17.593 4 38.1
The total price for a kilo of protein and fat are added together and volume is deduced (A+B-C), this determines the base price or the price in c/L once the minimum consistent are met.
Income
Taking a look at two example farms with different protein and fat percentages and the impact this can have on the milk price achieved.
Both farms supply 60,000L or 61,782kg of milk, example one has protein of 3.6% and fat of 4.5%, while example two has protein of 3.3% and fat of 3.6%.
Example one Example two Milk supplied (L and kg) 60,000L or 61,782kg 60,000L or 61,782kg Protein Percentage 3.6 3.3 Kg 2,224 2,039 €7.203/kg of protein €16,019 €14,687 Fat Percentage 4.5 3.6 Kg 2,780 2,224 €4.746/kg of fat €13,195 €10,556 Volume adjustment €2,400 €2,400 A+B-C €26,814 €22,843 Price in c/L 44.7 38.1
This example shows a difference in income of €3,971 on the milk sold off farm with a price of 44.7c/L achieved on example one, while example two achieved a base price of 38.1c/L.
Breeding season
This example shows the importance of using the correct sires on the correct cows this breeding season.
You want bulls that are going to increase the amount of kilos of milk solids sold out the farm gate.
This increase profitability and can be achieved without increase milk volumes.
Cow type or system of production in a sense does not matter, because bulls can be found that will suit most system – which will offer this type of genetic potential from a milk solids point of view.
Over the course of a lactation where increase protein and fat is being achieved on a farm it could result in significant financial gains.
Dairy farmers must obtain a better understanding of how they are paid for milk and use this to drive profitability in there systems.