Dairy focus: Picking the low-hanging fruit to improve profitability

After taking the reins of the family’s farm in 2008, Conor Kelleher has overseen impressive improvements to the Cork-based dairy farming business.

Not only has herd size jumped from 89 cows in 2014 to 147 cows currently, the net profit (€/ha) has more than quadrupled over the same period. At an adjusted milk price of 30c/L, net profit has climbed from €517/ha in 2014 to €2,113/ha last year.

Conor’s approach to making the profitability change revolves around four key principles – the right cow, the right feed, a financial focus and not passing the tipping point.

“What we are doing on the farm is producing and selling milk solids and we’re looking for the cow that does that job,” Conor told delegates at the recent Irish Grassland Association (IGA) Dairy Summer Tour.

It’s a core principle. I’m looking for a cow that does a near 300-day lactation, has the right calving interval and delivers solids.

“I’m not looking for a cow that’s going to give me a nice Hereford bull calf to take to the mart, or, I’m not looking for a cow that’s going to make me proud when I go to the factory. The cow’s job is to produce milk and to produce it efficiently, so that’s where my breeding goal is.”

As it stands, Conor is milking a herd of crossbred cows. Originally a black and white herd, the introduction of Norwegian Red genetics in the early 2000s produced smaller, hardier cows with better udders and feet.

More recently, Jersey genetics have been added to the mix and a criss-cross of Jersey and Holstein Friesian sires are used to breed the next generation of cows. One third of the herd is now 33% crossbred – be that Norwegian Red or Jersey cross – at least two thirds are at least 25% of either breed.

The EBI of the herd stands at €124 and emphasis is placed on fertility, maintenance and calving sub-indices. The cows roughly produce 5,500L/year and 528kg of milk solids were produced from a meal input of 832kg/cow last year.

Fertility performance 2017/2018:
  • Calving interval: 367 days;
  • Six week calving rate: 87%;
  • Empty rate: 8%;
  • Calving season: 10 weeks and three days.

The right feed

Conor farms 58ha in four sections of mostly free-draining, loamy soils near Aherla. All of the land is owned, with 41.7ha forming the milking platform. This is divided into three sections by public roads.

The section surrounding the milking parlour is linked by a roadway leased from neighbouring tillage farmers and across a public road from the middle section of 20ha purchased by Conor’s father in the mid 1980s.

The third section of 11.7ha of the platform was purchased by Conor and was recently linked by an underpass to the middle section. When cows graze this parcel, Conor estimates the construction of the underpass saves approximately one hour each day.

The remainder of the lands are located across an “angry glen” and are used to carry the replacement heifers and for silage. Overall, stocking rate this year is 2.9LU/ha.

Central to Conor’s success has been his ability to produce milk from grass, while the capability to seek and heed advice from other grass-based farmers is an outstanding characteristic.

Grass is the best and cheapest feed we can give the cows. I’m obsessive about getting the right grass into cows, getting the rotation length right and getting the pre-grazing yield right.

“If I do make a mistake on the rotation somewhere, I don’t ask the cow to fix that mistake. That’s where the surplus bales come in.

“If I’m trying to get the cow to graze down bad-quality feed, she’s not going to pay me,” Conor said.

Increasing grass yield and quality has been a major focus of Conor’s over the past number of years. At this stage, 95% of the farm is at index 3 for phosphorous (P) and potassium (K) and at optimum pH.

Conor has been measuring grass for 12 years, but has only been recording grass growth rates on the farm for three years. The tonnage grown over this period has increased significantly, standing at 14t/ha, 15.5t/ha and 16.3t/ha for the respective years of 2015, 2016 and 2017.

Conor touched on how he measures grass, adding: “There’s four of us in a grass group and we walk each other’s farm once a week. It means I’m walking my own farm once or twice a week and I walk somebody else’s farm as well.

“We spend a lot of time looking at grass and there are loads of advantages. Right through the spring and the summer, one of the big advantages to it is the social aspect. But we also get to find our solutions.”

After getting into the frame of mind that he had insufficient grass in the period before the dairy tour, Conor, along with the three other members of the group, completed a farm walk on the holding.

Previously, Conor has recorded a daily grass growth rate of just 9kg/ha/day and an average farm cover of <400kg/ha.

However, with the input of the other farmers, cutting and weighing the paddocks and using a dry matter of 30%, a farm cover of 604kg/ha was recorded.

“We made a decision. We decided to leave the meal in the parlour, leave the fodder stretcher in as well, but I pulled out the silage supplementation.

It was pointed out to me – and I’m delighted when a mistake is pointed out to me because it gives me an opportunity to correct it – that my cows probably weren’t working hard enough.

“We are making them work a little bit harder now and that’s directly as a result of the other three guys coming in.”

To bolster silage stocks, Conor has rented 15ac of recently-reseeded ground on a five-year lease. The first cut of silage was taken from this ground last August. This ground was also used to provide zero-grazed grass to the herd during the dry spell.

Deals have also been struck for wholecrop silage and Westerwolds. He estimates that the wholecrop wheat will cost approximately 20c/kg (dry matter), while the Westerwolds – which will be sown after spring barley – will cost 12c/kg (dry matter).

Labour and facilities

Conor works full time on the farm. A relief milker, Colleen, is hired in as well, as is a student for the busy calving season.

Conor’s father Con works on the farm as well, focusing on farm maintenance, some of the machinery work and trips to marts, the creamery, the bank and other merchants.

“Dad is around the whole time and he does a lot. I appreciate dad, but it’s in summers like this I really appreciate his value.”

Contractors also play a key role on the farm. Conor said: “I’m using contractors more and more.

“This was the first spring that I got Niall Canty next door to spread the fertiliser. Aside from that, in the years I’ve been here, the only machinery I’ve bought is the loader.

“I have a vacuum tank that’s 29 years old. I do almost none of the slurry work. The dirty water tank is about all I do.

“All the silage is contracted; I don’t draw bales anymore. Pretty much at this stage, all of the work is done by contractors. There’s three things I don’t like about machines – buying them, driving them and fixing them.”

When Conor commenced farming in 2008, the farm was equipped with approximately 80 cubicles. Over the years, and through cash flow, cubicle numbers have increased to 165. 145 of these are adjacent to the parlour.

The milking parlour was also upgraded to a 20-unit herringbone model recently, while approximately 16 weeks of slurry storage is also available.

Commenting on the changes, Conor said: “I want to acknowledge my dad because I got the farm at a young age. I was 28 when I got the farm.

George Ramsbottom and Conor Kelleher discuss grassland performance on the farm

“I was full of energy and enthusiasm and I was handed a debt-free farm that was running very well. I was lucky that I got handed something that was hard to do too much wrong with.

“I got the farm with 80-odd cubicles and the specialisation to dairying started eight-to-10 years before quotas were actually going to go.

“All the bullocks left the farm and I started converting. It was all done with a reasonable overall plan in mind and it was done in bits and pieces. It was done out of cash flow. A lot of the work was done ourselves and none of it was too expensive.”

Financial focus

The Cork-based farmer also credited the role of his Teagasc advisor Gráinne Hurley and the discussion group.

“We’re a budget group and we all sit down at the start of every year and prepare budgets. Gráinne drags us over the coals three or four times each year to make sure our budgets are up-to-date.

“We know exactly where we are going and how we are doing it at all times. It’s amazing when you sit down and crunch figures, what clarity it brings to your business. You can see what you’re doing right and if you’re looking at it properly, you can see what you’re doing wrong.

“The financial focus on the farm is strong because, at the end of the day, that’s the reason why I am doing this job. I enjoy farming, but much more than that, I enjoy seeing and providing for my family.

“You can measure every other metric, but at the end of the day, it goes down to your financial focus – budgeting and monitoring. The old adage is that you can’t manage what you don’t measure. As much as it applies for grass, it applies for finances.”

Tipping point

Although Conor’s farm has undergone major growth over recent years, he plays close heed to the law of diminishing returns.

“We have to acknowledge the law of diminishing returns. At some point, there’s more money going into cows and I’m conscious. I value my time an awful lot, because time on the farm is not time with the family.

“You’re drawing in feed. We grew 16t/ha; maybe we can grow 17t/ha, but we know we need a good year on our side to do that.

“If I end up supplementing for too much of the year, and supplementing with silage on the two shoulders, it just becomes unpleasant and it’s hard work.

“I want a system where I can get as much as I can out of the best resource that’s available to me and supplement sensibly.

From a management point of view, I definitely feel that this farm is stocked heavily enough. I’ve reached that tipping point and it comes back to, what’s there to be got from now.

“What I’m going to chase now is the efficiencies and the fine margins – another couple of days in milk, another 0.5t of grass – it’s the last 5% or 10%.”

When asked whether he had given any thought to getting the heifers reared and zero-grazing grass back from the heifer block, Conor said: “Financially, I’m after grabbing all the low-hanging fruit on this farm, contracting out the heifers and zero-grazing the outside block goes against my core principles.

“It definitely is more work and there’s a smaller margin on it. I’m not sure whether I am willing to chase it. Whatever decisions I make on the farm going forward, they have to make me better off and I don’t mean financially – I don’t exclude financially – I have to be happier and doing better.

“There’s no point in dancing around it; I’m quite happy about how the farm is doing financially.

“My focus is my family and I want them to have a positive attitude towards farming, and one of the key ways of doing that, for me, is to manage the farm like a business. That means that I can take the time off that I need to enjoy the fruits of that business.”