As we move into the autumn months it is a good time for dairy farmers to starting moving on marginal or cull cows for the year.
Farms are looking to build average farm covers (AFC) and it is now time to start looking at marginal cows.
Production costs remained high in 2023, but they were not offset by high milk prices like they were in 2022.
With milk having a tight margin in 2022, there are likely cows within herds that are not profitable this year.
According to Teagasc, dairy farm margins have decreased by over 50% in 2023, compared to 2022.
Much of this is due to the reduction in milk prices being paid to farmers, compared to 2022 when record prices were paid.
In 2022, nearly every dairy cow was profitable, but this is unlikely to be the case in 2023.
Marginal cows
Dairy farmers need to determine what is the breakeven point for their milk. Once this has been done, they then need to look at the cows that are below this.
The question needs to then be asked: Why milk cows that are not profitable?
There’s going to be some exceptions – such as heifers as their production in their first year is lower – but for a cow in a third or fourth lactation there should be no excuse.
There is no sense in keeping cows that are just along for the ride and are not contributing to the bottom line.
Most farms have some extra heifers and can afford to increase the number of cows exiting the herd.
If farmers don’t have excess heifers they should still be getting rid of these cows and possibly looking at purchasing heifers to replace them.
There is also a possibility that a large portion of the herd is not profitable and in that case, a serious look at the herd is need.
In that situation, a complete change within the herd may be needed.
Budgeting
When looking at these cows it may also be a good time to look at reviewing farm cashflow budget for 2023.
Margins are tight on farms this year and it is important that this budget is closely monitored throughout the year.
There may also be changes that can be made to make savings for the farm for the rest of 2023.