Consider business implications

Section

Overview

Resources

Milk buyer requirements and milk contract

 

Most milk buyers pay a premium or apply a penalty for seasonal profiles produced by block calving.

 

  • AHDB encourages every farmer to understand their current contract and how they can most efficiently produce milk to meet its requirements.
  • Before making any changes to production AHDB recommends that farmers discuss their plans with their milk buyer and where possible secures the contract best suited to their system
  • Currently few milk buyers offer incentives large enough to justify the additional costs incurred by the farmer to produce a level milk profile
  • Autumn block calving herds may be able to achieve a higher milk price due to seasonal incentives.

 

Use the AHDB Milk Price Calculator to check the impact on your milk cheque from changing system, and speak with your milk buyer. AHDB is leading discussions with milk processors on the opportunity to match 2 autumn and one spring herd to help achieve a level supply.

 

Cash availability

The cash flows throughout a year are significantly different between the two systems. AYR system will produce a more even flow of revenue from milk sales than the annual peaks and troughs of milk sales in a block calving system.

 

Any change in system will require careful budgeting and a cash requirement to manage the change process.

 

Use the AHDB milk forecasting tool to determine the impact on milk output and knock-on impact on cash flow. AHDB's partial budget helps calculate the financial effect on business of a proposed change in a portion of the farm business. 

 

Farmers are also advised to speak with their bank managers to explain the rationale behind any change they are looking to make and the support they will require. 

 

Labour

The labour requirement to successfully run a dairy herd varies depending on the dairy system

 

  • Labour requirements will tend to be less overall but more seasonal under block calving systems with a peak in labour demand during the calving season. A perceived lifestyle benefit with breaks and quitter times during the year. 
  • AYR herds will have a more even labour demand across the year