Business KPI Definitions - All Systems

Published 15 November 17

In the table below you will find an explanation of how the Optimal Dairy System business level Key Performance Indicators are defined and calculated for both all year round and block calving systems:

Key Performance Indicators  Definitions

Income (output) retained (%

Dairy profit (before tax and drawings) ÷ Total dairy income (sales) × 100 (e.g. £28,000 profit before tax and drawings ÷ £415,000 total income from milk and livestock x 100 = 6.7%)

Return on tenants capital (%)

Dairy profit (before tax and drawings) ÷ Tenants Capital Employed (management values for Livestock, Machinery, and Working Capital) x 100 (e.g. £65,000 profit before tax and drawings ÷ £650,000 tenants capital (the sum of the management valuations of dairy livestock, dairy machinery, feed, fuel and fertiliser in store, plus amount of cash in hand or at the bank and value of debtors) x 100 = 10%)

Full economic costs of production (ppl)

Dairy heifer/cow/bull purchases + Variable costs (purchased cow feed, purchased youngstock feed, value of homegrown cereals and proteins, purchased forage, grazing lets, forage variable costs, vet and med, AI and breeding, contract heifer rearing, bedding and dairy/livestock sundries) + Cash overhead costs (paid labour, machinery repairs and spares, machinery hire, contracting, electricity, fuel, vehicle tax and insurance, building repairs, rent, finance/interest charges, water, telephone, general insurances, professional fees, miscellaneous) + non-cash overhead costs (value of unpaid labour, machinery and building depreciation, rental value for owned land) should be divided by total milk produced

Farmers can access an online calculator to enter their own figures and see how they perform and highlight focus areas.