Top all-year-round calvers produce extra 100 litres per labour hour

Published 24 June 19

The most profitable all-year-round (AYR) calving dairy farms produced an extra 100 litres of milk per hour of labour inputted, compared with the least profitable farms in 2017/18. This difference in labour productivity was shown by analysis of around 350 GB dairy farm accounts for the latest Dairy Performance Results – our annual report looking at costs and margins for the top 25%, middle 50% and bottom 25% of farms (ranked by profitability) for AYR, autumn and spring calving herds.

Litres of milk produced per hour of labour- AYR

The labour productivity gap was driven by the top 25% of farms having less than half the unpaid labour costs of the bottom 25% during 2017/18. Meanwhile, paid labour costs did not vary with farm performance.

Labour costs for AYR calving herds in 2017/18

 

As unpaid labour is calculated here as an standardised opportunity cost, and so not a cash cost (i.e. a paid wage does not leave the farm bank account), it is still important – as the people providing the unpaid labour will still need to draw money to cover their living expenses, and so the business needs to account for this.

Farms in the bottom 25% had higher unpaid labour costs and used 13 extra unpaid labour hours per cow per year. For a herd of 100 cows, this amounts to 3.5 hours of extra work every single day for 365 days of the year.

So how do farms in the top 25% keep their labour hours per cow down? Part of the answer appears to be linked to the larger scale of the operation, but this is far from the whole story. The 2017/18 data show around 15% of the variation in total labour hours per cow (both paid and unpaid) may be explained by herd size. The remaining 85% of variation is due to other factors beyond the scope of the data available, which are likely to centre around how efficiently labour is utilised or the set-up of the facilities on farm. Another possible factor is that farms relying heavily on unpaid labour may have less time available to concentrate on farm management. This could lead to poorer herd performance as a result.

 

Evaluating your farm labour

  • Working out your paid labour costs is relatively straightforward, but working out the cost of unpaid labour can be more difficult because calculation methods vary. To benchmark your business directly against the figures in our Dairy Performance Results, take the number of unpaid hours worked on the farm each year, divide by 2,860 hours (i.e., the annual hours for one full-time equivalent worker) then multiply by an annual wage of £30,000. This gives total spend, which can be divided per litre, per cow and so on, to compare with tables in the Performance Results
  • Consider whether you are using your unpaid labour hours efficiently to get the best value from them. For example, are you able to give enough of your time to farm management? If not, there may be ways to reduce the time you spend on daily farming tasks to free up management time. This could involve changes to the way tasks are done on farm. It is important to consider this before turning to additional paid labour. Chapter 1 of the Teagasc Farm Labour Manual provides a step-by-step guide to identify possible options to free up time and decide whether extra paid labour is needed
  • Regularly examine whether paid labour is being managed as effectively as possible – continual improvement of people management was recently identified as one of eight factors seen on most profitable farms across all sectors. Some suggested starting points are included in our Horizon report on Preparing for change, on pages 18 and 19

 

If you’d like more information on farm performance, costs and margins for all-year round, autumn and spring block calving herds, take a look at the Dairy Performance Results 2017/18.