MMN July 2024 – Top Performing Dairy Farmers

In 2017, AHDB commissioned The Andersons Centre to identify the characteristics which define the top performing dairy farms in the UK. The report has been updated in 2024 using both data from the Farm Business Survey and case studies of two contracting dairy farms. Despite being produced using figures from England, the messages are still applicable to Scottish dairy farms and provide a good starting point for assessing the state of your own business.

The analysis compared the top and bottom performing farms, based on their Return on Turnover ratio (farm income / associated costs), which is one way of comparing farms of different sizes. The top characteristics which defined the top performing farms were:

• Focused cost control

Milk is a commodity and, in most cases, dairy farmers have very little control over the price received.  Maximising output from minimal costs is key to generating profits. Costs should be focused on ensuring cows are healthy and productive.

 

• Maximising output per ha by finding your optimum stocking density

Maximising milk from forage is the cheapest way to produce milk and improving land productivity is the best way to achieve this.

 

• Do more of what you are good at – be a specialist dairy farmer

When land, infrastructure and labour are in short supply then the top performing dairies focus on what they are good at – producing milk.  Other enterprises can distract from the main focus of maximising cow productivity and have a negative impact on profitability. This will not be true for all businesses, but the impact of other enterprises should be assessed to ensure they are not having a negative impact on the overall profitability of the dairy enterprise.

 

• Understand your milk contract, what your buyer wants and ensure you are delivering it to maximise milk price

Producing clean milk with components which maximise the bonuses available on your milk price is key to maximising milk revenue.  Seasonality penalties and bonuses require more consideration to the overall cost of production of the system as it may not be profitable to change calving patterns to suit.

 

• Understand what you and everyone on your team, staff and family, want to achieve

It is important that everyone involved in the business is given the opportunity to share their aspirations and understand those of everyone else. These can be financial or personal and should be discussed openly and recorded.  Budgets and plans can then be drawn up to ensure that everyone knows what they are working towards and how they are going to get there. These can also be used to track progress and provide contingency plans if there are bumps on the road.

 

• Keep a close eye on the detail

It is impossible to know all of the numbers all of the time, what is important is knowing where to find them. Make sure you have the most suitable farm software for your system, which collates as much management information in one place as possible to avoid duplication of data entry. Make your monthly book-keeping more relevant by taking time to split out costs on invoices and allocating them to enterprises such as cows, youngstock etc so that you can quickly access and evaluate farm financials and compare year on year.

The full report can be found at Characteristics of top and bottom performing dairy farms | AHDB and be sure to look out for Appendix 1 – 50 Ways to be Outstanding.

Support is available through the Farm Advisory Service to spend time on the actions discussed in this article at Advice & Grants | Helping farmers in Scotland | Farm Advisory Service (fas.scot)

alison.clark@sac.co.uk; 01776 702649