Polish your assets and prepare to improve profits

Asset review – it sounds dry and boring, but this is what good businesses do to maximise profits by responsibly optimising how they use their resources.

Dairy farmers should be no different. This was the main message from a recent open discussion meeting at Clive Hall, the Cheshire dairy monitor farm.

So, which assets need polishing to make more profit…

Take a step back

According to Dr Kay Carson of Streamline Farm Management, assets, and how they are managed, are the resources that drive a business.

“Profits are a measure of how efficiently resources are being used – and efficiency means maximising their value and minimising waste.”

Farm manager Phil Asbury

Farm manager Phil Asbury

Kay has been working with Clive Hall farm manager Phil Asbury at the Fletcher and Co grassland solutions farm, helping to focus management on what drives profit.

She said: “A full review of farm assets should happen annually, so that you can plan improvements, implement changes, check your progress and take actions.”

The main areas to consider in this type of grazing-based system are:
• Herd Health
• Tracks and buildings
• Soil and grassland
• Labour
• Machinery and equipment
• Feed and forage
• Fertility
• Milking and parlour

“For this type of grazing-based business, the tracks, soil and grassland are more important than housing and machinery, but efficiencies can be gained throughout most businesses,” added Kay.

The Open Meeting focussed on labour, herd health and soil/grassland.

Robust and healthy herd

“Our aim is to have a robust and healthy herd,” said Phil. “In the last 12 months this has meant focussing on scouring calves and lameness. With the calves, we were spending too much time looking after poorly animals, so we have started to tube every calf with three to four litres of colostrum and increased the frequency of bedding.

“In 2010 16% of calves were treated for scours and 90% of calves born alive reached weaning. In 2011, following the changes, we only treated 4% for scours and 95% born alive were weaned.”

Farm vet Ed Hayes of the Wright Morten practice in North Cheshire added, “This current herd health asset review is showing us that we have made good progress on lameness incidence, but we need to keep going on lameness treatment and prevention to get the current 5% of cows at score 3 on the DairyCo Mobility Score, down to zero.

“Our target is 90% at score 0/1 (currently 92% in the review), 10% at score 2 (currently 3%) and zero at score 3.

“We are also focussing on Johne’s, with a control plan in place. In 2011 the farm culled eight cows due to mastitis and we want to get that to zero by attention to detail on milking routine, using a dry wipe, looking at genetics, stopping chronic cases and good dry cow management.”

Ed concluded: “These actions come from reviewing the numbers and taking action to improve the herd as a business asset. The progress is all adding positively to the bottom line at Clive Hall.”

Get the right people into your business

Dairy farmer Ed Dale explains his approach to people management

Dairy farmer Ed Dale explains his approach to people management

Ed Dale, Cheshire dairy farmer, was very clear that the people working on his farms are a major asset and he looks for the sort of person that fits the culture he is developing.

“For me, the ‘right’ people are those that can fit in with and help us develop our culture. We want ambitious people that bring energy and persistence; they also need a positive attitude to go that extra mile and support their colleagues. And we want people who want to learn,” said Ed.

In terms of an asset review, David Heath told the meeting how this is handled in Grassland Solutions. “We want our staff to grow, so everyone has an annual review. This enables us to agree challenging and enjoyable targets. We review performance against last year’s targets before setting new ones for the coming year, and as our people grow, so does the business, in size and profitability.”

Start with soil to raise milk from grass

The basis for good grass growth and utilisation is achieving good soil condition, so the annual review of grassland management must start with the soil.

Andy Taylor of Promar International demonstrates how to review soil condition

Andy Taylor of Promar International demonstrates how to review soil condition

Andy Taylor of Promar International demonstrated to the Open Meeting what to look for when digging soil inspection pits.

“We should be digging in every field at the end of the season to look at soil condition,” explained Andy. “Good condition means well drained, crumbly soil, which is brown and smells ‘earthy’. There should be no compaction, so when the soil splits on your spade, it should break vertically; if it breaks horizontally, then compaction is an issue.

“Soil in poor condition will be wet, mottled with grey from waterlogging and might smell rancid. This is all common sense, but the impact of poor condition on reducing grass yield and grazing days will have a negative impact on the profitability of the business.”

The group also discussed the pros and cons of slot seeding versus ploughing to reseed and rejuvenate swards. The total operation cost for slot seeding might be only half that (£200 – £250/ha) of ploughing and reseeding (£400 – £500/ha), so if you can get results from slot seeding there are cost savings to be made.

However, as Andy pointed out, “If there are compaction issues, then ploughing can get rid of these and the expense will be paid back in extra grass growth. So it depends where you are starting from, which you will only know if you review soil condition in the first place.”

The Open Meeting clearly demonstrated that if you don’t review your assets and set targets, then you don’t know what to measure in the system to gain improvements.

If you don’t measure, then you can’t manage; if you can’t manage, then you are not in control; and it’s difficult to improve profitability when you are not in control of the system.

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