A time of change in the dairy industry

Thursday, 14 November 2019

Paul Flanagan, AHDB Dairy Strategy Director

The world has changed markedly over the last 25 years. Improvements in transport links and communications have created connections around the world and are a stark reminder that we are part of a global marketplace.

Dairy farming has not been immune to change. Over the last 25 years producer numbers have dropped by two-thirds, the GB dairy herd fell to around 1.9 million cows, herd sizes have doubled, and yet milk production has risen from 12 billion to 12.5 billion litres.

A changing landscape with the removal of quotas and increasingly international nature of markets means that farmers have had to develop new skills and knowledge in order to survive and thrive.

So, what have the top-performing farmers done differently to others? How can two neighbouring equally sized farms on similar soils with the same fundamental farm systems make radically different amounts of money?

We know the top 25 per cent of farms perform 1.8 times better than the bottom 25 per cent. Resulting profits, or lack of them, can mean the difference between staying in business or exiting the industry.

There are common traits among the top performing farmers such as having clear objectives, setting budgets and being ruthless in cost management. They embrace new ideas, care for soils and the environment, work with milk buyers, demonstrate outstanding staff management and above all else, they show remarkable attention to detail.

In developing AHDB’s set of key performance indicators, we found over 80 measures being used across the industry to gauge success so it’s little wonder the growth and availability of on-farm data has been a boon for many.

Producers need no reminding of the rapid genetic progress their cattle have made in recent years, with gains in milk, fat and protein production and a transformation in the appearance of cows each heavily influenced by decades of genetic selection.

Each year, the economic value of the genetic gain accumulates with aggregate benefits across the UK dairy industry estimated to be between £2.2 billion and £2.4 billion between 1980 - 2010. This progress has also reduced greenhouse gasses by about 0.8% per year.

Improving the environmental sustainability of the UK dairy sector has long been the focus of The Dairy Roadmap, a cross-industry initiative between ourselves, Dairy UK and the NFU.

Last year’s report cited a significant improvement in the industry’s environmental footprint, not only reducing the emission of greenhouse gases, waste, and other pollutants but also improving the efficiency with which it consumes water, energy, and other resources.

With the dairy industry is increasingly on the receiving end of negative media coverage about the environment, it’s right we at AHDB look at how we can better support farmers in this area and highlight opportunities to reduce any impact.

Collaboration and comparing yourself against other farmers are also key characteristics of the top operators. Discussion groups have led the way in this area, providing a safe environment to share performance and financial data, problem solve and pool expertise.

At AHDB, our strategic dairy farms are in effect bigger versions of this as they help farmers learn from each other through regular on-farm meetings, share key performance data and showcase what the best farmers are doing.

The Welsh Government and Volac have both recognised the benefits of this approach, providing funding to expand our existing network to 25 farms spread across GB enabling even more farmers to access the programme.

Our belief is that farmers who focus on a clearly defined production system – either all year round or block calving – can compete with the best in world so not only do our strategic farms follow this format, but we’re integrating this approach into a comprehensive package of support that helps farms to be as robust as possible.

While no one knows what the next few months will bring for the industry, let alone the next 25 years, the promising story is that the best British dairy farmers can compete with the best in the world.

If we’re outward looking, collaborative, learn from others, embrace data and technology and inspired by the best systems and practices then we can prosper over the next quarter of a century and beyond.