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godroISSUE 16. MARCH 2013
Your herd and minerals – pg 5
Mark Griffithsin the Hot Seat – pg 8
The newsletter for the Welsh dairy industry
Controlling udder health – pg 4
Assessing yourdairy housing
– pgs 2 & 3
Assessing yourdairy housing
– pgs 2 & 3
Assessing yourdairy housing
– pgs 2 & 3
PAGE 2
Housing issues & solutions
Now that the winter is officially over, it is a good time to stand back and assess how well your dairy housing needs were met over the winter and whether improvements are needed. DairyCo extension officer Richard Davies explains more on pages 2 and 3.
On page 4 we turn our attention to udder health and the challenges of preventing new infections during the summer months.
Minerals are a key component in the diet of dairy cows but too much or too little of just one mineral can potentially cause production and health issues. To learn the findings of a recent DairyCo study on minerals turn to page 5.
Anaerobic Digestion (AD) is slowly becoming more popular thanks to its combination of energy production and bio-fertiliser enhancement. On page 6 Kevin Monson of WYG and Will Llewellyn of Evergreen Gas Ltd explain why the key to a successful integration of an AD plant onto a farm is to find a plant that is the right size, the right price and a plant that requires an achievable quantity of feedstock.
On page 7 AHDB Senior Market Analyst, Matt Johnson, looks at the challenges and opportunities within the domestic market outlook.
In the Hot Seat this time is Mark Griffiths of Dyke Yaxley, Chartered Accountants. To learn about his tips on tax and much more turn to page 8.
Please continue to send us your feedback as well as suggestions for content in future issues.
Editor:Menna DaviesE-mail: [email protected]: 07875 098173
Note from the Editor Assessing your dairy housing?
Article contributed by DairyCo extension officer Richard Davies
With the miserable winter months behind us, this is always a good time to review how the buildings and yards have performed over the winter, and with some jobs only suitable when stock are out, now’s the time to plan and make a list of what needs to be done over the summer months.
During discussion group meetings over the winter, numerous building and yard issues have cropped up. So the first question to ask yourself is what have been the problem areas?
Let’s start with the calves, cow numbers are often on the increase but the corresponding calf and youngstock rearing facilities have not been expanded at the same time. With the latest survey showing that 8% of calves die within 24 hours of birth, more needs to be done on many units to improve this area. I’ve come across a recent example of this where a farmer had increased his cow numbers and installed a fully automated calf feeding machine to deal with the extra work. The result was a total disaster, not because of the machine but because of the building, as it was an old shipon type building with inadequate drainage and ventilation
(key factors for calf housing are air speed, moisture and air movement). With calf losses and medication bills rising, action was needed. Second hand calf hutches were purchased and the calf health problems vanished. There are many lessons we can learn from this example. Calves from three days old to seven weeks old were mixed in the same air space. Because it was an all year calving herd the building had no time to properly disinfect and rest. I have seen this on many occasions, where the calf rearing machine is plumbed and wired in and after a few months problems start occurring.
Another issue is calves that are too cold. Young calves need a temperature of 7°C or above to thrive, consider using calf coats in cold weather or giving calves shelter at the back of the pen. Supplying plenty of straw so that they can nest is also important for young calves.
So if calf rearing losses or health issues have been your challenge this winter, think, seek advice and plan ahead. Some of the changes will need investment, but count up the costs of losses and extra work involved, and it
Calf hutches located in an area that can be easily cleaned with good drainage and a cover for the calf feeder
PAGE 3
may well be a good investment.Another problematic area has been
poor quality and slippery concrete resulting in poor cow flow or injured cows. Take stock and if the current concrete is of good enough quality then consider grooving or scabbling. Poor quality or old concrete will often shatter with a groover and thus putting down new concrete may be the only option. If laying new concrete then use one of the various concrete grooving tools that are available to imprint the concrete as it is going ‘off’.
I am also seeing a lot of silage pits with poor floors. If the walls are in good order, to save work breaking and lifting the old concrete why not consider laying an asphalt floor? This is a mixture of bitumen and aggregate and I have seen it done a few years ago with excellent results. The job was done in a day, laid on top of the existing floor and useable within a week. In terms of cost, it was cheaper than concrete because there was considerably less
labour involved and it should have as good a working life as concrete. This is also suitable for self feed since slurry does not have the corrosive effect on this product as it would with tarmac.
With the never ending requirement to handle cattle for vaccination, TB testing or routine veterinary work then a cattle handling system has moved from a ‘nice to have’ to an essential piece of equipment. The basics of a cattle handing system should include a means of shedding the required cattle, preferably on the way from the parlour, a holding area and then a race or treatment area before dispersal back to the herd. On many units the cost of these systems need not be prohibitive, the challenge is often space. Start by planning your requirements and probable group size. What jobs need to be done? For example: AI, feet, vaccine, tag reading etc. How many would you normally group together for the vet? How many for lameness etc?
When it’s a whole herd event, such as vaccination – how will cow flow work then?
Plan out with the space you have available – perfection may not be achievable unless you have a clean sheet, so a compromise is usually part of the final solution. The first part is that of shedding the required animals from the parlour – manual shedding is easily done if you can identify the right cow and possess the space for a holding pen. Often the shedding area is out of sight and will depend on using auto-identification to work the shedding gate. Then from the holding pen it’s usually some form of race. There are a lot of personal preferences here, with the herringbone race becoming very useful for some jobs such as PD, tag reading and vaccination, whilst some prefer the long race with an individual crush. It’s really a case of ‘horses for courses’ and with all these systems it’s worth having a look at some before installing a system.
Further information on dairy housing can be found in DairyCo’s ‘Dairy housing – a best practice guide’. The guide provides up to date information, covering both implementing new builds and adapting existing buildings. To order your copy, call the DairyCo
publications line on 024 7647 8702 or visit www.dairyco.org.uk
Easy adaptations can be made to the feed rail to help cows reach the feed.
PAGE 4
Summer mastitis
Controlling udder healthA rise in bulk milk somatic cell count and the number of clinical mastitis cases, either together or alone, are a common issue on many dairy farms. A seasonal rise in summer mastitis cases can be driven by either a rise in the rate of new infection, a change in the pathogen causing disease or a combination of both. These changes are typically driven by environmental issues.
New intra-mammary infections (IMI) from the environment have classically been associated with winter housing but this is not necessarily always the case and in some herds managing summer environments can be a greater challenge than the winter months. This increased risk of infection over the summer months can apply to cows that are housed as well as at pasture, and equally to lactating and dry cows.
Cows at pasture are often thought of as being at lower risk of new infection, but examination of somatic cell count (SCC) records often shows an increased level of infection in some herds, with a higher proportion of cows >200,000 cells/ml when out at grass. Importantly, it can take some months for this increase in rate of infection to show in an elevated bulk milk SCC. Published UK research from a study looking at more than 5000 cows in 33 herds showed that increased bulk milk cell count in the summer was caused by an increase in persistence of infection rather than a higher rate of infection – this is likely to be driven by infections caused by Streptococcus uberis as this pathogen survives well on pasture and is more likely to manifest as a high SCC.
Control of cell counts for both lactating and dry cows at grass in the summer months needs to focus on reducing new infection using techniques such as rotating grazing paddocks so that cows spend no more than two weeks in any one area and minimising poaching around gateways and troughs.Gateways and tracks should be actively
managed to reduce poaching and cows should be fenced out of problem areas.
Cows housed through the summer months are often at increased risk of clinical mastitis due to increased coliform challenge (eg Escherichia coli). This increased risk again applies during the dry (infections become established, causing new clinical cases in the next lactation) and lactating period. Heat stress causing depressed dry matter intakes and lowered cow immunity can be an issue in some building designs. However, this increased risk of clinical mastitis is often due to elevated pathogen numbers in the presence of high humidity and raised ambient
temperature – bacteria flourish in moist, warm organic environments.
Control of clinical mastitis in cows housed in the summer needs to focus on reducing environmental challenges by improving cleanliness and creating an environment more hostile to bacterial survival. This can be achieved through methods such as increased scraping of passageways, increased bedding frequency, change of bedding to inorganic materials such as sand (though avoiding build up of organic matter in the bed remains an issue) and improved ventilation. In addition, other practices such as pre-milking teat disinfection can decrease the risk further in some herds.
Excessive poaching around gateways is a big risk factor for new intra-mammary infections at pasture
Controlling clinical mastitis due to E. coli infection in cows housed in the summer involves excellent bedding management and improving ventilation
For further information contact Farming Connect on 01970 636565 ore-mail: [email protected]
Research & Development
PAGE 5
Making the most of minerals
A DairyCo funded study of 50 farms carried out by Harper Adams University, has found that many dairy farms have been either over feeding or underfeeding several minerals during the winter.
Minerals are a key component in the diet of dairy cows but too much or too little of just one mineral can potentially cause production and health issues, so it’s important that dairy farmers ensure they are feeding the right amounts. Some minerals also influence the uptake of others, therefore, this needs to be taken into account when selecting the correct supplements.
This study measured minerals in mixed rations, forages, concentrates and water as well as calculating the supply from other sources in winter diets.
Mineral lick blocks were the most popular source of supplement used, with 54% of winter housed farms offering cows mineral lick blocks and 36% administering rumen boluses. Other supplementary sources included free access minerals (18%), drench (12%), injection (6%) with one farm using an in-water mineral supplement.
Copper (Cu) was one of the main minerals identified as fed in excess, with 31 of the farms feeding above the maximum recommended level of 20mg/kg dry matter. Worryingly, four of the farms were providing cows with double the necessary level. Whilst copper is an important element in the diet, over feeding it can result in copper toxicity and in the worst case scenario death.
Copper unfortunately is the one mineral where deficiency is common but so too is toxicity. So the concept that more is better is often not the best approach. The classic sign of deficiency include lightening of coat colour particularly around the eyes, weight loss, scouring, reduced milk yields, reduced resistance to disease and
fertility problems. More dramatically,
copper toxicity occurs when the liver can no longer absorb any more and releases large amounts into the blood stream. This copper accumulates in the kidneys and results in a rupture of red blood cells, jaundice and death.
Copper deficiency can be caused by a lack of Cu in the diet which is generally not a problem in the UK. The main reason for Cu deficiency is due to high levels of molybdenum, sulphur, iron and zinc in the diet which reduces Cu absorption.
In the Harper study, high dietary concentrations of Cu did not appear to be justified by high dietary molybdenum levels. In general, farms that should have been feeding higher levels of Cu were feeding low levels and vice versa. This indicates that these farms did not know their background mineral levels and were supplementing without taking the animals requirements into consideration.
The liver stores Cu and reflects the long term Cu intake of an animal whereas the Cu in the blood is only useful to indicate if animals are deficient. For this reason, assessing Cu in the liver is a more reliable indicator of a cow’s copper status. Sampling liver does require a biopsy but samples taken from cull cows can be easier.
The levels of sodium, potassium, calcium, magnesium, phosphorus,
copper, zinc, iron, manganese and molybdenum varied greatly across the 50 farms. Most farms were feeding an excess of at least one mineral with other minerals being underfed.
According to Professor Liam Sinclair from Harper Adam’s University College, determining the mineral status of dairy cows varies from mineral to mineral, but conducting an analysis of the forage and feed is very often a good starting point. In the case of copper a blood sample is useful to determine whether an animal is deficient. As minerals can be supplied from a variety of sources it is particularly important that one person has overall responsibility for the mineral nutrition on farm.
Article contributed by Dr. Jenny Gibbons, R&D Manager, DairyCo
The full minerals report can be downloaded from the Research & Development section of the DairyCo website: www.dairyco.org.uk.
PAGE 6
Renewable energy
Can small scale AD FiT your farm?
Anaerobic Digestion (AD) is slowly becoming more popular thanks to its combination of energy production and bio-fertiliser enhancement. The key to successful integration of an AD plant onto a farm is to find a plant that is the right size, the right price and requires an achievable quantity of feedstock.
AD plant outputs generally cover farm energy requirements and have a surplus for export which enables the farmer to move towards energy self-sufficiency and diversify farm income. Smaller-scale systems are now appearing in the market, making AD suitable to a larger number of farms.
Anaerobic digestion (AD) is a natural process in which organic matter is broken down by bacteria, to produce methane and carbon dioxide. AD can produce renewable energy in the form of electricity and heat from agricultural organic wastes (except woody material), as well as industrial, commercial organic wastes and energy crops such as potato, sugar beet, maize or grass silage. The renewable electricity produced attracts payments under the FiT scheme and the benefits of anaerobic digestion include:• Utilising existing on farm organic
wastes • Protection from increasing energy
prices• Renewable heat production• Renewable Heat Incentive (RHI)
payments (for heat ‘beneficially used’)
• Digestate is considered to be more beneficial to soil than slurry
• Long term improvement in soil quality
• Reduction in Green House Gas (GHG) emissions.Whilst large scale AD will require
either land to grow energy crops as feedstock, or the diversification into waste treatment, small scale AD can
enhance your existing business, rather than change it.
Systems can be based on slurry alone, but systems showing optimum returns are likely to be those supplementing slurry with other feedstocks to increase the energy output.
One tonne of cattle slurry (with a total solids content of 8 - 10%) should yield 10 - 20m3 of biogas per tonne. Maize silage will provide a biogas yield of 180m3/tonne, and grass silage between 70 - 140m3/tonne.
Slurry-only digesters can be made economically viable without the need for additional crops. What is needed is a lower cost plant from the outset. Low cost AD plants capable of achieving good returns on capital and delivering the benefits of AD on a small-scale and without the high price tag of the larger plants are becoming more available.
With capital costs for a 21kWe AD plant accepting slurry from around 150 cows being in the region of £250,000 - £300,000 (excluding site preparation, grid connection, planning and permits), AD is becoming a realistic option for established farm businesses looking to generate extra income through the guaranteed Government FiT and/or Renewable Heat Incentive (RHI) schemes. Simple payback periods of less than 5 years are achievable when supplementing slurry with grass silage
or maize to increase energy output.Digestate is an important product
of on-farm AD plants, because it is a valuable bio-fertiliser and according to some studies the amount of available NH4 Nitrogen in digestate (from cow slurry) increased by 20% when compared to the slurry feedstock.
Operating and maintenance costs also need to be taken into consideration, as does the amount of farm labour required to keep the plant running, which for a small scale plant shouldn’t exceed 1 hour/day.
Investing in AD is not a simple decision. There are many factors to be considered, and the level of investment and return can be significantly higher than other forms of renewable energy generation.
With AD, ‘one size does not fit all’, every AD plant on every farm will be different. Every AD project is case specific, and must be intelligently designed around each business.
Installing a small-scale AD plant could be an attractive proposition to farmers because in the future, they may be encouraged to further reduce their carbon footprint and AD enables them to mitigate methane emissions to the atmosphere, depend less on imported fertilisers and generate renewable energy, as well as potentially providing an alternative source of income.
Article contributed by Kevin Monson WYG and Will Llewellyn, Evergreen Gas Ltd
Small Scale, 50kW AD plant
For more information contact Energy Efficiency Project OfficerNeil Nicholas at the Dairy Development Centre on 01554 748592 or
e-mail: [email protected]
PAGE 7
Fuel for thoughtThe price of fuel is an ever increasing cost concern for dairy farmers. Fuel is one of several input costs that have continued to increase over the years, which is making more and more farmers aware of possible inefficiencies when using tractors and machinery.
Introducing fuel saving measures could bring significant cost savings to your farming business therefore why not take advantage of a FREE fuel review.
Farmers who have already taken up the offer have seen on average a reduction in costs of 22% by simply following the simple recommendations made in the review.
For more information contact Energy Efficiency Project Officer Neil Nicholas at the Dairy Development Centre on 01554 748592 or e-mail: [email protected]
EDF CongressThe annual European Dairy Farmers (EDF) Congress will take place in Falkenberg, Sweden this year between the 26th and 29th of June. Once again the Dairy Development Centre are organising a visit.
This year’s congress is titled: ‘Managing a High-Input and High-Output System’. During the congress there will be a chance to visit at least four Swedish dairy farms together with workshops where the cost of producing milk will be compared across more than 12 different European countries.
It is a great opportunity to network with over 300 dairy farmers. If you are interested in joining this year’s visit, please contact the team on 01554 748570 by 10 April 2013.
News in briefMarket outlook
Challenges and opportunities – A domestic market outlookThe first thing to say is that 2012/13 has been quite a year for the dairy industry. In the past, milk supply has been affected by drought or floods. There has also been volatility in global demand leading to fluctuating prices. However, in 2012/13 – these challenges all came at once.
Early 2012 saw wholesale markets falling in the UK, following trends seen globally. An increase in global production of 2% was met with lower than forecasted demand. At a farmgate level, prices held out for some months before falling on average by 2ppl as we approached the summer.
Weather conditions last summer have been well documented but it can’t be underestimated the effect that they had. Having moved from drought in March, the rest of 2012 was wetter, colder and darker than normal. In terms of milk production, having started 2012/13 in reasonable form, UK production fell away in the summer with deliveries 4 - 6% down on the previous year. Challenges with grazing meant alternatives were required, either bought in feeds or use of stored silage. With feed crops subjected to the same weather-related problems, prices for feed were high, increasing costs.
The protests seen in the summer and subsequent public interest set in motion events that could provide opportunities for the industry.
The voluntary code of practice regarding milk price contracts offers the potential of greater transparency as to how prices are set. Possibly more importantly, processors and farmers are now talking more about pricing and contracts. An example of this has been the recent announcements
regarding longer term pricing models. Using indicators of costs, market returns or a combination of both, many of these will use information from the DairyCo website: www.dairyco.org.uk/market-information.
Looking at production, DairyCo produce forecasts twice a year, in May and November. In May, the forecast for milk production for 2012/13 was at just over 13.5bn litres – slightly up on 2011/12. However, the November updated forecast re-estimated production at 12.9bn litres for the year on the back of weather impacts. While the final figure is likely to be closer to 13bn litres, this will still be nearly 4% below the previous year.
Predicting production any further than this is very difficult as it will depend on many different variables. However, it is estimated that production for 2013/14 will be somewhere close to 13.5bn litres – similar to 2011/12. Key to this will be three things: turnout this spring, grass quality in the grazing season and the ability to make good quality forage for the winter months. Weather will play a large role in how these three factors develop, although grass management will play a key role as well. The forecast also assumes that fertility will not have been too badly affected by conditions through the winter.
Despite all the challenges that the industry has faced in 2012, there are opportunities. Assuming ‘normal’ weather conditions 2013/14 should be better. In addition, there is still demand for dairy products, either here or abroad. To exploit these opportunities, farmers and processors need to work together. This may be a challenge but the rewards are there.
Article contributed by Matt Johnson, AHDB - Senior Market Analyst
PAGE 8
In the hot seat
Is there an optimum business structure for tax? In all honesty, there is no one structure suitable for all businesses, especially farming businesses. The business structure in place should suit the nature of the business in question, the goals of the owners and managers of that business and mitigate tax at all levels.
One structure may produce short term gains from tax at the expense of long term risks. You should review all your options, understand the tax implications of each and pick the one that maximises the objectives of the owners and facilitates the strategy of the business.
What would be your first piece of advice to a farmer who wants to save on income tax bills? There are many things a business can do to mitigate a likely tax bill, but it needs to be done in advance of the year end.
Farming is now big business and we all hear how they are being advised to understand their costs. I believe it goes beyond that, they need to take an interest in all the financials relating to the business.
If the business is not using a computer based accountancy package and with the simple press of a button, those financials become readily available, a review of the bank account will provide a likely indication of profit.
From a simple cashflow point of view, having taken into account the monies owed to and by the business at any one point, is there more or less money in the accounts? If there is more, there will usually be a profit.
So, if your goal is to minimise the tax bill, talk to your accountant before the year end. Get a picture of where you are and what you can do; capital expenditure, pension contributions, bring forward repair projects, and delay the
sale of stock.However, all of these items will
impact on cashflow. For every £100 extra you spend, you will only save up to £47 in tax; the other £53 is potentially lost to business for future investment. Sometimes tax can be the cheapest option and with claims such as ‘farmers’ averaging’, it may be possible to smooth those taxable profits over the long term. What are the main tax implications when it comes to diversification? Diversification by its nature has a number of issues.
Firstly it is often a foray into a new revenue stream for the farm. The question is does it want to be included in the farming activities?
Most farms are registered for VAT. If the diversified project is run by the same owners as the farm, it will be caught by that VAT registration and does this cause a problem for the farm, potential customers or with future capital purchases for the project?
Diversification may prove to be the catalyst to review the structure of the existing business and the driver to explore new structures for the diversified project.
The drivers for this may well be tax and a desire to reduce the exposure to higher rate tax. However, you should not ignore the potential business risks and the exposure to public, employment and financial liability. It should always be remembered, the farm is a valuable asset and should not be exposed to risk.
What tax tips have you got for renewable energy ventures?Don’t let tax dictate what you do. Tax is a product of the profit from the project. At the end of the day the Revenue only want a proportion of that profit.
If a renewable energy project is viable and will bring long term benefits to
the farm, it should be explored. Tax may well be mitigated in the
early years as the tax relief on the capital purchase eliminates the taxable profit.
It may also provide the opportunity to explore alternative business structures to shelter surplus profits from higher rate tax.
What is new in the Budget? As we always say, the devil will be in the detail, but there are a few headline points.
The mainstream rate of Corporation Tax is falling from the current rate of 26% to 24% in April 2013, 21% in April 2014 and finally 20% by April 2015. However, this rate is only applicable to profits in excess of £300,000; taxable corporate profits under this level are already taxed at 20%.
The Chancellor also announced that the personal allowance will rise to £10,000 by April 2014, a year earlier than planned. However, in line with previous years, the threshold on which higher rate tax is paid will also be cut, ensuring the benefit of the increase in the personal allowance is only given to basic rate tax payers.
Mr Osborne further announced a new £2,000 National Insurance Employment Allowance for all businesses, effectively saving businesses and charities in the UK up to £2,000 on their employers National Insurance Contributions from April 2014.
Mark Griffithsof Dyke Yaxley, Chartered Accountants
