Why good people working on dairy farms are value for money

The unavoidable consequence of reducing your labour bill, is that you and your family must do more work. If the extra workload is excessive this can result in important tasks being postponed or not getting done at all.

Do dairy farms have enough help?

Despite improvements in facilities and organisation, dairy farmers are working, on average, 60 hours per week, excluding breaks, and take just 14 full days off per year.

Many will say it’s their own business and like other self-employed people they expect to put in a lot of hours. Most farmers love what they do. So could they work even more hours in a long-term sustainable way? In most cases they physically can’t.

So, if the staffing bill is cut too far or is too low in the first place that means work won’t get done. In many cases this will drag down performance and hit the bottom line.

What are current wage costs?

Teagasc data shows that herds below 160 cows are paying circa €150–€200 per cow in wages which is part-time help. Herds over 200 cows need full-time help which is €300–€400/cow, depending on farm efficiencies.

For the average herd size requiring part-time help, relief milking is a proven and effective option. Table 1 indicates the amount of time that can be freed up by having a relief milker.

E.g. for around €10,000 of wages, at eight rows of cows, you could get around 150–200 milkings done. The seven milkings per week or 300 per year for around €15,000 (plus 9% PRSI) may or may not seem like good value to you. To some it may seem expensive when divided by the length of time it takes to milk the cows. However, there are potentially two days freed up that the farmer can use to get other tasks done or to build in some time off.

Tasks like grass measuring, fertiliser planning and office work can be kept up to date in the time won. Another key benefit of having a person coming regularly to milk is that you have someone who knows your farm and parlour.

If you are sick or incapacitated for some reason at least there is one person who can be called upon.

Table 1: Example – Part-time help

Number of relief milkings, wages and total time freed up

(Note: 9% employers PRSI is not included in the above.)

Are people an asset or a cost?

Some say that good employees are an asset and that they actually make you money. Others say you don’t make any money from employees after taking into account wages and PRSI costs.

A full-time employee including taxes can cost nearly €45,000. If you make on average €1,000 per cow profit that’s 45 cows’ worth of profit to pay for the help on the farm.

Research data shows us that farmers who have expanded and invested in facilities and ways to make tasks easier reduce the number of hours needed to run the farm. Table 2 shows the reduction in hours per cow that can result when you expand and invest in modern facilities.

In Table 2 we can see that the farmer is now paying an additional €25,000 in wages or buying around 1,200 hrs more. This spend could be on family help or outside of the family.

To go from 150 cows to 200 cows and so on requires additional housing, storage, grazing infrastructure etc. In the years immediately after increasing numbers the farmer may not be financially any better off because the additional cows’ profits are going to loan repayments and wages.

However, when repayments are made the farmer can be financially better off and benefit from some extra time off when there is another person to help run the farm. The example here is a farm that’s very efficient and this doesn’t happen overnight for any farm.

Investing in the right places does mean the hours per cow decreases. But only if the right infrastructure is put in place and the stocking rate is correct.

Table 2: Hours of work per cow and the number of cows to pay the farm owner

Farm efficiency and organisation

There is a wide range of total hours worked for similar farm sizes. The main factors causing the difference are:

• Milking facilities (rows, cow flow, drafting, collecting yard).
• Calf facilities (space per calf, no. of sheds, sale of calves, transport of milk).
• Winter housing (cubicles/feed space/cow, slurry storage).
• Calving facilities (space, feed area, slurry storage).
• Grazing infrastructure (roadways, crossing roads, land type).
• Calving pattern.
• Stocking rate.
• Use of contractor.
• No. of out blocks and groups of young stock.

To optimise each of the above takes time, money, hard work and planning. By and large the hours and ease with which you run the farm is in your hands and the choices you make.

Table 3: Physical performance of dairy farmers ranked by margin per hectare

Why hire employees?

Are the employees hired to increase farm efficiency and enable you to take time off? If the answer is yes then that’s a good return on investment.

With time freed up, the farmer can measure the grass, complete budgets, paperwork, shop around on input prices, plan projects etc. The farm performance will increase generating additional margin which can, in some cases, more than cover the extra cost of labour.

It’s a difficult place to be when there is insufficient help on the farm, particularly where infrastructure may be less than optimal. Employing effective people is financially and socially beneficial when good practices are in place and the farm KPIs improve on the back of having these employees.

This article was first published in Today’s Farm