There are a huge amount of things going on within a farming environment, especially when you’re keeping livestock on a dairy farm. To keep things simple, we’re focusing on the most important Key Performance Indicators (KPIs) that will have an impact on dairy farming.
1. Average milk yield: If this figure is looking low, you have to ask yourself what you can change to keep your business running. Can you reduce the amount you’re selling and shift to a different way of operating? Perhaps smaller yields will be of better quality so you can charge more.
2. Milk profit margin: Once you’ve calculated how much milk you’re producing on your dairy farm, you need to work out how much cash you’ll be generating from it. Calculate and monitor this dairy farm KPI so you know the value of your stock.
3. Land investment: Signing a big deal with a supermarket for your milk to be sold in will warrant the need for more space for additional cows. Can you afford to take on another field or cattle shed right now? If not, how are you going to plan effectively to be able to?
4. Productive cows percentage: This indicates your operational efficiency, by measuring the number of milking cows against the total number of cows within the herd. You’re aiming for a high percentage, as cows which aren’t producing milk are a drain on your resources.
5. Break even milk price: This KPI allows you to grow your profitability, therefore cashflow. It measures the lowest price you can accept per quantity of milk in order to break even. Once you know this figure, pricing out your produce will become easier, as you’ll have a figure to work from.
While you’re here, take a visit to our KPI Library.
Find out how to calculate your average milk yield here.
Learn how to calculate milk profit margin here.
Put your land investment into your forecast.
Measure productive cows percentage using this formula.
Learn to calculate your break even milk price here.