Getting ready to leave the dairy business

Optimisation, a simple way of working and keeping labour input as low as possible. That is the strategy of the Olivier brothers. To reach this, they now sell 15 to 30 fresh calved heifers annually, each with an average calving age of around 26 months. “Over the past few years we were able to lease about 100 hectares of land, so we expanded the herd with around 20 of our own cows,” says Philippe Olivier. The brothers don’t plan on expanding their dairy farming business. “Only if we could start at a new location we would consider building a larger barn,” says Philippe, who is mainly in charge of the 110 dairy cows and the young animals. His brother Jean-René deals with the 250 hectares of arable farming. Both branches of the farm have been generating roughly the same amount of income over the years.

Over the last few years, the Olivier brothers leased about 100 hectares of land, to be able to expand the dairy herd. Photo: Robert Bodde

Growth can be simple and cheap

The cubicle barn with a 2×8 herringbone parlour was installed in 1997. Next to the barn, the farmers built a machinery room and storage area for large round bales of hay and straw. An indoor manure storage area connects both buildings with each other. In theory, this storage area can be easily transformed into housing for at least 40 extra dairy cows. However, that will require an investment in boxes, feeder gates or pipes of around € 50,000 maximum. However, the brothers don’t want to expand, despite the good technical and financial results. They have a factory quota of 974,000 kilo of milk. Their dairy co-operation Agrial accepts an extra 3% on top of the quota, without a penalty. If they exceed the 3%, the levy is € 0.05 per kilogram of milk (0-5% extra litres). For the next 5% the levy is € 0.10 per kilo. Therefore, up until 29,200 kg on top of quota, there is no discount. If the brothers deliver 100,000 kg of milk more than the quota, they receive, on average, € 0.08 below the base price (which is € 0.33 at time of writing this article, including bonuses). A yield of about € 0.25 per kilo for the final litres is much more than the variable cost of these litres, which is around € 0.16, Philippe explained.

No straw in ration for more milk

The cows have limited access to pasture from late March until the end of October. In spring and autumn they go outside during the day and in the summer only at night. They can forage a fresh field twice a day, and after a week they return to the first plot. The French farmers prepare the ration in the pasture period with the mixer wagon. The diet consists of 7 kg dry matter (dm) corn silage, 2 kg soy, 1.3 kg dm corn-grain and 1 kg of straw. Their feed advisor is now recommending they replace the straw with a kilo dm of (high energy) corn silage, corn-grain or grain meal. This way, the milk yield can easily be increased by at least 1 kilo per day, without having to increase the herd size. These are the first 20,000 kilos of extra production that are allowed without extra costs.

The cubicle barn was installed in 1997. Photo: Robert Bodde

Planning for an exit

Philippe is clearly getting ready to cut down. This is also due to the fact he has no successor. Part of the company profits are put in the so-called MSA scheme, a fiscal form of saving for later (pension). “This location is leased and has no residual value. If there is a location for sale in the area, we will probably buy it to build a new and bigger barn for the cattle. However, in the long term, we will probably sell the dairy part of our business as a whole. My brother may have a successor and wants to stay a farmer, but then focus on crops. The brothers are working to be debt-free in 7 to 8 years and only time will tell whether the farm will stay a mixed farm or just be a crop farming business in the future.

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Name: Philippe Olivier (44) Residence: Notre Dame des Landes (France) Company: A mixed company on 350 hectares (ha), together with brother Jean-René (38). There are 110 Holstein dairy cows and 110 head of young cattle. 100 ha of grassland is available for the dairy cattle. Of the 250 ha of arable crops: 90 ha wheat, 70 ha corn, 30 ha barley, 18 ha sunflowers, 17 ha peas and 15 ha black oats. Average milk production in 2016 was 9,746 kg at an average cow age of 5.01 years. There is one employee for an average of 28 hours a week.