Being able to monitor costs of production effectively allows for active on-farm decisions to determine what makes money and what is not economically viable.

Working out the finances however, is not always as easy as it sounds, but Davidsons Feeds company has tailored management packages available to their customers. These are free of charge and include dairy herd costings and sophisticated rationing software, meaning individual rations can be tailored to achieve the most profitable and economical option.

According to the feed company, understanding a business' milk contract is key to making the most of such rations and increasing herd margins. And, by understanding the contract producers can then determine how much extra margin could be gained through increasing butterfat and yield milk.

Litres/cow 3.8% 4.0% 4.2%

28 0 £694 £1389

30 £1612 £2356 £3100

32 £3224 £4018 £4811

The table above shows in a standard month, the potential profit gain or loss from the change in butterfat percentage and average litres.

This illustrates how much can be gained or lost with the variation of butterfat and yield (based on a 100-cow herd over a month at 26p as standard litre, with a butterfat bonus of 4p BF%).

Therefore, the company says dairy farmers need to question what they are doing and whether it is worth pushing for the extra butterfat. They also need to question how much it will cost to bolster butterfat percentages.

By using calculations like these, it claims dairy farmers will be able to decide on whether or not it is cost effective to look to increase butterfat percentages or litres.

It also encourages producers to spend their money wisely. By looking at the table, working out the added feed costs is just as important .

For example, aim and achieve 32l at 4.2BF% from an average of 28l and 3.8BF% butterfat, through a spend of £20 per day can achieve an increased profit of £4.211 per month, totalling to an impressive £50,532 over a year. This shows that the cheapest is not always best.

Margin is also key when looking at winter rations, particularly this year. Understanding costs of production ensures managing spending in the correct places to increase margin.

Silage analysis results this season are generally of high quality but low NDF, therefore balancing a ration to suit an individual milk contract has never been as important, Davidsons claims. Therefore, is it worth aiming for an extra litre?

By understanding individual milk contracts and the use of Davidsons dietary planner, the company says it is constantly calculating these figures into their rations. This ensures their customers are as efficient as possible and achieve the highest margin over purchased feeds, possible.