Family Labour - The Real Value on Northern Ireland Dairy Farms

Working methods have progressed substantially on modern dairy farms allowing more cows to be managed per person than was once thought possible. However, the value of family labour cannot be ignored either at individual farm level or for the agri-food industry in Northern Ireland as a whole. While family labour may be omitted when comparing one farm against another, actual total production costs must include an allowance for family labour in order to realistically represent this valuable input on dairy farms.

An allowance for family labour on a dairy farm can be calculated based on the number of hours worked times a wage rate per hour. Contract labour used in cutting silage or spreading slurry for example, is generally ignored as the contractor’s charge will already be included in the overall cost of production. It should also be noted that non-productive time during a dairy farmer’s day is excluded.

Labour efficiency increases as herd size increases. This occurs because the time required to feed cows, wash the milking parlour or prepare farm accounts will be little different whether a farmer owns 40 cows or 400 cows. As herd size increases, the proportion of employed labour used on the farm also increases. Graph 1 below comes from the European Dairy Farmer’s survey of UK dairy farms and closely reflects the situation in Northern Ireland.

Figure 1 . Total Hours of labour (excluding contractors) required per dairy cow at various herd sizes.

It can be seen from Graph 1 that a 100 cow dairy herd requires around 40 hours of labour per cow (other than contractors) to provide for management and day-to-day running of the herd. While this is the average, it should be noted that there will be a large variation around this figure on individual dairy farms. This is roughly equivalent to two people working a 40 hour week.

If a dairy herd uses exclusively family labour, the question is what hourly rate should be used for this labour? The Department of Enterprise, Trade and Investment in Northern Ireland produce figures annually for the average earnings of various occupations. It could be argued that the occupation most closely resembling agriculture is that of a "skilled tradesman" where the gross hourly earnings are quoted at £9.20 per hour. The labour charge per cow could be calculated as 40 hours at £9.20 per hour or £368 per cow. The per litre figure is then dependant on milk yield per cow. If the Greenmount Dairy Benchmark average yield of 6,880 litres per cow is used, the family labour charge is just over five pence per litre.

Dairy farmers will be well aware of the time required to manage their dairy herds. In quoting their production costs, it is important that family labour is not ignored. A figure of five pence per litre can be taken as a guide but individuals must carry out their own calculations.

Family labour – a valuable asset on Northern Ireland dairy farms