The 17th Meeting of Dairy Club (Joint Venture of Alltech and UVAS) was held on Monday November, 12, 2012 at Syndicate Room UVAS. Following was the agenda of meeting:

Minutes of meetings are as follows:

Dr. Muhammad Ilyas opened the house and gave warm welcome to the participants. He introduced the worthy speaker and explained the agenda.

Lecture by Dr. Tariq Mehmood:

Dr. Tariq started his lecture by putting question to the audience that why we do business? Then he himself defined business and its objectives. Summary of his lecture is as under:

HOW TO ENSURE PROFITS ?

• We have to measure profits, first !
• Profit = Income − Expenses
• Profit = Revenue − Cost

↑ Profit = ↑Revenue − ↓Cost

HOW TO INCREASE REVENUES ?

• We have to measure Revenue, first !
• Revenue = No of units sold × Selling price/unit
• Revenue = Liters of Milk sold × Selling price/lit

↑Revenue = ↑Liters of Milk sold

HOW TO MANAGE COST?

• We have to measure cost, first !
• It is not always possible to reduce cost, an objective oriented strategy should be adopted to manage cost.

KEY MEASURE OF BUSINESS EFFICIENCY !

• Profit and Profitability
• Profit is an absolute value, while profitability is a relative characteristic of financial results and performance of any business.
• Key measures of Profitability !
• We have to evaluates how well the business generates returns to its resources.
• Return on Assets (ROA) = Profit / Total farm assets
• Return on Investment (ROI) = Profit / Investment
• Return in Equity (ROE) = Profit / Total Equity

KEY MEASURE OF FINANCIAL EFFICIENCY !

• We have to measure how efficient a business spends money to make money.
• Operating Expense Ratio (OER)
  OER = Total Expenses / Total Income

• Evaluates only operating expenses, not capital expenses, like interest and depreciation.

KEY MEASURE OF CAPITAL EFFICIENCY !

• We have to measure how efficiently the business uses its assets to generate income.
• Asset Turnover Ratio (ATR)
  ATR = Gross Income (Revenues)/ Total Assets

ANIMAL RELATED INCOME FCTORS

Key Performance Indicator is:

Liters of Milk Sold

• Progeny
• Milk production per cow per day
• Non sellable milk, consumption by calves, spoilage, pilferages, self consumption
• Cow’s Days in Milking
• Herd Production KPIs
• Reproduction KPIs
• Health status
• Cow Comfort Factors
• Cull rate
• Calf Management

BUSINESS RELATED INCOME FACTORS

Key Performance Indicator is:

Selling Price of Milk

• Rate per liter
• Composition based adjustments

CAPITAL COST RELATED FACTORS

Key Performance Indicator is:

Asset Turnover Ratio (ATR)

• Herd size
• Price of the Cow
• Production Life of the Cow
• Value of Land
• Construction of farm facility
• Machinery, dairy and agriculture
• Cow comfort
• Interest on capital borrowing
• Depreciation on infrastructure

OPERATING COST RELATED FACTORS

Key Performance Indicator is:

(ATR)Operating Expense Ratio (OER)

• Feeding
• Labor
• Utilities and vehicles
• Rent
• Owner’s compensation and draws

EFFICIENT MANAGEMENT KPI

• Feeding
• Income Over Feed Costs(IOFC)
• Feed Efficiency (Liters of Milk/ Kg of Dry Matter)
• Feed Cost per 100 lit of milk(milking herd only)
• Purchased Concentrates as a % of Milk Income
• Labor
• Milk sold per worker
• Cows per worker
• Labor/ 100 lit of milk
• Investment
• Investment/cow
• Machinery Investment/cow
• Debt Management
• Debt/cow
• Debt payment as a % of Income
• Cost of Production
• Total expense/revenue

Note: PowerPoint presentation of the lecture is available on Dairy Club website. (http://uvas.edu.pk/society-club/dairy_club/useful-links.htm).

At the end Dr. Shahzad Naveed Jadoon summarized the meeting and paid thanks to the worthy speaker and audiences

Schedule for the next meeting:

Many thanks for your time, contributions and cooperation