North Canterbury

Beechbank Dairies Ltd, owned and operated by Alan and Sharron Davie-Martin, has consistently been in the upper quartile for profitability in the Canterbury region.

Farm Facts

Business type: Owner-operator
Location: Culverden, North Canterbury 
Farm size: 141ha effective milking platform, 195ha effective owned dry land support block near Rangiora
Land: 100% pivot irrigation, part of Amuri irrigation scheme
Peak cows:
 540 friesian cross
PSC: 3/08/2021
Stocking rate: 3.8 cows/ha
Farm system: 4 (20-30% feed imported)
Production: 264,460kg MS/year, 1876kg MS/ha, 490kg MS/cow (4 year average)

Attention to detail and keeping things simple are key to the success of this business. Frequently monitoring and updating the budget and the farm plan are critical so there are no surprises and any actions can be taken early.

The approach to budgeting is to be conservative with estimates for production and generous with expenses so in the event of a milk price challenge or severe weather event there is wriggle room. The breakeven milk price for this farm is $5.10 per kg MS on 255,000 kg MS. At this price, there is no need to make compromises. Status quo farm working expenses are in the range of $3.90 - $4.10 per kg MS.

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Numbers at a glance

Financial KPI 2021-2022 budget

Physical KPI 2-year average

Net dairy cash income
$/kgMS
Total farm working expenses
$/kgMS
Total operating expenses
$/kgMS
Dairy operating profit
$/ha

Pasture and crop harvested
t DM/ha

Purchased N surplus
kg N/ha/yr*
Methane emissions
t CO2 equiv /ha/yr*
Six week in-calf rate
%
$8.43 $4.40 $4.31 $5,719 17.7 137

12.2

68

*Find out more about these KPI's and how to calculate them for your own farm here.

Management decisions

Season review

2021-22 Forecast Budget

Click here for PDF version of 2021-22 budget

Income $TOTAL $/KgMS $/COW $/HA
Net Milk Sales

The advance milk income for 2021-22 is based on a $6.40 kg/MS advance on 255,900 kg MS. The retrospective payment is based on 2020-21 production of 267,313 kg MS @ $1.50 per kg MS. 255,900 kg MS is minimum produced over the last 10 years. The Fonterra dividend is budgeted at $0.10 per share on 260,000 shares. Income is net of levies (DairyNZ levy of 3.6 c per kg MS and the biosecurity levy of 3.5 c per kg MS). This milk income is the farmers best estimate of their likely net milk sales. It may or may not be out of date based on new information from dairy companies. It does not necessarily reflect DairyNZ's milk price forecast.

2,043,700 7.99 3,785 14,494
Net Dairy Livestock Sales

Stock income based on 142 MA cows/R 2 Heifers @ $608 per head and 340 bobbies @ $38 per head and 8 R 3 bulls @ $1500.

111,290 0.43 206 789
Other Dairy Cash Income

Trading rebates - not fertiliser.

2,000 0.01 4 14
Net Dairy Cash Income 2,156,990 8.43 3,994 15,298

Expenses $TOTAL $/KgMS $/COW $/HA
Wages

The farmer owners live off farm so their input into the business is largely in governance and administration roles only, plus overseeing any R & M on the support block near Rangiora. Three full time staff are employed on the farm plus part time and relief staff equating to between 0.5 and 1 FTE. Some staff have been with the farm for 14 years so the remuneration to staff reflects the long term service and level of responsibility undertaken. One of the permanent staff is shared between the dairy farm and the support block.

(incl. ACC)
258,000 1.01 478 1,830
Animal health

This includes vet visits, minerals, drenches, dry cow therapy,(DCT), teat seal and vaccines. The farm policy is vigilance and be proactive. The SCC for the 2020-21 sesaon was 110,000. In accordance with recommended practice the policy is to use selective DCT on cows which have SCC over 150,000, had clinical cases of mastitis during the year, or have visible teat damage. This is about 20% of the herd. The balance of the herd is treated with internal teat sealant. Cows to be treated with DCT are identified in consultation with the Vet. The cost for treating anoestrous cows is included here.

80,700 0.32 149 572
Breeding and herd improvement

The herd has been sire proving scheme, (SPS), for over 30 years so herd testing and semen costs are discounted. AB is for 6 weeks with SPS bulls, followed by 1 week short gestation Hereford semen, (as a marker,) then 3 weeks AB using short gestation Kiwi cross semen. 4-5 herd tests per year are done. Costs include Tail paint and identification. Own bulls are used with the heifers and carry over cows.

21,700 0.08 40 154
Farm dairy

The dairy shed is 40 aside herringbone shed. Standard recommendations for plant cleaning and detergents are followed. Metered detergent dispensers are installed so wastage is minimised.

7,150 0.03 13 51
Electricity

This does not vary much year on year.

(farm dairy, water supply)
26,600 0.10 49 189
Supplements made

This covers 40-60 t DM baleage made on the milking platform and 510 t DM on the support block. Support block baleage is pasture and cereal silage, (oats). Mowing and tedding of supplement done by farm, baling is by contractor. 210 tonne of supplement from the support block will be transferred to the dairy farm. Transport costs of $3,000 are included.

(incl. Contractors)
88,050 0.34 163 624
Supplements purchased

Purchased supplement is budgeted at 233 t PKE, (209 t DM) @ $342 per t landed. Have contracted some of the PKE already for $342 per t DM. 200 t DM is for the Dairy platform and 9 t DM is a contingency for the support block.

80,000 0.31 148 567
Calf rearing

The budget is for 155 replacement heifer calves reared. Includes $1,500 for bedding and $1,500 for animal health. Calves are reared on colostrum and then whole milk from the vat - no penicillin milk is fed to calves. Hay and meal are available at all times to the calves.

16,400 0.06 30 116
Young and drystock grazing

All young stock are grazed on the owned support block. The $1500 is the cost of transport for stock between the dairy farm and the support block.

1,500 0.01 3 11
Winter grazing

Cows are wintered on the support block near Rangiora. The $15,500 is for freight to and from winter grazing for about 500 cows.

12,500 0.05 23 89
Fertiliser

This is net of rebates and includes about $40,000 for Nitrogen. The level of N application for 2021-22 will be below 190 kg N per ha. Fertiliser is applied as per nutrient budgets and soil test recommendations. Olsen P is over 40 and pH is 6.2. Includes fertiliser for the support block as well.

(incl. N)
128,400 0.50 238 911
Irrigation

Irrigation on the dairy farm is 95% pivot irrigators. This will be the fourth full season on the new pressurised Amuri Irrigation Scheme. The support block is not irrigated.

38,900 0.15 72 276
Regrassing & cropping

Cropping costs are $117,500. This covers cropping on the dry land support block for 25 ha of fodder beet for winter feed and 20 ha of forage rape for summer feed. 25 ha of oats for cereal silage will be sown after the fodder beet has been eaten. The estimated yields are 16 t DM/ha for the fodder beet, 7.6 t DM/ha for the forage rape and 8 t DM/ha for the cereal silage. The budget allows for some Italian rygegrass to also be sown to fast track pasture renovation on the dry land supprt block. 3.5 ha of fodder beet will be sown on the milking platform in November for autumn feed to transition the herd ready for wintering. A small amount may be used for late winter. Yields of 28 t DM per ha are expected for this irrigated crop. $6,700 has been allocated for the re-grassing of the cropped areas.

124,200 0.49 230 881
Weed and pest

This is just for weed and pest control on the milking platform. Support block weed and pest is included in the cropping costs.

200 0.00 0 1
Vehicles & fuel

The farm has a mix of Quads and 2 wheel motor bikes. Tractors are used mainly for general farm work and feeding out. Do own mowing and tedding but use contractors for baling silage. Have increased number of vehicles with the addition of the suport block at Rangiora so costs reflect this. Follow regular maintenance and service schedule for all vehicles.

55,200 0.22 102 391
R&M

Plant and machinery owned has increased with the addition of the support block near Rangiora so maintenance costs are up slightly on previous budgets. The farm policy is to be proactive for maintenance and keep up to date in good cashflow years so that if need be it can be reduced in low payout years. R & M average for the last 3 years is $68,000.

(land, buildings, plant, machinery)
69,400 0.27 129 492
Freight and general farm expenses
7,900 0.03 15 56
Administration

Includes about $3,500 for environmental monitoring, (soil moisture), and consents, $5,000 for training and conferences and $10,000 legal for on going succession planning. Do all own GST and payroll.

50,000 0.20 93 355
Insurance

Keep excesses on the high side to try to keep premiums down. This includes insurance for buildings and equipment on the dairy farm and the support block so are higher than previous years.

32,800 0.13 61 233
ACC

Based on 2020-21, plus a bit.

4,000 0.02 7 28
Rates

This is for both the dairy farm and the support block so is up on previous years.

21,300 0.08 39 151
Total Farm Working Expenses 1,124,900 4.40 2,083 7,978
Cash Operating Surplus 1,032,090 4.03 1,911 7,320

Non-cash adjustments have been included below the cash analysis to enable fairer comparisons to be made between farms. These adjustments are not part of a cash budget but are important to fully understand the efficiency of the farm business.

$TOTAL $/KgMS $/COW $/HA
Value of change in Dairy livestock

Female stock numbers are unlikely to change for the season, however will finish the season with 40 less R 1 steers and bulls, but will have 31 more R 2 bulls and steers.

7,100 0.03 13 50
Labour adjustment

This labour adjustment covers 0.4 FTE management input for maintenance work on the support block plus governance, business and farm planning, staff meetings, GST, payroll and farm administration.

25,000 0.10 46 177
Feed inventory adjustment

Plan to carry the same amount of supplement into the winter next season.

0 0.00 0 0
Owned support block adjustment

Based on 195 effective ha of dry land at an estimated market rental of $450 per ha. Provides grazing for all young stock, some carry over cows and 40 dairy beef and winter grazing for the majority of the herd for 6 weeks.

87,750 0.34 163 622
Depreciation

As per 2019-20 financial statements plus allowance for purchase of support block and machinery in 20-21.

120,000 0.47 222 851
Dairy Gross Farm Revenue 2,164,090 8.46 4,008 15,348
Dairy Operating Expenses 1,357,650 5.31 2,514 9,629
Dairy Operating Profit 806,440 3.15 1,493 5,719

More information

Click the link below to view this farm's figures from previous seasons

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