Tim Driscoll is the owner/operator of this 197 effective ha Southland farm.  For the 2018/19 season this is made up of 186 ha in permanent pasture and 11 ha of new grass ready for grazing from late December.

The 18/19 budget is based on 599 Friesian cows (3.00 cows per ha), producing 300,000 kg Milksolids (501 kg per cow and 1,523 per ha). No crop is grown on the milking area. Cows come home from winter grazing and calve directly onto pasture.  A 50/50 mix of PKE and corn gluten pellets is fed in shed during the spring and early summer at the rate of 1 kg per cow per day.

This season, the milking area is supported by 83 ha of support land (69 ha leased and 14 ha owned).  This area provides all young stock grazing, silage, and some winter grazing. This 2018 winter is the last season winter crop will be used on the support block. Only baleage and pasture will be used for wintering from 2019.

The budget provided is considered to be conservative with the advance price used being about $0.70 less than the company forecast (as at 31/5/2018), and budgeted costs are generous.  The surplus generated will be applied to additional debt repayment, taxation and further purchase of Fonterra shares.

The longer term challenge is still...."can this farm achieve 3.0 cows per ha, 1,500 kg MS per ha for close to $3.00 per kg MS cost structure?"

2018/19 Numbers at a glance

Total KgMS Cows Milked Hectares (effective)

Net Dairy Cash Income

Total Farm Working Expenses

Total Operating Expenses ($/kgMS) Dairy Operating Profit
300,000 599 197 $6.57 $3.45 $3.88 $4,261

2018/19 Forecast Budget

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

Based on 300,000 kg MS @ $4.36 per kg MS advance, 294,000 kg MS @ $1.75 deferred (includes payment in June 2018 for May 2018 milk produced ($110,000) and a 294000 MS @ $1.40), $0.19 per share dividend on 280,00 shares. This is net of DairyNZ levy on 300,000 kg MS @ 3.6 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 It may or may not be out of date based on new information from dairy companies.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.

1,879,500 6.26 3,138 9,541
Net Dairy Livestock Sales

Net sales includes 125 Cull cows/R 2 heifers @ $650, 400 bobbies @ $40, less 13 herd bulls purchased/sold for a net cost of $300 per head.

90,000 0.30 150 457
Net Dairy Cash Income 1,969,500 6.56 3,288 9,997

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

This covers 3 FTE (Farm manager + 2 farm assistants).

(incl. ACC)
150,000 0.50 250 761
Animal health

Metricheck and pregnancy testing and BCS carried out. Rotavac half MA cows. Treat all clinical mastitis cases. MgCl and basic minerals through dosatron all year with Selenium in spring through to christmas. Calving, anionic salts to springers with MgO. Milkers and colostrums MgO and limeflour through dispenser via in shed feeding and PKE trailer. The wholeherd is treated with dry cow therapy. Metabolic diseases were an issue last calving so the animal health budget is up on previous years to address this.

54,000 0.18 90 274
Breeding and herd improvement

7-9 weeks AB, no synchrony used. No herd testing done.

30,000 0.10 50 152
Farm dairy

Chemicals, rubberware - normal running costs.

13,000 0.04 22 66

Rotary cowshed. Hot washes once a day, milking twice a day all season.

(farm dairy, water supply)
22,700 0.08 38 115
Supplements made

1600 bales @$30 per bale (250 kg bales). This is across all land farmed (Milking area, 14 ha support land owned and 69 ha support land leased. Supplements made are up on previous years as now have to make enough to winter young stock on the leased support land. 1600 bales is the amount needed to get herd and young stock through winter and spring with no crop.

(incl. Contractors)
48,000 0.16 80 244
Supplements purchased

Purchased feed is budgeted to be 312 t PKE @ $250/t delivered and 170 t corn gluten pellets @ $410 per t landed. This is fed to cows as 50/50 mix with PKE at 1 kg per cow per day through spring and early summer. PKE fed is also fed via trailers in paddock as required. At $6.50+ per kg milk price breakeven on purchased feed is $8,500 or 14 kg MS per cow. Costs include $5,000 for a small amount of hay purchased July.

153,000 0.51 255 777
Calf rearing

This is for about 6 t calf meal @ $800 /t delivered. Calves reared on colostrum/wholemilk, meal, access to pasture after 6 weeks. 200 replacement calves reared.

4,900 0.02 8 25
Winter grazing

450 cows @ $30 per head per week for 10 weeks. Total cost includes cartage of $12,000. R 3 are being wintered separately from the main herd. R 2 heifers and 50 cows are wintered on the on the support blocks.

147,000 0.49 245 746
Support block lease

Lease 69 ha nearby so now fully self contained for young stock grazing. 65 ha used for young stock grazing and supplements and 4 ha is used for supplements only.

64,600 0.22 108 328

125 t maintenance fertiliser @ $400/t plus 130 t N products $540/t (Sulphate of Ammonia is used for first application in spring, then rest is urea). Individually soil tested paddocks in 2015 and designed a program around that. Minimum P applied only. Maintenance K & S. Fertiliser has not been cut back in the downturn but some higher fertility paddocks were missed out in previous years. Fertiliser is all applied by the farm staff.

(incl. N)
123,000 0.41 205 624
Regrassing & cropping

3 ha of Fodder beet on the support block to winter R 2 heifers will not be grown Autumn 2019. These regrassing costs include the costs to regrass the final 3 ha of crop on the support block (being used to winter R 2 heifers in 2018), plus another 4 ha of regrassing on the support block and 23 ha on the milking platform.

20,000 0.07 33 102
Weed and pest
7,000 0.02 12 36
Vehicles & fuel

Includes fuel/oil of $24,000. Attitude to vehicles - keep bikes modern, have 2 quads and 2 x 2 wheel plus a Suzuki Escudo (old). Tractors, 90 and 100 HP between 10 and 16 years old. Up slightly on previous years as more work is now being done with the addtion of support blocks.

53,000 0.18 88 269

Plant and Machinery and tools = $5,000, races/tracks = $2,000, fences etc = $1,800, water supply = $4,000, dairy shed R & M = $21,000 and drainage of $18,000. Farm conversion occured for supply commencing Spring 2012. Conversion completed to a high standard. 50 bale De Laval Rotary with milk meters. R & M high on shed possibly due to technology in shed? Haven't got to the bottom of that yet. Plant and machinery is generally old except for new fertiliser spreader 2016 and mower 2011. Have got all cultivation gear from sheep farming days. Repairs all completed through service providers. Upgrades to drains scheduled as very little has been done since conversion to Dairy so are now due. Also more required with the additonal lease land and purchased support block.

(land, buildings, plant, machinery)
75,000 0.25 125 381
Freight and general farm expenses

Includes $1,100 for protective clothing. A general cost of about $6,000 is included here as a contingency for unplanned expenditure.

8,100 0.03 14 41

Covers accountancy, computer, farm consultant, phone and general office costs. Farmer does own GST, PAYE, budgeting. Includes a one off consent payment of $5,500 relating to application for consent to milk on the additional 14 ha purchased in 2016.

18,000 0.06 30 91

Have saved >30% of farm insurance costs 3 years ago by changing provider.

20,000 0.07 33 102
3,100 0.01 5 16
21,900 0.07 37 111
Total Farm Working Expenses 1,036,300 3.45 1,730 5,260
Cash Operating Surplus 933,200 3.11 1,558 4,737

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.

Value of change in Dairy livestock

Plan to increase the number of R 1 heifers from 150 to 200. This is at IRD National Average Market Values (NAMV) for 2018 (50 heifers @ $691).

35,000 0.12 58 178
Labour adjustment

This covers 0.6 FTE for Owner input relating to strategic management, overseeing implementation of farm plan and farm work. (Owner on farm during Aug/Sept/October, plus relief labour during year).

50,000 0.17 83 254
Feed inventory adjustment

An additional 25 t DM will be carried forward as replacement for not having any winter crop on the support block for the 2019 winter.

7,500 0.02 13 38
Owned support block adjustment

Have 14 ha of support land purchased in 2016. Estimated market rental is @ $800 per ha. The land is currently being used as support land but have an application in for consent to use as milking land for 2019-20.

11,200 0.04 19 57

Based on 16-17 financial statements. Farm is only in 6th season from conversion so infrastructure is relatively new hence depreciation higher than on more established farms.

75,000 0.25 125 381
Dairy Gross Farm Revenue 2,004,500 6.68 3,346 10,175
Dairy Operating Expenses 1,165,000 3.88 1,945 5,914
Dairy Operating Profit 839,500 2.80 1,402 4,261

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