Business type: Syndicate, owner-operator
Location: Near Invercargill, Southland
Farm size: 218ha effective milking platform, stand alone 15ha effective support block nearby
Peak cows: 660 FJX
Production: 305,000kg MS/year, 1408kg MS/ha, 470kg MS/cow, (3 year average)
Stocking rate: 3.0 cows/ha
Farm System: 4 (20-30% imported feed)
Wintering system: 10% herd (made up of 50% of the R2’s plus lighter cows) are wintered on the milking area on crop, 14% of herd (the other 50% of the R2’s) wintered on support block, 86% herd at external winter grazing
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Numbers at a glance
Financial KPI 2021-2022 budget
Physical KPI (3 year average)
|Net dairy cash income
|Total farm working expenses
|Total operating expenses
|Dairy operating profit
Pasture and crop harvested
|Purchased N surplus
kg N/ha/yr *
t CO2 equiv/ha/yr *
|Six week in-calf rate
*Find out more about these KPI's and how to calculate them for your own farm here.
Strategy and financial
Concentrate on basic farm management principles that provide a farm system which delivers consistent results year on year.
The farm owners have high expectations around having an aesthetically pleasing and comfortable working environment for all staff and stakeholders.
- Planning and Budgeting
Have full budgets that include adequate allowance for capital expenditure and always include contingency outside of the operational budget to allow for 3% variation in production.
Prepare and frequently evaluate cash flow and feed budgets so timely decisions can be made.
Have a key policy to focus on repaying debt, and once debt is less than 40% of assets then two thirds of the profits will be paid as a dividend.
Implement environmental best practice within a profitable farm system.
Farm policy and infrastructure
- 12 year old 64 bail rotary shed, 1.3km from the furthest paddock.
- Well maintained races, fencing and water supply.
- Weaners leave the farm for external grazing at 3-4 months.
- Heifers are grazed off from May to May then are at winter grazing till July.
- 600 cows are wintered off farm from early June for 8 1/2 weeks. Half the herd returns home prior to calving and the balance return one month later.
- There has been targeted investment in infrastructure to minimise pasture damage and supplement wastage, this is in the form of a wintering/feed pad and in shed feeding.
- Independently assessed BCS, (provided by the Vet in early April), is used to make decisions on milking frequency, drying off date and targeted feeding regimes so cow condition targets are achieved by PSC and best use of winter feed is made.
Farm walks are done each week to measure pasture cover and evaluate the feed wedge which is used to manage feed supply and demand.
There is a strong focus on pasture utilisation, using the Spring Rotation Planner, rotation length and pasture cover targets throughout the year to minimise wastage.
Pasture eaten of approximately 11.5-13.5 t DM/ha/year is achieved.
A move to a longer rotation length of 28-30 days from December is planned in an endeavour to increase pasture grown. This is one strategy to try to reduce costs while maintaining production.
- Supplements made
Surplus pasture on milking area is harvested as baleage using contractors. On average expect to make about 200 bales, (300 kgDM/bale), or 60 t DM.
- Supplements purchased
Imported supplements fed is about 650-750 kg DM per cow or 1.96-2.2 t DM per ha.
Baleage, (usually about 80 t DM), is purchased from the support block at market rates, (the support block has its own profit targets).
Other purchased feed is 140-150 t DM grain, 50 t DM Molasses, 140-150 t DM PKE, and 8 t DM Straw.
- Cropping and Pasture renovation
The cropping/pasture renovation policy is aimed to maximise pasture/crop grown and includes growing about 8-9 ha of fodder beet each year as well as carrying out some grass to grass pasture renovation, (about 4 ha). Yields of 25 t DM per ha by May are targeted.
The fodder beet is used in late lactation to lengthen rotation and to transition cows to fodder beet ready for wintering.
- Low animal wastage and high standards for animal welfare are achieved though having good recording, observation and preventative practices.
- The decision has been made to have a herd that is all A2/A2 genotype, so the whole herd has been DNA tested. DNA testing of replacement calves is done each year.
- Replacement rate is 20-22 %.
- AB for 7 weeks for 60% of the herd, (highest BW/PW). Lower indices cows are mated to leased Hereford bulls. The bulls are then used for 4 weeks to complete an 11 week mating period. AB is also done on the R 2 heifers followed by Jersey bulls.
- Limited anoestrous treatments are used, with younger, higher genetic merit animals targeted. Thin cows are put onto OAD, (those below C.S. 4.0). Non-cycling cows are put into a separate mob and ad lib fed.
- Herd testing, 4 tests per year, (2 milkings per test).
People, health and safety
- Maintain HR and staff management policies that ensure quality staff are retained and a safe work environment is created.
- The business has good HR documentation, and staff training to ensure excellent OSH outcomes. This contributes to ensuring the business achieves a tertiary ACC rating resulting in a 30% saving in levies.
- Three full time staff made up of a farm manager and 2 herd managers, plus a calf rearer are employed. Total value package agreements are used and includes ACC payments and training.
- Labour remuneration is linked to delivering on monthly performances as per job descriptions with a discretionary bonus scheme based around cow death rate, milk production, farm working expenses and milk quality. If this is not met in any month that proportion is lost for that month.
- In the past 4 years the average milksolids per hour worked has exceeded 40 kgMS per hour worked.
- Staff retention is good so although with longer tenure and more experience, salary rates are higher, more of the costs of employment are being spent on productivity as recruitment costs are a much smaller portion of the overall cost.
- As an equity farm partnership, the business has its own administration staff and management consultant. Any input from the equity partners is paid for at market rates.
- Soils and fertility
Soil fertility is slightly above optimum with Olsen P of 34 and pH of 6.1. The fertiliser policy is based on soil test results, to maintain fertility, while being efficient in nutrient use.
N applied is 160-175 kg N per ha, (last 3 years average), over the whole farm, as a mix with P, K & S which is spread frequently at low rates. ProGibb is used when needed to minimise losses. DAP, PhasedN, SustaiN are all used depending on time of year, soil moisture and temperature.
- Cropping and Wintering
Cropping and wintering practises follow regional best practice recommendations to minimise runoff and ensure excellent animal welfare.
- Riparian planting
The farm has significant areas of riparian planting. Budgets each year allocate $0.02 per kg MS for maintenance and improvements of riparian areas. $0.01-$0.02 c per kg MS of capital expenditure is allocated each year to planting and beautification of the farm.
The resource consent to farm was renewed for 10 years in 2019 and now includes consent for effluent disposal over 100% of the farm.
Currently 40% of the farm, (100 ha), is set up for effluent irrigation from K lines. Capital development over the next few years will be prioritised to increase the effluent area.
The farm has 90 days storage for effluent.
- Soils and fertility
2020-21 Season Review
2020-21 Numbers at a glance
Milk Production (kgMS/ha) 1,376 1,396 Milk Production (kgMS/cow) 455 468 Net Dairy Cash Income ($/kgMS) $7.11 $7.91 Total Farm Working Expenses ($/kgMS) $4.28 $4.27 Cash Operating Surplus/Deficit ($/kgMS) $2.83 $3.64 Gross Farm Revenue ($/kgMS) $7.06 $7.90 Operating Expenses ($/kgMS) $4.56 $4.56 Operating Profit ($/ha) $3,440 $4,673
*These KPI's are based on cash book actuals to 31 May 2021 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.
- The 2020-21 season was an improvement on the previous year with pasture harvested for the year of 12.3 t DM/ha being up about 7%. However, another wet spring followed by a drier than usual December made for a challenging start to the season.
- Losses over calving from metabolic and calving issues were higher than expected resulting in peak cows milked of 650 being 10 less than budget. Pasture growth rates through late summer and autumn were better than budgeted so average cow numbers milked through March and April of 590 were higher than planned. The last 358 cows were dried off on June 4th.
- The estimated operating profit for the season of $4,673 is 36% up on budget and is the highest profit for the farm in 7 years. This great result is due to better than expected revenue, the result of more milk production and a higher milk price, and operating expenses of $4.56/kgMS which were exactly on budget, (farm working expenses were $4.27/kgMS - also on budget). DairyNZ benchmark estimates for owner operators in Otago-Southland has operating expenses for 2020-21 at $5.37/kgMS and FWE at $4.58, so the cost structure for the farm is still well below average.
- There was quite a wide variation from budget for the most farm working expenses, but close monitoring and frequent reworking of the budget meant that the total farm working expenses were with $150 of the total budgeted. The biggest variations were for supplements purchased, winter cow grazing, fertiliser, R & M and breeding and herd improvement.
Other points of interest
- A Staff member left in December and couldn't be replaced immediately as immigration restrictions delayed the start of a new staff member. Covid 19 has impacted availability of junior staff in Southland. A shortage of staff has seen salaries rising for junior level staff as farms compete for employees. This is an ongoing challenge for the industry in the south.
- 50 t DM more PKE/Barley was purchased for use during spring due to the wet weather and poor pasture growth through that period. The price paid was also higher than budgeted.
- Imported supplements used for the season were .5 t DM/ha less than the previous due to better autumn pasture growth.
- Supplements taken into the 2021-22 winter of 231.3 t DM is similar to the previous year.
- Only one application of maintenance fertiliser was applied and this was in January as soil conditions were too wet through the spring and early summer.
- N use for the season was 174 kgN/ha, with 100 kg N/ha applied prior to the end of December and the balance in the autumn.
- Repairs and maintenance for the season were up on budget due to unforeseen repairs needed for the effluent system. Additional upgrades of tracks and lanes were needed following the very wet November/early December and with the good cash flow, further upgrades to staff housing were carried out.
- 37 weaner heifer calf were kept on farm until they were sold in early March.