Southland

This syndicate owned farm in Southland is a system 4, non-irrigated Fonterra supply farm. The focus is on maintaining production levels and increasing revenue from livestock sales, while reducing costs, to achieve a sustainable low-cost dairy farm business.

Farm Facts

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
PSC: 10/08/2021
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
$/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
%
$8.44 $4.52 $4.80 $4,993 12.1 155

9.0

73

*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

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

Based on Deferred revenue from 304,396 kg MS @ $1.50 per kg MS and advance revenue from 293,610 kg MS @ $6.26 per kg MS. This is net of the DairyNZ/biosecurity levy (6.6c per kg MS). Have been conservative on milksolids produced for the season as there are some staff changes this year. 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 It may or may not be out of date based on new information from Dairy Companies.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.

2,324,320 7.92 3,522 10,662
Net Dairy Livestock Sales

Based on 20.3% removal rate from herd, and 2.2% deaths, and a 23.3% replacement rate. Income is made up of the sale of 35 weaner heifer calves @ $500, 10 empty R 2 heifers @ $450, 108 MA culls @ $523, 30 MA budget cows @ $800, 300 bobbies @ $30, 80 bull calves @ $ 100, 6 R 1 Jersey bulls sold @ $650, less the purchase of 6 bull calves @ $100.

113,100 0.39 171 519
Other Dairy Cash Income

This is rent charged to employees on an independently assessed commercial basis, plus $500 for trading rebates.

41,200 0.14 62 189
Net Dairy Cash Income 2,478,620 8.44 3,755 11,370

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

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. Includes ACC and training. The aim is to achieve tertiary ACC rating for 30% saving. Remuneration includes milk quality and production bonuses and is linked to monthly performance evaluations. The owner does R & M and his time is charged to R & M. Very big focus on what work is done so that work hours are well controlled. In the 2020/21 season over 40 kgMS per hour worked was achieved. Includes $9,000 for calf rearing.

(incl. ACC)
262,300 0.89 397 1,203
Animal health

Breakdown is: Antibiotics $1,870, bloat $1,320, Breeding intervention $5,230 (staff metri check and vet administers metricure - only 2% of herd), dry cow therapy $5,280, mastitis $8,580, (follow SAMM plan and use cheapest products). Some teat sealing is used on low SCC cows to reduce antibiotic use. Minerals $7,080, metabolic treatments $8,580, (MgO and MgCl – only used until part way through mating, dust MgO at calving (also Ca) then MgCl in water until half way through mating, Cu in water), other $2,640, internal/external parasites $1,320, (young stock only), vaccines $4,290, (Salmonella, Lepto, 7 in 1), vet $3,300, (very little lameness in the herd).

49,500 0.17 75 227
Breeding and herd improvement

This covers AB, herd testing, lease bulls, heat detection, herd records and animal ID. DNA testing of replacement calves is included in this cost. Now only aiming at 22% replacements instead of 25%. 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. Will use some anoestrous treatments. Tail paint only. AB for 60% of the herd - about 7 weeks. Leased Hereford bulls are used with the rest of the herd. AB is also done on the R 2 heifers followed by Jersey bulls. Re-use herd number tags, these are stamped so last for 10 - 15 yrs. Includes 4 herd tests per year for the 21-22 season.

61,600 0.21 93 283
Farm dairy

Only use one liner/year. Focus on accurate measures of detergent. Includes $3,960 for detergents, $2,640 for rubberware and $1,518 for other shed consumables.

8,100 0.03 12 37
Electricity

Hot water is at night rate and heat recovery unit is fitted to chiller.

(farm dairy, water supply)
19,600 0.07 30 90
Supplements made

Surplus pasture harvested as baleage on milking area using contractors. Based on 200 bales, (300 kgDM/bale), or 60 t DM @ $106 per t DM.

(incl. Contractors)
6,300 0.02 10 29
Supplements purchased

Feed purchased from the support block is purchased at market rates as the support block has its own profit targets, usually about 80 t Baleage @$320 per t DM. Other purchased feed is 145 t DM grain @ $512 per t DM, 50 t DM Molasses @ $419 per t, 145 t DM PKE @ $383 per t DM and 8 t DM Straw @ $300 per t DM. All prices include freight.

178,700 0.61 271 820
Calf rearing

Includes $8,800 for meal. Labour cost of $9,000 is added to wages. Rearing 190 replacements with 35 to be sold as weaned heifers. Will also rear 20 bull calves to reatin for the herd. Have swapped meal for a home mixed PKE/crushed grain/Molasses mix, cost is $8,800, ($800 per t). Includes bedding $4,000 animal health $500 and equipment $1,200.

14,500 0.05 22 67
Young and drystock grazing

160 R1 heifers @ $10.00 per head per week for 11 months and 153 R 2 heifers for 1 month (May) @ $25 per head per week. 160 weaner calves @$7.00 per head per week to end of April (21.5 weeks) and then 160 R 1 heifers for 1 month, (May @ $11.20 per head). Also 6 service bulls for 3 months @ $10 per head per week.

124,200 0.42 188 570
Winter grazing

Negotiated each year with a couple of regulars. Includes $15,000 of freight (average of 500 cows @ $15 per head per trip). Grazing cost is for 600 for 8.5 weeks @ $36 per head per week, and 300 cows for a additional 30 days @$34 per head. Expect to have last of cows home by the end of August.

243,300 0.83 369 1,116
Support block lease
0 0.00 0 0
Fertiliser

Expenses are net of fertiliser rebates. Base fertiliser cost is $81,000. Nitrogen cost (including $5200 for proGibb), is $45,200. 160-180 Kg N/ha is used over whole farm as a mix with P, K & S which is spread frequently at low rates. Costs include lime at 500 kg/ha on 200 ha @ $45 per t applied ($8,500). Cartage and spreading for fertilisers is included in the above costs.

(incl. N)
120,700 0.41 183 554
Regrassing & cropping

8-9 ha Fodder beet is grown on farm as part of a re-grassing program. It is planted as early in spring as possible to help reduce a grass surplus. The crop is used in late lactation to lengthen rotation and as part of transition for winter. Expect 30 t/ha yield, the cost is $20,000 for the fodder beet crop so for 8 ha @ 30t DM/ha the cost works out at about 7-8 c/kg DM. $10,200 for 12 ha re-grassing , most as ex crop to grass and one paddock of grass to grass. Effluent solids are applied to this area and ploughed in.

32,000 0.11 48 147
Weed and pest

Weed control covers spraying gorse, broom, thistles and spraying around riparian and amenity plantings. $1,500 for weeds and $100 for pests.

1,600 0.01 2 7
Vehicles & fuel

Includes $10,120 fuel costs. Staff focused on keeping gear clean through a change in staff culture. Try to be efficient in use of all vehicles. Recent replacement of some bikes has reduced maintenance costs.

25,000 0.09 38 115
R&M

The cowshed is now 12 years old and running costs are increasing. This is of some concern as there is potential for R & M costs balloon. This seasons R & M budget includes costs for cowshed, ($15,000), Staff housing, ($10000), winter feed pad, ($4,000), drains, ($10,000), and $1,500 for effluent R & M. Allocation has again been made for shelter and riparian planting, ($8,000). Plant & machinery allocation is $6,500. The owner carries out repairs and maintenance and costs for this work are included. Have farm policy that is focused on keeping to good maintenance schedules and proper training on equipment use. The budget includes a $5,000 contingency allowance.

(land, buildings, plant, machinery)
76,200 0.26 115 350
Freight and general farm expenses

Includes $3,500 for health and safety and protective clothing.

3,900 0.01 6 18
Administration

Includes $64,462 management fee which covers work involved with all payroll, GST, policy setting and office administration. Balance covers costs for meetings, (equity partnership), accountancy, communication, farm consultancy, permits and consents, bank charges and general office costs.

73,600 0.25 112 338
Insurance

Cut the insurance right back a couple of years ago. Have a high excess. $3,700 is for the farm and $6,400 is for farm housing.

10,100 0.03 15 46
Rates
15,200 0.05 23 70
Total Farm Working Expenses 1,326,400 4.52 2,010 6,084
Cash Operating Surplus 1,152,220 3.92 1,746 5,285

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

Budgeting on 5 less R 1 heifers, 6 more R 2 heifers, 6 less MA cows and 20 more R 1 bulls at the end of May 2021. This is based on 2021 IRD NAMV.

3,300 0.01 5 15
Labour adjustment

All owner labour is paid for by the business at market rates. The work done by the owner is included in R & M costs and administration costs.

0 0.00 0 0
Feed inventory adjustment

Expect feed on hand at the end of May 2021 to be 8.1 t DM more than at the start of the season.

2,700 0.01 4 12
Owned support block adjustment

15 ha support block is run as a separate entity and any feed supplied is paid for at market rates.

0 0.00 0 0
Depreciation

Based on 2019-20 financial statements with allowance for asset purchases and sales for 2020-21 and 2021-22.

85,000 0.29 129 390
Dairy Gross Farm Revenue 2,481,920 8.45 3,760 11,385
Dairy Operating Expenses 1,408,700 4.80 2,134 6,462
Dairy Operating Profit 1,073,220 3.66 1,626 4,923

More information

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