The predominantly Jersey herd is stocked at 2.4 cows per ha, but with both weaners and R2 heifers at home the effective stocking rate is closer to 3.0 cows per ha. Calving starts July 20. The only supplementary feeding is pasture based and made on the farm.
The business focus is on sustainability and profitability over production. Operating expenses remain under $3.25 per kg MS (FWE $2.31 per kg MS).
This business is made up of an equity partnership between family members, with one of the equity partners also being the Variable order sharemilker for the equity partnership. The business is viewed and run as an Owner Operator and the budget shown reflects all the income received and all costs incurred by both entities.
The 2017/18 extreme climate for Coastal Taranaki resulted in the herd being dried off on Christmas day 2017. This has impacted the deferred income in the 2018-19 budget and equates to about $70-80,000 or $0.58 per kg MS/$446 per ha less income for the year.
The farm situation as at 31/5/2018 has the whole herd in condition score of 5.4 and pasture cover of 2,900 kg DM per ha. Wintering will be all grass with maintenance levels of feeding.
Given the season, the limitations for importing feed as an organic farm and the current farm position now, the decision to dry off so early was definitely the right one for this farm, the people on the farm and the animals. It means that the physical effects of the poor season will not carry over to the 18-19 season or beyond.
2018-19 Numbers at a glance
|Total Milksolids||Cows Milked||Hectares (Effective)||Net Dairy Cash Income ($/kg MS)||Total Farm working Expenses ($/kg MS)||Total Operating Expenses ($/kgMS)||Dairy Operating Profit per ha ($/ha)|
2018-19 half-yearly update: December 2018
Six months into the season this farm has provided an update on how they are tracking, what, if any major challenges to their budgets they are facing and plans for managing any variances for the rest of the season.
Season to date 13-12-2018
What a difference a year makes! Last season’s total production was passed on 15th November, (last year the herd was dried off December 25th).
Production to date (12-12-2018) is 69,847 kg MS which is above target.
The weather and grass growth rates this season to date have been normal. The winter was mild and while there were a high number of rain days in June and July there was not too much rain on any one day and the soils could cope with it.
Through spring and early summer there has been a good mix of rain and sunshine hours.
13 ha of supplement have already been harvested, with more to be done, so should have about 600-650 bales, (15 bale equivalents).
Cash surplus to 30th November is a bit below budget. Milk income is about 4% down on budget due to a slightly lower advance being received, and some costs are up slightly.
Currently pasture cover is 2,400 kg DM per ha, soil moisture levels are high for this time of year and supplements made or ready to be cut equate to about 600 bales of hay, (30% above budget). Cow condition score is 4.3-4.5 which is a lot better than this time last year.
Current daily production has the farm on track to hit 78,000 kg MS by the end of December. Historically the farm has achieved 60% of the season’s total production at this point so with the current feed on hand and growth rates heading into summer the farm is still well on target to reach 130,000 kg MS for the season.
The milk price for organic farms in transition is still $0.45 above the forecast advance. However, the original budget was based on an advance rate $5.75 per kg MS so this has now been revised downwards to be in line with the latest forecast price.
Despite animal health being above target, a review of the budget still has farm working expenses for the year close to the $2.31 per kg MS budgeted as there will be some savings in other areas.
Plans to manage risks
Weakening milk price and a severe summer/autumn dry are the predominant risks to the business.
The farm is now in a good position with no more compliance expenditure needed for some time. Housing, dairy shed, effluent systems and infrastructure are all in excellent order, so there is no capital expenditure that must be done.
As a full organic farm next September the milk price received will be at the certified organic rate. This year it is forecast to be $8.50 per kg MS, and indications are that next year it is likely to be similar. So, while the farm is vulnerable to the softening milk prices this season there is a lot more surety around income from September next year. In the meantime a drop in price can be managed by monitoring the cash flow regularly and ensuring costs are controlled.
Next season significant progress can be made with retiring debt and reducing the business's exposure to risk.
A dry summer is less of an issue this year given the current levels of feed that are being taken into the summer. Being a low input farm the impact of a summer dry period is already factored into the budgeted milk production.
The current stocking rate is low for this farm, and we are prepared to cull early if need be. The philosophy for summer is not to feed supplements to any animal that won’t be in the herd for the next season.
Feed and Pasture
- In early November, 2.7 ha of turnips were planted as part of a contouring and re-grassing regime. This is growing really well and will be due for grazing in early February. The original budget was for 4-8 ha so costs for cropping and re-grassing will be down on budget.
- 150-200 bales of hay will be retained for the winter so that leaves 400-450 bales for summer use.
- Most of the harvesting is done with own gear so the increase in supplements made will have only a small impact on the budget.
Calving and reproduction
- Calving went well, helped by good weather and well established routines due to having staff that have been with the farm for a long time.
- Calving rate was 58% after 3 weeks, 87% after 6 weeks and 99% after 9 weeks, from a 10 week mating period and no intervention.
- Submission rate this season was 86% after 3 weeks.
- Pregnancy testing via milk sampling is scheduled for late January.
Other points of interest
- Peak cows milked is 385, (15 down on budget – half were late empties and the rest was enthusiastic selective culling).
- Animal health spending is already over $20,000. The budget for the whole season is $20,800 so this will now be revised upwards slightly. This is one area that is really hard to budget for as there are new remedies becoming available all the time for organic farms. That said, with being organic, remedies need to be ordered in, (they can’t just be sourced from the vet), so more supplies are stored on farm and there should be enough on hand to last for the remainder of the season. The only costs still to come for the farm are Lepto vaccinations, zinc and calf drench.
- Calf rearing is about $2500 under budget. The weather conditions were much better for calves and less meal was used.
- Fertiliser applied to date is 1.5 t/ha of chicken manure, (3.1% N), over 143 ha of non-effluent area in September/October and another 1.0 t/ha applied in December. Last season the second application was not done until autumn so this is cost is up on budget to date but will remain on budget for the season.
- R & M and vehicle costs are under budget.
- The Fonterra loan has been paid off out of cash flow.
- The genetic merit of the herd is good so there are options to sell surplus cows at better than cull rates if empty rates are low. The demand for cows from closed herds that are certified disease free is strong.
- Currently there are 100 heifers on farm which is more replacements than needed. Additional income could be added to the cash flow from sale of surplus heifers.
Bio-security & Environment
- The farm is due for full organic certification next September. As an organic farm there are already excellent bio-security measures in place.
- Contractors and coming on farm have to provide a cleaning declaration as part of the organic certification.
- Fertiliser trucks must be cleaned before being allowed access to the farm.
- Tighter bio-security for all farmers has driven demand for bull calves from this farm, for rearing to be used as herd bulls.
- The farm has a farm environment plan,(FEP), with the regional council and as part of that riparian planting is ongoing. The FEP will likely be updated in the autumn.
- Committed to low-cost, low-input, profitable farming, with a focus on quality production rather than quantity. Profit is the key!
- Use spring rotation planner developed from feed budget and expected calving report
- No extra feed is purchased so autumn culling and dry-off dates are determined by autumn feed on hand and cow condition
- Move to organic farming does not represent a huge change. Biggest learning now is about soil health. The majority of research is from overseas studies
- Osflo organic fertiliser is used at recommended rates of 3 t per ha (applied in 3 applications)
- Organic science indicates that liming improves soil health so starting in January 2019 a liming programme will be started. The average farm pH is 5.9 with one block at 5.8. Levels of liming will depend on soil tests and advice based on current research for organic farms
- Weed management is all mechanical – topping, grubbing or pulling, as there are currently no organic approved sprays available. Weeds are not a problem so these methods of control work well
- Have a strong awareness of the value of water. Peak daily use of 35 litres of water/cow in the cowshed. Focus on minimising water consumption
- Effort put into employing the right people because they can help us develop our systems
Key Success Factors
- Vision to future-proof their business and maintain a healthy work/life balance
- Robust, simple systems
- Strong financial management. Take ownership of information by preparing own budgets and monitor and analyse it regularly
- Enjoy a challenge (organic conversion)
- Constantly benchmarking farm operation to find ways to improve its profitability
- Share information, always looking for new ideas to improve