Taranaki

Rachel and Kenneth Shorts' 400 cow, 168 effective ha, self-contained, very low input coastal Taranaki farm is heading into year three of a three year conversion process to be certified organic. Production is budgeted to be about 130,000 kgMS (325 kgMS per cow and 774 per ha).

Rachel and Kenneth Short

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)
130,000 400 168 $6.76 $2.31 $3.24 $2,684

2018-19 Forecast Budget

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

Milk revenue is based on 130000 kg MS @ an advance of $5.75 per kg MS including the organic transition premium of $0.45, 53,532 kg MS @ $1.40 deferred, and 147,000Shares @ $0.15. This is net of DairyNZ levy (3.6 c per kg MS). Milk income: 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.

839,200 6.46 2,098 4,995
Net Dairy Livestock Sales

Based on approx 107 MA Jersey and R 2 heifer culls @ $355 and 290 Bobbies at $10.

40,000 0.31 100 238
Net Dairy Cash Income 879,200 6.76 2,198 5,233

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

Covers one 2-ic staff member and a small amount of relief labour for when both owners are absent.

(incl. ACC)
55,000 0.42 138 327
Animal health

Focus is on prevention rather than cure. The approach to animal health is kept simple and is based on good observation. The farm has good infrastructure so things like lameness are not an issue. This is the third year of a 3 year transition to full Organic certification so only organic remedies will be used. Calving is Jersey on Jersey so there are fewer calving related difficulties/vet visits. Standard minerals are used and required vaccinations are carried out (Lepto). BVD not a problem - milk test is used.

20,800 0.16 52 124
Breeding and herd improvement

The calves are genemarked as part of the previous seasons mating Sire Proving Scheme, (SPS), obligation. Have dropped SPS and so semen costs are up this year. Herd testing is at market rates. AB is for 6 weeks and bulls are out for 4. The costs include the leasing of 8 R 2 bulls which are used on the heifers and then used on the herd. Only one lot of bulls is needed as the heifers are run on the milking area. For the 2018-19 based on pregnancy testing 94% of 2 year olds, (91 out of 97), will be calved in the first 3 weeks of calving.

20,000 0.15 50 119
Farm dairy

Includes detergent, rubberware replaced 1 times/yr and miscellaneous shed expenses. Standard cleaning procedures and recommendations for detergent use are followed.

4,500 0.03 11 27
Electricity

Focused on efficient processes so good cow flow and efficient routines have decreased milking costs. Have varivac fitted to machines so electricty usage is more efficient. This incudes the cost of access to the water scheme that provides all the farm water via gravity feed. Shed/farm Power is $8,000 and water supply is $6,000.

(farm dairy, water supply)
14,000 0.11 35 83
Supplements made

Only genuine surpluses harvested off the 168 ha. Amount varies each year but usually make between 400-500 bales of hay each year (15 bale equivalents). Have all own hay making equipment. This cost is to cover scenario where machinery or labour are unavailable and outside contractors need to be called in.

(incl. Contractors)
6,000 0.05 15 36
Calf rearing

This is for the costs of Calf meal. 100 replacement heifer Calves are reared on colostrum, whole milk and organic calf meal.

4,000 0.03 10 24
Young and drystock grazing

Not required as all young stock - approx 100 weaners and 100 R 2 heifers are grazed on the 168 ha milking area. The area required to feed them is estimated to be the equivalent of 26 ha (as per DairyBase young stock area calculation).

0 0.00 0 0
Fertiliser

Fertiliser used this year will be Osflo (organic) in 3 one t applications. It is applied to non effluent areas only which is 143 ha. This cost includes spreading charges. OsFlo is 3.1% N, 1.1% P, 1.9% K, 0.3% S and 2.5% Ca. This equates to 93 kg N/ha applied to 143 ha. No other N products are used. A liming programme will be starting in January, so the cost is up slightly.

(incl. N)
60,000 0.46 150 357
Regrassing & cropping

All costs associated with the cultivation and seed for 4-8 ha of turnips and new pasture. The cropping is part of the contouring policy so is done as much for the re-contouring as for the summer feed provided. No sprays are used.

3,000 0.02 8 18
Weed and pest

Weeds and pests are not usually a problem. Weed control is all  manual as the organic spray that was being used is no longer available.

100 0.00 0 1
Vehicles & fuel

Do all own harvesting and tractor work so includes the fuel costs associated with that. Plant is quite old but well maintained.

24,000 0.18 60 143
R&M

Farm has been well maintained over the past years so very little maintenance is planned. Have the ablility to carry out a lot themselves. This includes the maintenance of the harvesting machinery owned, some of which is over 20 years old.

(land, buildings, plant, machinery)
31,000 0.24 78 185
Freight and general farm expenses

Includes costs for protective clothing and freight for culls.

4,000 0.03 10 24
Administration

Do own GST, PAYE and budgeting. Includes administration and accounting fees for two financial entities, $2,250 Organic auditing fees which is an annual requirement for Organic certification and travel costs relating to visiting other organic farms and organisations as part of continued learning about organic farming. Allowance is also made for the registration of 100 heifer calves with the breed society Jersey NZ.

20,000 0.15 50 119
Insurance

Includes: milk losses, loss of cows, public liability, property. This is something that is reviewed annually to make sure it is still relevant.

15,500 0.12 39 92
ACC
1,500 0.01 4 9
Rates
16,500 0.13 41 98
Total Farm Working Expenses 299,900 2.31 750 1,785
Cash Operating Surplus 579,300 4.46 1,448 3,448

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

Expect to end the season with 13 less R 1 hfrs, 13 more R 2 heifers and 10 less MA Cows. IRD NMAV (National Average Market Values) 2018 used to estimate value of change in Dairy livestock.

-7,000 -0.05 -18 -42
Labour adjustment

This is for 1.5 FTE (3600 hours) of unpaid labour input from the business owners.

83,350 0.64 208 496
Feed inventory adjustment

14.1 t DM will be carried into the 18-19 season. It is likely that a similar amount of feed will be carried forward into the 19-20 season so no change in feed on hand is anticipated.

0 0.00 0 0
Depreciation

As per financial statements for 2016-17 year, with allowance made for further depreciation and asset purchases and sales.

38,000 0.29 95 226
Dairy Gross Farm Revenue 872,200 6.71 2,181 5,192
Dairy Operating Expenses 421,250 3.24 1,053 2,507
Dairy Operating Profit 450,950 3.47 1,127 2,684

More information

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