80% of the farm is flat and the remaining is a grazeable gully. Milk production for 2018-19 is budgeted at 76,000 from 220 Friesian - Friesian cross cows, (1,041 kgMS/ha and 380 kgMS/cow), with operating expenses of $4.09 per kg MS, (FWE $3.00 per kg MS).
A key focus this season is maximising milk production before Christmas, so stocking rate has increased 10% compared with the previous 2 years. Once a day milking will be commenced again early in the summer and options for cropping as a way to increase home grown feed will continue to be researched.
The size of the business means profitability has to come from efficiently implementing a simple system and close monitoring of income and costs is a critical part of this implementation.
2018/19 Numbers at a glance
|Total kgMS||Cows Milked||Hectares (Effectives)||Net Dairy Cash Income ($/kgMS)||Total Farm Working Expenses ($/kgMS)||Total Operating Expenses ($/kgMS)||Dairy Operating Profit ($/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
The first half of the 2018-19 season has been completely different from 2017-18 weather wise. Production to the 10-12-2018 is 48,256, up 5% on last year and up on budget.
An earlier mean calving date this year, better spring growth and utilisation and more cows all contributed to the increase in milk solids to date. The cows peaked higher at 2.0 kg per cow. The peak was later this year but was held for longer. (17-18 peak was early and short).
Less imported feed has been used to date and more supplement has been harvested..
Income is up on budget with 2,000 kg more MS and the advance is as per budget, although the budget did include an October dividend which did not eventuate.
Farm working expenses are on budget even though there are some unders and overs. It is likely there will need to be some capital spent upgrading vehicles as running costs are creeping up.
Currently pasture cover is good at 2,300 kg DM/ha and of good quality. Recent warm rains mean that soil moisture levels are high, (and so much better than last year). Cow condition score is 4.3 and better than last year.
This time last year the herd was on once-a-day. Will still go on OAD December 23rd as planned.
The farm is well place heading into summer with close to 500 kg DM per cow of supplement available for summer/autumn feeding.
The full season budget is still well on track to achieve 76,000 kg MS and $3,000 operating profit per ha.
Plans to manage risks
Payout and a dry summer are still the main concerns heading into the second half of the season.
Still budgeting on $6.00 final milk price. The current advance of $4.50 plus capacity adjustment to the end of April, (received May), is still very close to the advance used in the original budget. The budget still includes a dividend in April. That said there will still be close monitoring of the income side of the budget to ensure the bottom line of the budget is on target.
Operating costs are still on budget for the whole season.
Financially the short term focus is to review provisional tax liabilities for the year and continue to increase working capital to cover this and some capital expenditure
The usual management practices will be carried out should it turn drier than usual. Empties can be culled early in February if feed supply is declining too much. The plan is to not increase the allocation for spending on feed.
Feed and Pasture
- Supplements made is 34.2 t Silage which is double what was cut last year. Making costs will be up about $1,200-1,300 on budget.
- 2 ha of hay currently shut.
- 4 ha of turnips have been planted – 2 ha each 3 weeks apart. They are growing well and the first paddock will be ready for grazing late January.
- 50 t PKE has been used so far which is less than last year to the same time. Still plan to use the 100 t PKE that is in the budget – it leaves more to use from February. Budgeted price was $240 per t landed. The early PKE was at this price but the 30 t was purchased for $285 per t landed. Another 20 t has been contracted at $269 per t so the cost for the season will likely be up about $2,000-$3,000.
- 4 t DM of Pro liq has been used to date which is 18 t DM less than last season.
- The plan is to still purchase straw as per budget but may get a mix of hay and straw. If that happens the budget for this may go up a little because of the hay.
- Pasture growth from September through to the end of November was above average and led to higher covers though October. Pasture tended to go to stalk early this year so some topping was done early to maintain quality.
- N use to date is 72.5 kg N per ha. Still following the herd as weather allows so will have applied 84 kg N/ha over all the milking platform by the end of December. Budget for the whole year is 120 kg N per ha so still on track for that.
Calving and reproduction
- Mid-point of calving was 29th July, 14 days after PSC, which was 2 days earlier than last season. Mean calving date was August 1st so the overall calving was compact.
- Calving rate at 3 weeks was 70%, after 6 weeks it was 95% and after 9 weeks it was 100% .
- Submission rate after 3 weeks of mating is 88% with no synchrony or intervention. Bulls have gone and now just finishing with AB and short gestation bulls semen.
- Bulls were bought from a closed herd this year, (for bio-security reasons). However they broke down after 1 1/2 weeks so AB with short gestation semen will be for 3 weeks not 2, therefore AB costs will be up slightly.
- At this stage returns appear to be less than usual for the same time so that is offsetting some of the increased cost due to the extra week of AB.
- Bull costs are on budget at about $800 per head net to buy and sell.
- Pregnancy testing is scheduled for the end of January using milk samples.
Other points of interest
- Peak cows milked is 220 which is 6% higher than last year and was part of the plan for this year to capture more milk before Christmas.
- Young stock are all at grazing now and are all doing well.
- Plan to review cash flow and forecast in January, with a view to making some principal repayments. Currently work with interest only.
Bio-security & Environment
- Boundary fences are all good.
- Changed where bulls were purchased from.
- Scrubbing station and foot bath at the dairy shed for visitors.
- Cows are bulk milk tested.
- Had conversations with young stock grazier to ensure acceptable bio-security measures are in place.
- Riparian planting for the farm is about 75% done. Should be completed in the next 1-2 years.
- Have a farm environment plan but it was done some time ago so needs to be updated.
- The 2018-19 budget is based on increased cow numbers compared with previous years, (220 cows compared with just over 200). The focus is to get more milk in the vat up to Christmas, with the aim of achieving 69% of total season’s milksolids by 31st December.
- Formally feed budget from March to September and use the spring rotation planner. Re-assess pasture cover every 10 days (using plate meter) and update feed budget with this data during this period
- Late spring/early summer constantly monitor post grazing residuals to ensure action is taken early (dropping out paddocks for silage) to maintain pasture quality and optimise pasture utilisation
- Imported feed is budgeted to be 180,000 litres proliq, (1.0 TDM/ha), 100 tonnes of PKE, (1.2t DM/ha), and 0.25t DM/ha of straw. PKE is chosen as it can be stopped and started as needed and is easy for one labour unit to feed out. The purchase of this feed is price dependent, particularly after late December. Cows have access to proliq all year during the milking season.
- This is a one labour unit operation (apart from relief labour) and effort has been made to find efficient ways to carry out tasks without compromising farm performance
- Milk colostrum cows once a day
- Feed calves once a day from birth
- Use supplements that don’t require much time to load up or feed out eg baleage/hay, PKE, proliq
- Go to once a day milking prior to Christmas to free up more time for family and reduce reliance on relief staff
- Summer crops of 4 ha of turnips is planned. This is used to minimise the effect of dry summers. Aim to maximise crop yield. Expect to achieve 14 - 16 t DM per ha
- Late summer/autumn management is largely driven by the feed budget. Culls are all gone by March /early April or sooner if feed is limited and low condition score cows are dried off early. The aim is for cows to be at condition score 5 by the end of May and this is usually achieved. Having access to proliq helps.
- Weaners are kept on the milking area, and from late December they are break fed and given access to proliq. They go off to grazing in May (10 months old) at 200 kg average liveweight.
- Phosphate levels are 77 Olsen P and therefore the plan is use this bank of nutrients during poor pay out years as a way of reducing expenses.
Key success factors
- Achieve a good work/life balance through implementing a simple farm plan that has labour efficient systems
- Have strategies to cope with the effects of variable rainfall. Focus on what you can control and not what you can’t.
- Monitor actuals against budget cash flow predictions to ensure the business stays within overdraft limits
- Frequently monitor financial position to be ready to take advantage of opportunities and manage threats to the business. Utilise accountant and banker expertise to assist with this.
- Repay additional debt when there are surpluses in the budget which takes the pressure off when the cash flow is limited.
- Focus on pasture management – always reviewing current intakes, looking at pasture ahead and reviewing growth rates behind the current grazing regime.
- Have a keen interest in what is happening in the industry, both domestically and globally, so very aware of what is likely to be happening
- Use all available information to aid day to day farming decisions. Very price aware and frequently review costs of inputs against returns
- Share ideas and information via discussion group and peer interaction
- In good pay out years ensure all property maintenance is kept up to date and any major development is carried out so in low pay out years minimum expenditure in this area is required