We find out Peter and Trixie's response on-farm, their approach to efficient farming to drive high profits, lessons they've learned from similar seasons and why they're confident they can get through low milk price seasons.
How long have you been dairy farming for?
My wife Trixie and I have been on our Kokupu farm for 25 years and working in the industry for 34.
How are you responding to the low milk price?
We’re making sure every dollar spent gets a good return – and this is something we focus on at all times, not just when the payout is low. We work on a good return being 100 percent.
Why do you work on a 100 percent return?
If we’re going to add a cost to the business – other than necessities – we take the approach that it has to double the money – a 100 percent return. That way, if your workings are slightly out and you fall short of 100 percent, you’re still earning good money on that extra cost.
Why’s that important?
If you start getting marginal returns, they can easily become marginal losses. I see people doing a hell of a lot of work for limited returns. Also factor in time and stress. You’ve got to get good gains.
What’s a main focus for you to increase profits?
To grow and harvest as much grass as possible. On average we grow 16t of pasture/ha (calculated using professional pasture cuts) and harvest an average of 13t of pasture/ha (81 percent).
We focus on pasture management at all times – it’s an absolute fundamental for profitable dairy farming in New Zealand, regardless of what system you’re in. It’s the farmer that utilises the most grass who earns the most money.
What are you doing with supplements?
We feed supplements once a day, but it will be adjusted to what the payout can support. Good pasture management is a focus because it reduces reliance on supplements.
What changes have you made on-farm for cost reduction?
When the payout is low we take a closer look at supplement use. It’s not about dragging all supplements out, you just have to work out whether each supplement is profitable or not. It still might be worthwhile, but do the equations.
We start with looking at the highest priced supplements and move down the list from there, working out the returns for each.
Maize silage we are growing ourselves and getting home for a direct cost of about 14-15c/kg so that will stay because we know we can still make money from that even with this payout. We’re planning not to use higher priced supplements like palm kernel this season, but it will still depend on weather conditions.
What have you learnt from previous tough seasons?
Keep the long-term goal in sight. Identify areas that give the best return and don’t cut anything that will affect future profits.
How do you identify areas that give the best return?
A big part of our strategy is gathering a lot of information. We know exactly where we are in our business which gives us valuable insight – knowing what effect any change or decision will have.
How does that benefit your business?
It makes making decisions at times like this very simple. I’m not that concerned about the low payout because I know we can get through it – but we certainly aren't smiling like we were with an $8.40 payout. We set targets from strong historical data and changes on-farm are based on clear scientific proof.
What’s your advice to other farmers around tactical decision making?
Start collecting all the information you can on your business – things like pasture growth, pasture utilised and soil fertility levels. It seems meaningless at the start, but information from the past will help you in the future. There’s that saying that you can only manage what you measure.
What areas do you find generate the best return?
Use your figures to make decisions. We don’t sacrifice anything that is going to affect next year. We have very good fertility levels on our farm. Since 1990 I’ve put fertiliser on every year and we’ve been through about five dips in that time. The main things is, it’s well monitored, so we know exactly what we can do and where we are at every year with soil fertility levels.
How do you monitor soil fertility levels?
They’re tested every year by our fertiliser supplier – regardless of payout. It’s important to collect information to see the trends.
How will the milk price affect your decisions?
If the milk price drops even further, then we might not put our spring fertiliser on, we may use potash and sulphurs only. But because we have all the information collected, we have the ability to make those decisions relatively easily. I know I’ve got enough in our soil fertility bank that we can do that.
What other areas have you made good gains in?
Focusing on reproduction – our herd is high in genetics which means we can sell our surplus cows every year. Our cows typically get in calf quickly as we monitor cow condition closely alongside pasture and feed and train staff on good observation. We have 95 percent of cows submitted in the first 24 days before CIDR use. We’ll be using the same approach this season, using between 15-20 CIDRs.
Are you making any changes this season?
Mating length has been shortened to an 11-week process using AB over the entire herd. We use Forward Pack fresian and crossbreed bulls for seven and a half weeks. For the next three and a half weeks we’ll just use short gestation crossbreed bulls so they all calve in a total of ten and a half weeks.
What costs don’t you remove?
Our animal health costs stay because they wouldn’t be there in the first place if we didn’t need them. We invest in preventative measures that save money in the long run, such as the rotovirus vaccination.
I’d rather spend on animal health to prevent issues like mastitis – it takes workload and stress off staff and myself.
We teat seal our rising two year olds about nine weeks before calving starts and blanket dry cow and teat seal our milking herd at dry off.
How do you minimise impact on staff?
Staff are important to our business and we want to retain them. We make sure they know their jobs are safe and try to make work enjoyable by having a laugh and good communication.
Staff training and progression is important so we include them in our business decisions and go through our workings with them so they understand why we’re doing what we’re doing. They can then use the process themselves later in life.
Why did you agree to be a case study farmer for DairyNZ’s Tactics campaign?
It’s about creating discussion as well as a support network. It’s an opportunity to look at figures and consider areas where efficiency could be improved.
If by hosting and contributing to these fieldays more farmers are able to drive better profits regardless of payout, it will be better for Northland and New Zealand dairy farming as a whole, including the next generation of farmers.
What other farming goals do you have?
Debt reduction is a big focus for us because we have purchased all our farms through borrowing money from the bank. Debt can be your friend because it’s the thing that makes you sharp and it makes it crucial to really perform well – it’s why we have to have a profitable system.
What’s your advice to farmers who are finding it tough?
It’s a learning process – keep positive and remember these times and learn from them and you’ll be in a better position.
Relationships and family are more important than saving a few dollars, and even a short break helps keep things in perspective. You’ve got to enjoy what you do every day and stay focused on your long term goals.
Peter and Trixie's key farming philosphies
- Debt reduction – farm profit must be produced.
- Minimise wastage in all areas – concentrate on efficiency.
- Management practices must support long term goals.
- Targets set from strong historical data and scientific evidence.
- Long term monitoring crucial for basis of decision making.
- Every dollar spent provides a good return.
- Focus on growing and utilising as much pasture as possible.
- Create an enjoyable work environment.
- Learning and development of staff is a strong focus.
- Staffing does not change, no matter the circumstances.
- Help staff progress to build future industry capability.
- Good communication and clear role definitions, systems and policies.
Priorities for this season (15/16):
- Management decisions based on projected milk price and calculated workings.
- Maintain focus on low farm working expenses.
- Supplement purchased after optimal utilisation of pasture and conditional on projected income.
By the numbers
|Foote farm||National DairyNZ model||Foote farm||Northland average||National average||Foote farm||Northland average||National average|
|Cows milked at peak||451||-||458||402||461||458||422||482|
|Production (total MS)||174,400||-||194,990||143,349||183,614||172,730||136,352||180,831|
|Production/ha (kg MS/ha)||1231||1075||1380||827||1156||1222||779||1081|
|Production/cow (kg MS/cow)||386||378||426||324||397||337||345||375|
|Farm working expenses ($/kg MS)||3.43||4.05||3.49||4.74||4.47||3.29||4.45||4.23|
|Operating expenses ($/kg MS)||-||4.90||3.56||5.72||5.24||3.61||5.54||5.09|
Note: operating expenses include non-cash costs of depreciation and management.
This article was originally published in Inside Dairy August 2015