Achieving and maintaining a profitable operation with a production target of 1700kgMS per hectare across a 2350 cow Canterbury dairy farm does not happen by accident. It is made all the more challenging with a milk price that comes with a “4” in front of it.
But as sharemilker and equity partner of the 595ha Singletree dairy farm near Ashburton, as well as sharemilker on the adjoining 210ha Chertsey farm, Will Grayling was confident of achieving that in the midst of a tough summer.
He maintains that despite tighter milk price predictions, the potential to squeeze added margin from the tougher environment exists, thanks to recognising individual staff members’ skill sets and aptitude.
“If they are doing a good job, it’s more important than ever we reward them, even if our income is down. The gains they can contribute in a tighter environment count even more than in a high milk price environment to our return,” says Will.
To provide a platform for staff to shine, Will has spent time this season focusing hard on costs per unit of production, particularly feed which forms 50 percent of the farm’s total farm working expenses.
His key performance indicator for costs is set at $3.60/kgMS, a tight target for the system four operation, but one he is confident of achieving based on past experience.
Setting that target is half his task, the other is tracking it closely. To help achieve this he has recently signed on for DairyNZ’s DairyBase service, and over time that will help him monitor how the farm is performing against his own target and that of other farms in the region and the country.
Target monitoring also extends to production targets, set at 1700kgMS/ha for the Singletree farm, and 1900kgMS on the Chertsey farm at $3.60/kgMS. Based on achieving these costs in previous seasons, Will is confident he can reach the production targets without loosing profit.
“We have also continued to invest in areas that deliver a strong return, including re-grassing, which has a relatively rapid payback.”
They also continue to invest in quality feed inputs, particularly silage.
“Buying silage that is .5ME better in quality, but the same price as last year, is money well spent because you will get an improved return off it,” says Will.
With confidence his budget numbers are sound and achievable, Will can work on building the skills and value his team of 10 brings.
He finds the staff that want to improve or develop new skills are proactive and keen to discuss their goals. “It’s then up to me to find the best pathway to help them achieve their targets.”
Staff assessments are formally conducted once a year, with both parties honestly discussing where to next.
His rule of thumb for assessing a potential staff member is their ability to sit down and have a coffee and conversation with him.
He still has two team members who started with him on the smaller Chertsey farm six years ago. “It’s about ensuring good communication around individuals’ goals and providing pathways to achieve them.”
Focus on budget in tough year
As 2011 Young Farmer of the Year, Will Grayling knows the challenges any young operator can face when kicking off a sharemilking career.
He has some well founded advice for operators contemplating a tough 2014-15 season short of feed, and of cash. Part of his Young Farmer award included tenure on the Kellogg Rural Leadership programme, and bought him close to a cross section of people engaged in the rural sector.
“In any business you see the best operators will always survive, and dairying is no different, there will always be a New Zealand dairy industry, it’s not going away, so it comes down to your ability to get through those tough periods.”
He believes that in turn this comes down to having a good level of self knowledge, understanding what you as an operator and as a person can and cannot achieve under the conditions.
“That plays through to setting a budget you are comfortable with, one you know is realistic and achievable, and working from there on your cost areas.”
He also advises on investing in the farm business when times are good, ensuring production can hold up over the revenue drops.
Will offers some sage advice about media, and how much of it to digest.
“You can read the papers and start to think the grass is greener somewhere else, but it’s rarely the case.”
Will also appreciates the value of strong relationships when times are tough, a currency that will endure long after shiny payouts have evaporated.
“You need to look for a win-win with whoever you are dealing with.
“It’s likely that if you look to win at the other guy’s expense, you are going to lose out sooner or later.”
He believes this is particularly pertinent in the Canterbury dairying community where dairy operators can benefit by building and maintaining good relationships with cropping and dry stock counterparts.
“While our revenue may have dropped this year, we also have to appreciate those farmers we do business with, they can’t simply drop their price so low they are giving it away – it’s important to remember it’s about both parties, not just about you when it comes to these relationships.”
Promoting dairy farm careers
Will shares his ‘day in the life of dairy farmer’ in the documentary ‘Just the Job – a career in dairy farming’.
This article was originally published in Inside Dairy April 2015