Budgeting, Andrew and Vicky Booth (Northland)
12 min read
Andrew and Vicky Booth sharemilk 390-400 cows on a 220-hectare family farm in Titoki, west of Whangārei. This is their 14th season (5th all autumn calving) and they have a strong focus on environmental care, especially the Mangakahia River. This environmental focus benefits their production, the climate, freshwater, and biodiversity. The farm has faced challenges, including three floods in May 2023. Key decisions revolve around being environmentally and economically sustainable, maintaining work-life balance, community involvement, and regular budgeting.
Andrew and Vicky Booth sharemilk 390-400 cows on their 220-hectare family farm in Titoki, 30km west of Whangārei on the banks of the Mangakahia River. This is their 14th season on the farm, (5th all autumn calving).
The Mangakahia River is an important ecosystem for the farm and the surrounding valley. Taking care of the environment is a priority on the farm, an approach that is leading to better production outcomes as well as wins for freshwater, biodiversity and the climate.
The farm has suffered from the impact of 3 floods in 10 days in May 2023, on the back of a very wet summer and early autumn. Over 60 ha of pasture has been out of the grazing rotation since early May making the effective stocking rate close to 3.5 cows/ha. The 2023-24 budget includes additional purchased supplements to help get through the peak of milking and mating and keep pasture cover at optimal levels.
Titoki, West of Whangarei
174 ha effective milking platform, 71ha eff support block nearby
7/4/2023, (heifers 7 days earlier)
3 (11-20% feed imported)
160,000kg MS/year budgeted, 920 kg MS/ha, 400 kg MS/cow
Production (last 3 years):
158,200 kg MS/year
How has the season been so far?
October 24th ,2023
What are cash flow forecasts looking like? How will a drought impact this?
Has the NIWA El Nino forecast changed how you are approaching this summer?
What strategies do you have this season for when a drought comes early, late, or is prolonged?
We already have a lower stocking rate than usual with having 18% of the milking area out of rotation through the winter. Twenty hectares of that should be back in rotation by the end of November and with only 5 ha of deferred grazing, the available area for grazing relative to the current stock numbers is better than is better than for previous summers.
If it gets dry, the options are:
If it is really dry in March/April then OAD from calving is always an option.
|Financial KPI 2023-2024 budget|
|Net dairy cash income$/kgMS||Total farm working expenses$/kgMS||Total operating expenses$/kgMS||Dairy operating profit$/ha|
|Physical KPI 2022-23 est|
|Pasture and crop harvested t DM/ha||Purchased N surplus kg N/ha/yr||GHG t CO2 equiv/ha/yr||Six week in-calf rate%|
Strategy and financial
Farm policy and infrastructure
Pasture cover over the whole farm is measured fortnightly with a plate metre, with additional monitoring done on the few highest cover and lowest cover paddocks in between whole farm walks, particularly at times of very high or very low growth.
The information is used in feed budgets to determine grazing rotation and levels of supplementation.
Pasture on farm is predominantly ryegrass and clover, Kikuyu is not a problem.
More recently regrassed areas are being sown with ryegrass, white clover 1% chicory and 2 % cocksfoot mix on the wetter soils and chicory, ryegrass clover, cocksfoot, fescue and Lucerne on the drier soil types.
Grazing rotation length over the dry period, (March) is 90 days, moving to 40-45 days through the winter. Allocation of feed to milkers is based on residuals, (and soil conditions).
The spring rotation length is based on pasture cover and growth rates, but will get down to 21-22 days at the peak of spring growth rates.
The aim is to move to a 30 day round for summer, usually by Christmas, but again is dependent on growth rates and pasture cover.
By late January, as growth rates slow the grazing rotation is moved out to 40 days with the addition of supplements and drying off of some cows.
The last of the herd will be dried of in late February, and will be on a 90 day round with supplements.
In addition to pasture, the springers are fed hay in paddock, while dry cows are fed maize silage on the feed pad.
Through calving and winter the herd is fed maize silage and PKE/DDG on the feed pad with grass silage fed in the paddock.
Late spring and early summer the herd is largely fed pasture only.
Silage will be fed again in summer.
Chicory is often used as part of the pasture restoration programme and crops and grass seed are direct drilled to protect soil integrity.
The plan for 2023-24 is to grow 10 ha Maize the milking area and 5 ha on the support block.
Much of the area regrassed autumn 2023 has been affected by subsequent floods and will be under sown in the spring when soil conditions dry out.
About 70 t DM of grass silage is usually made on the milking area and about 140 t DM of baleage and hay is made on the support block with about half of that coming back to the milking area.
Pay all costs for supplement made on milking area and half for what is made on support block
About 270 t DM of PKE/DDG are usually imported along with 70 t DM maize from the support block, 50 t DM baleage and 12 t Hay.
Feed contracted for the 2023-24 season is 270 t PKE and 77 t DDG. This is nearly 25% more than last season. Stock grazing pressure is temporarily higher with over 50 ha of pasture currently ungrazeable due to the impacts from the 3 floods in 10 days that affected the farm in May, so the extra feed is needed to ensure pasture cover is maintained.
People, health and safety
Soils and testing
pH range is 5.7-6.2
Olsen P range is 12-19
Nitrogen is applied through the winter at rates of 18-30 kg N/ha. 100 kg N/ha have been used in the previous two seasons.
Product used is Ammo36 (for 1 ½ rounds in the winter) and urea or SustaiN for the balance of the spring and early summer if needed.
The family has been planting and restoring land for years, with upstream and downstream neighbours now joining the community effort. Generous riparian zones have been set aside on the farm and planted to prevent erosion, protect waterways, and increase biodiversity and habitat.
More than 5 ha of riverbank have been fenced off between the dairy platform and the support block, which is just up the river. All bush pockets are fully fenced, and plans are in place now for fencing off a0 lot of the critical source areas around the farm, as well as small drains. Around 25,000 native plants have been planted over the last five years.
90 days storage, irrigated onto 44 ha.
Purchased N surplus for 2022-23 was about 97 kgN/ha/year.
Methane emissions 7.14 t CO2 equiv/ha/year for the milking area.
|Net Milk Sales
Milk income is based and receiving 50% of $8.80/kg MS on 160,000 kg MS. This covers the deferred, advance and winter milk premium for the financial year April 2023 to March 2024. This is net of the DairyNZ levy. Nearly 3 months in to the milking season production is already 4,000 kg MS up on the previous year and the herd is still up on a daily basis at the middle of June.*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 DairyNZs milk price forecast.
|Net Dairy Livestock Sales
Includes the sale of 80 MA cows and empty heifers @ $850/head, 300 feeder calves @ $120/head and 8 R 2 bulls @ $2,000/head. Being autumn calving means that cull cows are sold in the late spring and early summer so usually return a premium, calves are sold in the yards and also attract a premium. About 10 cows are sold as in calf for a spring calving so they also are sold at higher than standard cull cow price. Each year 4-5 low birth weight, R 1 Angus bulls are purchased for the heifers and 9-10 Hereford bulls are purchased for the herd. The average price is $2,300-$2,500/head. The bulls are sold in November/December for about $2,000-$2,100/head.
|NET DAIRY CASH INCOME||812,900||5.08||2,032||4,672|
Currently employing 1 full time permanent staff member, 1 milking assistant and 1 part time employee, (about 30 hours per week). This is likely to increase later in the season and the owners will have less hands on input on this farm as they have just purchased a new, spring calving farm nearby, sol will be more involved in setting that up. This includes employers ACC levies but is net of employee accommodation allowance.
The animal health focus is on good observation, prevention and early treatment if required. Includes about $10,000 for mastitis control, teat spray and dry cow therapy and $6,000 for vet call outs. Have installed an automatic teat sprayer this season so still working out the best concentration of teat spray to use - it does use more than hand spraying. All minerals and zinc are delivered to the animals on the feed.
|Breeding and herd improvement
Mating is 10 weeks, 5 1/2 weeks of AB and 4 ½ weeks with bulls. Bulls are returned to the herd again in October to give any empty cows another chance to get in calf. These will be sold as spring calving cows at the end of the season. Heifers are mated to low birth weight Angus bulls. The policy is to use half Friesian semen and half crossbreed semen, with the aim of achieving an F12 herd. Jersey looking cows are mated to Friesian and Friesian looking cows are mated to crossbred. The bulls used over the herd for the tail end of mating are Hereford. Half the herd will be milked once a day during mating to reduce stress on the younger and vulnerable animals and so help improve reproductive performance. The empty rate last season was 12%, if the cows sold as in calf spring calvers are included as not in calf, (otherwise it is 9%, but from a much longer mating period). Herd testing is carried out 4 times a year with one milking per test.
Covers dairy shed consumables including detergents and rubber ware.
|Electricity(farm dairy, water supply)
Covers power on the milking platform, for shed, farm water and effluent pump. The shed is a 36 bail herringbone and milking takes about 2 hours. One herd is milked once a day.
|Supplements made(incl. Contractors)
Usually make about 70 t DM of grass silage, (in the stack), on the milking platform, plus some baleage and hay on the support block.
Feed costs are shared 50-50 with the owner. Feed for the year is all now contracted. 270 t PKE @ an average price of $366/t landed, (the early contract was $389 landed the most recent one mid June was $320/t landed). In addition 77 t DDG has been contracted @ $750 landed. More supplement has been contracted than usual as stock grazing pressure is temporarily higher with about 30 ha of pasture currently ungrazeable due to flood impacts from the 3 floods in 10 days that affected the farm in May.
87 replacement heifer calves have been reared this autumn. Calves are reared on colostrum, milk and baleage/hay. This cost covers bedding. Some is still stock piled so may not be used until next autumn.
|Young and drystock grazing
All young stock are grazed on the support block from weaning.
All cows are on the milking area over winter and during the dry period.
|Support block lease
Part of the support block area is leased in conjunction with the farm owner.
Nitrogen is applied through the winter at rates of 18-30 kg N/ha. N use is about 100 kg N/ha/year. Product used is Ammo36, (for 1 ½ rounds in the winter) and urea or SustaiN for the balance of the spring and early summer if needed. This cost also includes phospate and sulphur for the leased support block, as well as some crop fertiliser.
|Regrassing & cropping
15 ha of maize will be grown, about 10 ha on the milking platform and 5 ha on the support block, the sharemilkers share of these costs is $14,000. The share of pasture renovation costs is 15,400 and covers seed and cltivation costs.
|Weed and pest
|Vehicles & fuel
Over 50% of this cost is fuel.
|R&M(land, buildings, plant, machinery)
Covers plant and machinery repairs and maintenance and effluent disposal.
|Freight and general farm expenses
Includes freight, waste disposal, bio-security levy and general farm expenses not coded elsewhere.
Do own pay roll, GST and budgeting. Includes subscription for payroll software, SPACE pasture monitoring and online farm accounting package.
This includes farm and liability insurance as well as key person business cover.
As per last year, this is business owners ACC only.
Rates on the leased support block.
|TOTAL FARM WORKING EXPENSES||515,600||3.22||1,289||2,963|
|CASH OPERATING SURPLUS||297,300||1.86||743||1,709|
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.
|Value of change in Dairy livestock
Expect to have 8 less R 2 bulls on hand at the end of the season. All other stock numbers will be similar. This is based on 2023 IRD NAMV.
This is for 0.6 FTE of unpaid shareholder input. Equates to wages of management of $115,000/FTE.
|Feed inventory adjustment
Expect to have 100 t DM of maize silage on hand at the end of the season. Less maize was carried in to the the 2023-24 season as yields were affected by the floods. This is 50% of 100 t DM valued $400/t DM.
Based on 2021-22 financial statements plsu allowances for 2 more years of additional depreciation and asset purchases and sales.
|DAIRY GROSS FARM REVENUE||804,900||5.03||2,012||4,626|
|DAIRY OPERATING EXPENSES||598,600||3.74||1,497||3,440|
|DAIRY OPERATING PROFIT||206,300||1.29||516||1,186|
|Milk Production (kgMS/ha)||891||895|
|Milk Production (kgMS/cow)||391||393|
|Net Dairy Cash Income ($/kgMS)||$5.29||$5.62|
|Total Farm Working Expenses ($/kgMS)||$3.23||$3.35|
|Cash Operating Surplus/Deficit ($/kgMS)||$2.06||$2.27|
|Gross Farm Revenue ($/kgMS)||$4.77||$5.10|
|Operating Expenses ($/kgMS)||$3.95||$4.11|
|Operating Profit ($/ha)||$723||$884|
*These KPI's are based on cashbook actuals to 31 March 2023 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.
Comments and points of interest
Want to see how the top operators are spending their money? Are there areas for improvement in your own business where savings can be made? We’ve collected in-depth current season budgets from a number of top performing farms with a focus on lower ‘per unit’ cost of production to help you identify opportunities.
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