Budgeting, Anne-Marie and Duncan Wells (South Otago)

Feed is a relatively large portion of our farm working expenses. At this stage feed has not been contracted, but conversations with feed suppliers will occur so that the there is a balance between quantity of feed supplied and the price it needs to be so that it is profitable.

Keep your budget current.  This can help identify areas where you might have come in under budget and so can potentially use that money elsewhere, or where you might be going over budget and have to rein things in a bit.

It is important to communicate with your bank and keep them up to date about where your financial pinch points can be expected during the year. Having a current budget and knowing your numbers will also demonstrate that you have a good understanding of where your business is at.

M - Milk Production
I - Integrity
L - Livestock
K - Keep it Clean

Simple Farm Goals

• Milksolids production 310,000 kgMS
• No Fonterra Grades
• Average SCC <100,000
• 6 Week In-calf Rate: 78%
• Environmental Goal – being ahead of the game and future focused
• Provide a safe work environment

The focus is on producing good quality milk, from healthy stock, with good milking practices and having a good team while meeting or exceeding environmental KPI’s. This is achieved through attention to detail.

There is a policy of implementing technology where it provides value and makes attention to detail easier to achieve e.g. SPACE, automatic cup removers (ACR), milk meters, protrack, accounting and payroll software.

A key aim is to achieve a consistent production (maintain 310,000 kgMS) with a focus on efficiency and good environmental practices. As the system gets more efficient, the number of cows will reduce, potentially reducing costs and environmental impact

The farm has good infrastructure which is kept well maintained. Having a tidy and attractive farm means we are able to positively promote the dairy industry through hosting people on farm.

Governance

Three meetings a year with the governance team (shareholders, the accountant and the bank), along-side monthly governance reports to the governance team, ensures good communication and an opportunity to share knowledge and experience to identify and solve issues early.

These reports include a financial update – keeping the budget “alive” and engaged with. Regularly updating the budget not only keeps everyone informed, but prevents you from being overwhelmed when the budget does get updated

This governance structure creates accountability and provides pressure to perform, keeping farm performance strong both for the current situation, but also staying ahead of the game to manage future challenges and opportunities.

The banker is viewed as an asset, along with the equity partners and the accountant. They are a valuable source of information, bring experience and make a positive contribute to the discussion.

The shareholders want to see a productive and profitable farm business that produces a return on their asset, with happy and productive people and cows. The goal is to pay down debt to ensure a strong balance sheet and be in a better position to manage risk.

Risk management is an important component of the monthly governance reports; keeping risks top of mind and planning the response. Risks are assessed for likelihood and impact and include natural disasters, interest rates, access to winter grazing and burnout. The governance team identify solutions to help manage risk

• The farm operates a production system 4-5 (33% imported feed including off farm grazing)
• Pasture & Crop Eaten was 13.4 tDM/ha in the 2022/23 season (impacted by dry summer)    
• 1.4tDM/cow of imported supplement and winter grazing
  Imported supplement ~884 kgDM/cow (2022/23), mix of grain (44%) and silage (48%) plus small amount of molasses and hay
• Cropping: 14-15 ha of Fodder Beet grown on farm: ~5 ha fed in autumn, balance grazed in winter or spring
• Young stock grazed off, ~80% of cows wintered off farm
• Nitrogen typically 100-110 kgN/ha/year with N surplus of 27-33 kgN/ha
• Milking platform 210 ha effective, Flat contour – mostly recent silt loams
• 35% effluent irrigated (69.3 ha)
• Milk 650 cows at peak, Friesian Cross (~485 kgLW in Dec)
• The herd is of high genetic merit with a BW 229/5 and PW 301/77 in May 2023. This was top 25% for BW and top 5% for PW.
• Milk Production ~470-480 kgMS/cow (97% of LW) and 1460-1480 kgMS/ha
• 54 Bail rotary, with ACR, milk meters and in-shed feeding (with a mill)
• Herd reproduction: 2022/23: 73% 6 week in-calf rate (72-77% in recent years), 9.5 weeks mating (4.5 weeks AI, then bulls , 10% CIDR’s (targeting young/high BW cows)
• Cows are body condition scored by the vet 3 times per year – targeting minimum of 4.5 at drying off

2022/23 (Impacted by dry weather in summer)
• Pasture & Crop Eaten: 13.4 tDM/ha
• Total Feed Eaten: 20.1 tDM/ha
• Purchased N Surplus (21/22) 33kgN/ha (benchmark average is ~150 kgN/ha)
• GHG Emissions (21/22) 9.7 kgCO2/kgMS or 12,878 kgCO2e/ha (benchmark is ~11 kgCO2/kgMS)

The farm has just been granted a 10 year consent to apply effluent (this included the ponds being assessed by an external consultant). The farm has 1,000,000 L3 effluent storage.
Currently in the process of applying for a consent to use water at the shed. Water is sourced from bores on the farm, these are not currently monitored, but this is being implemented now, (2023).
Drains are fenced – no waterways or wetlands on the milking platform.
The initial Farm environmental plan was completed in 2019. It is being updated now (2023). It is expected that there will not be any actions to follow up on, but it may include some nice to have’s.

Soil fertility, fertiliser and N applied

Soil tests are used strategically to look for long term trends rather than testing every paddock on the farm
Soil test results are typically; pH 5.9 – 6.1, Olsen P 15-40
Fertiliser is applied strategically according to need
Application is either with own gear to get the best timing (monitored via GPS) or external contractors are used

Shelter and riparian planting
There are established hedges on the farm that provide shelter
Any planting is primarily for aesthetics

• Pasture
  Spring Rotation Plan (and snapshot calculator) are used to help hold the rotation from calving to balance date (balance date is typically around the 10th October). The plan is to finish the first round on 20th September.
  Rotation length is typically around 30 days; 23-25 days is as quick as it gets in the spring.
• Regrassing
  The winter crop area (14-15 ha) is re-grassed in the spring, usually by October, and is back in the rotation by December/January.
• Crop
  14-15 ha of Fodder beet is grown each year (sown ~1st November);
  • Around 1/3 used in the late autumn (Apr/May) to help transition the cows for the winter
  • 1/3 used to winter some cows at home
  • 1/3 used to bring the cows home from wintering prior to calving
  Fodder beet is used because of the high yield and good quality, but has some challenges with transitioning on and off. There’s a good transition plan developed in conjunction with the local vet which has helped to reduce metabolic issues.
• Supplements purchased
  Supplement is mostly barley with some wheat (300t or ~415 kgDM/cow) crushed through the mill and in-shed feeder with minerals and a small amount of Molasses for palatability.
  PKE is not used as part of the farm system (as an environmental choice), which makes the feed slightly more expensive.
  Around 300 tDM of Silage (either grass or cereal silage) is purchased and primarily fed through the summer.
• Supplements made on the milking platform
  Usually no supplement is made on the milking area. The plan is to have sufficient cow numbers to harvest all the pasture.
• Winter grazing
  The herd is grazed off on average for 9 weeks. Stock are able to be walked to the grazing so no freight costs are incurred.
  Cows return to the milking platform just prior to calving so are bought home in small mobs.
• Young stock
  The last of the calves leave the farm as weaners by 1st December. They return to the farm mid-July 1st as in calf heifers. They are grazed on support land owned by Camden Group. All costs are at market rates.

• The milk production target is for the cows to be producing around 100% of Liveweight.  They average 485-490 kgLW in December and have been producing ~98% of Liveweight.  The target for first calvers is 75% of the herd average.
• Reproduction is good, (6 week in-calf rates between 72-77%), mating is for 9 ½ weeks (AB for 4 ½ then the bull).  Submission rate in 2022/23 was 87% for the first 3 weeks (target is 90%).  Calving is tight; 71% calving in the first 3 weeks, 92% in the first 6 weeks and 99% by week 9.  Around 10-12% of cows are treated with CIDR’s targeting young, high BW cows.  Not in-calf rates are around 12%
• 165 calves are reared (25%) with around 150 coming into the herd as first calvers – in 2022/23 around 83% were retained to calve as 3 year olds. 
• Young stock are grazed off farm from 3-4 months old.  Enough calves are retained for a 25% replacement rate, but this may be reduced – grazing is expensive and with sexed semen there’s scope to get enough high quality replacement calves to meet the herd requirements.
• Calves are DNA tested at dis-budding.  Herd testing was 4 times, but this has been dropped to 3 times per year once milk meters were installed (to provide data for LIC).  
• Heifers are mated to yearling jersey bulls – this is more practical given it’s difficult to manage AI where they are grazing.  First calvers need to be kept in a separate mob when they calve to avoid keeping the calves as replacements
• There’s a focus on prevention and attention to detail with animal health which has kept costs for animal health and breeding typically below the DairyBase benchmark.  Teat seal is used in preference to dry cow therapy and a well structured plan for minerals and BCS is refined with regular testing. 
• Winter grazing is sourced on the open market. For the current season, the grazing is nearby and the cost is based on the amount of feed supplied, (pasture crop and . The farm team manages the stock over the winter with the cows initially wintered in age groups rather than calving date, they come back closer to calving to graze the beet paddocks, later calvers are sent back to graze off farm longer.  This season 380 cows were grazed off and 150 kept at home.

• All hours worked are paid as wages rather than drawings
  There’s a total of 4.5 FTE – part of ensuring the farm is an attractive place to work
  • Duncan is full time on the farm
  • Anne Marie manages the office work and provides back-up on farm
  • Assistant Manager (95 hours/fortnight)
  • Two people job-share
       -5am to lunchtime (80 hours/fortnight)
       -9:30 to 5pm (80 hours/fortnight)
     These staff share a 7 on 1 off, 4 on-2 off (11 on and 3 off over two weeks allowing 1 weekend off every 2 weeks)
  • Introduction to farming role:
       - 9am to 5pm Monday – Friday (35 hours/week)
  • A Calf Rearer 2.5 months 4-6 hours per day
  • Relief milker
  • Lincoln student over summer (to cover annual leave)
  
  Health & Safety
  First aid refresher every 2 years as a farm team – trainer comes to the farm and does it at the workshop (with a minimum of 15 people needed, non-staff make up the difference) which allows the training to include farm specific training.
  There’s an H&S Manual, which is used by the team. Any new staff receive a detailed orientation – a key message for the farm “is if you feel unsafe stop!”
  Staff meetings – Target Team meeting every two weeks (includes a H&S component) – discussing anything going on the farm now and what’s coming up.

  Individual staff
  One-on-one review 2-3 times per year, keeps everyone informed and helps address issues early.