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Budgeting, Dan and Kate King (West Coast)

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13 min read

Farm facts Numbers at a glance Mid-season update Management decisions 2023-24 forecast budget Previous season reviews Additional resources

Dan and Kate King run a family farm near Reefton, Buller district, focusing on getting the most milk production from each cow at low costs. Their farm is 74 ha with 155 Friesian cross cows and all young stock on farm. The farm has about 30% of the area under pivot irrigation. With changing weather, they're adopting a cautious approach for resilience. Their management decisions include having clear goals, maintaining a low-stress profitable farm, updating budgets, and networking with peers for new ideas.

Dan and Kate King run a small family farming operation near Reefton in the Buller district, with a focus on high production per cow from low costs of production. They enjoy trying new ideas and their biggest challenge is managing the wet periods.

The 2023-24 season budget and farm plan is a work in progress and many iterations will occur as the season unfolds. The aim is to be up to date with the farm financial situation and be clear what the implications will be if the milk price changes or the cost of inputs suddenly change so adjustments can be made. The budget at present shows the business can survive at a lower payout.

The new normal with the ongoing changes to the weather pattern seems to be wetter springs and prolonged summer dry periods so Dan and Kate have developed a conservative farm system that will ensure the farm and finances, (and people), remain resilient.

Yearlings on mixed winter crop

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Yearlings on mixed crop

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Yearlings on swedes

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Swedes and pasture for winter

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Millet crop

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Getting off the farm

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Summer mixed crop January 2023 - Millet, crimson clover, chicory and raphno brassica.

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Summer mixed crop January 2023 - Millet, crimson clover, chicory and raphno brassica.

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Swede crop autumn 2023

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Worksafe signage and replacement calves reared.

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Milking herd with pivot irrigator in the background.

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A line of poplars planted 4 years ago.

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Clearly displayed signage advising visitors of farm hazards.

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Clearly displayed speed limit signage, along with a reminder to sign in before entering the farm.

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Clearly displayed signage advising visitors of farm hazards.

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On-farm entertainment for family and friends!

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Cows grazing summer mixed crop 2023

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Farm facts

Business type: 

Owner-operator

Location: 

Reefton, Buller district

Farm size: 

74 ha effective milking platform

Farm size (inclusion):

4.3 ha across a creek mainly used for young stock and some dry cow grazing

Peak cows:

 155 Friesian cross

PSC: 

1/08/2023

Stocking rate: 

2.5 cows equivalents/ha including all young stock on farm

Production: 

70,000kg kgMS/year, (Budget 23-24, 959 kgMS/ha, 458 kgMS/cow

Production: (3 year average)

944 kgMS/ha and 453kgMS/cow

Farm system: 

4 (21-30% feed imported) for 2023-24

Wintering system: 

All MA cows and in-calf heifers are wintered on the farm

Irrigation: 

27 ha, (37% of the total effective farm area of 74 ha), is irrigated with a centre pivot irrigation system

Soil Type: 

Ikamatua silt loam

Numbers at a glance

Financial KPI 2023-24 budget
Net dairy cash
income ($/kgMS)
Total farm working 
expenses ($/kgMS)
Total operating
expenses ($/kgMS)
Dairy operating profit ($/ha)
$7.26 $4.52 $6.10 $1,009
Physical KPI 2021-22
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 (%)
9.6 130 7.5 62

Find out more about these KPIs and how to calculate them for your own farm here.

2023-2024 mid-season update 5-01-2024

Numbers at a glance

2023-24 mid-season update as of 5 January 2024.

View/download PDF of updated budget

Financial KPI's Budget Updated forecast
Milk Production (kgMS/ha) 959 959
Milk Production (kgMS/cow) 458 476
Net Dairy Cash Income ($/kgMS) $7.26 $7.88
Total Farm Working Expenses ($/kgMS) $4.52 $4.34
Cash Operating Surplus/Deficit ($/kgMS) $2.74 $3.54
Gross Farm Revenue ($/kgMS) $7.15 $7.84
Operating Expenses ($/kgMS) $6.10 $5.67
Operating Profit ($/ha) $1,009 $2,077

 

Comments and points of interest

Key Points
•    Production is similar to last year which is 0.5% up on budget and 57.4% of the 70970 kgMS total budgeted for the season.
•    Deferred and advance milk price received has been revised upwards from $7.05/kgMS to $7.50/kg MS. This has added about $30,000 to income.
•    Farm working expenses will likely to be about $4.30-$4.35/kgMS which is about $0.20/kgMS lower than forecast. 
•    Farm working expenses and the farm plan were reviewed in August when the payout drop was announced and some refining of the budget and farm management has saved about $15000 on fertiliser and $4,800 on bulls purchased.
•    The season has not been too wet, with rainfall not exceeding 200 mm in any one month.
•    River flow levels are currently normal.
•    Yearlings wintered well on Swedes, baleage and PKE. See picture.

Season to date 5-01-2024

Production to the end of December is 40,712 kg MS which is 0.5% up on last season and budget. The number of cows milked at the peak was 149 which is 3 less than last season and 6 less than budget, (155). 
Rainfall for the 7 months from 1st June 2023 is 929 mm and has been well spread over the season with no more than 200 mm falling in any one month. The previous season 800 mm fell in June and July!
The winter was relatively dry and not too cold, and with a slightly lower stocking rate and better than average pasture growth rates, “balance date" came early in mid-September.
The winter crop this year yielded about 16 t DM/ha, quite a bit less than last season, in part because wet weather in November-December delayed planting. Despite this the 3.6 ha grown provided sufficient feed for dry cows and yearlings through till early September.
The herd peaked about the 20th of October producing 2.4 kgMS/c/d, (same as last season), from 20 kg DM/c/day (18 kgDM pasture and 2 kg DM PKE). 
Supplements fed to date are 123 t DM made up of 77 t DM PKE, (imported), and 30 t DM of hay, (from inventory), 5.2 t DM baleage, (from inventory) and 11.1 t DM straw, (purchased July), This equates to about 830 kg DM/cow or 1.7 T DM/ha. The amount fed is similar to the previous season but this season does include wintering 36 yearlings so overall supplement use is down per stock unit.
In an effort to try and ensure high pasture intakes for the herd residuals have been quite high. Therefore to control pasture quality topping was started about the second week of October, often just half a paddock at a time. This has continued to a greater or lesser degree up until now.
Pasture monitoring has been more frequent through the spring and early summer with up to 3 farm rides per fortnight.  Pasture cover levels have stayed on track and growth rates have consistently matched or exceeded demand.
Late November-early December, swedes have been planted on 4 ha of the effluent area for next winter. This year rather than planting a whole paddock in crop, paddocks have been split lengthwise and only half the paddock planted in crop. The balance is left in pasture.  See picture. The pasture parts of the paddocks will be shut from April so will have covers of 3500-4000 kgDM/ha by late May. The crop and pasture will be fed off across the width of the paddock allowing cows to have access to half swedes and half pasture.  The aim is that the pasture should provide some area with a bit of cover so the animals have somewhere to lie down that is not directly on the bare ground.
The 3.6 ha of the winter swedes was planted in oats on the 6th October for cereal baleage. This was about 10-14 days later than planned, with delays in the contractor being able to come. In addition there was a mix up with what was required and the wrong equipment to plant was used. This resulted in much lower yields than expected, (2 t DM/ha harvested so only about 25% of what was originally hoped for.  This area is now in millet, (planted 28th December), and will be planted in permanent pasture in the autumn. 
Another 6.5 ha of millet has been planted, (30th November), on the effluent area. This will be fed at 6.4 kg DM/c/day starting in the second week in January. The crop was tested for nitrate levels before feeding to ensure high nitrate levels are not an issue while grazing it. Testing was done on a cloudy day, mid-morning which is about the time of day the cows would be grazing the crop. Levels in the paddock that had had N applied within the previous 3 weeks was 25-50 which is deemed to be some risk of nitrate poisoning but the risk is low, while the paddock that had not had N applied was below 25 so safe to feed.
This 6.5 ha of millet on the effluent area will be planted in annual ryegrass in the autumn to provide a good bulk of early spring feed.
5.0 ha of cool season crop (annual rye grass, triticale and crimson clover), planted in the autumn of 2023 was a mixed success. It was grazed in May by the yearlings when conditions were quite wet and the area sustained some damage. However, in August when the rest of the farm was growing very little due to low soil temperatures (4 degrees C), this 5 ha was growing at 30 kg DM/ha/day and in September when the farm was growing at 30 kgDM/ha/d the 5.0 ha was growing at 100 kg DM/ha/day.  The species that performed the best was the annual rye grass which is why the plan is to plant 6.4 ha of annual ryegrass this autumn, following the millet. In the spring some of this 5.0 ha went to make up the 4 ha of swedes planted and the balance is part of the 6.5 ha of millet.
Supplements made to date are 263 bales of baleage from 34 ha. This is 30% more than budgeted and 20%, (50 bales), more than last year. Each cut has been identified so that the better quality earlier cut can be used for milking cows and the later baleage for dry cows.
Early January there was 46 mm of rain over 3 days which has been sufficient to keep pasture green and growing.
The irrigator has been run for three days, so far which is normal for this time of year. It was run mainly to check that everything is functioning as it should. This season the plan is to irrigate at slightly higher soil moisture levels to ensure levels are kept topped up in case restrictions occur again like last season.  Fortunately the current water levels are good but this can change quite quickly.
N applied to date is 65 kg N/ha. This was as 3-4 applications at rates of 15-20 kg N/ha. Another one to two applications will go on in the autumn if needed so total for the year will likely be slightly under budget of 110 kgN/ha. 
All spring fertiliser is on. When the payout dropped in August the fertiliser programme was reviewed to provide a more cost effective use of fertiliser. Two thirds of the paddocks were at optimum Olsen P so the fertiliser programme was adjusted. With less nitrogen used and less fertiliser applied about $15000 or $$0.21/kg MS was saved.

Current situation

There are currently 148 cows milking, still all on twice a day, (4 less than the same time last year). Per cow production is 1.80 kgMS/cow/day which is 4% behind last season. The herd is currently being fed about 19 kg DM/c/day made up of 17 kg DM of pasture and 2 kg DM/c/d of PKE.  Pasture quality is impacting production now though, with milk production 6% behind last season, (and budget), based on the most recent 10 day comparison.  Cow condition is about 4.5 BCS which is similar to last year.
Pasture cover is 2150 kg DM/ha, (excluding crop areas), and there is good clover content. This is on target and similar to the same time last year. Pasture growth rates for the last week has been averaging about 60 kgDM/ha/day. With some silage recently harvested and some topping, cover has been holding. 
Daily pasture requirements are about 40 kg DM/ha/day, so pasture cover should start to increase as grazing of crops starts and silage paddocks come back into rotation
The grazing rotation has been 21 days but will move to 28 days by the 10th January, with the feeding off of some of the millet crop. This is about a week earlier than usual, (but will make pasture management easier for relief staff while we are on holiday in Mid-January.
The 30 weaners are grazed one day ahead of the milking herd and the 36 rising 2 year olds are following one day behind the cows to clean up some of the higher residuals.

Looking forward

With the current pasture cover, growth rates, crops and the recent rainfall, the farm is in a good position which is similar to last season. However with an EL Nino summer forecast a prolonged drought could still happen so a conservative approach is still being taken. The risk of irrigation restrictions is also ever present.
There is currently about 90 T DM available in the feed budget, (PKE still contracted plus baleage carried over from last year), to be used to the end of May. This will still leave about 90-100 t DM of feed to carry through for the next season, which is 30-40 t DM more than last season, and nearly double what was used last winter and spring.
The purchase of 70 bales of hay, (about half of what was budgeted) has been contracted and the price is $84/bale landed, ($30 per bale less than budget).  Less hay is being purchased because 37 bales of cereal baleage from oats was made, this was not in the original budget.
The herd will likely go to 3 milking’s in 2 days in late January if per cow production continues to drop.
The herd will be pregnancy scanned in late January/early February.
The plan is to still milk through to mid to late May with as long as pasture growth rates permit.
Budgets have been revised based on 70,970 kg MS, with advance and deferred milk price received of $7.50/kgMS and farm working expenses of $4.34/kgMS. 

Calving and reproduction

•    Caving rate this season was 63% after 3 weeks, 90 % after 6 weeks and 99% after 9 weeks. These numbers are ahead of the previous year (61%, 97% and 97%), which helps compensate for a few less cows than budgeted.
•    Submission rate for this seasons mating was 87% which is again up on last season (81%). This is with no anoestorus treatment used.
•    The estimated six week in calf rate is 71%, which is also up on last season (65%). 
•    With the drop in payout the decision was made to run the yearlings with the herd. This meant only 6 bulls were purchased instead of 8, (a saving of $4800).
•    36 yearlings were run with the herd for 9 weeks during mating. They had 3 weeks of AB and 6 weeks in the herd with the bulls. 
•    30 replacement heifer calves have been reared, 4 less than budgeted.

Other points of interest

•    Managed to contract 180 t PKE for the season at $334/t landed which is 9 t more but nearly $100/t less than budget (budget was done in late April and feed prices dropped significantly after that). This has saved about $13000.
•    Purchased 17.7 t DM of straw in July as it was available, was a good price and part of conservative approach to winter and early spring management. The purchase meant better quality supplement could be saved for milkers. The cost of this was about $5000. 
•    Total feed costs for cropping, supplements made, and hay/straw and PKE purchased will likely be similar to the original budget as savings on PKE costs are offset by having made more baleage on farm. 
•    The yearlings were wintered on Swedes with PKE and baleage from mid-June to early September.  They grew exceptionally well.  A few thin younger cows were grazed with them to help break open the swedes. It only took about 10 days for the yearlings to really start eating the swede bulbs.
•    Actions taken in August when the payout drop was announce plus the subsequent improvement in forecast milk price has meant that cashflow has been good enough to enable more principal repayments despite going to interest only after August.
•    At this stage the budgeted operating profit of just over $1,000 should easily be achieved.

Management decisions

Strategy and financial

  • Have clear short, medium and long term goals
  • Build a resilient farm system that delivers a low stress, profitable business that is enjoyable to manage
  • Continue to be organised and update and analyse budgets regularly
  • Budgets are prepared for at least 2 years and updated regularly as this helps with planning for tax and capital requirements
  • Research with the bank manager what levels of debt they are comfortable with the business carrying and then use cash surpluses to increase off farm investments in the share market, rather than putting it all into debt repayment
  • Focus on producing high per cow in order to dilute costs
  • Continue to improve environmental outcomes for the farm by further investigating and trialing diverse pasture mixes to minimise input of fertilisers and use of sprays
  • Network with peers to continue learn new farming and business ideas

Farm policy and infrastructure

  • The dairy shed is a 20-a-side herringbone shed
  • It is 1.1 km from the farm dairy shed to the furthest paddock
  • 4.3 ha of farm is separated from the main milking area by a creek. This is usually used for young stock, (weaners and yearlings), and dry cows, but there is movement of stock and feed between both areas so it is all treated as effective milking area.
  • Farm was originally fenced to give even paddock sizes so contour was not taken into account. While the farm is flat, there are some lower lying areas that pond in the wet and gate ways are not always in the best position.
  • Many of the paddocks are long and narrow – 65 wide and 250-330 m long. Paddock sizes mean cows have 24 hours grazing in each paddock. Despite having gate ways on either side of the paddock a lot of pasture is wasted with cows having to go in and out of a paddock twice. The has been remedied by putting a race along the back so that paddocks can be entered from both ends.
  • Extra water troughs have been added so every paddock has a trough at the front and back. This has improved pasture utilisation during wet periods and pasture intakes in summer.
  • The races are narrow due to the size of the farm. This is not issue for farm vehicles but can cause problems when contractors arrive with big gear. Most of these can be solved by guiding contractors across paddocks to prevent any damage to gates etc.
  • Along the exit race where the cows walk out after being milked there are a number of rectangle concrete feed troughs in a line where PKE is fed. It is on a concrete pad so it can be hosed down each day with the wash water flowing into the effluent tank. This is spread on crop paddocks before planting.
  • Planned start of calving is 1st of August. The mean was 21 days from PSC for 2022.
  • Drying off is usually in late May, (May 24th for 2021). Drying off decisions are based on calving date, cow condition and feed budget forecasts.
  • All in-calf cows are wintered on the farm on 3.6 ha of swedes, plus hay, baleage and PKE. The MA cows are fed 9.5 kg DM/cow/day and R 2 heifers, 13.5kg DM/cow/day. The PKE is fed on trailers on the the crop area.
  • 35-45 yearlings and carry over cows are grazed on farm.

Feed

Pasture management

  • Regular feed budgeting is carried out all year along with use of the spring rotation planner at the appropriate time. Pasture cover is re-assessed every 7 days using a C-Dax pasture meter, and the data is used to update the feed budget.
  • Analysis of the feed budget information is used to manage supplementary feeding levels and harvesting and cropping decisions.
  • Post grazing topping or mowing in front of cows is avoided if at all possible. When the grass growth rates are really high, pasture monitoring is carried out more frequently - every 4 to 5 days - and surpluses are managed by taking regular, light cuts of baleage to maximize pasture quality.
  • Residuals of 1600-1700kg DM are targeted to maintain pasture quality.

Imported feed

  • 1200-1300 kg DM/cow of supplements are in the 2023-24 budget. Made up of 154 t DM PKE and 42.5 t DM hay.
  • About 1000 kg DM/cow of PKE is budgeted to be fed both to in-milk cows and through the winter to dry cows. The PKE is bought on contract. The budget is for $430/t landed.
  • Hay is usually sourced from Canterbury, total of about 130 bales at $115 to 120/bale landed.

Supplements

  • Surplus pasture is harvested as wrapped bales of silage. About 200 bales,(400 t DM), is usually budgeted.

Cropping

  • In the autumn 5 ha will be planted with a multi graze mix of annual rye grass, triticale and crimson clover.
  • 3.6 ha of swedes is sown late spring for feed for the following winter.
  • 8.6 ha of summer crop, (millet, crimson clover, chicory and raphno brassica), will be planted in the spring. 3.36 ha from the previous years winter swede crop area, (3.6 ha), and 5 ha of of winter multi graze mix.

Irrigation

  • During the summer, for 6-8 weeks, in most seasons, it is significantly dry and the non irrigated areas burn off very quickly. Pasture growth on these areas are typically about 20 kg DM/h per day. The 27 ha of the farm under pivot irrigation will grow at about 50 kg DM per ha per day. This usually provides enough pasture to meet the most of the farms feed requirements with some supplementation from baleage and PKE.
  • Irrigation is used on average about 30 days each summer.
  • The summer of 2023 was the first time that low river flow impacted the ability to irrigate.

Herd

Mating and reproduction

  • Mating period is 12 weeks using 4 weeks of AB followed by 6 weeks with jersey bulls and finished with 2 weeks of AB using short gestation length dairy breed semen.
  • The majority of AB uses forward pack kiwi cross semen, plus 2 straws per day of fresh sexed semen is used and 20 straws of Murray Grey have been purchased for use on lower BW cows.
  • Cows are metrichecked prior to mating and treated accordingly.
  • Pre mating heats are recorded and non cycling cows are treated with CIDRs at the start of AB. Usually about 14 % of the herd are treated but this number was double for spring 2021 due to the wet conditions and poor pasture utilisation in early spring.

Young stock

  • 60 2021 born Friesian cross replacement heifer calves have been reared.
  • Calves are reared on colostrum, whole milk, meal and pasture. Milk is fed ad lib for 4 weeks then twice a day for 3 weeks then once a day until weaned at 85 kg liveweight.
  • They are then fed 1 kg.calf/day of meal plus good quality fresh pasture until 120 kg liveweight, when meal is stopped and they are on pasture only. At this stage they begin their drenching programme.
  • They are grazed mainly on the 12 ha across the creek but do return to the main milking platform if necessary.

People, health and safety

  • Labour on the farm for 2021-22 is 1.2  of owner input assisted by part time staff from June to September, (35 hours per week), and 4 weeks of contract relief work between January and April to allow for 4 lots of one week holidays can be taken off farm.

  • All casual staff are employed under a signed employment contract and are given health and safety sheets printed off from the Work Safe website. These papers include all information that details how to perform their farm duties safely. These are read and discussed with the employee and each page signed by the employee once they fully understand the hazards relating to each farm task eg stock handling, tractor driving, riding a quad bike, milking etc.

  • A very simple system for health and safety is maintained that is based on a culture of having good practices carried out daily so paperwork is done regularly and records are always up to date. This eliminates the need for onerous amounts of time to complete documentation.
    There is good signage at the farm entrance that is easily seen on entry. Posters and protocols are displayed on the cowshed wall and visitors are to follow instructions: Be inducted, sign in confirming that an induction processes has been given. Contact numbers for the farm owners are displayed so visitors can contact them at any time. Visitors are met, advised of hazards using the farm hazard map, they must then sign the farm hazards book and are required to follow all farm health and safety procedures during their visit.
    If not seen to leave the farm, visitors must txt or call the owner to advise that they have departed. The data sheet and chemical information sheet is kept in a folder, along with the visitor sign in book in a letter box by the cowshed

  • Casual relief milkers have always been employed since purchasing the farm 8 seasons ago. They generally assist with afternoon milking as needed but are trained to be able to look after the farm by themselves so that the owners can take time away.

  • Innovative ways have been found to have "time off" at home with the local community by organising picnic days/activity days which are a lot of fun.

Environment

Best practice

  • Environmental best practice guidelines and resulting KPI's are understood for this this area, and this farm. Attention is given to continue to implement on-farm practices that deliver the best outcomes for the environment. This is one of the drivers for trialing diverse seed mixes for both winter and summer crops as they require less cultivation and spraying.
  • Care is taken to ensure livestock and pasture management and the sue of feed and fertiliser follow recommended best practice for the soil types.

Irrigation

  • As there is no soil moisture monitoring equipment installed, irrigation decisions are based on weather forecasts. If there is no significant rain due within a week, irrigation will commence in the summer and will be stopped when the forecast indicates there will be significant within the next week. The pivot keeps up well so it is no issue to stop and start again if the rain does not eventuate.
  • Applications are usually 10 mm per pass which is every 38 hours.

Fertiliser and nitrogen

  • Fertiliser is applied as per fertiliser company recommendations and are in line with best practice guidelines for the region and soil types. Per ha recommended nutrients for 21-22 are 181 kg N, 36 kg P, 64 kg K and 72 kg S.
  • All fertiliser is spread with own gear. Products used are Ammo31/36, Ureammopot, and a mix of Cropmaster DAP/Pot Chloride/Ammonium Sulphate.

Wintering practices

  • Winter crop areas are carefully selected to ensure they minimise the risk of runoff. Winter crop grazing best practice is followed to minimise soil and environmental impact and ensure good cow health and welfare.

Soil testing

  • A whole farm soil test is done every 4-5 years. In between times a few paddocks are tested each year prior to cropping/regrassing.

Effluent

  • Effluent is spread via a traveling irrigator, applied to 10% of the total farm area. The plan is to increase the effluent area in the 2021-22 season.
  • A holding tank gravity feeds through an underground pipe out to a storage pond out in the paddock beside the cowshed. The effluent is gravity fed back the holding tank which has a floating pump on it which pumps it out to the travelling irrigator. This system is compliant with the council.

Riparian planting

  • Stock are excluded from all creeks and. Broom and trees grow alongside the main creek. An ongoing spray programme is carried out to control/eradicate the broom.
  • Shelter belt planting, (poplars) has been underway for 4 years, and there are plans to plant more this coming winter. Different tree species are being investigated including Italian Alder.

Budget revision following milk payout drop

Overview

Managing our budgets well in the good years means we are set up for the bad. We are in a better position to ride out this downturn, which could last for more than a year or two. Lower debt, good current cash reserves, a history of tight control on expenditure, and regularly taking time out from farming to have fun without spending money give us the confidence to face this current situation. Things we have done already or considered are:

  • Revised our budget and communicated this with our bank
  • Arranged to go interest only on our debt servicing as of next month, this will help protect our cash reserves so we won't need to go into overdraft
  • Reviewed feed budgets and allocations of feed types to ensure best quality feeds are going to the milking herd
  • We have reviewed our replacement rate and will reduce it from 22-25% down to the industry recommended optimum of 18%, this will save feed and animal health and rearing costs
  • If the milk price drops significantly further, one partner has the option to work off-farm between milkings, which would reduce the need to take funds from the farm
  • We are not keen on changing expenses too much as there is a risk that milk production will drop, and at this stage of the season it is important to maximise milk production.

What advice would you give to farmers who are either first time sharemilking or farm owners?

Taking control by updating your budgets, knowing your numbers and asking for help can give you a lot of peace of mind.

The industry has lots of support networks so, don’t be afraid to ask for help. Don’t let financial pressures affect your mental health.

What words of positivity would you give to farmers planning for the coming months ahead?

You and your family are number one in your business so look for strategies that keep you all well, happy, and safe.

Get all the information you can for your farm and use it to be more efficient with using your resources.

  • Monitor growth rates and know your pasture covers so you can better budget feed allocation and nitrogen use.
  • Use soil temperatures as part of your decision-making process for applying nitrogen so you can apply it when you will get a better response. Get your own soil thermometer if you can.
  • Look at extended weather forecasts and adjust feeding out timings and allocations to avoid driving on pasture when it is really wet and allow for wastage due to the wet.

2023-24 forecast budget

Budget last updated April 2023

INCOME $TOTAL $/KgMS $/COW $/HA
Net Milk Sales
The budget is prepared on an advance milk price of $6.50 per kg MS for 70,970 kg MS plus deferred income of about $0.86/ kg MS. The assumption is that the majority of the seasons total milk price will be paid out by the end of May. This estimated milk income received is about $1.00 per kg MS lower than the expected final for 2022-23 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.
500,500 7.05 3,229 6,764
Net Dairy Livestock Sales
Based on the sale of 37 cull cows and R2 heifers @ $480/head, 100 bobby calves @$30/head, 8-9 bulls @ $1,180-1,320/head less the purchase of 8-9 bulls @ $1,700-1,900/head.
14,450 0.20 93 195
Other Dairy Cash Income
Trading rebates.
400 0.01 3 5
NET DAIRY CASH INCOME 515,350 7.26 3,325 6,964
EXPENSES $TOTAL $/KgMS $/COW $/HA
Wages(incl. ACC)
Permanent part time staff for 48 weeks for 16 hours per week. Equates to .32 FTE.
22,650 0.32 146 306
Animal health
Animal health philosophy is to be very observant, keep good records and be pro-active, with much of the costs being for preventative rather than remedial treatments. Mineral supplements are provided via inline water supplementation, cows are metrichecked prior to mating and treated as appropriate. The average SCC average is under 150,000. In-calf heifers are teat sealed in June. Includes pregnancy testing for the herd.
13,750 0.19 89 186
Breeding and herd improvement
This covers 3 weeks of AB using premier sires for the majority of the herd and yearling heifers. Lower PW/BW cows will be mated to short gestation beef semen in the first week of AB and then short gestation dairy semen for the remaining 2 weeks. 8-9 Jersey bulls will be purchased to run with the herd and the heifers for 6 weeks. The bulls will be removed on January 1st and 2 weeks of AB using short gestation length semen will follow. No anoestous treatments are planned for the 2023-24 season. Herd testing is done 4 times a year.
9,900 0.14 64 134
Farm dairy
Covers all rubberware, detergents and consumables and milking machine testing for the 20 a-side herringbone shed. Standard recommended cleaning procedures are used.
3,800 0.05 25 51
Electricity(farm dairy, water supply)
The plan is to go to 3 milkings in 2 days when the cows get to 1.8 MS/cow/day in late January and then OAD at 1.5 MS/cow/day in April, but the timing is weather dependent.
8,300 0.12 54 112
Supplements made(incl. Contractors)
The budget is for contractors make about 200 bales of silage, (400 t DM), baling and wrapping only, (about $60/bale).
12,000 0.17 77 162
Supplements purchased
Includes $73,800 for PKE, (171 t @ $430/t landed), this is yet to be contracted. $15,500 has been allocated for 130-140 large bales of hay for use during the winter at $115-120 per bale landed.
89,300 1.26 576 1,207
Calf rearing
35-40 replacement heifers will be reared this season. Calves are reared on colostrum, whole milk, meal and pasture. Calves are weaned off milk at 85 kg and get 1 kg/calf per day of meal plus good quality fresh pasture, then weaned off meal at 120 kg. Costs include meal and equipment.
2,000 0.03 13 27
Young and drystock grazing
36 yearlings and 7 carry over cows will be on farm all year.
0 0.00 0 0
Winter grazing
Cows and in calf heifers are all wintered on the 74 ha platform.
0 0.00 0 0
Fertiliser(incl. N)
This is net of fertiliser rebates. Fertiliser is applied as per fertiliser company recommendations and are in line with best practice guidelines for the region and soil types. Per ha recommended nutrients for 21-22 are 181 kg N, 36 kg P, 64 kg K and 72 kg S. All fertiliser is spread with own gear. Products used are Ammo31/36, Ureammopot, and a mix of Cropmaster DAP/Pot Chloride/Ammonium Sulphate. Farm fertility is high, (Olsen P are in the range of 34-50), so there is cope to reduce fertiliser inputs if milk price drops too much.
67,300 0.95 434 909
Irrigation
Irrigation is used for about 6 weeks each year between January and March. Cost is for electricity for pumping water from the nearby creek and running the centre pivot irrigation.
2,500 0.04 16 34
Regrassing & cropping
This cost allows for 3.6 ha winter crop, (swedes) to be planted late spring, and the regrassing of the previous winter crop area, (3.6 ha), in spring. In addition there is a 5 ha area, which was planted the previous autumn in a winter multi graze mix, (annual rye grass, triticale and crimson clover), which will be also be regrassed in the spring. Both areas, (total of 8.6 ha), will be sown in a summer multi graze mix, (direct drilled) The summer multi graze mix likely to be used is millet, crimson clover, chicory and raphno brassica. The 5.0 ha of summer crop area will be replanted in a winter multi graze mix again in the autumn, and 3.6 ha will be sown in permanent pasture. This cost includes any weed and pest control for the crops.
14,000 0.20 90 189
Weed and pest
Pasture weed control is mainly spot spraying scotch thistles and ragwort. No chemical will need to be purhcased this season as there is plenty still on hand.
0 0.00 0 0
Vehicles & fuel
Vehicles and machinery are kept clean and maintained regularly. Includes $14,300 for fuel. Care is taken to minimise damage, tractor hours per year are medium to low. Feeding PKE takes 5-10 minutes per day.
28,300 0.40 183 382
R&M(land, buildings, plant, machinery)
Farm buildings and infrastructure are in very good order so very little maintenance is planned for 2023-24. Includes $3,000 for fencing and $3,600 for plant and machinery repairs and maintenance.
7,200 0.10 46 97
Freight and general farm expenses
Includes dog related expenses, protective clothing, general freight and bio-security levy. A contingency allowance of $6,000, (about $0.08/kgMS), is also included here.
11,400 0.16 74 154
Administration
Do all own GST, pay roll and budgeting. Includes accountant's fees, computer consumables, subscriptions and communications costs.
7,800 0.11 50 105
Insurance
This has increased on the previous year. The farms insurance cover is reviewed regularly to ensure it continues to be relevant and cost effective.
12,000 0.17 77 162
ACC
Similar to last year.
3,400 0.05 22 46
Rates
As per rates demand.
5,100 0.07 33 69
TOTAL FARM WORKING EXPENSES 320,700 4.52 2,069 4,334
CASH OPERATING SURPLUS 194,650 2.74 1,256 2,630

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.

$TOTAL $/KgMS $/COW $/HA
Value of change in Dairy livestock
Expect to have about 5 fewer MA cows and in calf heifers at the end of the season. 2022 IRD NAMV used to value the change in livestock numbers.
-8,000 -0.11 -52 -108
Labour adjustment
This is for 1.2 Full time equivalent unpaid shareholder input.
72,000 1.01 465 973
Feed inventory adjustment
Expect to have no significant change in feed on hand for the year.
0 0.00 0 0
Depreciation
Based on the previous years depreciation and adjusted for subsequent planned asset purchases and sales.
40,000 0.56 258 541
DAIRY GROSS FARM REVENUE 507,350 7.15 3,273 6,856
DAIRY OPERATING EXPENSES 432,700 6.10 2,792 5,847
DAIRY OPERATING PROFIT 74,650 1.05 482 1,009

2021-22 season review

Financial KPI's

Financial KPI's* Budget Actual
Milk Production (kgMS/ha) 963 944
Milk Production (kgMS/cow) 465 456
Net Dairy Cash Income ($/kgMS) $8.59 $9.93
Total Farm Working Expenses ($/kgMS) $4.45 $4.70
Cash Operating Surplus/Deficit ($/kgMS) $4.14 $5.23
Gross Farm Revenue ($/kgMS) $8.53 $9.63
Operating Expenses ($/kgMS) $5.92 $6.25
Operating Profit ($/ha) $2,517 $3,187

*These KPI's are based on cash book actuals to 31 May 2022 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.

Click here for PDF of 2021-22 budget v actuals

Comments and other points of interest

Comments

  • Rainfall to the end of December was 600 mm up on previous year, (90% of annual expected rainfall), so very wet start to season which impacted pasture utilisation, and pasture growth. Cows were underfed for 4-6 weeks in spring and despite additional supplements being fed there was a high incidence of clinical ketosis which impacted production.
  • Rainfall for the latter half of the season was variable with January drier than usual and March extremely dry. A warm moist April contributed to a high incidence of late season eczema with 6% of the herd showing clinical signs of the disease.
  • Despite the challenging weather conditions, production finished at 77,438 kg MS which was only 2% down on budget.
  • Operating profit for the season is estimated to be about $3,200/ha which is 26% up on budget. A 13% increase in milk price compared with budget, plus careful management of the farm working expenses budget which limited increases in spending to only $0.25/kg MS have contributed to the increase in budgeted operating profit.

Other points of interest

  • Pasture and crop harvested for the season is 9.6 t DM/ha which is 0.8 t DM/ha lower than the 2020-21 season.
  • Number of irrigation days was 31 days, which was similar to previous years but instead of being in January and February it was in January and March.
  • Early February saw 200+mm rain in a 24 hour period with flooding on part of farm over 2 wires, but minimal damage resulted and flooding cleared quickly so there was no impact on grazing rotation. This flooding event meant no irrigation in February, however March was particularly dry so irrigation was needed through March, which is a month later than usual.
  • Feed supply was tight through January to April, with pasture covers only being maintained by feeding extra supplement. A total of 1.6 t DM/ cow was fed over the entire season, (440 kg DM/cow, or 36% higher than the 2020-21 season).
  • A longer round, (30days early March to 42 days by late March), was key to protecting pasture cover through the autumn, with cover only getting as low as 1860 kg DM/ha in mid- March. With additional supplements used, pasture cover was over 2100 by late April and the farm was in an optimal growing state when better rainfall and warm temperatures in early May occurred. This resulted in the farm measuring growth rates in excess of 50kgDM/ha/day, so by May 18th pasture cover was just under 2500kg DM/ha. (The following week after several frosts, pasture growth rates had dropped to 15 kg DM/ha/day).
  • End of May pasture cover on target at 2300 kgDM/ha and cow condition was 4.3. By late June BCS is now close to 5.0.
  • The last culls left the farm May 7th. Culls went a bit earlier than usual as there was a high risk of getting caught with culls on hand going into June. 114 cows dried off May 26th which is similar to previous seasons.
  • The 2021-22 budget included double the use of imported feed compared with previous years. In part, because lack of works space meant culls were carried into June so winter feed was impacted. The wet winter and spring plus higher forecast milk prices meant that when feed contracts were being set in July the decision was made to increase PKE contracted. At 371/t landed this has been profitable decision, given the final pay out and the challenging summer/early autumn pasture growth.
  • N use 120 kg N/ha for the year – well down on budget of 180 kg N/ha as soil and weather conditions were seldom suitable for application.
  • The winter swede crop grew well and had a yield of 20+ t DM/ha in late May.

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Last updated: Aug 2023
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