Budgeting, Justin and Melissa Slattery (East Waikato)
9 min read
Justin and Melissa Slattery farm in Elstow, prioritising environmental stewardship with efficient resource use. On their 177 ha milking platform, they manage 535 FJX cows. In the upcoming season, they're expanding with an additional 77 ha and will operate two herds, one of which a contract milker will manage. Their vision emphasises leadership in profitability and sustainability. They adjust their budget frequently, use any surplus to reduce debt, and assess their financing yearly. By benchmarking with tools like DairyBase and networking with professionals, they aim for continuous improvement. A key focus is achieving superior environmental outcomes on their farm.
Justin and Melissa Slattery have been on their 100 ha farm at Elstow, between Tahuna and Paeroa for 6 years. Their approach to farming is to be good stewards of the environment through having simple systems that are resource efficient.
The 2023-24 season will be their first with an additional 77 ha, (owned/leased), next door. The business will operate 2 herds through separate sheds but there will be movement of stock and feed between the two areas at times during the year. One farm and shed will be managed with a contract milker.
Owner-operator with Contract milker
Elstow, Southern side of Hauraki Swamp
177 ha effective milking platform
535 FJX (540 wintered)
1/7/2023 MA cows (23/6/2023 Heifers)
3 (11-20% feed imported)
210,000kg MS/year budgeted, 1186 kg MS/ha 393 kg MS/cow
Production (3 year average):
1,170 kg MS/ha and 390 kg MS /cow
How has the season been so far?
October 23rd, 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?
Monitor feed supply and utilise once a day milking and then early culling to try to balance feed demand with supply. The aim is to try to keep as many cows milking as possible so if the drought breaks early and pasture growth increases there are still enough animals on farm to take through to the late autumn.
If a dry spell is later then the herd will be milked on twice a day for longer and culling may be delayed.
If there is a prolonged drought, the plan would be to go once a day early, cull empties as early as possible and try to keep heifers off the farm for longer, or wintered off so that the pasture cover and cow condition for the next season is not compromised.
The current budget does include $20,000 to purchase silage to extend the crops if needs be. This is an early March decision and coincides with trying to keep the in calf heifers off beyond May. The aim is to extend the grazing of crops eaten until rain comes to protect undersowing and pasture cover for late lactation.
|Financial KPI 2023-24 budget|
|Net dairy cash
|Physical KPI 2021-22|
|Pasture and crop
surplus (kg N/ha/yr)*
in-calf rate (%)
Strategy and financial
Farm policy and infrastructure
People, health and safety
Budget revision following milk payout drop
August 15th, 2023
A $1.25 drop in the advance means about $265,000 has disappeared from income. We are going back to a zero budget, where every single expense has to prove a return. Some revisions include:
What advice would you give to farmers who are either first time sharemilking or farm owners?
Update your budgets and go into each month eyes wide open so there are no surprises.
Work out percentage returns for $$ spent. I know it's never an exact science but as a sharemilker anything under 30% on an average pay out is not the focus of your energy.
If you are a first farm purchaser, follow best practice financial management which includes setting and following a budget, monitoring cash flow and sharing with your bank manager. Set a strategy for interest rates etc and work out what the full season looks like.
What words of positivity would you give to farmers planning for the coming months ahead?
The best lessons are learnt in hard times.
We rebounded and purchased our farm post $3.90 pay out because we had managed the low and were ruthless with our spending. Opportunities flow in times like these.
Do you have any tips and tricks for looking after your people on farm?
Make sure you are well, which will allow your team to be happy in their job.
Enjoy the team spirit on the farm. Having a good culture makes farming enjoyable and relieves some of the stress.
|Net Milk Sales
This budget is the first season with 2 supply numbers so the deferred income is based on only one production from one farm, 120,835 kg MS @$1.57/kgMS. The advance is based on 120,000 kg MS @ $6.57/kg MS. Income includes a total Fonterra dividend of $0.30/share on 99,900 shares. This is net of the DairyNZ levy of $0.036 /kgMS. *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
Estimate there will be about 95 MA cull cows and empty R 2 heifers to sell @ $700-$750/head plus about 380 bobby calves @ $30/head. Includes purchasing 24 Jersey bulls, (5 yearlings @ $1,000/head and 19 2 year olds @ $2,000/head). These will all be sold December/January for about $800/head (yearlings) and $1,600/head 2 year olds).
|NET DAIRY CASH INCOME||1,654,500||7.88||3,093||9,347|
|Wages (incl. ACC)
This covers paid wages for one full time staff member to assist owners on one farm, (300 cows), and remuneration for one contract milker with some owner support over calving and at key times, on the second farm, (235 cows). This is net of staff housing, and includes employer contributions to Kiwisaver. The contract milker is responsible for shed and electricity costs for the 235 cow farm, plus the provision and running of a farm bike.
The approach to animal health is to be proactive and vigilant. Animal health costs include mineral supplements as required. This is mainly Mg in winter and late spring. Cu levels as per liver tests are normal so supplementation here is not required at present. Zinc supplementation is carried out summer and autumn based on spore count levels published by the vets. Lameness is not an issue on the farm. Mastitis management is based on industry recommended guidelines. Wastage is about 3% deaths and under 10% empties.
|Breeding and herd improvement
This covers 4 weeks of AB with premier sires followed by 8 weeks with leased bulls. 24 Jersey bulls will be purchased, 5 yearlings to run with 129 replacement heifers and 19 R 2 bulls to run with the cows. As there are 2 herds the bulls will be split into 4 teams, and 2 teams rotated with each herd. Herd testing is included with 3 tests, (over 2 milkings unless on once a day).
This is for the farm dairy consumable costs for the 28 a side herringbone shed. The contract milker remunerations covers their share of the shed costs for the 22 a side shed.
|Electricity (farm dairy, water supply)
This is the shed and farm electricity for the 300 cow farm, 28 bail herringbone shed.
|Supplements made (incl. Contractors)
Very little supplement is harvested on farm, with spring surpluses managed by dropping paddocks out for cropping. An allowance of $3,500 for about 25 t DM baleage, (10 ha), is included here. (Approximately 140 bales @180kg/bale @ $25/bale).
The budget is for about 370 t (wet), 333 t DM of PKE blend, (with DDG and some tapioca), @ about $560/t landed. Both sheds have in shed feeding systems so wastage is low. This equates to about 620 kg DM/cow.
About 115-120 replacement calves will be reared. Calves are reared on colostrum/wholemilk twice a day plus meal and hay. They are weaned off meal at 100 kg at about 10 weeks old. Includes bedding and equipment.
|Young and drystock grazing
The yearlings are off farm for 52 weeks and weaners for 26 weeks. This does not include freight.
All cows are wintered on.
|Fertiliser (incl. N)
Focus is on increasing clover performance so that nitrogen application can be reduced. Nitrogen applications will likely be under 120 kg N/ha/year over 5 applications, but are dependent on soil moisture and pasture cover. Product used caries on the time of year and expected rainfall. This spring one application will be in liquid form with progib and sulphur, which has a quicker uptake, so a lower application rate can be used. Fertiliser to be applied is still to be finalised following soil tests on the new farm.
|Regrassing & cropping
This covers the cultivation, seed, planting, weed and pest control and harvesting of 15 ha of Maize for silage, along with the cultivation, seed, planting and weed and pest control of 4.5 ha of fodder beet. In addition this cost includes the regrassing of these areas in the autumn plus an allowance for some remedial regrassing or patching if needed.
|Weed and pest
Weeds are not too much problem. This covers some weed spray and some pest control.
|Vehicles & fuel
Keep vehicles well maintained and try to be efficient with vehicle use. No extra vehicles were purchased with the addition of the second farm. The current tractor and machinery will be shared and so will just work a bit harder.
|R&M (land, buildings, plant, machinery)
Maintenance for this year will just be essentials. The infrastructure on the original farm is now in reasonable shape so just basic maintenance will suffice for this year, particularly if the payout drops. The farm has its own sand pit so race maintenance is relatively low cost.
|Freight and general farm expenses
This includes freight, (on stock sold/purchased and young stock to grazing), protective clothing and bio security levies.
Do own financial management, (budgeting and GST), and administration. Accounting costs are low as one shareholder is a qualified accountant. Includes subscription to payroll management package.
Have a higher excess than standard to save premiums and self insure the small stuff where appropriate. Have a $1000 excess on most things. Included under insurance is key person insurance, which has a 13 week stand down to reduce premiums but is good cover if something major happens.
Includes ACC for 1 FTE of owners cover and ACC for employees.
Council and regional rates for both farms.
|TOTAL FARM WORKING EXPENSES||902,100||4.30||1,686||5,097|
|CASH OPERATING SURPLUS||752,400||3.58||1,406||4,251|
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
There will be minimal change in number of livestock on hand for the season.
This covers 1.25 FTE of unpaid owner input, including all on farm work, administration, strategic planning and governance.
|Feed inventory adjustment
Feed on hand should not change significantly.
Based on previous years financial statements plus allowance for addition of new farm lease block.
|DAIRY GROSS FARM REVENUE||1,655,850||7.88||3,095||9,355|
|DAIRY OPERATING EXPENSES||1,072,100||5.11||2,004||6,057|
|DAIRY OPERATING PROFIT||583,750||2.78||1,091||3,298|
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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