Budgeting, Medium Input System (South Waikato)


6 min read

Farm facts Numbers at a glance Mid-season update Management decisions 2024-25 forecast budget Additional resources

This small north-east facing farm near Arapuni, has a simple, sustainable system for continued profitability. The farm of 68 ha in size, milking 215 FJX cows, operates a medium input system, with a production target of 85,000-87,000 kg MS/year. Infrastructure and farm systems are in place to enable a contract milker to manage the farm, with the owners living off farm. Key to success is controlling farm expenses and consistent budget monitoring.

This small, north east facing, system 3 farm, near Arapuni, is typical for the area with a rolling contour.

A simple sustainable farm system is key to maintaining this profitable farm business that allows the owners to stay involved in farming but also enjoy quality time off farm.

This farm has infrastructure and farm systems that enable one person to manage the farm by themselves with just a little help with calf rearing.  As a small farm, it is important that farm working expenses are kept well under control so there is no wasteful spending. Regular and frequent budget monitoring is key to this.

Farm facts

Business type: 



Arapuni, South Waikato

Farm size: 

68 ha effective milking platform, no support block

Peak cows: 

215 FJX


26/7/2024 MA cows (21/7/2024 Heifers)

Stocking rate: 

3.16 cows/ha

Farm system: 

3 (11-20% feed imported)


87,000 kg MS/year budgeted, 1,279 kg MS/ha, 405 kg MS/cow

Production (last 3 years):

82,800 kg MS average

Numbers at a glance

Financial KPI 2024-25 budget
Net dairy cash
income ($/kgMS)
Total farm working 
expenses ($/kgMS)
Total operating
expenses ($/kgMS)
Dairy operating profit ($/ha)
$8.52 $5.17 $5.52 $3,831
Physical KPI 2023-24 Estimated
Pasture and crop
harvested (t DM/ha)
Purchased N
surplus (kg N/ha/yr)
GHG (t CO2 
Six week
in-calf rate (%)
13.5 122 13.8 66

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

2023-24 mid-season update January 17th 2024

Numbers at a glance

2023-24 mid-season update as of 17thJanuary 2024.

View/download PDF of updated budget

Financial KPI's Budget Updated forecast
Milk Production (kgMS/ha) 1,243 1,272
Milk Production (kgMS/cow) 393 402
Net Dairy Cash Income ($/kgMS) $7.94 $8.59
Total Farm Working Expenses ($/kgMS) $5.41 $5.36
Cash Operating Surplus/Deficit ($/kgMS) $2.53 $3.23
Gross Farm Revenue ($/kgMS) $7.83 $8.50
Operating Expenses ($/kgMS) $6.07 $5.97
Operating Profit ($/ha) $2,182 $3,220


Comments and points of interest

Key Points

•    Forecast milksolids has been revised upwards by 2.3% after an average growing season and more supplements fed to date.
•    The farm is in a good position going into the summer in terms of pasture cover and feed on hand.
•    Gross farm income is expected to be up about 11% on the budget revised in August as forecast milk production and milk price have risen.
•    Close monitoring of the cash flow has ensured farm working expenses and operating expenses have stayed close to budget.


Milk solids to 31-12-2022 is 55,967, which is 9% ahead of last season and budget. As a result the budget to the end of May has been revised upwards 2,000 kgMS and the cash flow has been reworked on 86,500 kgMS.
Cow milked during the peak was 215, (milking twice a day), which is on budget and similar to last year. Losses have been low, (3 cows), so peak cows milked is close to the number of cows wintered.
Rainfall to date has been just above average but reasonably well distributed. It was quite windy in December and although a bit drier, it was very cloudy which affected sugar content of pasture and growth rates of crops.
Pasture growth rates have been average for the season. The DM % has often been higher than last year and this has helped increase utilisation. 
To date 1.69 t DM/ha has been fed to the herd, made up of 104 t DM of PKE and 34.4 t DM of baleage from inventory, (equates to 641 kgDM/cow). This is up on last season.
Baleage made for the season is half of what was budgeted, 20 t DM compared with 40 t DM in the budget.
The area of maize planted is 1.8 ha, (on budget). It was planted November 4th, about 7 days later than target. The cooler and cloudy weather through November and December slowed growth rates so the crop is behind in development compared with normal.  With the recent hot sunny weather it has taken off, the awns are up and the aim is now to harvest in mid-March. Yield is still on target for about 19-20 t DM/ha.
Nitrogen applied to date is about 87 kg N per ha, in the form of Ammo 30N, Ammo 36, sustain and urea. The budget was for about 130 kgN/ha for the season and that is still on track for that. Spring fertiliser has been spread as per budgeted. 
The first season with the contract milker is working well and has allowed the owner to spend less time in the shed which was one of the reasons for moving to this arrangement. Other farm work such as fertiliser spreading and maintenance are still done by the owner so there are still regular visits to the farm.

Current situation

There are currently 211 cows milking, producing 1.54 kgMS/cow/day, (twice a day), although the previous 10 day average was 1.6kgMS/c/day. They have dropped with the recent hot weather. This time last year they were on once a day milking and averaging 1.4 kgMS/c/day.
The herd is currently getting 18.5 kg DM/cow /day made up of 16 kgDM of pasture, and 2.5 kgDM of PKE. Body condition score is average for this time of year.  
The pasture cover is 2300 kg DM/ha and the rotation length should be at 30 days within a couple of days. Current growth rates are around 50-55 kg DM/ha/day. At current pasture intake levels this is just enough to maintain pasture cover. 
Another round of N at 23 kg N/ha is going on over the next couple of weeks, (sustain 25 K), to also help keep a feed wedge ahead of the cows with the longer rotation. This will bring applications to date up to about 107 kgN/ha.
Somatic Cell count has been a lower than last year but has just risen in the last couple of days. This Efforts are being made to identify the source before going to OAD later this week.
Zinc supplementation has just started at low rates.

Looking forward

With current supplements still on hand from last season, PKE still left form contract and maize yet to harvest there is 114.6 t MD to feed out between now and the end of May, plus leave 69 t DM to carry into the next season.
PKE will continue to be fed at 2.0-2.5 kgDM/c/day. At this rate is should last till early April.  The maize still on hand from last season will be started around mid-February and will last until the end of the season. This equates to about 570-600 kgDM/c/d to the end of May. All the baleage on hand plus this season maize will be carried through to next year.
There is still one more application of N, (at about 23 kg N/ha), to come in the late autumn. Autumn maintenance fertiliser is also still to go on.
Four cull cows are going this week which bring numbers to 207 to milk through until mid-February which is when pregnancy testing is scheduled. Cow numbers will be reviewed then and depending on pasture growth and feed supply more culls may go to bring numbers down to about 190. 
A further cull will probably happen early to mid-March to drop numbers to about 180 and a final cull will happen on April 20th.  At this time all the first calvers will also be dried off. This will leave 120 MA cows to milk through until drying off on May 20th.
This destocking regime is standard practice for the farm and in conjunction with once a day milking from late January, plus the supplementary feeding programme, works well to enable key targets for cow condition, and pasture cover at the end of the season to be met while still protecting later season production.

Calving and mating

The calving rate for the 2023 spring was 60% after 3 weeks, 86% after 6 weeks and 99% after 9 weeks. This is similar to last season.
The submission rate this spring is 79% from 3 weeks mating. This is up on last season (72%). 
The estimated 6 week in calf rate is 66 % which is up on last season, (64%).
The number of replacement calves born this season was down, (only 39), so an additional 9 calves were purchased from a neighbour to give 48 calves replacement calves reared. This means the number reared was actual 5 more than the 43 budgeted. All weaners went to grazing in late November as planned.

Other points of interest

Milk revenue for the season has been revised upward by 11% due to the higher milksolids now expected and a higher milk price compared the revised budget form August 2023, (post payout drop). 
Total farm working expenses look to be on track, (currently showing about a 1% variance). With the revised milksolids of 86,500 kg, forecast FWE will drop slightly from $5.41/kg MS on 84,500 kgMS to $5.36/kgMS.
When non cash costs are accounted for, including the 54 t DM decrease in feed on hand, operating expenses are now just under $6.00/kgMS.
Farm working expenses have stayed close to budget for most categories, which is not surprising as the budget was revised in mid-August and more purchases had been committed to by then so there was more certainty about price.
Despite the drop in expected cash flow there is still sufficient surplus to enable further debt repayment and capital investment
Other work on farm is limited to essential jobs only to ensure there is no cost creep.

Management decisions

Strategy and financial

  • Mission
    To create long term stability and financial security through dairy farming. Aim to maximise profit through simple, sustainable systems.
    Strive to create win/win situations for all involved in the farm business – for ourselves and farm staff.
  • Vision
    Have a well-managed farm that can be managed a contract milker with support from the business owners at key times.
  • Values
    Family is number one priority.
    Profit is king.
    Sustainability – systems must be environmentally and personally sustainable.
    A very high standard of animal welfare must be maintained.
  • Financial management
    Keep a detailed cashflow, updated weekly, to ensure well informed decisions can be made quickly.
    Continue to prioritise debt repayment which helps mitigate business risk. The level of debt at the end of the 2023-24 season should be about half of what it was in 2018.
    Keep up to date with current research and technology, evaluate and implement appropriate systems early.

Farm policy and infrastructure

  • The farm is managed based on a production system 3 with imported feed, (PKE), at about 12-14% of total feed eaten.
  • All young stock are off farm from weaning.
  • All cows are wintered on farm.
  • The farm is of rolling contour with 60% of the farm about 40 m elevation difference from the farm dairy. It is 850 m to the furthest paddock. There a 34, 2 ha paddocks, each with 2 water troughs.
  • Milking is twice a day from calving till January 25th, then once a day until drying off about May 20th.
  • The farm dairy is 20 a-side herringbone, (built 2009), so about 11 rows are milked at peak.
  • The dairy yards can hold up to 280 cows so there is plenty of space for 220 cows over winter if cows need to be stood off.


  • Fertiliser
    pH is 6.2, Olsen P is 50+ (volcanic soils).
    Fertiliser applied includes 130kg N/ha/year over 6 applications of 23kgN/ha each, from May to January. Depending on the time of year it is in the form of Ammo 30, (urea and Sulphate ammonia mix), in the early spring, SustaiNK mix, (23 kg N/ha and 25 kg K/ha), or urea.  The autumn fertiliser applied is a mix of N, P and Mg.
  • Effluent management and use
    The farm has stirred storage tanks that can hold thirty days of effluent.
    Effluent can be sprayed on to 17 ha, (about 25% of the farm). Contour limits how much of the farm can be used for effluent.
  • Riparian planting
    6 ha of the farm has been fenced off and have been planted.
    Some steeper areas of the farm have been identified to be retired in future.
  • Waterways
    The majority of waterways are fenced with just a few minor drains left to do.


  • Pasture management
    The key to a simple profitable system is to maximise pasture utilisation. Pasture cover and growth rates are monitored throughout the year, with the spring rotation planner used through calving and into the early spring.
  • Supplements purchased
    About 140 t PKE (126 T DM), is fed all season from 2-4 kg DM/cow/day depending on time of the year, grazing residuals and weather.
  • Cropping
    Usually, 3-4 ha of maize, (130-140 days maturity), is grown each year on the effluent block. This helps shift surplus feed from the spring to the autumn and removes excess fertility from that area.
    Traditional cultivation is used.
    The yields are about 60 t DM, which is fed as maize silage mainly in the autumn. About 20-30t DM is carried through for use in the spring or late summer if needed.
    For the 2023-24 season it is unlikely any maize will be grown as three times as much supplement is on hand at the start of the season than is usually taken into the winter. The wet summer and autumn of 2023 meant none of the 2023 maize crop was fed out and a lot more baleage is also still on hand.
  • Supplements made
    Approximately 40 t DM of baleage, (220 bales), is made, using contractors for all the work.


  • Breeding and herd testing policy
    AB is for 3 1/2 weeks using A2 semen. The majority of the herd is mated to dairy breeds although a few lower BW cows or likely culls are mated to beef semen.
    2 bulls are run with the herd for another 6 weeks to give a 9 1/2 week mating period. 2 bulls are leased to be used over the R 2 heifers.
    There are no intervention treatments used over mating. 
    Herdtesting is 4 times a year - usually twice with 2 milkings and then 2 tests over 1 milking, (after January when the herd is on once a day).
    All replacement calves are DNA tested.
  • Animal health
    Mineral supplementation is via drenching from calving till late November (Mg and a probiotic), Se via drench November and January, plus a Se injection in the winter.
    Heifers are given copper, (Cu), when they return to the farm. No other Cu supplementation is given as the milkers get PKE all year and this is high in CU.
    Drenching with zinc for facial eczema starts in late January.
    The herd SCC averages 129,000 for the 2021-22 season. High SCC cows are treated with longer acting dry cow at drying off. The rest of the herd is also blanket treated with short acting dry cow antibiotic.
  • Young stock policy
    Replacement rate is about 20% with 43 calves reared in the 2023 spring.
    Calves are reared on milk and meal and go to external grazing late November. About 8 beef animals are reared each year and go to the owners off farm property in the Bay of Plenty
    R 2 heifers return to the milking platform May 1st.

People, health and safety

  • The farm is set up to be able to be managed by one full time person.
  • The 2023-24 season will be the first season with a contract milker.
  • The farm owner will provide on farm support at key times.
  • The farm is compliant for all health and safety requirements.

Budget revision following milk payout drop


A focus on debt repayment in the past nine years has given our business the resilience needed now to cope with this downturn in payout. The latest drop translates into $105,000 being lost from expected income.
We have revised our budgets, and cashflow forecast, using a $5.20/kg MS advance, ($6.75 /kg MS final payout). This has shown that:

  • We needed to revise our provisional tax payment schedule, as our first installment, (already paid), should cover the entire seasons liability, which significantly helps the bottom line
  • Our cost structure is relatively streamlined, R & M will be cut to absolute essentials, but at this stage there is very little else we will reduce
  • We have some reserves, which could be used if need be.

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

Don't bury your head in the sand! Revise your budgets as soon as there is any change in payout. Just understanding the impact on your bottom line will help you feel in control. You will be able to make better decisions once that is done.

Maintain good communication with your banker and accountant.

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

Costs at this time of year are largely essential, so don't make any rushed decisions on cutting spending. Focus spending on areas that make money.

Concentrate on getting the basics right; Follow the spring rotation planner and keep doing your feed budgets.

Do you have any tips and tricks for looking after your people on farm?

Good communication is key so staff understand what impact the lower payout is having on the farm plan and what the new plan looks like.

2024-25 Forecast budget

Budget last updated June 2024

Net Milk Sales
The original budget had milk income based on deferred income for 82,230 kg MS @ $1.34/kg MS, (received July to October 2023), and advanced income for 84,500 kg MS @ $6.65/kg MS, (received July 2023 to June 2024). The Fonterra dividend is estimated at $0.45/share of 90,800 shares. After the August revision the advance income is based on the on $5.60/kg MS to the end of May, received June. Milk income is net of the DairyNZ levy of $0.036/kg MS. *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.
698,500 8.03 3,249 10,272
Net Dairy Livestock Sales
Includes the sale of 45 MA and R 2 heifer culls @ $670/head, 145, four-day old calves @ $35/head and 5 R 2 steers @ $1400. Includes the purchase of one 2-year-old Angus bull and the sale of one 3-year-old Angus bull.
42,700 0.49 199 628
NET DAIRY CASH INCOME 741,200 8.52 3,447 10,900


Wages (incl. ACC)
This is payment to the contract milker and covers remuneration for 1.0 FTE plus some relief milking and allowances for calves reared. The contract milker is responsible for the costs of dairy shed consumables and running their farm bike. Included under wages is remuneration to the farm owner for 0.30 FTE work provided to the business. This covers on farm work, governance, administration and strategic planning.
160,500 1.84 747 2,360
Animal health
This covers mineral supplementation via drenching from calving till late November, (Mg and a probiotic), Se via drench November and January, plus a Se injection in the winter. Heifers are given Cu when they return to the farm. No other Cu supplementation is given as the milkers get PKE all year and this is high in Cu. Drenching with zinc for facial eczema starts in late January. The herd SCC for 2023-24 was 144,000. High SCC cows are treated with longer acting dry cow at drying off. The rest of the herd is also blanket treated with dry cow antibiotic.
21,600 0.25 100 318
Breeding and herd improvement
AB is for 3 1/2 weeks using A2 semen. The majority of the herd is mated to dairy breeds although a few lower BW cows or likely culls are mated to beef semen. 2 bulls are run with the herd for another 6 weeks to give a 9 1/2 week mating period. This cost includes the lease of 3 bulls for the heifers. Herdtesting is 4 times a year - usually twice with 2 milkings and then 2 tests over 1 milking, (after January when the herd is on once a day). Includes the lease of 2 bulls to be used over the R 2 heifers.
13,000 0.15 60 191
Farm dairy
This covers milking machine testing, rubberware and other incidentals that are the owner's responsibility.
4,200 0.05 20 62
Electricity (farm dairy, water supply)
This is higher than average as the effluent system is driven by electric motors - for both the stirrers and pumping, (much of which is up hill).
11,900 0.14 55 175
Supplements made (incl. Contractors)
Approximately 37 t DM of baleage, (200 bales, 185 kg DM/bale), is made on farm using contractors for all the work. The expected cost is about $34/bale.
6,800 0.08 32 100
Supplements purchased
The budget is for 165 t PKE (already contracted) at $about $320/t landed. This is simialr to the amount fed last season. PKE is fed in the paddock, in trailers, to the milkers at rates up to 4 kg/cow/day for most of the milking season.
51,200 0.59 238 753
Calf rearing
48 replacement heifers and 8 beef steers will be reared for the 2024-25 season. This cost is for about .0t meal at $1,200/t. The calves are reared on colostrum, milk and meal and are weaned at 90-100 kg liveweight. Bedding and equipment costs are included.
6,100 0.07 28 90
Young and drystock grazing
48 weaners from late November till May 1st at $9.50/head/week and then May 1st to May 31st at $12.00 plus 48 R 2 heifers from June 1st to May 1st at $12.00/head/week. In addition, the cost of grazing for 2 bulls during the mating season is included. Does not include the costs of drenching, that is under animal health. Includes freight to and from grazing.
44,300 0.51 206 651
Fertiliser (incl. N)
This is net of fertiliser rebates of about $1,500. Fertiliser applied includes 130kg N/ha/year over 6 applications of 23kgN/ha each, from May to January. Depending on the time of year it is in the form of Ammo 30, (urea and Sulphate ammonia mix) in the early spring, SustaiNK mix, (23 kg N/ha and 25 kg K/ha), or urea. The autumn fertiliser applied is a mix of N, P, sulphur and Mg.
57,500 0.66 267 846
Regrassing & cropping
The budget allows for about 7.5 ha of direct drilling into pasture for pasture renewal. Maize will again be planted this year, so the budget does include about $7,000 for planting and harvesting about 1.5 ha of maize which is about half of what is usually grown.
9,000 0.10 42 132
Weed and pest
Weeds and pests are not a problem. California thistles are the main problem.
1,500 0.02 7 22
Vehicles & fuel
Fuel is quite high as the tractor is used every day to feed out, and the owner has to travels some distance when working on farm.
11,800 0.14 55 174
R&M (land, buildings, plant, machinery)
Infrastructure and buildings are in good order so no large R & M projects planned. The farm has its own rhyotlite pit so tracks and races are maintained quite cheaply.
15,200 0.17 71 224
Freight and general farm expenses
Includes bio security levy of $700. Covers protective clothing and general freight.
1,900 0.02 9 28
Do own GST, have own payroll system. Covers accountant, computer/communication and general administration costs.
12,300 0.14 57 181
Insurance 7,500 0.09 35 110
Based on latest invoice.
2,500 0.03 12 37
As per latest rates demands, includes district and regional rates. Updated in August based the most recent rate demands.
11,000 0.13 51 162
TOTAL FARM WORKING EXPENSES 449,800 5.17 2,092 6,615
CASH OPERATING SURPLUS 291,400 3.35 1,355 4,285

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 no significant change in the number and classes of livestock on hand for the season.
-500 -0.01 -2 -7
Labour adjustment
All owner input is included under wages paid and is at market rates.
0 0.00 0 0
Feed inventory adjustment
Expect to have minimal change in supplements on hand for the season.
1200 0.01 6 18
Owned support block adjustment
Allowance for about 2.7 ha of off farm land that is used for 10-11 beefies which are included in calf rearing and stock sales.
1,600 0.02 7 24
Based on previous years financials plus allowing for additional purchases/sales and another years depreciation.
30,000 0.34 140 441
DAIRY GROSS FARM REVENUE 740,700 8.51 3,445 10,893
DAIRY OPERATING EXPENSES 480,200 5.52 2,233 7,062
DAIRY OPERATING PROFIT 260,500 2.99 1,212 3,831

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Last updated: Aug 2023
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