Budgeting, Pete Morgan and Ann Bouma (South West Waikato)

October 24th, 2023

• The 2023 -24 season has been pretty good so far.  June was very wet but a drier July and August made the early spring a lot easier to manage.
• Early season budgeting for production was conservative as this is the first season with 70 less cows and all the young stock on farm. Factored in to the budget was the fact the herd also has a higher proportion of first calvers this season and a slower than usual calving pattern due to the new A2 cows purchased having a spread calving.
• So, a conservative budget, a reasonable spring and good planning has resulted in milksolids to date being 3000 kg ahead of budget which is pleasing.
• Peak cows milked is 520 which is 10 more than budgeted as wastage has been low. 
• The cows have peaked at 2.2 kgMS/cow/day which is better than last season and above budget. The heifers this year are milking really well, as a result of targeted higher feed intakes over the winter. This has contributed to the higher daily per cow peak.
• Unlike some years once a day milking has not been used prior to mating this season. Mating has been going for 2 weeks and the cows are cycling well.
• The herd is still being fed 1 kgDM/cow/day of PKE through the shed as a vehicle for delivering minerals.
• PKE used to date is 10.8 t from inventory and 20 t from the 100 t contracted for this year. The PKE was contracted early and the price is close to $500/t landed.
• Pasture cover is 2350 kgDM/ha which is on target for this time of year.
• There are 20 ha of silage shut already and another 10 ha will be dropped out of the next round.  This will give 30 ha of silage which is about half of what was budgeted, but there are few more cows on farm.
• Nitrogen use to date is only 12 kg N/ha, down on budget, in part because there has been sufficient feed.
• The cropping plan has changed from the original budget mainly due to the owner needing to be away when much of the cultivation for the chicory and turnips would have been done. Instead of 7.4 ha of maize, 20 ha of chicory and 9 ha of turnips there is now 10 ha of maize, 25 ha over sown with plantain and 2 ha of chicory, (only planted as there was seed on hand from the previous year).  There will be no turnips.
• One paddock of last year’s chicory was just under sown with pasture last autumn rather than spraying it out before drilling.  This is doing really well and still has a good proportion of chicory in the sward, so will help to augment the other summer crops.
• Soil moisture levels are currently very good for this time of year with little but frequent rainfall. With the soil types being predominantly light and free draining they are very susceptible to dry spells and hot winds, so moisture levels can change very quickly.

• With the early season production up on budget and the advance pay out similar to forecast the cash flow is currently on track.  
• The change in the cropping programme has decreased the cropping costs as there is less cultivation work and weed control needed.
• There has been some unplanned capital and R and M expenditure. The milking plant in the main dairy shed needs to be upgraded as the milk lift pump and wash down system are not up to standard. The decision has been made to install automatic cup removers and automatic teat spraying system at the same time. Eventually a drafting gate system that is integrated with Halter will also be installed.  This will make the shed a one person shed so labour savings will be significant.
• If there is a very severe and prolonged drought milk production will be down and feed costs will probably have to go up so the operating profit for the season will drop. There is sufficient surplus in the budget to cope with this.
• About one third of the cost will be repairs and maintenance, so the budget for R and M will be about double now. The balance will be capital expenditure.

NIWA’s El Nino forecast has not changed our summer management plans as dry summer conditions are always factored into the farm plan and budget.

• Changing milking frequency, extending rotation length, reducing stocking rate through culling and strategic drying off stock are all strategies used to help balance feed demand and supply to reduce pressure on pastures and livestock. The timing of this depends on when the summer dry occurs and how long it lasts. It has been as early as November in the past.
• Culls are always booked in for early February once empties are confirmed. Close monitoring and matching of feed supply with demand happens all the time with the aim of being able to make decisions early.
• At this stage the plan is to manage the summer with the current feed already budgeted for the farm – 30 ha silage, 37 ha of crops and about 80 t of contracted PKE still to use.
• It will be critical to ensure that the young stock are well fed over the summer. At this stage the yearlings will be predominantly on pasture and the weaners with get crop and pasture.  
  If there is a drought, and, it is particularly severe, or long, then more PKE will be purchased if absolutely necessary so that young stock liveweights and welfare are not compromised.
  However the season unfolds, management decisions made will ensure pastures are protected from overgrazing, young stock liveweights remain on target and cow condition and pasture cover for next season are not compromised.

• Vision
  Operate a simple, evidence based, low cost, profitable and resilient business that enables the owners to enjoy a quality lifestyle with family and friends. Have a strategic plan that includes looking for opportunities to future proof the business.
• Review budget regularly
  Review the budgets regularly to assess options and act early. This is at GST time or sooner if there is a significant change in the forecast payout, a severe weather event or a major breakdown.
• Planning
  Review each season, (good record keeping is a must for this), and use that for planning the next one.  Carry out planning for next season early in the prior autumn. Use this plan to build the budget.
• Debt
  Once the last of the major capital expenditure programmes have been completed the focus will return to retiring debt.
• Communication
  Ensure all staff understand the farm plan and have regular, (usually weekly), team meetings to keep everyone updated.
• Networking
  Utilise expertise from other professionals, in particular accountant and local farm consultants and specialists.
• Benchmark
  Share information, seek out top performers in the area and learn from them as well as use benchmarking.
• Technology and Science
  Keep up to date with current research and technology, evaluate and be early adopters of technology to enable efficient use of all resources to further aid in measuring and managing environmental emissions so targets can be met.
  Utilise Halter to fully achieve the gains this system can provide:reducing time and labour requirements on farm whilst increasing production outputs through more efficient pasture utilisation, better animal welfare and improved sustainability standards.
• Environment 
  Achieving a high standard of environmental outcomes for the farm is a priority. The whole farm system is evidence driven with research science behind all decisions, many of which impact the key environmental KPI’s.

• The farm operates as a system 2 production system with imported feed at approximately 3-4% of total feed eaten.  All young stock are on farm.
• The whole farm system is evidence-driven, so research science is behind all decisions and achieving a high standard of environmental outcomes is an important part of implementing the farm plan.
• The herd is now all A2 genetics. The cows are usually managed in 2 herds although Halter technology makes it easy to manage the herd in several mobs if need be.
• There are 2 herringbone dairy sheds on the farm, one 34 bails and one 28 bails. The 28 bail shed has an in shed feeding system, and a feed pad nearby.
• Both sheds will be in operation during calving with one used for colostrum cows and the other, (the 28 bail, in shed feeding), will be used for the milking herd. Once calving is finished the cows will all be milked through one shed.  The other shed will be used on occasions when the herd is grazing in proximity to that shed.
• PKE at low levels, will be fed daily in shed to the milking herd as a means to deliver minerals when required, (Mg in the spring and Zn in the summer/autumn).
• It is 1.5 km from the either farm dairy shed to the furthest paddock.
• The average paddock size is 6 ha now that Halter technology is used and grazing areas can easily be determined by mob size and pasture cover. Electric fencing is still required for grazing management with the weaners.
• All cows and in-calf heifers are wintered on the milking area with predominantly all grass feeding.
• Yearlings and weaners will general be grazed at one end of the farm, furthest away from the main milking shed, but there could be some cross over with the milking herd herd.
• Focus is on getting the basics right. The correct calving date, stocking rate and pasture management leads to good pasture utilisation.
• Light soil types mean the farm is susceptible to summer dry. Once a day milking is used for the whole herd early in the season. Depending on cow condition and feed supply this is usually mid to late December, but can be as early as November or as late as January.
• Drying off decisions are made on cow condition, feed budgets and calving dates, (not production), to ensure pre-calving target CS of 5.0 for MA cows and 5.5 for 2 year old heifers are met.
• Success depends on knowing the correct target pasture covers for the farm at critical times, (start of calving, mid spring when growth exceeds demand and start of winter), and the use of feed budgeting to ensure these are achieved.

• Pasture
  Aim to optimise the amount of pasture grown through good pasture management which includes achieving optimal soil fertility, strategic use of nitrogen, minimising pasture damage in the winter and overgrazing in the summer, and have a planned approach to pasture renovation.
  Pasture cover and growth rates are monitored at least every 2 weeks and this information is used along with the spring rotation planner to manage pasture allocation during the spring. Frequent monitoring of feed budgets allows for proactive and early decision making.
  The herds are checked during the day to monitor grazing residuals and may be shifted more than once if necessary. Halter technology makes it easy to shift stock, so it is easy to achieve target post grazing residuals all the time now. Better allocation of feed during the winter and spring has also reduced pasture damage and increased pasture utilisation.
• Feed policy
  The feed policy is developed around a conservative approach to feed supply in recognition of the more variable and extreme weather events that are now being seen. About 110-120 kg DM per cow of supplement, (maize or pasture silage plus a little bit of hay), will usually be carried through from the previous season for use in the spring.
  The feed carried into the winter for the 2023-24 season is close to 190 kg/cow. This is partly because less supplement was needed the previous autumn, but also, this is the first winter where all young stock are on farm so having extra feed provides a more security as systems for being self-contained are embedded.
  The ongoing challenge of managing low growth rates through the summer dry period means the budget could extend to purchasing additional PKE, but is price dependent. The decision is always made based on feed budgets, feed prices and the milk price.
• Cropping
  7-8 ha of maize is grown as part of pasture renovation and for weed control as well as to provide a bulk of feed later in the season, and for the following spring. To minimise the impact of cultivation on the light soils the maize is direct drilled with strip tillage practices. The budgeted yield is 18 t DM/ha.
  9 ha of turnips, are planted for weed control and to transfer feed from December to February. Plantings are staggered so the crop is not all ready at once.
  20 ha of chicory are planted for summer feed. This will largely be used for the yearlings and weaners.
  The turnips and chicory are planted using the farms own air seeder, which gives more flexibility around planting times along with precision seed placement and allocation.
• Supplements made
  Surplus pasture is made in to silage or hay. The amount can vary each year but the budget is for 60 ha at a 2 t DM/ha yield. This is used to fill summer deficits.
• Supplements purchased
  A small amount of hay, (about 10 t DM), is purchased each year to be used in the winter and spring during wet weather to help settle dry stock so trampling damage is limited.

• The animal health focus is on good observation, prevention and early treatment if required. Information from the Halter technology plays a big role in this, as it highlights any animals whose behaviour has changed.
• Best practice is followed to ensure good udder health and good quality milk is produced. SCC are 125,000-130,000.
• The breeding policy is formulated with the aim of achieving a compact calving of 12 -14 days to mid-point for a planned start calving of July 18th for cows and July 15th for heifers.
  Pre-mating heats, (identified from Halter information), are used to identify cows for anoestrous and synchrony treatment. The 2 year old heifers are usually put on once a day milking from 1 month before mating, and fed additional supplements if feed is short, to ensure better mating outcomes for this age group.
• The yearlings are fitted with Halter collars and will also be mated to AB.
• Mating is for 11 weeks using all AB. This is made up of 3 weeks AB plus 2 days to cover returns from cows treated for anoestrus, with the top 20% of the herd on genetic merit mated with sexed semen, the lowest 20% mated to AB short gestation, (SG), Hereford semen and the rest of the herd is mated with premier sires. AB will continue for a further 5-6 weeks using SG Hereford semen. The last 2 weeks of mating is with AB using short gestation bull semen. With the use of SG semen the actual calving period is about 9 1/2. The aim is to be finished calving by September 20th. All dairy semen used is A2 genetics.
• The replacement rate is 18-20%. Systems are in place to ensure 100 kg live weights at weaning for replacements, (crossbreds), are achieved.
  Young stock liveweights are monitored, and measured against industry recommended liveweight targets. Action is taken early if the liveweight gains are not on target.
• Young stock with be run in mobs of about 50 animals each as research shows this is an optimal number for animal welfare. During the summer the plan is to graze them on chicory and feed PKE.
• The herd undergoes milk testing 4 times a year, (drought permitting), with once a day herd testing. This information assists with decision making for mating, culling, and milk quality control and drying off.
• Colostrum cows are milked once a day. Rumination data supplied by Halter will be used to judge when they are up to speed enough to go to the twice a day herd, but it will not be earlier than 8 withheld milkings.

• Staffing levels are set that allow flexible work rosters that provide the owners and staff with better work/life balance.
• One full time farm manager, one full time assistant manager and one full time farm assistant and 0.6 FTE of part time and relief staff are employed. The farm owners provide 0.4 FTE of unpaid input.
• Remuneration levels recognise the experience and responsibility levels of each staff member.
• Good documentation is provided for occupational health and safety and training is undertaken to ensure staff follow protocols and processes.
• Halter technology has changed work routines and resulted in much improved work efficiencies. At the peak of the season staff hours worked is under 45 hours per week.

• Soils and testing
  The farm soil type is predominantly Maeroa ash which is a well-drained allophanic soil. Protecting soil structure and maintaining weed free pastures are key considerations when implementing the farming system and do impact the budget.
  Individual paddock testing has been done in the past so this information is used to enable strategic fertiliser applications. Olsen P levels are 27 and pH is 5.9.
• Nitrogen
  The policy relating to N use is
  • need to be sure of a good response
  • need to be able to utilise the feed effectively                                                         
    Realistically the opportunities that meet the above criteria for N use are limited, so N applications have historically been no more than 60 kg N per ha. Attention is paid to application rates, timing of the application and the type of N used so that the risk of N leaching is minimised.

• Farm environment plan
  The FEP was completed in 2020 and is used to prioritise planning to ensure continued progress is made towards achieving the best environmental outcomes for the farm and business.
• Riparian planting
  The farm plan includes continued focus on improving riparian areas. The farm now has over 21 ha of fenced riparian areas including over 1 km of river boundaries.
• Effluent
  The current effluent irrigation area is 75 ha. Work is ongoing to increase this area as time and budget allow.
• Halter
  The use of virtual fencing via Halter is one of the features of the programme. This enables fertility transfer to be controlled by excluding cows from camping areas which will reduce leaching and in the long term also fertiliser use.
  All virtual fencing of breaks are considered for their impact on soil and water. Steep slopes and sensitive areas are grazed for the minimum time necessary and avoided if conditions are not optimal.

Financial KPI's

^{*These KPI's are based on cashbook actuals to 31 May 2021 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.}

^{Click here for PDF of 2020-21 budget v actuals}

Comments

• The financial performance for the 2020-21 season was defined by better than expected production and milk price. Net cash dairy income was 19% up on budget while total farm working expenses were only up 9%.
• The operating profit per ha for the season is estimated to be $2,916, which is 34% up on budget. A major contributing factor to this result is an increase in pasture eaten for the year of 1.3 t DM/ha. This is up 11.7% compared with the 2019-20 season.
• The majority of the increase in farm working expenses was due to a 90% increase in repairs and maintenance. With the better than expected payout more discretionary work was carried out, equating to $0.24/kg MS, with projects including a major upgrade of the vet race and yards at one shed, double glazing 2 houses, and clearing willow trees.
• In November 2020 the farm signed up to be part of the Halter programme. This farm management tool uses solar-powered, GPS-enabled smart collars fitted to each dairy cow and combines with a simple app to allow farmers to remotely shift, virtually fence and proactively monitor their cow’s health, feed and behaviour.
• This system provides a greater level of information for less physical input than less technical options. To gain the full benefits from this programme effort is still required to interpret and act on the information provided.
• Setting the farm up to fully integrate with this programme has taken a lot of the management focus for the latter part of the season. There will be ongoing changes to infrastructure as fences are removed so paddock sizes change from 1.8 ha to 4 ha to optimise land use.
• Benefits are already being seen with cows moving a lot more quietly, particularly entering the farm dairy, and the farm owners and staff are looking forward to the first full year with this programme, particularly the additional information that it provides for monitoring cows during calving and mating.

Other points of interest

• The early part of the season was great favourable weather conditions through winter and calving and with a better calving pattern getting the season off to a good start.
• Early gains were eroded later in the spring as it seemed impossible to maintain pasture quality due to early seed head emergence and very high November pasture growth rates. This impacted pasture resulting in feed with lower digestibility and DM%. The situation was further exacerbated with delays in getting supplement off due to contractor unavailability. Production was 7% behind budget by the end of December.
• Rainfall in the latter half of the season was much more regular than the previous season, and pasture growth rates were well up on the 2019-20 season. This made up for the earlier losses in the spring and the season finished with 5000 kg MS more than budgeted.
• Both herds went to once-a-day milking on the 18th of December. 70 Culls went off the farm through February and March and the remaining 539 cows were milked through to May. The last of the herd was dried off in mid-May, which is the latest dry-off date for the farm for some years.
• By May 31st pasture cover was at 2,350 kg DM per ha. 50% of the herd were at body CS of 5 and 50% were at 4.8, so well on track to meet the targets for planned start of calving.
• Silage made on the milking area in the spring was at 69 ha or 30% of the farm was nearly double the area made in 2019-20. This was a result of better spring growth rates, but also due to having less area out for growing maize. Maize grown was only 3.7 ha instead of the budgeted 8 ha. Increased silage-making costs were offset by decreased maize growing costs.
• Purchased feed costs were down as no hay was purchased. The good winter and spring meant very little of the hay on hand was fed out so there was still sufficient inventory on hand going into the 2021 winter. Maize purchased was 110 t DM (20 t DM up on budget), however, the price was less than budgeted, ($300 per t DM compared with $390 per t DM) so total costs was similar.
• The not-in-calf rate was 16% which was disappointing as it is higher than the 2019-20 season of 11%. The six-week in-calf rate is 70% E which is below target and the lowest for the farm for the last 3 seasons. Some of this poorer performance could be attributed to the poorer pasture quality through November. This will be an area of focus for the 2021-22 season.
• Sexed semen was used on the top 20% genetic merit cows for the first time this season. More of the lower genetic merit cows were mated to beef breeds. The aim of this strategy is to ultimately reduce the number of calves bobbied.
• Incidences of downer cows as a result of low phosphorous meant the decision was made to use DAP despite soil tests indicating soil phosphate levels were more than adequate.

Financial KPI's

^{*These KPI's are based on cashbook actuals to 31 May 2020 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.}

^{Click here for PDF of 2019-20 budget v actuals}

Comments

• The financial performance for the 19-20 season was dominated by the effects of the Waikato wide low rainfall from October to April. Production was 12.8% down on budget, net cash dairy income was down 5% and total farm working expenses were up 3%.
• The milk price received was 8% up on budget, ($0.54 per kg MS), and livestock sales were also up by the 8% which helped to slightly offset the impact of the lower milk production.
• Repairs and maintenance are 28% up on budget as a considerable amount of time and money has been spent on development and improvement projects including
  • fencing of 5 ha retired for riparian planting
  • upgrading the water supply on the 65 ha added 2 years ago
  • implementing recommendations from the farm environment plan
  • extra work on tracks

Other points of interest

• A mild winter and spring resulted in above average winter and spring growth rates. However, a less than ideal calving spread for 2019, below average pasture growth for October and lower stocking rate meant that production to the end of December was behind budget.
• Limited freezing works space due to the drought meant that not all culls could go early February as planned, so about 60 cows were on farm for another 4-5 weeks putting further pressure on feed demand.
• 85 t DM of early maize silage was imported to fill the gap until the farm grown crop was ready. This replaced 45 t PKE that had been in the budget.
• The last of the herd was dried off mid-March as budgets for buying in PKE and milking longer showed a very small profit margin at current milk prices.
• By May 31^st pasture cover was at 2,450 kg DM per ha, and cow condition was 4.8 for the MA cows and 5.3 for the heifers, which is on track to meet the targets for planned start of calving.

Feed situation

Dry off date: 50% on 13/3/2020 and 50% 16/3/2020.

Culls still on farm: 9 empty heifers and 2 cows (slips) – will go before late May if possible.

% Milking area regrassed: 12% of farm (67% in annuals and 33% permanent pasture) due for first graze soon. Sown mid to late April which is 2-4 weeks later than usual due to lack of moisture.

N applied this autumn to date: 50% of the farm @ 30kg N per ha, with autumn fertiliser. Application started late April (about 10 days late) as access to contractors was held up.

Planned N application to end of month: 25% of the farm @ 30 kg N per ha.

Actions taken to address the feed shortage

• Once a day for whole herd pre-Christmas.
• Pregnancy tested early with the aim of being able to send all culls early February. Works space was limited and only got 33% away. This meant we had 60 culls on hand for 4-5 weeks longer than usual. Last lot went 18th March.
• Went into summer with extra supplement (some made on farm and we purchased some late December). Started feeding this supplement from mid-January.
• Also purchased 4 ha’s of early maize silage, (35 c per kg DM landed), when it was evident more cows would be carried into the summer for longer. This was fed through February and into March until our own maize was harvested. Maize yield was 16 t DM/ha – harvesting was about 2 weeks early due to extreme dry and heat. Maize was already at 41% DM when harvested. Having to harvest early reduced yield by about 2 t DM/ha.
• The decision to dry the herd off mid-March was made after doing budgets for buying in PKE and milking longer. At the spot PKE price the profit margin was very small even with the current milk price. As there were plenty of other jobs to keep all staff fully employed it was decided to dry off!
• Split the herd to allow preferential feeding for lighter condition cows.

Plans to achieve target APC and BCS and PSC targets

• Continue to run 3 mobs of cows - 35% MA cows are in a light mob getting 4 kg DM maize and 6 kg DM grass, 65% MA cows are being fed 2 kg DM maize and 6 kg DM grass and R 2 heifers are being fed 8 kg DM grass. This allows stock to gain weight while keeping the rotation length at 150 days to maximise the gains from the current growth rates.
• Continue with autumn fertiliser and N application.
• Closely monitor growth rates, feed budget and BCS in order to adjust feeding rates quickly to keep both pasture cover and BCS as close to target a possible. Minimum growth rates of about 36 kg per ha per day are needed for the next 3 weeks to ensure target pasture cover is reached. This is achievable with the anticipated response to the N applications, plus the increase in the young grass growth, rates expected after the first grazing, particularly the annuals.

Concerns and plans for the upcoming weeks

• The biggest threat for the next 3 weeks will be climatic. If it gets cold, (several heavy frosts), or stays dry over the next 2-3 weeks, growth rates will fall. 
• If growth rates are below budget the cows would be fed less, (ie forgo some cow condition), so target pasture cover is not compromised.

Financial KPIs

^{*These KPI's are based on cash book actuals to 31 May 2019 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.}

^{Click here for PDF of 2018-19 budget v actuals}

Comments

• The overall financial performance for the business was very close to the budget which was a satisfactory result given that the 18-19 season was the first year of the larger farming operation, (60 more hectares and 165 more cows.
• It is worth noting that the budget for the 18-19 season has a lower deferred milk income being the first year of the larger operation, ($350 per ha), and included some extra costs relating to the integration of the additional land.
• Cash income was down 2%. The lower milk income was offset slightly by increased livestock income.
• Total Farm working expenses were actually $9,929 under budget, (12%), which is $3.76 per kg MS on the lower than budgeted milksolids so F W E were 3.3% up on budget for the season.
• Additional capital expenditure of $120,000 for an effluent system upgrade for one of the sheds was also able to be completed out of cash flow this year.
• The labour costs for the farm have been well above average, (at around $1.40 per kg MS), for the last 2 seasons as the owners allowed for extra input to ensure successful implementation of the new business structure, (2017/18) and integration of the extra land, (2018/19). Labour requirements for the farm should reduce to more average levels from now on, (more like $1.00 per kg MS).
  
  

Other points of interest

• The first part of the season was much improved on the previous 2 years in terms of rainfall and pasture growth. However September and October growth was still about 15% below average, and the latter part of November was wetter and colder.
  By late December feed on hand, pasture cover and soil moisture were all good and production was on target for 220,000 to 225,000 kg MS.
• Hot windy weather and very little rain from mid-January to late April had a big impact on the final season’s performance, with production finishing at 211,250, (4.0% below budget).
• All empty cows were culled after the early February pregnancy test, and drying off started early April with the last milking on April 11th.
• A lot more re-grassing was carried out in the autumn to repair pasture damage from late winter and early spring 2018 and to remedy the opening up of pastures due to multiple and prolonged summer droughts. There is about 17% of the farm in new grass, under-sown with Italian shogun or in an annual grass/oats crop. It has all been direct drilled with no mechanical cultivation and has established well.
• As at June 20th pasture cover is finally on target and cow condition is close to 5.0 so the farm is prepared for the start of calving.

Financial KPI's

^{*These KPI's are based on cash book actuals to 31 May 2018 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.}

^{Click here for PDF of 2017-18 budget v actuals}

Comments

Spring was cold and relentlessly wet so got off to a slow start. Conditions improved from late September and because our farm drains well we had caught up lost production and were ahead by late November. Then the dry hit and production crashed precipitously! We put the cows onto once-a-day in early December and had no good quality feed to put them on so they didn't hold production levels as well as usual. Late summer things started to improve. We dropped only a proportion of our empties early as we had lots of feed all of a sudden. We had almost caught up with production again when we started feeding the maize. Unfortunately we had a new contractor this year and forgot to ask for a longer chop. It was fed out as we normally do but because it was a very fine chop and the grass was growing a lot more rapidly than normal - almost like spring pasture, a significant proportion of the herd developed ruminal acidosis to a greater or lesser extent. This dropped production precipitously again and it took a long time for the cows to pick up again this late in the season. We ended up with production 5,000 kg MS below budget but equal to last season which was not a particularly good season either!

The cows have picked up well since drying off and we are happy with their condition and have good pasture cover for next season. Have had a bit of an issue with lameness as the races have taken a hit with all the wet weather and cows have been stood off a bit as well.

Financially the year has gone reasonably well, with a slightly higher milk price offsetting the 3% lower than budget milk production.

Farm working expenses for the year finished at $3.66 per kg MS (including $1.15 per kg MS of owners PAYE wages).  This is 3.7% less than budgeted with the main variation being that 100 t DM of maize budgeted to be purchased in the autumn was not needed as some extra Maize was grown, 5 ha more grass silage was made and very little was needed to be fed in the autumn due to exceptional pasture growth rates.

Despite the lack of deferred income of about $1.20 due to the 17-18 season being the first year of operation under this equity partnership, the business generated enough cash surplus to be able to repay the early season working capital borrowings, plus put aside sufficient funds to tide us over the 2018 winter and early spring.

Other points of interest

The maize was again planted with minimum tillage – spray and direct drill which does impact yield.  It was slow establishing because of the dry conditions but despite that still gave 16-17 t DM per ha.

We are very happy with the minimum tillage approach as the soil structure is much improved and will continue with this method in the future.

N use was 85 kg N per ha which was similar to the previous season but up on budget, again largely due to the cold wet weather in the late spring period.

Somatic cell count for the season is 132400 which is up a little on the previous season but still reasonable given the cows were on once a day for so long and just how wet it was in the spring.

The first round of mating went well with good submission rates, however the very hot weather and poor quality pasture through late November and December resulted in above average numbers of late empty cows.

Financial KPI's

^{*These KPI's are based on cash book actuals to 31 May 2017 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.}

^{Click here for PDF of 2016-17 budget v actuals}

Comments

The 16-17 season was one of two halves;

A cold wet August followed by a very dull, wet October with poorer pasture growth and quality due to less sunshine had an impact on production and costs for the first half of the season. Production was down 6,000 kg on budget by the end of December and more supplement had been purchased in early spring.

Better than average summer/autumn rainfall meant less supplement was needed and the decline in production was halted.

Below average pasture growth rates and very wet soil conditions in May 2017 has meant that the season has finished with cows in condition score 4.8 and pasture cover of 2,100 kg DM/ha, both of which are a little behind target.  Continued slow pasture growth for the early winter and dull wet conditions are impacting our target pasture cover at calving.

A deliberate decision to carry out additional R &M in response to the increase in milk price accounted for $0.10 /kg MS and unplanned repairs to farm vehicles accounted for another $0.07/kg MS.  This combined with production being down 3% on budget gave farm working expenses (FWE) for the year of $2.95 per kg MS ($0.26 /kg MS up on budget).

Keeping a close watch on the budget as the season unfolded meant that decisions could be made quickly as circumstances changed.