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Budgeting, Rachel and Kenneth Short (Taranaki)

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24 min read

Farm facts Numbers at a glance Season review Management decisions 2024-25 forecast budget Previous season reviews Additional resources

Rachel and Kenneth Short own a 168 ha self-contained, organic farm in Coastal South Taranaki, milking 350 Jersey cows and grazing all young stock. In addition to all their own stock another 50-55 yearlings are grazed for their second organic farm. Their mission is sustainable, profitable production of specialty milk while minimising environmental harm. Regenerative pasture and soil management are a key part of their farm management plan. They've recently introduced Halter technology, which adds $0.30/kgMS to their farm working expenses.

Rachel and Kenneth Shorts' self-contained, very low input, organic, coastal Taranaki farm is embracing regenerative pasture management practices. The business focus is on sustainability and profitable production of high-quality specialty milk with a low environmental footprint.

Rachel and Kenneth are motivated to make the most out of a self-contained system with decisions made accordingly to manage the resources and pasture grown for each season.

This is their second full season with Halter technology which adds to $0.30/kg MS. Grazing income for the heifers from their second farm equates to $0.28/kg MS.

Rachel and Kennth Shorts

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Spreading organic liquid fertiliser.

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Multi-species pasture with shelter trees in the background.

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Organic certification and Welfarm monitored.

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Fencing and races.

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Fonterra organic butter sold in the US market.

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Farm facts

Business type: 

Owner-operator, organic

Location: 

Coastal South Taranaki

Farm size: 

168 ha effective with all young stock on farm, plus 52 yearlings from second organic farm

Peak cows: 

350 Jersey

PSC: 

20/07/2024 MA cows

Stocking rate: 

2.1 cows/ha (3 cow equivalents/ha with weaners and and all R2 heifers)

Farm system: 

1 (no imported feed)

Production: 

115,000 kgMS/year, 330kg MS/cow, 685 kgMS/ha (budgeted).

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)
$11.05 $3.46 $4.61 $4,432
Physical KPI 2-year average
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 (%)
10.7 -38 6 62

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

2023-24 Season review June 5th 2024

Numbers at a glance

View/download PDF of updated budget

Financial KPI's Budget Updated forecast
Milk Production (kgMS/ha) 661 622
Milk Production (kgMS/cow) 329 306
Net Dairy Cash Income ($/kgMS) $10.97 $13.00
Total Farm Working Expenses ($/kgMS) $3.14 $3.68
Cash Operating Surplus/Deficit ($/kgMS) $7.83 $9.33
Gross Farm Revenue ($/kgMS) $11.02 $13.04
Operating Expenses ($/kgMS) $4.29 $4.96
Operating Profit ($/ha) $4,448 $5,031

 

Comments and points of interest

Key points

•   2023-24 was the first season running the farm as two separate blocks; 113 ha with 340-360 milking cows and utilising 55 ha of the farm as a support block providing winter grazing for the herd, and grazing for the farms yearlings and weaners as well as an additional 50-55 yearlings from a second organic farm.
•    Pasture and crop harvested for the season is 10.6 t DM/ha which is slightly less than the previous year, (10.8 t DM/ha).
•    Well distributed average rainfall and plenty of sunshine days in the winter helped to set up a good start to the season, with production being up on budget by the end of December.
•    A more normal dry weather pattern for the late summer and autumn resulted in a “green” drought with final milk solids for the season 9% behind budget.
•    The last of the herd were dry by the end of April.
•    Milk price received to the end of June will be $11.99/kgMS, (including deferred income and dividends). This is 1.89/kgMS up on budget.
•    Operating expenses, (opex), and Farm working expenses, (FWE), are estimated at $4.95-$5.00/kg MS for opex and $3.65-$3.70/kgMS for FWE.
•    Operating Profit/ha is around $5,031/ha, up 9% on budget.
•    Higher interest rates have impacted cash flow so total cash surplus for the year, after interest, debt repayment, tax and drawings is down on last season.
•    Halter continues to deliver savings in time involved with collecting information required for making stock and pasture management decisions.

Comments

Production for the season was 104,524 kg MS, 9% down on budget. Peak cows milked of 342 were 8 less than budget. 
Pasture growth from June to December was been better than previous years and spring growth was on target. November had a higher than average rainfall but there were many windy and sunny days in between so conditions never got too wet. 
Supplements fed for the season is 44 t DM of hay from inventory, the majority of which was fed in the winter and spring. 
90 t DM of hay was made in the summer on the 55 ha support area, with 40 t DM still on hand.
The herd peaked at 1.8 kg MS/cow/day which is well up on the previous year, (1.5 kgMS/cow/day).
6.36 ha of multi species crops were planted in the spring as per budget and provided about 4 weeks grazing for the milking herd in February. 
The 8 ha of deferred grazing set aside for the heifers worked well for summer/autumn grazing. The area deferred was last year’s summer multi species crop. The resulting big seed drop, germination and regrowth from this has been excellent and has helped consolidate the pasture. 
The herd went on to once a day milking on December 8th, (similar time to last season), for lifestyle reasons and to benefit the cows.
The bulk of culling occurred in mid to late February after pregnancy testing. Herd numbers were down to 280 cows by the end of February.
A drying off plan was developed with the help of the vets based on body condition score and calving date. With the continuing dry weather the plan was brought forward and the first cows were dried off 21st March and the last 180 by 26th April.
Having information from Halter has made decision making so much easier. In August Pasture pro was released and this has now replaced other methods of pasture cover and growth rate assessment.
The capital payment from Fonterra in August made a big difference to the cash flow and helped to mitigate the impact of the drop in the advance rate at that time.

Current Situation

Pasture cover is 2,440 kg DM/ha, and with current pasture growth rates of 35 kg DM/ha/day cover is holding.  Cow condition was independently assessed at the end of May as being a BCS of 4.3, (excluding the in calf heifers).
In addition to the 364 MA cows and in-calf heifers for the coming season, there are 4 empty heifers, (for meat), 133 rising 1 year old heifers and 9 rising 1 year old bulls on farm. 
Soil moisture levels are still reasonable for this time of year as rainfall for May was below average.

Calving and reproduction

•    The calving pattern for the 23-24 season was 52% after 3 weeks, 73% after 6 weeks and 91% after 9 weeks. This is similar to the previous season and is till slower than ideal.
•    Relied solely on Halter information to identify cows in heat this season, which made for a stress free mating period.
•    Submission rates for the first 3 weeks were 84%, (as per MINDA), which is up on last season, (80%).
•    With heat detection for mating easier, the bulls were removed from the herd early and 10 days of AB with short gestation bulls was carried out.  This meant mating finished 8 days earlier than planned on December 24th. It also means fewer bulls need to be reared as herd bulls in the future.
•    Actual 6 week in calf rate as per MINDA is 65%, slightly better than last season (62%).
•    Last season, only cows identified as possibly empty on Halter were pregnancy tested. There were no late empties identified in the winter and early spring so this process was followed again in February. This has significantly reduced the cost required for pregnancy testing.
•    The not in calf rate, (as per MINDA) was 13%.
•    Fewer bulls are needed now with lower yearling heifer numbers for next spring and the plan to use all AB for the herd.

Other points of interest

•    As part of the Welfarm programme the herd body condition score was again assessed four times over the year. (Pre-calving, pre-mating, mid-February and at drying off). 
•    In addition the whole herd undergoes an annual tail scoring and a locomotion assessment, (lameness). There have only been 7 lame cows all season with 5 of these occurring in one week. They all quickly recovered after being removed from the herd for a short time.
•    Somatic cell count for the season was 196,000 which is up on previous years. This is frustrating as there were fewer clinical cases of mastitis, particularly in the latter part of the season. Investigations as to the source have identified stray voltage coming into the shed but efforts to mitigate this have been unsuccessful so far.
•    An increase in wages paid for the year was the main cause of increases in farm working expenses. Total paid labour on the farm was up about 0.35 FTE. The budget was for the permanent staff member to work 0.6 FTE, but they actually were closer to 0.7 FTE. For 2023-24 have been employing son at part time so labour on the farm has increased by about 0.26 FTE.
•    Weed and pest expenditure was well above budget as a gorse mulcher and operator were hired to clear areas of gorse on inaccessible lahar slopes. This has been money well spent as this area can now be controlled with stock grazing and will be more productive.
•    Debt repayment has continued despite pressures on cash flow from higher interest rates.

Environment

•    There are no outstanding actions on the Fonterra Farm Environment plan. 
•    The tree planting plan was put on hold when interest rates started to rise. 
•    Continued maintenance of existing plantings was done in the autumn.

Management decisions

Strategy and financial

  • Vision to future-proof the business and maintain a healthy work/life balance
  • Have a robust, simple system that profitably delivers high quality specialty milk with a low environmental footprint
  • Share information and always look for new ideas for improvement
  • Excellent financial management. Take ownership of information by preparing own budgets, which are then monitored and analysed frequently
  • Prioritise debt repayment as cash flow allows to maintain a strong balance sheet
  • Enjoy a challenge, (organic farming)
  • Constantly benchmark the farm operation to find ways to improve its profitability

Environment

Farm status
The approach is to have a certified organic farming system that is sustainable and enhances soils, pasture and livestock. We have no compliance issues, and the number of international organic audits we have in a season strengthens our ability to market our product.

Farm environment plan
The farm environment plan was completed in the autumn of 2021. There are no actions required with the last of the required riparian planting being completed in 2021-22.The farm has had a tree planting plan done in 2022-23 to provide guidance for all future plantings. The plan will be enacted over several years, but will provide more shade, shelter and food for the stock.

Water use
We have strong awareness of the value of water. Peak daily use is 35 litres of water/cow in the cowshed. There is a focus on minimising water consumption.

Soil testing, soil fertility and N applied
The farm recently undertook a new strategy for its nutrient management plan on farm. The farm is using biological fertilisers to help unlock the nutrients that are already available in the system by applying fish & seaweed fertiliser.Typically the N,P,K,S percentages of these fertilisers are 2.2%N, 1.55%P, 0.28%K and 0.18%S. The farm currently applies 2 passes of the liquid fertiliser per season meaning a small amount of N & P are applied during those times but the main idea to provide organisms a feed source. All liquid fertiliser is spread using own machinery and weather forecast is monitored before applying.Improvements in topsoil structure and worm populations were already being observed just six months after changing to biological fertilisers and mixed pasture species.There has also been less ponding and pasture loss following heavy rainfall in the winter and spring with the improved soil structure.Soil testing is carried out every 2-3 years to monitor the soil fertility status and compare with pre organic levels. Soil tests being done are both traditional and those that evaluate the soil microbial health.

Shelter and riparian planting
100% of waterways are fenced. Extending areas of riparian planting and of shelter belts is ongoing. Maintenance of existing plantings includes manual release of trees and shrubs and replacing plantings that are lost to flooding or pests, (mainly rabbits).

Farm policy and infrastructure

  • The farm policy is to maintain a self-contained system with a closed herd and farm within certified organic guidelines using a low input farming system, (farm production system 1).
  • The farm is in two, not quite contiguous, blocks, 113 effective ha that is predominantly for 350-360 milking cows and 55 ha for support.
  • Approximately 114 weaner heifers and bulls, 104 R 2 heifers and 14 R 2 bulls, (until summer), are grazed on the 55 has. This area will provide provide winter grazing for the herd, grazing for 54 yearlings from a second organic farm for 52 weeks, plus all the hay, (500 bales 15 bale equivalents), for the herd and young stock. As the 55 ha are not quite adjacent to the milking area, reducing the peak cows milked from about 390 to 350-360, and having additional young stock there, greatly reduces the need to move milking cows along a public road.
  • Dairy shed is 36 a-side herringbone.
  • 1.8 km from the shed to furthest paddock.
  • Races, fencing and water supply are excellent.
  • The farm water is part of a water scheme that draws form a river on the boundary. It is gravity fed to the farm.
  • Motivation to make the most out of a self-contained system and make decisions accordingly.
  • Use the spring rotation planner developed from feed budgets and expected calving report.
  • The herd usually goes to once a day, OAD), milking in early to mid-December for lifestyle reasons. OAD will be used strategically earlier in the season to reduce stress on stock, pasture cover and people if necessary.
  • Monitor farm physical KPI's frequently and base decisions on this. eg pasture cover, growth rates, cow condition and young stock liveweights.
  • Maximise income from livestock by having certified disease free organically grown livestock.
  • Continue to become familiar with the Halter technology to gain full benefit from it. 2023-24 will be the first full season with the technology.

Feed

  • No extra feed is purchased so autumn culling and dry-off dates are determined by autumn feed budgets and cow condition.
  • Surplus pasture from the 168 ha is harvested as hay. This amount varies each year but is usually between 450-550 bales - 15 bale equivalents, (about 100-120 t DM t DM).
  • 45 t DM minimum is carried through each year for use in the winter and spring and the balance is used for summer and autumn.
  • Weeds are not a problem so control is largely mechanical – topping, grubbing or pulling. A new organic approved spray has recently been used with success on gorse along the river banks.
  • The farm has had 3 years following a regrassing plan based on regenerative pastures using mixed pasture species. This has worked well and most of the farm has now been regrassed, so for the 2023-24 season the plan is to do no regrassing or cropping and just use some deferred grazing which will contribute to some pasture regeneration.
  • Previously the spring planted pasture, was treated as a summer crop which then morphed into permanent pasture. The seed mix included 27 species of which 1/3 are annuals and 2/3 are perennials. The autumn sown pasture was a 19 species mix.

Herd

  • The approach to animal health is on prevention rather than cure and is based on good observation.
  • The farm has good infrastructure so things like lameness are not an issue.
  • Being organic and certified disease free provides an opportunity to sell in calf surplus cows at a premium and meet a demand for well recorded Jersey bull calves.
  • All 2020 born animals and younger attract a $100 organic premium at slaughter.
  • The breeding policy is to maintain a high BW Jersey herd registered with the Jersey NZ breed society.
  • Mating is for 11 weeks with no intervention, using AB for 6 weeks and bulls for 5 weeks.
  • Herd testing is four times a year and DNA testing on calves is done each year.
  • 90-100 replacement heifer calves and 14 bull calves are reared each year.
  • The milking herd is run in one mob.

People, health and safety

  • Effort is put into employing the right people because they can help us develop our systems. We have a great team, both on farm staff and our wider team of rural professionals.
  • Staff contracts are based on hourly rates with time sheets kept so staff can be paid for the hours worked each week.
  • Work/life balance is valued so having regular time off farm is incorporated into farm work rosters for both staff and farm owners.
  • Labour on the farm equates to 2.35 , made up of 0.6  permanent paid external labour and 1.75 unpaid owner and family input.

Budget revision following milk payout drop August 2023

Overview
August 15th, 2023

The forecast milk price for Fonterra Organic farmers has not been lowered yet. By July 2023, organic suppliers were advised the contracted sales for organic milk products for the 23-24 season were already up on last year so this has probably cushioned the immediate impact of the latest GDT figures. At this stage little has changed in our budget for the following reasons:

  • The budget for 2023-24 was been done on a $7.60/kg MS organic milk advance rate, which is about $1.00/kg MS lower than last year’s advance.
  • The farm’s cost structure is already quite low so there is very little scope to remove costs from the farm system.

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

Keep up to date with your cash flow information and maintain good communication with your bank, accountant, and key suppliers of goods and services, so there are no surprises and any issues can be dealt with proactively.

The focus, as always, is to try to use resources as efficiently as possible and minimise waste.

Ensure pasture grown is fully utilised.

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

The industry has gone through these troughs before and will rebound.

Many are in the same boat, so look out for each other.

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

It is not just affecting farmers but also those who service the rural communities. You will need them in the long term so good communication and continued support are important.

 

Strategy for managing a dry summer

October 20th, 2023

How has the season been so far?

  • 2023 has been a fantastic season so far. Having lower stock numbers and all young stock on including 47 from the second farm is working well.
  • Production is up 9% on last season despite lower cow numbers – 345 compared with 370.
  • Halter is fully integrated into the farm management and is really assisting with decision-making.
  • Soil moisture is good for this time of year.  This last month has seen regular rainfall which has negated the effects of the strong westerly winds that have been the norm for the last 6 weeks.
  • Pasture cover is currently about 2500 kg DM/ha which is up on last season. Surpluses are just starting to occur and paddocks are being dropped from the round ready for hay or deferred grazing.

What are cash flow forecasts looking like? How will a drought impact this?

  • Cash flows are on target due to the higher than budgeted production and a record high final payment for organic farms.
  • A drought will impact our final milksolids but at this stage with being 9% ahead for production things are still on track to meet our target of 115,000 kg MS as at least some summer dry has already been factored into the budget. Costs shouldn't change much as no feed or nitrogen is purchased.
  • The current outlook for markets and prices for organic milk products is still positive which is another plus.

Has the NIWA El Nino forecast changed how you are approaching this summer?

Not really. The NIWA forecast for our area for the next couple of months is still for normal rainfall. That said, we always have dry summer strategies in our overall farm plan.

What strategies do you have this season for when a drought comes early, late, or is prolonged?

  • As a system 1 organic farm the key strategy for managing drought conditions is pasture diversity, active soil biology and longer round lengths which result in higher soil moisture holding capacity and more resilient pastures.
  • Monitoring weather forecasts, pasture cover, growth rates, soil moisture levels and cow condition is continuous. 
  • Then it is a matter of deciding when to go once-a-day milking, (which already is early December for lifestyle reasons), cull cows and or dry off cows.  
  • Culls are always booked in for mid - February which is the earliest that empties can be confirmed.
  • Care is taken to ensure that no matter how the season unfolds, cow condition and pasture cover for the following season is not compromised.

2024-25 Forecast budget

Budget last updated June 2024

INCOME $TOTAL $/KgMS $/COW $/HA
Net Milk Sales
Milk revenue is based on 115000 kg MS @ an advance price of $8.30/kg MS, 104,524 kg MS @ a deferred price of $1.70/kg MS and a Fonterra dividend of $0.30/share on 130,000 shares. The milk prices used are as per Fonterra notification late May 2024 of $10.00/kgMS for Organic farm supply and are May paid June prices, (this farms financial year is 1 July to 30 June). This is net of the DairyNZ levy, (3.6 c/kg MS). Milk income: 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.
1,164,400 10.13 3,327 6,931
Net Dairy Livestock Sales
Based on approx 66 MA Jersey cows and empty R 2 heifers @ $560, 9 R 2 bulls @ $1000, and 260 Bobbies at $20. Any animals born after 2020 are sold as organic meat so receive a premium of $100/head at slaughter.
56,700 0.49 162 338
Other Dairy Cash Income
Rent from staff for housing housing plus grazing for 52 yearlings, from second organic farm near the coast, for 52 weeks
49,300 0.43 141 293
NET DAIRY CASH INCOME 1,259,800 10.95 3,599 7,499
EXPENSES $TOTAL $/KgMS $/COW $/HA
Wages (incl. ACC)
This is the gross wages including employee house allowance for 0.6 FTE permanent staff member, (25-30 hours per week, most weekends off). In addition there is 0.45 FTE for one employee from June till mid December.
92,400 0.80 264 550
Animal health
Focus is on prevention rather than cure. The approach to animal health is kept simple and is based on good observation. The farm has good infrastructure so things like lameness are not an issue. SCC for 2023-24 was 192,000. Calving is Jersey on Jersey so there are fewer calving related difficulties/vet visits. Standard minerals are used and required vaccinations are carried out, (Lepto). BVD not a problem - milk test is used. Calf horn de-budding is included in animal health costs. Johnes testing is done annually from herd test milk samples. Incidence is low now and there are no clinical signs of the disease. As part of being fully organic certified and as a participant in the Well Farm programme, the herd will be independently condition scored, (by vets), four times a year. BCS at end of May 2024 was 4.3.
37,100 0.32 106 221
Breeding and herd improvement
Includes the cost of DNA testing calves 90-95 calves and herd testing. Mating is AB for 6 weeks followed with bulls for 5 weeks. 9 R 1 bulls are used on the heifers. With information for heat detection now suppliled by Halter AB is used for the herd for the whole of mating. The enot in calf rate for the herd for 2023-24 was 13%. Also included in this expense is registration of about 80-85 heifer calves with the breed society Jersey NZ.
26,700 0.23 76 159
Farm dairy
Includes detergent, rubberware, (replaced once per year), and miscellaneous shed expenses. Standard cleaning procedures and recommendations for detergent use are followed.
4,400 0.04 13 26
Electricity (farm dairy, water supply)
Focused on efficient processes so good cow flow and efficient routines have decreased milking costs. Have varivac fitted to machines so electricity usage is more efficient. This includes the cost of access to the water scheme that provides all the farm water via gravity feed. Shed/farm Power is $10,000 and water supply is $6,300.
16,800 0.15 48 100
Supplements made (incl. Contractors)
Only genuine surpluses harvested off the 168 ha. For 2024-25 the budget is based on 400 bales of hay, (15 bale equivalents) @$15/bale for an external contractor doing the baling plus about $1,000 for raking.
7,000 0.06 20 42
Calf rearing
This is for the costs for bedding and sundry equipment. The plan is to rear 80-85 replacement heifer calves and 9 bull calves. Calves are reared on colostrum, whole milk, pasture and hay. This has been the practice for the last 4 years and it has worked well.
1,600 0.01 5 10
Young and drystock grazing
Not required as all young stock - approx 90 weaner heifers and bulls, 81 R 2 heifers and 9 R 2 bulls, (until summer), are grazed on 55 ha of the farm. This area also will provide winter grazing for the herd, grazing for 52 yearlings from a second organic farm for 52 weeks, plus all the hay, (400 bales 15 bale equivalents), for the herd and young stock. The 55 ha are not quite adjacent to the milking area so having additional young stock there greatly reduces the need to move milking cows along a public road.
0 0.00 0 0
Fertiliser (incl. N)
Fertiliser for the farm is based on organic fish, seaweed and humates. A fit for purpose spreader is owned so spreading is all done in house. Cost includes 8,154 for soil microbial, pasture and soil testing. This testing allowance is quite high as there is always something new to investigate in an endeavor to learn more about the organic soil system and to help evaluate actions taken.
28,200 0.25 81 168
Regrassing & cropping
Much of the farm has now been planted with multi species pastures and a small area continues to be cropped each year. The 2024-25 plan is to plant another 6 ha of multispecies summer crop, which will morph into permanent pasture. Some defered grazing will also be done again this coming season, targeting the previous years crop. The budget also allows for some seed for a bit of remedial reseeding should there be damage during periods of very wet weather.
4,000 0.03 11 24
Weed and pest
Weeds and pests are not usually a problem. Weed control is a combination of manual control or an organic spray. The spray is mainly used for gorse on the river boundary. This cost also includes equipment and supplies for organic pest trapping and control. Included is an allowance for more gorse mulching.
5,800 0.05 17 35
Vehicles & fuel
Do most of the harvesting and tractor work so includes the fuel costs associated with that. Includes $16,700 for fuel.
26,200 0.23 75 156
R&M (land, buildings, plant, machinery)
The farm has been well maintained over the past years and buildings and infrastructure are in good condition. Very little maintenance is planned but have included $5,100 for buildings, $4,800 for fencing and $1,000 for tracks and drains. A lot R & M is done in house, so reliance on contractors is minimal. This cost includes the maintenance of the harvesting machinery owned and cowshed plant maintenance of about $3,500. An allowance of $5,800 is in the budget to cover maintenace of existing riparian plantings, and for the purchase of about $1,800 worth of trees and plants. Spending on riparian areas has been scaled back while interest rates are high.
41,100 0.36 117 245
Freight and general farm expenses
Includes costs for protective clothing, bio-security supplies, (disinfectant, brushes etc), rubbish disposal, dead cow removal and bio-security levy, (now $0.008/kgMS).
5,700 0.05 16 34
Administration
Do own GST, PAYE and budgeting. Includes administration and accounting fees for two financial entities, $2,000 for Organic auditing fees which is an annual requirement for Organic certification, plus travel costs relating to visiting other organic farms and organisations as part of continued learning about organic farming.
26,700 0.23 76 159
Insurance
Includes: milk losses, loss of cows, public liability and property. This is something that is reviewed annually to make sure it is still relevant.
22,300 0.19 64 133
ACC
All cover is with a private insurer and is not included in the farm budget.
0 0.00 0 0
Rates
As per rates demand.
16,700 0.15 48 99
Halter
Halter subscription costs for 350 cows, paid in advance in one lump sum, so get one month free.
35,000 0.30 100 208
TOTAL FARM WORKING EXPENSES 397,700 3.46 1,136 2,367
CASH OPERATING SURPLUS 872,700 7.59 2,493 5,195

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 end the season with 2 fewer R 1 heifers, 20 fewer 2 R 2 heifers and 20 more MA cows. IRD NMAV, (National Average Market Values), for 2024 are used to estimate the value of change in dairy livestock numbers. Net livestock income , (cash and non-cash), equates to $0.53/ kg MS.
4,900 0.04 14 29
Labour adjustment
This is for 1.75 FTE, (3600 hours) of unpaid labour input from the business owners and family.
103,000 0.90 294 613
Feed inventory adjustment
Expect to have no significant difference in opening and closing feed on hand for the season, (40 t DM of hay opening and closing).
0 0.00 0 0
Depreciation
As per financial statements for 2021-22 year, with allowance made for two more years depreciation. There have been no significant asset purchases in the past year and none are planned for the 2023-24 season.
30,000 0.26 86 179
DAIRY GROSS FARM REVENUE 1,275,300 11.09 3,644 7,591
DAIRY OPERATING EXPENSES 530,700 4.61 1,516 3,159
DAIRY OPERATING PROFIT 744,600 6.47 2,127 4,432

Previous season reviews

2021-22 season review

Financial KPI's* Budget Actual
Milk Production (kgMS/ha) 774 762
Milk Production (kgMS/cow) 325 326
Net Dairy Cash Income ($/kgMS) $8.06 $10.46
Total Farm Working Expenses ($/kgMS) $2.28 $2.95
Cash Operating Surplus/Deficit ($/kgMS) $5.78 $7.51
Gross Farm Revenue ($/kgMS) $8.13 $10.35
Operating Expenses ($/kgMS) $3.20 $3.87
Operating Profit ($/ha) $3,811 $4,939

*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 2021-2022 budget v actuals

Comments

  • The 2021-22 winter and spring were wetter than the previous two season but this was not such an issue as it has been in the past.  The benefits from having multi species pasture and better soil aeration were evident with less ponding in the winter and spring despite some heavy rainfall events.
  • January was drier than average with only 16% of the average rainfall. February 2022 started with 2 heavy rainfall events which saw about 280 mm of rain fall over Waitangi weekend followed a week later with another 100mm.
    The herd went on to once a day milking on December 11th, (the first day of the school holidays), which is similar to last season. This was for lifestyle reasons and to benefit the cows.
  • Even though the pasture cover was reasonable in February 50 culls were gone by March 1st, to avoid the risk of being caught with too many cows on farm due to lack of space in the freezing works. This left 324 cows in milk for the autumn.
  • The herd was still dried off on May 18th based on body condition score and pasture cover. Days in milk for the farm was 247 which is 2 days less than the previous year. Pasture cover at the end of June was 2,600 kg DM/ha which is on target for PSC, (July 21st). At the same time, body condition score, (independently assessed), was 4.75 for MA cows and 5.5+ for the in-calf heifers. The cows are slightly behind last season for BCS but it is mostly the later calving cows so with time and some preferential feeding, and they should be at BCS 5.0 by calving.
  • Pasture harvested for the season is estimated at 11.3 t DM/ha. This is 7% less than the 2020-21 season.
  • Operating profit for the season is estimated to be $4,939 /ha which is up 32% on the budget of $3,755 and is similar to the 2020-21 season.
  • The milk price received to the end of June was $9.87/kg MS, which is $2.41 up on budget. Farm working expenses for the year were $2.95/kg MS, $0.66/kg MS up on budget. The majority of this increase, ($0.51/kg MS), was due to an increase in discretionary R & M spending.
  • Debt repayment has continued to be a key focus, particularly with this good financial performance.

    Other points of interest
  • The date that spring pasture growth rates exceeded demand as 2 weeks later than usual. Supplements were 2 weeks later being shut so even though the usual 40 ha of hay was harvested the crop was lighter as the area was not out of rotation for as long. 92 t DM was harvested compared with 106 t DM the year before.
  • The decision was made to plant 10 ha in the spring with a 27 multi species summer crop mix. This provided good summer feed and the area then morphed in to permanent pasture so did not need re-grassing in the autumn. As per budget 15% of the farm was also re-grassed in the autumn with 19 multi species pasture mix.  The re-gassing/cropping costs were $0.6/kg MS up on budget.
  • A large portion of the farm is now in multi species pasture.  This pasture has performed well over the dry autumn.
  • This farm did not experience any facial eczema last autumn even though it was prevalent in the surrounding district.  This could be due in part to the multi species pasture which seems to provide a better canopy and potentially lower soil temperatures.
  • Young stock appear to be thriving on the multi species pasture, with the R 1 animals at 225 kg live weight by May 31st, and growing at 0.7-0.8 kg LW/day.
  • Flooding from the February deluge did not impact pasture but did affect some fencing. The organic certified posts that had been forward purchased, (due to limited supply), were all used to replace tanalised posts that were displaced.
  • Calving rate was 49% after 3 weeks, 71% after 6 weeks and 93% after 9 weeks from an 11 week mating period and no intervention. This slower calving rate was due to a poor mating in the spring. It was due to “human error”. The reason for this has now been identified and corrected so the 2022 mating has been much better.
  • Submission rate this season was 75% after 3 weeks with no intervention and after two seasons of slow calving rates. 99% of all cows cycled with no intervention. The six week in calf rate this year is 61%.
  • Pregnancy testing via milk sampling was done late January. The not in calf rate was 15%, which is up on the previous year of 10%.
  • Cow wastage was higher this season with 3% deaths recorded. Five cows were lost, (four of them over a two week period). This is first incidence of this disease in over 10 years.
  • The wetter spring saw an increase in the number of mastitis cases. There were 64 cases recorded for the whole season.  The incidence of lameness was higher in the spring as well, with 24 cases recorded. These mostly were minor stone bruises or stones in the hoof. Prompt identification and removal of the stone provided a quick and easy remedy.
  • The farm has signed up to WelFarm with their local vets. This is a New Zealand web-based assurance programme designed to help dairy farmers better understand key animal health markers and how they impact on the optimisation of on-farm production performance. The costs of this is included under animal health, and includes condition scoring the herd 4 times a year, an annual tail score, gait analysis as part of lameness assessment as well as interpretation of MINDA animal health information.  It provides an external animal welfare endorsement which complements other quality assurance information needed for organic certification audits.
  • The farm is also part of the stage 2 pilot programme for Calm the Farm which is aimed at helping farmers manage the transition to regenerative agriculture.

2020-21 season review

Financial KPI's* Budget Actual
Milk Production (kgMS/ha) 774 792
Milk Production (kgMS/cow) 325 326
Net Dairy Cash Income ($/kgMS) $8.81 $9.52
Total Farm Working Expenses ($/kgMS) $2.78 $2.65
Cash Operating Surplus/Deficit ($/kgMS) $6.03 $6.87
Gross Farm Revenue ($/kgMS) $8.75 $9.19
Operating Expenses ($/kgMS) $3.63 $3.52
Operating Profit ($/ha) $3,965 $4,493

*These KPI's are based on cash book 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 2020-2021 budget v actuals

Comments

  • The 2020-21 season was the first full season since becoming fully certified as Organic and will be remembered as one where both the payout and the pasture harvested were above expectations.
  • Operating profit for the season is estimated to be $4,456 per ha which is up 12% on the budget of $3,965. This is 46% higher than the DairyNZ estimated profit for Taranaki Owners for the 2020-21 season of $3,084 and is the highest profit for the farm since 2013-14. It is a very pleasing result and an endorsement of the business philosophy to make the most of a self-contained farm system by sustainably and ethically producing quality high-value specialty milk.
  • The cash operating surplus was $124,000 more than budget, a combination of income being $127,000 above budget while maintaining cash costs close to budget,(just under budget by $8,181 total).
  • Despite a much slower calving rate than the previous year, milk production was 3,122 kgMS up on budget for the season. This is a direct result of a 10% increase in pasture harvested for the year, (total for the year was 12.3t DM/ha, which is the highest for the farm over the past 6 years). 
  • The milk price received to the end of June was $9.08 per kgMS, which is $0.73 up on budget. This was the main contributor to the increase in cash operating surplus.
  • Farm working expenses for the year were $2.65/kgMS, slightly less than the $2.78 budgeted. The main variation in expenses was a 30% decrease in fertiliser costs as a result of a change in fertiliser policy following a review of the farm fertiliser programme. This was offset by a 26% increase in repairs and maintenance costs as more discretionary work was done with a better than expected cashflow.
  • Debt repayment has continued to be a key focus, particularly with this good financial performance

 Other points of interest

  • The calving rate was 50% after 3 weeks, 62% after 6 weeks, and 90% after 9 weeks from an 11-week mating period and no intervention. This slower calving rate was due to poor mating in the 2019 spring – the first season of DIY so was due to human error. Unfortunately, operator error was not fully corrected until after the 2020 mating so the 6-week in-calf rate was only 59%.
  • The slower calving rate plus good pasture growth resulted in an early spring surplus. Instead of making silage, the decision was made to trial remaining on a 24 day round. This is in keeping with regenerative pasture management principles and meant higher residuals were left. This resulted in higher pasture covers in October and with the benefit of hindsight this decision was a good one given November was very wet with rainfall 236% up on average, and growth rates were lower than average. By late December pasture covers were back to normal.
  • 106 t of hay was made which was similar to what was in the budget, however an additional 4.68 ha of deferred grazing was trialed on a multi-species pasture, (sown autumn 2020). This worked very well fed as a crop, which the herd found palatable. The pasture regrowth was excellent so this pasture management strategy will be used again in the coming season if pasture surpluses allow.
  • The herd went on to once-a-day milking on December 12th, (the first day of the school holidays), which is similar to last season. This was for lifestyle reasons and to benefit the cows.
  • Pregnancy testing via milk sampling was done in late January. The empty rate for the season was 10%.
  • 40 culls were sent off the farm in mid-February as planned. They had been booked in since December, so even though the feed supply at the time was adequate, the decision was made to send them as planned as space in the works was getting limited.
  • Late summer and autumn pasture growth were excellent and 311 cows were finally dried off on May 25th. Days in milk for the farm was 249 which is 23 days more than the previous season.
  • Pasture cover at the end of the season (May 31st) was well above target at 2,608 kg DM/ha and cow body condition score was 5.0.
  • 25 less replacement calves were reared as fewer AB calves were born as a result of the slower calving rate. This prompted a review of the farms’ replacement rate policy and the decision going forward is to keep it at 18-19% rather than the 22-25% previously.
  • The fertiliser policy has now moved away from organic chicken manure to using biosea organic fertiliser. One application of OSflo organic chicken manure was made in the spring and the first application of Biosea organic fertiliser started in December. Detectible changes are already evident in the soil structure and plant root development.
  • Soil aeration was carried out in the autumn particularly in low-lying areas in the paddocks and paddocks that had suffered the most during the very wet winter and springs of 2016-17 and 2017-18.  So far the results have been spectacular with no ponding in these areas despite recent deluges which would not have been the case prior to aeration.

2019-20 season review

Financial KPI's* Budget Actual
Milk Production (kgMS/ha) 774 653
Milk Production (kgMS/cow) 325 273
Net Dairy Cash Income ($/kgMS) $8.19 $9.45
Total Farm Working Expenses ($/kgMS) $2.57 $3.06
Cash Operating Surplus/Deficit ($/kgMS) $5.63 $6.39
Gross Farm Revenue ($/kgMS) $8.07 $9.58
Operating Expenses ($/kgMS) $3.40 $4.05
Operating Profit ($/ha) $3,614 $3,609

*These KPI's are based on cash book 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 2019-2020 budget v actuals

Comment

  • The farm became fully certified as Organic in September 2019.
  • Operating profit for the season is estimated to be $3,609 per ha, (very close to budget of $3,614!). This is the highest profit for the farm since 2013-14. It is a very pleasing result and an endorsement of the business philosophy to make the most of a self-contained farm system by sustainably and ethically producing quality high value specialty milk.
  • The cash operating surplus was $31,000 less than budget, a combination of income being $30,000 below budget while maintaining costs to close to budget (only up $1,870).
  • Milk production was 20,000kg down on budget due to the drier summer and early autumn and also due to taking 30% of the farm out of the grazing round in the autumn to sow in multi species pasture.
  • The lower milk production was offset by the milk price received to the end of June being $8.96 per kg MS, ($1.23 up on budget). The final organic milk price for 2019-20 has been announced at $10.19 per kg MS.
  • There were a number of smaller costs variations but the main increase over budget was re-grassing costs, which were well up due to the change in the pasture renewal programme. The main savings compared with the budget came from vehicle costs and farm repairs and maintenance.

 Other points of interest

  • The winter and spring were mild although mid-September soil conditions got a bit dry. This was followed by cold and wet conditions until early October.
  • Through spring and early summer there has been a good mix of rain and good hours.  Pasture growth has been normal.
  • The herd went on to once a day milking on December 14th which was nearly two months earlier that last year.  This was entirely for lifestyle reasons.
  • 50 ha of supplement were harvested as hay well, up on budget and previous years. There was no turnip crop planted as no contouring was needed to be done this year so this contributed to more pasture surplus.
  • Some small areas that were pugged during the winter were reseeded, which worked well.
  • After much research the decision was made to move away from ryegrass and white clover predominant pastures and 30% of the farm was sown with mixed pastures incorporating plantain, chicory and a mixture of other species. In the autumn. This increased re-grassing costs this year.
  • Calving went well, helped by good weather and well established routines due to having staff that have been with the farm for a long time.
  • The calving rate was 64% after 3 weeks, 85% after 6 weeks and 97% after 9 weeks from a 10 week mating period and no intervention.
  • Submission rate for 2019-20 was 86% after 3 weeks with no intervention. However the non- return rate is 52% which is lower than previous years, so the 2020-21 calving could potentially be a bit slower than this season, and there could be fewer AB replacements available.
  • Pregnancy testing via milk sampling was done late January. The empty rate for the season was 11%.
  • The herd was dried off earlier than planned due to the drier summer/autumn as well as having 30% of the farm out of rotation due to re-grassing with multi species pasture. This was the right decision for the farm system as it ensured cow condition and pasture cover going into the winter were on target and the 2020-21 spring would not be compromised.
  • Administration costs were up as a specialist biological soil scientist has been employed as part of the fertiliser policy and pasture species review.
  • R & M was down as the budget had included the repainting of the cowshed in the autumn which was deferred due to Covid-19.
  • The farm has no compliance issues, and the several international organic audits during the season strengthens their ability to market their product.
  • Fertiliser applied was 2.5 t per ha of Osflow in 2 applications.

2018-19 season review

Financial KPI's* Budget Actual
Milk Production (kgMS/ha) 774 743
Milk Production (kgMS/cow) 325 324
Net Dairy Cash Income ($/kgMS) $6.76 $6.40
Total Farm Working Expenses ($/kgMS) $2.31 $2.72
Cash Operating Surplus/Deficit ($/kgMS) $4.46 $3.68
Gross Farm Revenue ($/kgMS) $6.71 $6.55
Operating Expenses ($/kgMS) $3.24 $3.63
Operating Profit ($/ha) $2,684 $2,173

*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

Comment

  • The 2018-19 season was a lot more like a “normal” season compared with the previous 3 years.  Winter was reasonably mild, with not too much rain and the spring and early summer had a good mix of rain and sunshine hours. More supplement was harvested than budgeted and despite a prolonged dry autumn, production for the season finished only 4% below budget.
  • The operating profit per hectare is estimated at $2,173 which is 18% below budget, but is still well up on the DairyNZ estimate for the region of $1,635 per ha.
  • Milk income was down on budget as the milk price received of $6.12 was $0.33 less than budgeted and milksolids produced was 5,243 kg MS down on budget.
  • Livestock income was down slightly largely because the budget hadn't fully taken into account the heavy culling done the previous year and had over-estimated the number of cows to be culled.
  • Total farm working expenses were $339,069, ($2.72 per kg MS). This is up $40,000, (14%), with half this increase coming from R & M and vehicle repairs, and $9,400 from increased fertiliser spending.

 Other points of interest

  • The cows calved in very good condition, having been dry since late December 2017. Pasture cover at calving was very good as well and both contributed to a very good mating result for the 18-19 season. The empty rate for the season was 7%.
  • The prolonged dry period form mid- January did impact cow milking days in the latter part of the season. Culling was done in early February and the herd went to once-a-day milking on February 6th, much earlier than usual. A few cows were dried off in April but 250 cows did continue to milk through until early May.
  • Excellent pasture growth rates in May meant the farm started the winter with pasture cover above target at 2400 kg DM/ha. By planned start of calving 2019 the cows were body condition score 5.0 and the first calving heifers were 5.5+.
  • Some of the R & M increase related to changes required to vat size due to the upcoming full Organic accreditation status in spring 2019. As an organic farm, milk pick up is every second day so Fonterra replaced the vat with a larger vat in May, meaning additional cost to disconnect the old and reconnect the new vat, including some changes to the pipes. None of this was budgeted for.
    Some unforeseen breakdowns of milk plant and vehicles added to R & M and vehicle costs.
  • Discretionary spending was carried out on upgrading milking cups and clusters so that they better fitted the jetter lines that had been upgraded a couple of years earlier.
    Animal health spending was up $6,500 on budget. This is one area that is really hard to budget for as there are new remedies becoming available all the time for organic farms. Also being organic, remedies need to be ordered in, so more supplies are stored on farm.
  • Soil tests done after the budget was prepared resulted in elemental sulphur prills being added to the fertiliser as well as a little more fertiliser being applied.
  • The farm became fully accredited as Organic 1st September 2019.

2017-18 season review

The first half of the 2017-18 season was defined by extreme weather conditions.

The very wet winter and spring and associated reduced pasture growth and utilisation saw the herd put on once a day in early October. 

This was followed by a sudden change to extreme dry with less than 20% of the average rainfall falling from mid-October to early January.

Despite being on once a day milking since October and culling 14 % of the herd, the on farm situation in late December was critical, with very low pasture cover, no supplements made on farm and limited options for purchasing supplements due to the constraints with the conversion to Organic supply. 

The decision was made to dry the whole herd off in late December with production at 41% of budget. This decision was not made lightly but was helped by having a strong balance sheet and good support from the bank.

The farm situation as at 31/5/2018 had the whole herd in condition score of 5.4+ and pasture cover of 2,900 kg DM per ha.  Wintering 2018 was planned to be all grass with maintenance levels of feeding.

Given the season, the limitations for importing feed as an organic farm and the farm position going into the 2018 winter, the decision to dry off so early was definitely the right one for this farm, the people on the farm and the animals. It means that the physical effects of the poor season will not carry over to the 18-19 season, (or beyond).

Click here for PDF of 2017-18 budget

2016-17 season review

Financial KPI's* Budget Actual Physical KPI's 2016/17
Net Dairy Cash Income ($/kgMS) $5.00 $6.38 Milk Production (kgMS/ha) 769
Total Farm Working Expenses ($/kgMS) $1.89 $2.30 Pasture and Crop Eaten (t DM/ha) 12.4
Cash Operating Surplus/Deficit ($/kgMS) $3.11 $4.08 Imported Supplements & Dry Cow Grazing (% of total feed eaten) 0%
Gross Farm Revenue ($/kgMS) $4.93 $6.41 Six Week In-Calf Rate (*A=Actual E=Estimated) 64% E
Operating Expenses ($/kgMS) $2.76 $3.21 First Calvers on Farm End of Season(% of first calvers at start of season) 81%
Operating Profit ($/ha) $1,809 $2,455 Milksolids per Labour Unit (kgMS/FTE) 49,819

*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

An unplanned staffing shortage in the autumn (2 IC off for 10 weeks due to a non-farming related accident), that also coincided with a difficult family time, put extreme stress on the business.  Employing and successfully integrating new relief staff at this time was made easier having robust systems in place. Keeping things simple made it easier to cope when adversity struck.

We farm for profit and sustainability so our budget can cope with an 8 % variation in milk production. Operating profit would still have been over 1300 $/ha without the payout increase and including the $32446 increase in FWE.

Revenue was up due to the increase in milk price and better than expected stock prices, and most of the increase in farm working expenses was either a conscious decision to do catch up R & M or dealing with unplanned breakdowns.

Any additional cash surplus from this year has been used to reduce debt and strengthen the financial position of the partners.

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Last updated: Aug 2023
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