Budgeting, Tatua Supply Farm (East Waikato)
6 min read
Located north-east of Morrinsville, this 66 ha Tatua supply farm peak milks 210 FJX cows with a production target of 100,000 kg MS/year. Their vision prioritises family, a balanced lifestyle, top-notch animal health, and high environmental standards while achieving excellent financial performance. Engaged in projects like riparian planting and the Piako Catchment forum, they work on reducing methane emissions and purchased nitrogen surplus.
The philosophy of this Tatua supply farm business has been to grow wealth through being profitable and sustainable. The 2023-24 season is the first year with a contract milker which will allow the owners to further develop one of their other goals which is to spend more time with family.
Owner with contract milker (2023-24 is first season)
North-east of Morrinsville, Matamata-Piako district
66 ha effective milking platform, no support block
7/7/2022 MA cows (Heifers 7 days earlier)
3 (11-20% feed imported)
100,000 kg MS/year budgeted, 1,515 kg MS/ha, 476 kg MS/cow
Production (last 3 years):
99,570 kg MS average
How has the season been so far?
October 24th, 2023
What are cash flow forecasts looking like? How will a drought impact this?
Has the NIWA El Nino forecast changed how you are approaching this summer?
What strategies do you have this season for when a drought comes early, late, or is prolonged?
|Financial KPI 2023-24 budget|
|Net dairy cash
|Total farm working
|Dairy operating profit ($/ha)|
|Physical KPI 2022-23 est|
|Pasture and crop
harvested (t DM/ha)
surplus (kg N/ha/yr)
|GHG ( t CO2
in-calf rate (%)
Strategy and financial
Farm policy and infrastructure
People, health and safety
Budget revision following milk payout drop
Overview: August 15th, 2023
Being prepared means we have been better able to deal with the recent declining milk prices. The original budget for the 23-24 season was based on a $9.00/ kg MS pay out, (below the original Tatua forecast), and at 8% interest rate. The current Tatua forecast is now at $9.00/kg MS so a budget revision is not needed just yet. Other factors which have contributed to being in this position are:
Current debt servicing is locked in till March next year, at significantly lower than the 8% we have used in our original budget
At this stage it looks like there might only be one more hike in the OCR so the farms interest costs should come in under budget for this financial year
All major capital expenditure has been done over the last couple of years so there shouldn’t be any big expense surprises
This year some of the farm costs seem to be coming down, (although slowly). PKE for the season is locked in at an average of $300 delivered which is about $100/t cheaper than the year before, (and about 10% lower than budgeted).
What advice would you give to farmers who are either first time sharemilking or farm owners?
Talk with your bank, accountant, suppliers and with your farm owner. There are a lot of people in the same situation.
Look at expenses that are not necessary or where you can make efficiency gains. For example, use the effluent pond more effectively and don’t put urea on those paddocks.
Know your soil fertility on farm and know where you can make cuts in phosphate or lime, for example. An $80 soil test is cheaper than a $500/tonne product.
Cull cows early, like empties/low producers, especially if we are in for a dry summer.
Have a plan about upcoming issues. Try to deal with them early, not the day of or day before, as you will just be setting yourself up for stress.
If you have a question and don’t know where to start, ask someone, as it is likely they have been through a similar situation so you can learn from them.
Your local DairyNZ extension partner is always up for a yarn if you don’t know where to start.
What words of positivity would you give to farmers planning for the coming months ahead?
This is short term and it is not new. Every decade we have a period of unease and stress. The word volatility has been around in the dairy industry since 2007.
Go to discussion group and listen. Most people will be thinking what you’re thinking and a problem shared is a problem halved. Talk with neighbours, partners and industry people. Many of them will have experience of lower payouts and could have valuable advice.
Spend time with your family and friends when you can and do simple things. Go for a walk in your local region, off farm. Pack a picnic and find a path/playground/beach you have never been to. Laugh and have fun on that day. The farm will be there tomorrow but you will have a new memory that didn’t cost a thing.
Do you have any tips and tricks for looking after your people on farm?
If you can, talk to suppliers, and ask them to spread payments for items, so you don’t go into overdraft. Spreading payments over 3-4 months lightens those big bills.
Talk with employees and ensure you are doing what you can to minimise the stress of this time of year.
Our first year with a contract milker is going well. Having good communication from both sides and knowing where we both stand has been key. Giving them the day off by getting back into the shed for the day also helps with easing the stress of calving and wet weather.
|Net Milk Sales
This farm is a Tatua supplier. Milk income is based on receiving a total of $9.00/kg MS, (advance and deferred), on 100,000 kg MS from June 2023 to May 2024. This is net of Dairy NZ 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.
|Net Dairy Livestock Sales
Stock sold will be about 50 MA cows and empty heifers, (30 culls @ $700/head and 20 surplus in calf cows @$900/head), plus 140-150 4 day old calves @ $35/head.
|Other Dairy Cash Income
Rent for surplus house, plus small amount of trading rebates.
|NET DAIRY CASH INCOME||953,600||9.54||4,541||14,448|
|Wages (incl. ACC)
Remuneration for the contract milker. They are responsible for any relief milkers, shed and farm electricity, (including running the effluent pump), shed consumables and providing a motorbike.
Animal health philosophy is to follow best practice guidelines to ensure a high level of animal well being. Preventative treatments, observation, quick response and good record keeping are key for this. Cow manager technology is used to assist with this. Included under animal health costs is mineral supplementation, (done via in line dispenser or dusting), vaccinations for salmonella and leptospirosis, calcium boluses for cows over 4 years old, testing for BVD and Johnes disease for the herd, plus drenches, vaccinations, Cu boluses and minerals for young stock. Mastitis management includes dry cow therapy for the herd and teat sealing all cows and first calvers. The SCC for 2022-23 was 90,000, which was higher than usual in part due to the very wet season. Lameness has been a problem in 2022-23 due to the wet weather.
|Breeding and herd improvement
Mating is for 12 weeks with the last 3 weeks using short gestation, (SG), dairy semen, to give a 10 1/2 week calving period. The first 6 weeks are with AB using premier sires/genomically tests bulls, plus some short gestation beef bulls on the lower 20% BW/PW cows. Bulls are rotated with the herd for 3 weeks before finishing mating with the 3 weeks of SG AB. About 7-10% of the herd is treated for anoestrous using CIDRs. Included under AB and herd testing is DNA testing of about 50 replacement heifer calves. Herd testing covers 3 test over 2 milkings each, unless the herd is on once a day milking, (OAD).
This covers any shed costs that are the farm owners responsibility.
|Electricity (farm dairy, water supply)
Farm owners business share of house power.
|Supplements made (incl. Contractors)
About 200 bales of baleage are made each year depending on the season. The budget has $10,000 for raking, baling and wrapping 200, (180 kg Bales), @ $50/bale.
Have budgeted for 220 t PKE @ 330/t landed. Fed on feed pad.
Budget is for 51 replacement heifer calves to be reared. Calves are reared on colostrum and whole milk plus pasture and meal. All colostrum milk is tested and the best quality is frozen so that it can be used to ensure every calf gets fed gold colostrum with in 12 hours of birth. This provides better lifetime immunity for each calf and results in healthier cows long term. Meal is fed until February, (up to 2 kg meal/calf/day). The calves are then 6 months old and go to external grazing. They are consistently well above industry recommended live weights. Costs cover about 15 t 20% protein meal @ $1,300/t plus bedding and equipment.
|Young and drystock grazing
51 yearling heifers for 52 weeks @ $11/head/week and 51 weaners for 18 weeks @$9/head/week. Includes freight.
|Fertiliser (incl. N)
This includes crop fertiliser, maintenance fertiliser, nitrogen, cartage and spreading. Spreading contractors have GPS precision spreaders. N applied is about 130 kg N/ha on pasture. Applications are at 25 kgN/ha, and there are 5-6 applications per year depending on pasture growth, soil moisture and weather conditions. Products used are N rich urea or PhaSedN. Farm fertility is good, with Olsen P levels of 24-49 and pH of 5.9-6.3. Effluent is applied to about 2/3 of the farm.
|Regrassing & cropping
About 8 ha of maize is grown each year. The budget includes $14,000, ($1700-1800/ha), for seed, cultivation, planting, weed and pest control, harvesting and stacking. Yields are typically 22-23 t DM/ha. Pasture renovation includes regrassing the maize areas after harvest with permanent pasture. Each year paddocks are ranked 1-5 on performance. The worst, (ranked at 1), are earmarked for next years maize crop and under sown with annual rye grass in the autumn, any ranked 2 or 3 are under sown with permanent pasture and any areas that have been affected by drought, pugging or insects area are also repaired. One third of the farm is broadcast with plantain each year which results in about 20% of the sward being plantain in year 1, 10% in year 2 and 5% in year 3. This helps to mitigate N losses.
|Weed and pest
Includes general weed spray for 1/3 of the farm, (the area with the least amount of plantain in the sward), crop and regrassing sprays, and spray for aesthetics, (round buildings, races and riparian areas.
|Vehicles & fuel
Fuel costs are relatively low, (about $5,000), as all feeding is done on the feed pad which is near the dairy shed and feed bunkers.
|R&M (land, buildings, plant, machinery)
R and M for the last 5 seasons have been in excess of $100,000 per year. This season the budget is lower as there is very little that will need upgrading.
|Freight and general farm expenses
Includes protective clothing, dog expenses, rubbish disposal and bio-security levy
Do all own admin, financial management, budgeting and GST. This includes accounting costs and subscriptions for cow manager and HALO systems, (technology for monitoring vat temperature, water pump and supply and effluent irrigation).
Review frequently to ensure it remains relevant.
As per latest rates demands, includes district and regional rates.
|TOTAL FARM WORKING EXPENSES||535,800||5.36||2,551||8,118|
|CASH OPERATING SURPLUS||417,800||4.18||1,990||6,330|
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 similar numbers of stock on hand at the end of the season.
This covers about 0.4 FTE of unpaid owner input for work on farm as well as administration and governance.
|Feed inventory adjustment
Expect to take the same amount of supplementary feed into next winter, (22 t DM of baleage and 130 t DM of maize silage).
Based on 2021-22 financial statements plus allowance for asset purchases and sales for 2 years as well as another two years depreciation claimed.
|DAIRY GROSS FARM REVENUE||953,600||9.54||4,541||14,448|
|DAIRY OPERATING EXPENSES||620,800||6.21||2,956||9,406|
|DAIRY OPERATING PROFIT||332,800||3.33||1,585||5,042|
Want to see how the top operators are spending their money? Are there areas for improvement in your own business where savings can be made? We’ve collected in-depth current season budgets from a number of top performing farms with a focus on lower ‘per unit’ cost of production to help you identify opportunities.
22 min read
5 min read
6 min read
13 min read
6 min read