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Budgeting, Will Green and Sally Eames (Mid Canterbury)

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9 min read

Farm facts Numbers at a glance Mid-season update Management decisions 2023-24 forecast budget Additional resources

Will Green and Sally Eames are herd-owning sharemilkers for Dairy Holdings Ltd on a 264 ha farm near Hinds. Peak cows milked are 1060 Jersey cross cows. The farm operates on a low-input pasture based system, with less than 10% imported feed. The main goal for this business is to maximise profit using sustainable practices. Management prioritises people, pasture, and profit. Regular reviews of financial and feed budgets assists good decision making and efficient use of resources.

Will Green and Sally Eames are 50% sharemilkers for Dairy Holdings Ltd (DHL), on a fully irrigated farm in Hinds. This is their fourth season on the farm, the second as herd-owning sharemilkers.

The farm owners, Dairy Holdings Ltd, have a closed farm policy so all grazing-off or pasture-based purchased feed for each farm is in-house with support land owned by the company. All transactions between the farm and the support blocks are at market rates. The overarching business philosophy is to use pastoral-focused farming and wealth creation principles to build equity.

Farm facts

Business type: 

Herd-owning Sharemilker (50% milk revenue)

Location: 

Near Hinds, Mid-Canterbury

Farm size: 

264ha effective milking platform

Peak cows: 

1060 Jersey cross

PSC: 

29/07/2022 MA cows (24/7/2022 in-calf heifers)

Stocking rate: 

3.9 cows/ha

Farm system: 

2 (< 10% imported feed)

Production: 

365,000kg MS/year budgeted, 1,383kg MS/ha and 344kg MS/cow.

Production (previous 3 years):

347,000 kgMS average

Wintering system: 

90% of the herd are wintered off for 54 days

Numbers at a glance

Financial KPI 2023-24 budget
Net dairy cash
income ($/kgMS)
Total farm working 
expenses ($/kgMS)
Total operating
expenses ($/kgMS)
Dairy operating profit ($/ha)
$3.97 $2.98 $3.41 $1,273
Physical KPI 2022-23 
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 (%)
15.4 88 11.1 80

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

2023-24 mid-season update December 19th 2023

Key Points

  • A combination of good winter pasture growth rates, more cow milking days and excellent herd management from the staff has resulted in milksolids for the season, (and budget), being up 11%, (21,000 kg MS), for the season, from the same number of cows.
  • The budget has been conservatively revised based on 380,000 Kg MS, up from 365,000 kg MS.
  • With the current milk price forecast, (advance payment of $5.50 kg MS to end of April received May), this still shows an increase in milk income of 11%.
  • The farm is well set up heading into the second half of the season with pasture cover 2 weeks ahead of budget.
  • Farm working expenses are tracking at or below budget and could come in under $4.00/kgMS for the season if revised milksolids targets are met.

More detail

The season to date has been going very well, due to a combination of good winter pasture growth rates, more cow milking days and excellent herd management from the staff.  Milk solids for the season is up 11%, (21,000 kg MS) for the season and 18% up for December compared with last season (and 2023-24 budget). Peak cows milked were 1060 which is the same as last season and as per budget.

The budget has been conservatively revised based 380,000 Kg MS, up from 365,000 kg MS. With the current milk price forecast, (advance payment of $5.50 kg MS to end of April received May), this still shows an increase in milk income of 11%.

The farm is well set up heading into the second half of the season with pasture cover 2 weeks ahead of budget. 

Farm working expenses are tracking at or below budget and could hopefully come in under $4.00/kg MS for the season.

The increase in milksolids is in part due to more cow milking days through August and September. A combination of more cows to calve, (19) and a faster calving through August and September, (44 more calved by the end of September), has contributed to the increase cow milking days.

Cows peaked in early October at 1.9 kgMS/cow/day, this is up on the 2022-23 season which was 1.74 kg MS/cow/day.

Calving rate for the 2023 calving was 68% after 3 weeks, 90% after 6 weeks and 97% after 9 weeks.

Winter pasture growth was above average so pasture covers were ahead of targets. The spring growth has been sufficient to maintain pasture covers and pasture quality has been able to be maintained with grazing only. There has been no topping and no paddocks dropped out for regrassing.

18 t DM of milking quality baleage was bought in early October, to fill a small feed deficit. This is about 17 kg DM/cow, which is well below the 120 kgDM/cow budgeted. At this stage there are no plans to purchase anymore.

The majority of the 42 t DM of straw was fed during the late winter and early spring, so more will be purchased in the autumn to replace this before winter as per budget.

Three applications of nitrogen (urea) have been made as per budget, equating to 95 kg N/ha on the non-effluent area and 65 kg N/ha on the effluent area.

Pasture cover and growth rates are sufficient at present so the December nitrogen will not be applied.  This is similar to last season.
Potassium was added to the November nitrogen application based on recommendations following herbage testing. As per plan, winter phosphate was applied.

The three week submission rate was 87% which is slightly down on last season (90%). Pregnancy scanning is scheduled for January 12th
Once a day milking, (OAD), specifically for anoestrous cows was not used this year, but a herd of 50 cows has been mainatianed that are on OAD all season. Cows are moved in and out of the herd depending on their need for preferential treatment.

A total of 354 replacement heifers and 55 Jersey bull calves were reared this spring.  The bulls, which were not in the original budget,  were sold on contract for use as Jersey bulls. This should add about $18,000 to stock sales. 

All young stock are off the farm now.

Current situation

There will be at 1035 cows in milk by the end of December, which is similar to last season. Only 10 cows  have been culled since the peak and 15 dried off. The latter were really thin, so from an animal welfare point of view it was the best thing to do. There is an area that is non effective but suitable for dry cows where they can be grazed without impacting the milking area. If they are early calving they will likely be retained and any late or empty animals will be sold when they are fat and prices are better.

The herd is being fed all pasture and are producing 1.8 kg MS/cow/day. For comparison, by January 12th last season they were down to 1.45 kg MS/c/day.

Pasture cover is 2330 kgDM/ha and increasing slightly each week.  This gives average growth rates of 65-75 kgDM/ha/day with average daily demand at 63 kgDM/ha/day.  The grazing rotation went to 30 days on the 18th December.

Pasture cover is about 2 weeks ahead of schedule which is one reason for not using any nitrogen in December. 

Cow body condition score is at about 4.2 which is usual for this time of year.  The herd will be independently assessed in paddock in early February.  This information will assist decision making about milking frequency, drying off and culling.

Looking Forward

From early December decision making focus is about setting up for next season.

Once late calvers and empty cows are identified decisions will be made about culls. Space is already booked for February so definite culls will go then. 

Then it is just a case for monitoring cow condition and pasture cover and use milking frequency, drying off and finally culling to match feed supply and demand while ensuring targets for the end of May are met for cow condition and pasture cover.

The farm is near the coast so does not have the same number of “heat Stress’ days as much of mid Canterbury.  There is the option to set up a sprinkler system on the yards if the forecast hot weather becomes too much of an issue.

Water supply from the irrigation company has always been very reliable and the risk of water restrictions is lower than for some other areas in Canterbury.

The farm is set up well going into the latter part of the season and provided there are no water restrictions and too many extremely hot days, the production advantage as at the end of December should be maintained, which will be a great outcome for the far

Other points of interest

The staff have done an excellent job of managing the herd this spring. They have done all the milking rosters with only oversight from the herd owner. 

With the automatic cup remover’s only one person is needed in the shed. Milking efficiency for the farm was the highest of all DHL farms with rotary sheds at 86 l/cluster/hour and at the same time the farm had the highest milksolids/cow/day.

SCC is down in part due to the automatic cup removers eliminating over milking. Incidence of mastitis is similar to last season and lameness is down. There has been minimal culling in the past for SCC so this is still one option to further reduce SCC and mastitis.

Currently all costs apart from vehicles are on track to be below or well below budget.  If that continues the farm working expenses should be under $4/kg MS, especially if the final production is up per the revised forecast.
Vehicles are likely to be on budget or up a bit due to the age of the equipment.

Voluntary debt repayments have been made out of cash flow already, and some Fonterra shares have also been purchased.  This means that cash flow is still tight, but being able manage this well demonstrates excellent financial management to the bank so that in future the business will be viewed as lower risk.

There will be about 200 surplus R 2 heifers for sale at the end of the season. The market for these is uncertain so options are being considered if a buyer at the right price cannot be found.  These include leasing for free for one year or culling more heavily from the herd and milking 25% heifers. There are currently 23-24% first calvers in the herd so that is not too much of an increase.

Management decisions

Strategy and financial

Strategic focus
People, Pasture, Profit

Vision
Use pastoral focused farming and wealth creation principles as a pathway to build equity to purchase a farm and build a family home in an area we would like to live, that is of sufficient size to deliver good returns and also provide scale to employ staff and not be tied to the farm every day and so ensure a good life and work balance.

Values
Honesty and integrity. Strong team culture in a safe, fun and prosperous work place. Have active involvement in the community. Leadership and being active in within the dairy industry. Support New Zealand owned co-operatives. A healthy work life balance.

Financial
Prepare budgets and continually review and update them so decisions can be made proactively. Focus on debt repayment so that the good cash flow and equity from the sharemilking business can be used to to help passive investment opportunities. Current equity and cash flow has allowed for the purchasing of additional stock which have been leased out for the 2023-24 season. (This investment is not shown in the 2023-24 budget - that only shows the operational finances for the sharemilking business).

Networking
Identify and interact with peers to continue to learn from them. Encourage and share information with staff and other new entrants to the industry to enable them to progress.

Environment
The farm is committed to reducing purchased N surplus and methane emissions while maintaining profit, through being more efficient with use of inputs and harvesting pasture.

Farm policy and infrastructure

Farm policy

  • Run a low input, system 2 which has a low environmental footprint.
  • N loss to water is minimised by matching feed demand to the grass curve.
    This is done through the strategic use of urea, 170-180 kg DM/cow of pasture baleage and crop straw, (imported from DHL support blocks), to fill winter and spring deficits and by starting to destock early, (obvious culls are gone in early December and empty cull cows are all off the farm by the end of March).
  • 90% of the herd wintered off.
  • Two herds are utilised most of the season, milking twice a day.
  • All young stock off farm by mid-December.

Infrastructure

  • 54 Bail rotary shed with 2 people milking/moving herds.

  • Cup removers were installed in 2022 which has reduced need for 0.5  in the shed.

  • The farm is fully irrigated by two centre pivots with corner sprinklers and K-line irrigators.

  • Races, fencing and water supply are all in good order and regularly maintained. The farm policy is to undertake capital upgrades when milk prices are favourable. To do so ensures infrastructure and resources remain in good order.

  • The farm has good calf rearing and implement sheds.

Environment

Soils and fertility
67% are well drained Brown soils. 33% imperfectly drained pallic soils. Olsen P ranges from 21-57 and pH ranges from 5.6-6.5.

Fertiliser and nitrogen
The plan is to apply 167 kg N/ha, (as urea), for the year over 6 applications to the non-effluent areas, with 3-4 applications up to December then 2 in February and March. The effluent area receives 3 applications of urea. The farm is soil tested every year and fertiliser applied is as per recommendations, (last season 42 kg P/ha applied and 31 kg K/ha).The farm has soil moisture monitors so super phosphate, (P and S), is able to be applied in the winter in June and July when soil moisture levels are suitable. Potassium is applied in September with the September nitrogen application.

Effluent
14 days effluent storage. Effluent is applied via traveling effluent irrigators to 30% of the farm.25% of herd can be stood off paddock on the cowshed collecting yard. This is seldom required and only happened three times in the 2022 season. Wet soil conditions can usually be managed by adjusting the grazing area and increasing feed allocated.

Feed

Pasture
Pasture and crop eaten is 14 -15 t DM/ha. The district average is 16 t DM/ha so the aim is achieve this or better. Improvements have already been seen with better weed control and with improved pasture species from regrassing 10% of the farm each year. Regular and frequent pasture monitoring and feed budgeting are critical to ensuring excellent pasture utilisation. Spring pasture surpluses are managed through taking paddocks out for regrassing. The aim is to control pasture quality without needing to use a mower for topping or harvesting supplements.

Feed policy
The aim is to have very little pasture grazing waste. This is achieved through having a high stocking rate and applying nitrogen early in the season to grow and utilise as much pasture as possible through the spring. A small amount of purchased baleage is on hand to use through the spring for any short term feed deficits. Balancing feed supply and demand from early December to late March through destocking reduces the need to use nitrogen and imported feed in the autumn, which is the high risk period for N leaching in Canterbury.

Supplements purchased
About 120 kg DM/cow of baleage, (126 t DM), for the spring and 80 t DM straw are purchased each year for dry cows though the winter and calving and also for use at drying off.

Supplements made on the milking platform
The plan is to harvest all the pasture with the herd and use regrassing in the spring to manage any surpluses that arise. Very little surplus pasture is harvested each year, (last seasons no baleage was made).

Regrassing
Approximately 10% of the farm is being regrassed each year to improve pasture species. This is done as grass to grass in the spring using a pasture seed mix of dairy diploid ryegrass and white clover direct drilled. The area to be regrassed is not set in stone and is dependent on the farms pasture cover in the spring. If pasture cover is too low at cultivation time then less area will be taken out of the rotation.

Irrigation
77% of the farm is irrigated via centre pivots. The balance of the farm area is split equally between K line irrigation and sprinklers. It takes about 2.5 hours per day shifting the k-lines and sprinklers. Policy is for all staff to be competent in shifting the irrigation so the work doesn’t always fall to one staff member.

Winter grazing
90% of the herd is grazed off for 54 days, with the first cows leaving the farm form Mid-may and the final mob gone by June 1st. The cows return in batches starting 2 weeks prior to due calving dates.The 10% of the herd remaining on the milking platform over winter are those that need extra attention. They are ad lib fed through to calving.

Young stock
The last of the calves leave the farm as weaners by mid-December. They return to the farm mid-July 1st as in calf heifers. The grazing costs include freight, the majority of animal health cost and the provision of bulls for mating.

Herd

  • The herd is Jersey cross
  • Twice-a-day, (TAD), milking is employed for the majority of the season. In the previous 2 seasons milking frequency was reduced to three milking’s every two days from January to give manage staff leave over the summer period.
    With the installation of cup removers and fewer people needed each milking it is the intention that the herds will stay on twice a day through until April when once a day milking will start. The cows will remain on OAD until they are dried off in mid to late May, based on pasture growth and body condition scores.
  • The herd improvement budget allows for 1.2 straws of nominated Jersey high BW, high fertility semen and two herd tests per year, (one milking). No anoestrous intervention products are used, although, prior to and during mating an extra herd of non-cycling cows is milked OAD.
    Once a heat has been recorded they are returned to a TAD herd. After 3 weeks of mating any cow not mated is transferred to the OAD herd. Mating is for 10 weeks with AB is used for 5 1/2 weeks, followed by Jersey bulls for 4 1/2 weeks. The Jersey bulls are supplied by DHL as part of their closed herd policy. 29 bulls are provided and rotated between the 3 herds. 
    Heifers are mated with Jersey bulls, at a rate of 1 bull to 15 heifers, with a mating start date 5 days earlier than the main herd. Submission rate for 2022-23 was 91%.The 2022-23 6 week in calf rate was 80% (Actual) and the not in calf rate was 9%.
  • The philosophy for animal health is to be observant and proactive. Unplanned vet visits are rare, (only 3 this year so far). The SCC for the herd is below 150,000. The herd is blanket treated with short acting dry cow therapy at drying off.
    Lameness is not a problem with the incidence of lameness less than 6%.Included in the animal health costs are Lepto vaccinations for the herd, selenium injections prior to calving and magnesium and mineral supplementation via in trough dosatron.
    Calf animal health includes 10 in 1 vaccinations, a turbo drench which covers coccidiosis plus a pre wean drench and horn de-budding.
  • 320-340 replacement calves are reared. They are reared on milk and pasture and weaned at 80 kg.

People, health and safety

  • The farm has 3 full time external FTE, 0.75 FTE part time plus 1.2 FTE of Will’s input.
  • As an employer it is important to have a good reputation so staff want to come and work for the business.
  • By building a good team culture productivity has increased. Making the financial performance of the farm available to staff so they feel involved has helped this.
  • Weekly team meetings are held and include incident reporting and health and safety training and updates.
  • The farm has good processes and documentation, and is compliant for farm safety and on farm inductions.

Budget revision following milk payout drop

Overview
August 15th, 2023 

With over 70% of the herd calved already, and milk production well up on the same time last season, it is important to ensure the good start to the season is maintained. We have gone into calving with higher than expected pasture cover due to good winter growth rates so the key is to manage the pasture eaten in the first round to ensure no grass is wasted. This can be the difference between a good season and a great one. This year with a lower pay out we need a great season! Other key points for our business are:

  • Sufficient overdraft facilities are already in place as we have always stress tested our budgets with lower milk prices to fully understand what the outcome will look like and have strategies to minimise risk to the business.
  • Our focus is to stay within the farms current lending criteria from the bank even though there is equity that could be used. This ensures the business won’t go backwards. It also demonstrates financial discipline to the bank which is of benefit in the future. The current seasons budget, (re worked on $6.75/kg MS final), shows that debt repayments will continue as planned. If milk prices drop further this may be reviewed.
  • The purchase of a herd to lease out earlier this year is vulnerable to increasing interest rates. At current interest rates there is still about 1.3% leeway before the debt servicing costs exceed the lease revenue.
  • I have taken on a farm supervising role with DHL for 2 days per week. The net cash benefit is small as extra labour has been employed for the farm. The main upside of the off farm work is the personal growth that will come from this, and the long term gains from building my own consulting business. Being off farm 2 days a week also means that the farm staff have more responsibility. With staff roles expanded, they are able to increase their skills without having to look elsewhere for job growth. This helps with staff retention which is a positive for the business.

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

Look for any opportunity to reduce the need for short term finance (OD) as this is at a much higher interest rate than other debt.

  • For SI farmers and sharemilkers the biggest cash flow pressure at the moment is paying winter grazing bills which can stretch over draft levels. Check with graziers to see if there is opportunity to set up a payment plan which spreads the costs.
  • We have always used the Farm source winter power deferral payment option. Again this reduces costs when income flow is low. It doesn’t save costs other than the cost of overdraft which can get out of hand.
  • Farm Source also has 6 months interest free credit on purchases over about $500-600, again this can be used to spread cash flow and reduce the impact on OD.
  • Don’t buy anything until absolutely necessary. If you can delay purchases until the first of the month, this means the invoices won’t be due until the 20th of the following month - again delaying payments until the bigger milk payments are received.

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

Revise your budgets and review expenses to identify savings that can be made without impacting farm performance. You may be surprised at just what can be achieved.
For example:

  • Talk to your accountant about provisional tax liabilities. Moving to payments based on estimates rather than last year’s financial performance will make a big difference.
  •  Also ask you accountant about deferring terminal tax payments for 6 months. IRD interest rates are currently cheaper than Bank OD rates.
  • We are currently reviewing herd testing and may reduce the number of herd tests or even cut it out altogether if there is further pay out decline.
  • We have extra young stock at grazing as a way to increase assets. We can currently afford to keep the extra stock so will do so as it puts us in a better position to take advantage of future opportunities such as farm purchase. However, in some cases it might be prudent to sell surplus stock which would free up capital and reduce costs if cash flow is extremely tight, and not rear extra stock as that would further increase costs.

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

Our staff are all on hourly rates which gives more flexibility with how they work.
We have always made the financial performance of the farm available to our staff. They understand the impact of the lower milk prices on the farm business and are reassured that their employment will not be impacted detrimentally

2023-24 forecast budget

Budget last updated May 2023

INCOME $TOTAL $/KgMS $/COW $/HA
Net Milk Sales
Milk income is based on 50% of 365,000kg MS @ an advance milk price received to May 31, 2024 of $5.90/kgMS and 50% of 365,000 kgMS @ as deferred milk price of $1.42/kgMS. Income is net of the 50% share of the DairyNZ levy of 3.6 c per 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.
1,340,800 3.67 1,265 5,079
Net Dairy Livestock Sales
Net livestock sales includes the sale of approximately 160-180 MA surplus or cull cows and empty R 2 heifers @ approximately $650/head and 610-620 bobby/heifer calves at an average of about $30/head.
110,000 0.30 104 417
NET DAIRY CASH INCOME 1,450,800 3.97 1,369 5,495
EXPENSES $TOTAL $/KgMS $/COW $/HA
Wages(incl. ACC)
This covers 4.25 FTE external staff, and is net of staff accommodation. Employer ACC is included here.
233,000 0.64 220 883
Animal health
The philosophy for animal health is to be observant and proactive. The SCC for the herd is below 150,000. The herd is blanket treated with short acting dry cow therapy at drying off. Lameness is not a problem with the incidence of lameness under 6%. Included in the animal health costs are Lepto vaccinations for the herd, selenium injections prior to calving and magnesium and mineral supplementation via in trough dosatron. Also included are calf 10 in 1 vaccinations, a turbo drench which covers coccidiosis plus a pre wean drench and horn de-budding. Unplanned vet visits are rare. The cost of testing for BVD as required is included under animal health.
66,000 0.18 62 250
Breeding and herd improvement
This cost covers AB and herd testing and includes the allowance for 1.2 straws of nominated Jersey high BW, high fertility semen and three herd tests per year, (one milking). No anoestrous intervention products are used, although, prior to and during mating an extra herd, milked once a day is run for non-cycling cows. Once a heat has been recorded they are returned to a twice a day herd. After 3 weeks of mating any cow not mated is transferred to the OAD herd. Mating is for 10 weeks with AB used for 5 1/2 weeks, followed by Jersey bulls for 4 1/2 weeks. The Jersey bulls are supplied by DHL as part of their closed herd policy. 29 bulls are provided and rotated between the 3 herds. Heifers are mated with Jersey bulls, (provided by the grazier - DHL, at a rate of 1 bull to 15 heifers), with a mating start date 5 days earlier than the main herd. The six week in calf rate for the 2023 calving is 80%, (actual). The not in calf rate for the 2022-23 season is 9%.
37,000 0.10 35 140
Farm dairy
Covers all rubberware, detergents and milking plant consumables like filter socks.
20,000 0.05 19 76
Electricity(farm dairy, water supply)
This covers the cost of running a 54 bale rotary cowshed plus power to the farm for stock water supply, effluent irrigation and electric fencing. A heat recovery system was installed in 2022 which has resulted in a reduction in power used.
36,400 0.10 34 138
Supplements made(incl. Contractors)
There is not usually sufficient surplus pasture to justify harvesting for silage/baleage. Early surpluses are managed by taking paddocks out for regrassing.
0 0.00 0 0
Supplements purchased
Purchased supplements are 80 t DM of straw, (@$320/t DM, 50% share), for use during the winter and at drying off, plus approximately 120 kg DM/cow of baleage, (126 t DM @ $350/t DM, 50% share), to cover any short term feed deficits in the spring.
35,000 0.10 33 133
Calf rearing
The budget is for 330 replacement heifers to be reared. They are reared on milk and grass. The costs included here are for bedding and equipment.
2,500 0.01 2 9
Young and drystock grazing
Young stock at grazing will be 336 2022 born heifers plus 330 2023 born calves. All young stock are grazed on DHL support blocks at commercial grazing rates which include most animal health costs, provision of bulls for mating and freight. Rates are about $9.00/head/week for weaners and $14.25/head/week for R 2 heifers. Weaned calves have all left the milking platform by December 15th. In-calf heifers transition to winter grazing on June 1, and return to the milking platform mid-July. The contract has the sharemilker covering 100% of the grazing cost.
320,900 0.88 303 1,216
Winter grazing
90% of the herd, about 950 cows, are grazed off for an average of 54 days. The first cows leave the farm from May 20th and the last are gone by June 1. They return to the milking area in batches based on calving date. Winter grazing costs this year are $32/head including freight. This cost is a 50% share.
125,000 0.34 118 473
Fertiliser(incl. N)
This cost covers the sharemilkers share of the nitrogen plus all the spreading costs of the nitrogen. The plan is to apply 167 kg N/ha for the year over 6 applications to the non-effluent areas and 3 applications to the effluent areas, with 3-4 applications up to December then 2 in February and March. All N is applied as urea. Budgeted price for urea is about $1100/t. The farm is soil tested every year and fertiliser applied is as per recommendations. Potassium is applied in September with the September N. The farm has soil moisture monitors so phosphate is able to be applied in the winter in June and July when soil moisture levels are suitable.
64,000 0.18 60 242
Irrigation
This is a 50% share of irrigation electricity. The farm has 2 centre pivot irrigators plus K lines.
57,500 0.16 54 218
Regrassing & cropping
The sharemilker is responsible for the contracting costs for spraying out existing pasture. Approximately 10% of the farm, (25ha), is being regrassed each year - grass to grass in the spring. All sprays, seed and sowing is covered by the farm owner.
1,600 0.00 2 6
Weed and pest
Minimal costs, this is for rat bait.
50 0.00 0 0
Vehicles & fuel
This cost covers the running and maintenance costs for a tractor, sundry farm bikes and farm vehicles. The tractor does less than 300 hours per year. The other farm vehicles are used for towing irrigation K lines, calf feeders etc. Fuel costs make up about 50-60% of the total cost.
30,000 0.08 28 114
R&M(land, buildings, plant, machinery)
Being low input and not making any supplements, there is very little plant to be maintained.
19,100 0.05 18 72
Freight and general farm expenses
Includes bio security levy of $4380, protective clothing, waste disposal and a small amount of general freight.
6,380 0.02 6 24
Administration
Do own GST and payroll so includes subscriptions for packages that support that. Also includes about $8,000 for staff and training costs.
18,400 0.05 17 70
Insurance 11,000 0.03 10 42
ACC
Similar to previous year.
5,000 0.01 5 19
TOTAL FARM WORKING EXPENSES 1,088,830 2.98 1,027 4,124
CASH OPERATING SURPLUS 361,970 0.99 341 1,371

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
This is based on having 6 fewer R 1 heifers, 74 more R 2 heifers and 16 more MA cows on hand at the end of the season. Stock income for the season, (cash and non-cash), is estimated to be $0.66/kg MS. This is above the Canterbury 50-50 SM average of about $0.55/kgMS.
131,200 0.36 124 497
Labour adjustment
This covers the 1.2 FTE of business owner, (sharemilker), unpaid input.
120,000 0.33 113 455
Feed inventory adjustment
It is estimated that there will be no change in supplements on hand for the season.
0 0.00 0 0
Depreciation
This is based on 2020-21 financial statements plus allowance for the additional purchase of plant and machinery in 21-22 and 22-23.
37,000 0.10 35 140
DAIRY GROSS FARM REVENUE 1,582,000 4.33 1,492 5,992
DAIRY OPERATING EXPENSES 1,245,830 3.41 1,175 4,719
DAIRY OPERATING PROFIT 336,170 0.92 317 1,273

More budget case study farms

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.

Last updated: Aug 2023
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