Budgeting, Will Green and Sally Eames (Mid Canterbury)
9 min read
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.
Herd-owning Sharemilker (50% milk revenue)
Near Hinds, Mid-Canterbury
264ha effective milking platform
1060 Jersey cross
29/07/2022 MA cows (24/7/2022 in-calf heifers)
2 (< 10% imported feed)
365,000kg MS/year budgeted, 1,383kg MS/ha and 344kg MS/cow.
Production (previous 3 years):
347,000 kgMS average
90% of the herd are wintered off for 54 days
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 payout, we need a great season! Other key points for our business are:
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.
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.
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.
|Financial KPI 2023-24 budget|
|Net dairy cash
|Total farm working
|Dairy operating profit ($/ha)|
|Physical KPI 2022-23
|Pasture and crop
harvested (t DM/ha)
surplus (kg N/ha/yr)
|GHG (t CO2
in-calf rate (%)
Strategy and financial
People, Pasture, Profit
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.
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.
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).
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.
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
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.
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.
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.
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.
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.
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).
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.
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.
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.
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.
People, health and safety
|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.
|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.
|NET DAIRY CASH INCOME||1,450,800||3.97||1,369||5,495|
This covers 4.25 FTE external staff, and is net of staff accommodation. Employer ACC is included here.
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.
|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%.
Covers all rubberware, detergents and milking plant consumables like filter socks.
|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.
|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.
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.
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.
|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.
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.
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.
This is a 50% share of irrigation electricity. The farm has 2 centre pivot irrigators plus K lines.
|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.
|Weed and pest
Minimal costs, this is for rat bait.
|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.
|R&M(land, buildings, plant, machinery)
Being low input and not making any supplements, there is very little plant to be maintained.
|Freight and general farm expenses
Includes bio security levy of $4380, protective clothing, waste disposal and a small amount of general freight.
Do own GST and payroll so includes subscriptions for packages that support that. Also includes about $8,000 for staff and training costs.
Similar to previous year.
|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.
|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.
This covers the 1.2 FTE of business owner, (sharemilker), unpaid input.
|Feed inventory adjustment
It is estimated that there will be no change in supplements on hand for the season.
This is based on 2020-21 financial statements plus allowance for the additional purchase of plant and machinery in 21-22 and 22-23.
|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|
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