Budgeting, Medium Input (Canterbury)
10 min read
Willsden Farm in Te Pirita, is 20 km west of Dunsandel. The farm is part of the Camden group whose stakeholders strive to strive to operate a profitable, sustainable and resilient business, which is able to identify major risks to the business and utilise tools to mitigate and manage these risks.
The farm has a 304.8 effective ha milking platform milking 1045 kiwi cross cows running a medium input feed system. Pasture management and feed budgeting are a priority and key to ensuring efficient use of feed and consistent milk production.
Willsden Farm, at Te Pirita 20 km west of Dunsandel is part of the Camden Group. Camden Group operates across Canterbury, owner/operator of 4 irrigated dairy platforms and ownership and investment in irrigated dairy support farms. Camden Group are also equity partners in farms in mid and South Canterbury.
Camden Group dairy support farms provide all young stock and winter cow grazing and silage requirements. All transactions between the dairy farm and the support farms are at market rates.
The aim of the business is to exceed best practice standards with regard to employment, animal welfare, compliance and the environment.
The stakeholders strive to operate a profitable, sustainable and resilient business, which is able to identify major risks to the business and utilise tools to mitigate and manage these risks.
Location: Te Pirita, Selwyn District, Canterbury
Te Pirita, Selwyn District, Canterbury
304.8 ha effective milking platform,
100% irrigated (Water source is Central Plains Water Ltd)
Lismore Stony Silt Loam
1045 Kiwi cross
3 (11-20% feed imported)
100% of the herd wintered off farm for 9 weeks
485,000 kg MS/year, 1,591 kg MS/ha, 464 kg MS/cow, budgeted
Production (4 year average excluding 2022-23 season):
Our 2023-24 budget was planned to cope with an inevitable change in payout. Therefore we have not adjusted our plans, at this stage, in response to the lower forecast milk price.
Our day-to-day spend for the farm has not changed, other than to update the budget to account for timing changes and an increase in winter grazing costs. Good feed growth at the grazing block meant cows have remained at winter grazing for longer to eat the surplus feed, so that cost has risen ($0.04/kgMS).
Our capital spends (plant replacement and upgrade of dairy shed) were completed over the winter as per budget.
We have always had a policy of re-investing surpluses back into the farm business in good years, which can be drawn on in the not so good years. The key is to invest in areas that can be utilised, such as, debt repayment, maintaining good soil fertility and keeping maintenance of infrastructure up to date.
What advice would you give to farmers who are either first time sharemilking or farm owners?
Budget and re-forecast regularly. Keep the bank and your accountant in the loop.
Challenge your suppliers on what they are charging.
What words of positivity would you give to farmers planning for the coming months ahead?
Your business is long term, this drop in milk price will likely be relatively short term so take out any unnecessary spending but make sure you continue to spend where you are going to make a return: on your people, animal health and breeding, fertiliser, and essential maintenance. You will bounce back more quickly.
If you have enough equity, consider using some of that to cover cash flow. Term debt is at a lower interest rate than overdraft so this could save money.
Do you have any tips and tricks for looking after your people on farm?
Keep your staff up to date with the on farm situation so they understand what changes might be made and why they are being made.
|Financial KPI 2023-24 budget|
|Net dairy cash
|Total farm working
|Dairy operating profit ($/ha)|
|Physical KPI 2021-22|
|Pasture and crop
harvested (t DM/ha)
surplus (kg N/ha/yr)
|GHG (t CO2
in-calf rate (%)
Strategy and financial
To create a financially secure group of businesses that allows all participants to thrive – and continues to sustainably serve communities for generations to come.
"The Camden Way"
The farm operation is supported by Camden Group Services, a business services group which support all six farms. This includes farm management oversight and administration and financial management, the cost of which is charged to Willsden at market rates.
Budgeting is drafted by the Camden Group Services team in consultation with Farm Managers and 2ICs and is approved by the Directors prior to the start of each season. The budget is monitored and reviewed frequently using an online farm accounting software package and budget v actual variance reports. The budget is updated in more detail for quarterly board meetings so an accurate forecast of the year-end view is established. This gives the Board the ability to plan ahead in making decisions on dividends and future capital expenditure
Since the 2021-22 season the farm has achieved the standards required to receive a Fonterra Co-operative difference of 8.0-9.4 cents/kg MS. This is above the company average. Undertaking the work needed for this has been beneficial for the farm and farm staff as it has helped to show what “good” looks like.
Camden Group management value the benefits gained from being involved in community and industry projects and networking with their peers.
Farm policy and infrastructure
The farm is well subdivided, (45 paddocks 6.5-7.0 ha each, 1-2 wire electric fencing), with good internal laneways.
An independent stock water well and reticulation system provides all stock water. There are two 1,300 litre troughs in each paddock. A dosatron inline dispense is installed for delivery of minerals.
The farm has minimal machinery, and a plant replacement policy that includes turnover of bikes at 15,000 km. This keeps R & M costs low but does have a higher capital cost.
The aim is to winter 1085 cows and in calf heifers, all off farm on the adjacent support block.
All young stock are grazed off farm, with weaners off farm by 1st December.
Pasture management and feed budgeting are given priority. Farm cover is measured and feed budgets updated weekly for 9 months of the year.
Spring Rotation Planner is followed from 1 Aug, to balance date around 25th Sep, on 24 day round from there until 1 March, then go to 35 day round for remainder of the season. Spring surpluses are managed with planned regrassing program, (12-15% /year permanent pasture), & silage made if there is an unmanageable surplus. Quality is king, correct round length is vital. Fully feed cows 100% of the time. Post grazing residual 1500-1600 KgDM/ha is the aim.
Achieving recommended cow condition and pasture cover targets for the farm at key times are critical, and decisions for culling and drying off are based on feed budgets, cow condition scores and calving dates
People, health and safety
|Net Milk Sales
The milk revenue is based on 485,000 kg MS @ $6.20/kgMS, advance and 430,499 kg MS @ $1.30 deferred, plus the Fonterra dividend of $0.30/kgMS on 480,000 shares and a Fonterra co-operative difference of $0.08/kg MS. This is net of the DairyNZ levy of $.036/kgMS. 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 stock income is based on approximately 690-700 bobby calves @ $25-30/hd, 178 MA cull cows and R 2 heifers @ $700/hd. The plan is to purchase about 30 MA in calf cows from Camden Group Support, (CGS), dry stock enterprise, (were carry overs from previous year sold back to CGS), to build numbers back up to opening levels. The average price will be about $1,600/head.
|Other Dairy Cash Income
Rental from related entity for shed on boundary.
|NET DAIRY CASH INCOME||3,902,150||8.05||3,734||12,802|
The farm operation employs 6.5 FTE, made up of one farm manager, one 2IC, two senior farm staff, one intermediate farm staff and one junior farm staff. A calf rearer is employed from July to December and students are employed over the summer. This is net of employee accommodation allowances and includes employee ACC.
The approach to animal health is to be vigilant, keep good records and be proactive. Metabolic diseases are not an issue as supplementation can be made easily through the metered in line water dispenser. The average bulk somatic cell count for the herd is below 130,000. The animal health budget includes dry cow therapy for the herd, and teat sealing, (including the in calf heifers). This accounts for about 1/4 to 1/3 of the total animal health budget. The incidence of lameness varies, (3-8% of the herd), but is mostly treated in house so is not a large direct cost. Laminitis can occur in December/January with the change in feed quality.
|Breeding and herd improvement
Mating is for 10 weeks, AI is used for the first 5 weeks, made up of 3 weeks using 80% premier sires, 10% sexed semen and 10% beef semen, (for lower genetic merit cows). Week 4 is 90% premier sires and 10% beef semen, and week 5 is with compact calving “dairy” semen. 45 Jersey bulls are leased for $500/hd plus grazing. Some are used with the heifers, and the balance are used with the herd for the last five weeks of mating and are withdrawn from the herd 4th January. Pregnancy testing is carried out at 35 days after mating has finished. A second pregnancy is done late April/early May to identify any final empties. The current reproduction plan is to treat non cycling cows with CIDRs in the second week of mating, (usually about 4-5% of the herd). Herd testing is carried out 4 times a year with 2 tests over two milking and two tests from one milking. Includes protrack subscription.
Standard dairy plant cleaning and maintenance is followed.
|Electricity(farm dairy, water supply)
The dairy shed is a 50 bail rotary shed turnstile, (built in 1999), with Read slide pulsation, Read automatic cup removers and a circular yard with capacity for 500 cows.
|Supplements made(incl. Contractors)
Usually no supplement is made on the milking area. The plan is to have sufficient cow numbers to harvest all the pasture.
All hay and silage purchased are sourced “in house” from within the Camden Group at market rates. About 765 kg DM/cow will be purchased for the 2023-24 season; 550kgDM/cow of baleage @ $0.40/kg DM, 150 kg DM/cow of proliq @ $0.19/kg DM, 53 kg DM/cow of barley @ $0.50/kg DM and 12 kg DM/cow of straw, (for feeding to the springers). $15,000 is included in the budget for fodder beet which was fed in May 2023, (paid for in June 2023), on the dairy platform as a transitional supplement before the cows go to winter grazing.
About 250-260 replacement heifer calves are reared each year, on whole milk, meal, pasture and hay. They are weaned off milk at 70 kg liveweight, (LW), and continue to get crushed barley and fresh pasture until they reach 100 kg LW. Up to 2 t of milk powder may be used each year to top up the fresh milk supply.
|Young and drystock grazing
250 heifers @ $15.50/head/week for 52 Weeks and 261 weaners from December to May 1st @ $9.50/week. Per head price includes freight and animal health costs.
The herd is grazed off on average for 9 weeks @$34/hd/week. Stock are able to be walked to the grazing so no freight costs are incurred. Cows return to the milking platform just prior to calving so are bought home in small mobs.
Fertiliser applied each year are based on soil tests and nutrient budgets. Nutrients applied are: Phosphate 30-40 kg/ha Potash 0-5kg/ha and Sulphate Sulphur 55-65 kg/ha. Nitrogen use is 180 kg of N/ha usually applied at 22.5 kg/N/ha over 8 applications.
Moisture and evapotranspiration levels are monitored on farm, and water use is budgeted. This information is used in daily irrigation planning to ensure costs are kept down and the irrigation carried out is effective. Costs include CPWL water rates and some electricity.
|Regrassing & cropping
This season the plan is for 3.5 ha of Kale for use in late winter and spring 2023 by the milkers, and 3.5 ha of fodder beet for transitioning cows in May 2024 prior to going to winter grazing. The current regrassing plan is 7 ha of annuals planted in September, (to be regrassed in permanent pasture September 2024), 20 ha of perennial ryegrass/white clover mix, (grass to grass), also sown in September, plus returning last winters kale area, (7 ha), to permanent pasture. The permanent pasture is usually in the grazing rotation by late December.
|Weed and pest||5,250||0.01||5||17|
|Vehicles & fuel
The farm has minimal machinery, and a plant replacement policy that includes turnover of bikes at 15,000 km. This keeps R and M costs low but does have a higher capital cost. Includes $27,000 for fuel.
|R&M(land, buildings, plant, machinery)
Includes $28,000 for irrigation equipment repairs and pivot rut remediaiton, $18,000 dairy shed repairs, $10,000 for fencing, drains and effluent, $10,000 plant, $7,000 shelter trees and $3,000 for water supply.
|Freight and general farm expenses
Includes bio security levy of $10,600, dead cow disposal and waste disposal.
Includes environmental compliance and irrigation consent monitoring, plus $111,000 for Willsdens share of Camden group services business overheads.
As per last invoice plus allowance for additions.
|TOTAL FARM WORKING EXPENSES||2,627,950||5.42||2,515||8,622|
|CASH OPERATING SURPLUS||1,274,200||2.63||1,219||4,180|
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
Anticipating that there will be 7 more R 1 heifers, 6 more R 2 heifers and 59 more MA cows on hand at the end of the seasons. Total stock income cash and non cash is $0.20 + $0.23 = $0.43/kg MS which is slightly below the average for mid Canterbury owners, ($0.45-$0.51 for 2020-2022 financial years).
All owner input is covered by the share of Camden group service business fee.
|Feed inventory adjustment
Took more supplement into the 2023 winter so expect to have about 160 t DM less on hand at the end of the season. This is valued at $400/ t DM.
|Owned support block adjustment||0||0.00||0||0|
This is as per the financial statements for 21-22 season.
|DAIRY GROSS FARM REVENUE||4,012,150||8.27||3,839||13,163|
|DAIRY OPERATING EXPENSES||2,805,950||5.79||2,685||9,206|
|DAIRY OPERATING PROFIT||1,206,200||2.49||1,154||3,957|
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.
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