Budgeting, Medium Input (Canterbury)

View/download PDF of updated budget

Key points

•    Pasture growth has been similar to last year and good pasture management has seen pasture cover sit around 2,000 kgDM/ha since September, with average pasture quality for 12.23 MJME/kgDM for the whole season.
•    Production for the season was similar to budget.
•    Milk income 7% up on budget due to milk price received being higher than budgeted. 
•    Farm working expenses, (FWE), were $0.32kgMS up on budget, but when offset with $0.14/kgMS from supplement sales, the variance is only $0.18/kgMS.
•    The main increases in FWE were due to unplanned R & M, price increases in the cost of water and extra winter cow grazing due to surplus feed at grazing.
•    Revision of the fertiliser policy and more targeted phosphate applications have delivered some savings for this year.
•    Operating profit up 13% as the increase in income was more than double the increase in costs.

Comments

Production for the season is 486,383 just marginally up on budget. This is from 1053 cows milked at the peak, up 8 on budget. There was less wastage and fewer losses this year as fewer unsound cows were taken into the 23-24 season, a result of better in calf rates from last season’s mating.
The last 914 cows were dried of May 29th prior to going to winter grazing. 
Total supplements fed for the season are 478 kg DM/cow, (220 of baleage and 258 of proliq). This is down on budget of 500-600 kgDM/cow, with most of the savings coming in the first half of the season.
Better than average winter growth rates and good crop yields on the support block resulted in cows staying at winter grazing for longer to clean up the crops. Therefore, less supplement was needed on the milking platform in the early spring so surplus was sold to other Camden dairies. Winter grazing costs are up about $73,000. This extra cost was in part offset by the sale of surplus supplement not needed in the spring.
The herd peaked at 2.02 kg/cow/day from 1053 cows getting up to 3.9 kgDM/c/day of baleage plus a little proliq in October and early November.
Pasture management has been very good this season and pasture cover during the spring and early summer did not varied significantly, sitting between 1950kgDM/ha and 2050 kg DM/ha.  
Pasture quality has also been very consistent, with testing averaging 12.2MJME/kg DM for the first half of the season. Pasture quality information shows that the cows were able to be fully fed from pasture.
6.9 ha of fodder beet was planted in October. The original plan had been for 7.0 ha of crop, half fodder beet and half kale. However more of the off-farm wintering will be done on fodder beet next season so more fodder beet is needed to transition cows prior to going to winter grazing.
39 ha of regrassing in the spring was done in the spring, 4 ha more than budget. The last of the regrassed paddocks are coming back into the grazing rotation now.
There was a small surplus of pasture in the spring on the milking platform, with 85 t DM (baleage), from 42 ha being made. The original budget was for no supplement harvested on the milking area. 
Nitrogen applied for the season is on budget with 182 kgN/ha average over the whole area. Fertiliser applied is below budget with some late changes made to the Phosphate nutrient budget after a revision when the payout drop was announced in August. A reduction in P applied plus lower prices for product has resulted in a $15,000 drop in fertiliser spend. 
Olsen P levels from all the paddock testing was studied in the spring, and to make a saving, (this season only), it was decided not to apply Super phosphate to paddocks that had Olsen Ps over 37, and reduce the amount applied on paddocks with Olsen P of 25 to 37. Some Ammo31 may have to be applied to those paddocks in autumn if S levels are low. Ammo31 went on all the farm in September.
R & M costs are up nearly 60%, largely due to ongoing issues with the rotary platform and milk lift pump replacement that were not included as part of the Dairy shed capex. There has also been some additional R & M to the staff housing.
CPW irrigation prices set for the 23-24 season were higher than the original budget and have gone up 14%. Total water use for the season of 6,611 m3/ha is well up because of the very dry conditions from Early February 2024. This cost the business over $1,300/ha including energy for a boost pump, ($74) for the 2023-24 season.
with the “spring flush” a little later than last year.
Pasture management has been very good this season and pasture cover has not varied significantly since September, sitting between 1950kgDM/ha and 2050 kg DM/ha.  
Pasture quality has also been very consistent, averaging 12.2MJME/kg DM for the season so far. Pasture quality information shows that the cows were able to be fully fed from pasture.
 Supplements fed for the season to date is 265 kg DM/peak cow milked. The plan is to feed 500-600 kg DM/cow for the year but that will depend on how the summer plays out.  The herd peaked at 2.02 kg/cow/day from 1053 cows getting up to 3.9 kgDM/c/day of baleage plus a little proliq in October and early November.
6.9 ha of fodder beet was planted in October. The original plan had been for 7.0 ha of crop, half fodder beet and half kale. However more of the off-farm wintering will be done on fodder beet next season so more fodder beet is needed to transition cows prior to going to winter grazing.
39 ha of regrassing in the spring was done in the spring, 4 ha more than budget. The last of the regrassed paddocks are coming back into the grazing rotation now.
There was a small surplus of pasture in the spring on the milking platform, with 85 t DM (baleage), from 42 ha being made. The original budget was for no supplement harvested on the milking area.
Nitrogen applied to date is on budget with 94 kgN/ha average over the whole area. Product used is 82 kg/ha Ammo31 applied at the end of August, 60 kg/ha of Urea in October, 60 kgN/ha of NProtect in November and 50 kg/ha NProtect in December. 
Fertiliser applied is below budget with some late changes made to the Phosphate nutrient budget after a revision when the payout drop was announced. A reduction in P applied plus lower prices for product has resulted in a $44,000 drop in fertiliser costs. 
Olsen P levels from all the paddock testing was studied and to make a saving, (this season only), it was decided not to apply Super phosphate to paddocks that had Olsen Ps over 37, and reduce the amount applied on paddocks 25 to 37. Some Ammo31 may have to be applied to those paddocks in autumn if S levels are low. Ammo31 went on all the farm in September.
Better than average winter growth rates and good crop yields on the support block resulted in cows staying at winter grazing for longer to clean up the crops. Therefore, less supplement was needed on the milking platform in the early spring so surplus was sold to other Camden dairies. Winter grazing costs are up about $75,000. This extra cost was largely offset by the sale of surplus supplement not needed in the spring.
R & M costs are up nearly 50%, largely due to ongoing issues with the rotary platform and milk lift pump replacement that were not included as part of the Dairy shed capex. There has also been some additional R & M to the manager’s house.

Current Situation

•    All cows left the milking platform in early June and are now at winter grazing.
•    As at May 31st the herd body condition score was 4.5 and closing pasture cover 1,943 kgDM/ha, both on target for that time of year.

Calving and reproduction

•    The calving pattern for the 23-24 season was 69% after 3 weeks, 89% after 6 weeks and 98% after 9 weeks. This is similar to the previous season of 66%, 89% and 99%.
•    Submission rates for the first 3 weeks were 92% which is up on last season, (80%).
•    The 6 week in-calf rate is 70% (Actual), and the not in calf rate is 17%. These KPI’s are based on information that does include 13 cows out of 1,053 that were not mated.
•    There were 28 R 3 Jersey bulls leased for the herd and 17 R 2 Bulls leased to run with the yearlings.
•    More replacement heifer calves were born than budgeted so 267 heifer calves were reared, 7 up on budget.

Other points of interest

•    Baleage purchased from the associated support block, (harvested in November before any seed head production), tested at 12.91 MJME/kgDM. This will provide exceptional milking cow feed for the spring.
•    Planned shed upgrades went well so there is now the capability for herds to be kept separate on the yards which makes prioritising feed allocation easier.  
•    Protract was installed in August and has improved drafting and stock management through the shed.
•    The farm Dairy is now a one person shed so labour efficiencies have improved.
•    Dry cow therapy has typically made up about one third of animal health costs. More focus on managing mastitis and somatic cell counts, (SCC) to reduce this in the long term has seen a nearly 20% improvement in SCC for the season. The average for the season 127,000 compared with 157,000 last season.  
•    This has come at a cost, with animal health costs up about $7,000. Hopefully savings will come early next season with fewer cows needing dry cow therapy. 

Mission
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"

• People/Community: Provide our employees with a safe and supportive working environment. Be respectful, honest and open with them and recognise and encourage their individual personal development and goals. Be recognised as a preferred employer by the farming industry. Be positive and supportive of the communities in which we live.
• Animals: Be respectful and take good care of the animals that we farm. We are committed to meeting all the animal welfare needs of the animals we farm.
• Soil, water & air: Operate our farming business to have the least possible impact on the natural environment, with the goal of leaving it in an improved state.
• Technology/Farm Systems: Utilise effective technologies in our farming systems to achieve our broader aims. We want to be involved with the leading farmer organisations and be early adaptors of positive change.
• Compliance: Where possible endeavour to operate at standards that are higher than the minimum compliance standard, working with all industry partners to achieve this.
• Financial: Strive to operate a profitable, sustainable and resilient business.
• Risk: Identify the major risks to our business and where possible utilise tools to mitigate and manage the risk.

Management
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
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

Co-operative difference
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.

Networking
Camden Group management value the benefits gained from being involved in community and industry projects and networking with their peers.

• 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 a 24 day round from there until 1 March, then go to a 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 with the aim to 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

• Pasture
  The farm is in a status quo position now for re-grassing as the whole farm has been re-pastured within the last 10 years. The current regrassing plan is 36 ha of perennial rye grass/white clover mix, all sown in the spring. The permanent pasture is usually in the grazing rotation by late December. 
  The main weed problem is nodding thistles which are managed with some winter weed spraying or through the regrassing programme which includes each year putting the two most weed infested paddocks through a cropping rotation first, (brassica or annual rye grass).
• 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 rye grass and white clover direct drilled.
• Crop
  From 2024-25 the cropping programme is 7 ha of fodder beet for transitioning milking cows in May prior to going to winter grazing, and some late winter feed for springers. The winter crop area is part of the total spring regrassing programme.
• Supplements purchased
  All hay and silage purchased are sourced “in house” from within the Camden Group. About 550 kgDM/cow is as baleage. Taking paddocks out of rotation for regrassing in the spring helps to manage pasture surpluses without needing to use a mower.
  About 150 kgDM/cow of proliq is imported.
• Usually about 75-100 t DM is carried into the winter for springers and to cover any short term deficits for the milkers in early spring.
• Supplements made on the milking platform
  The plan is to have sufficient cow numbers to harvest all the pasture so usually no supplement is made on the milking area.
• Irrigation
  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.
  Irrigation is provided by:
  125 ha -3 Briggs 250 Rotorainers, on a 7 day rotation (20-23 hour runs), average daily shift time 2.5 hours
  170 ha – 776m Centre pivot (installed 2010)
  11 ha – K lines in 2 corners
• Winter grazing
  The herd is grazed off on average for 9 weeks. 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.
• Young stock
  The last of the calves leave the farm as weaners by 1st December. They return to the farm mid-July 1st as in calf heifers. They are grazed on support land owned by Camden Group. All costs are at market rates.
• Feed quality
  Pasture and baleage samples are analysed during the year so that the quality of feed available is known. This allows better allocation of feed to ensure the best quality feed is given to the milking cows which assists in ensuring the cows are fully feed.
  the average pasture quality for during the spring and early summer 23-24 season was 12.23 MJME/kgDM.

• 2023-24 will be the first season protrack.
• The herd has a BW of 197/48 and a PW of 253/63 from 98% recorded ancestry, as at 1/1/2022.
• Herd testing is carried out 4 times a year with 2 tests over two milking and two tests from one milking.
• 40-50 empty high BW/PW young cows are sold to the group support enterprise each year and maybe purchased back as in calf cows the following year.
• The herd has a replacement rate of 23% each year, made up of in calf heifers and about 40 in calf carry over cows.
• 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.
• Mating starts 26th October and 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.
  About 30 Jersey bulls, (leased in house), are used for the last five weeks of mating and are withdrawn from the herd 4th January.
• Heifers are run with about 15 Jersey bulls, (leased in house).
• 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). Camden Group is currently investigating other intervention options including once a day milking for 2 weeks post calving.
• 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 ¼-1/3 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.

• The farm operation employs 6.5 FTE, made up of one farm manager, one 2IC, two senior farm staff, one intermediate and one junior farm staff. A calf rearer is employed from July to December and students are employed over the summer.
• The average length of employment is about 4 years, with most staff being promoted within the business and only leaving to move to being self-employed, (contract milking, sharemilking or equity partnerships).
• Farm systems and processes for employment and health and safety meet best practice standards and are in line with “The Camden Way”. The team pride themselves on a proactive health, safety and well being culture, and the Board of Directors take particular interest in this too.

• Soil testing
  The last soil test was May 2022, with 5 sites having full tests done and all paddocks tested for pH and phosphate levels. The results are: pH Phosphate Potash Sulphate Sulphur 6.0 32.9 7.2 8.6
• Fertiliser
  Fertiliser applied each year are based on soil tests and nutrient budgets. Nutrients applied are: Phosphate Potash Sulphate Sulphur 30-40 kg/ha 0-5 kg/ha 55-65 kg/ha
• Nitrogen
  Nitrogen use is about 180 kg N/ha, usually applied at 22.5 kg N/ha over 8 applications.
• Effluent
  Effluent is spread via the irrigation system to 63 ha. The farm has 30 days of pond storage.

Overview

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.