Budgeting, Medium Input (Canterbury)
15 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.
Cows on race aerial shot.
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Farm dairy aerial shot.
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Travelling irrigator.
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Travelling irrigator working.
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Business type:
Owner Operator
Location: Te Pirita, Selwyn District, Canterbury
Te Pirita, Selwyn District, Canterbury
Farm size:
304.8 ha effective milking platform,
Land:
100% irrigated (Water source is Central Plains Water Ltd)
Soil Type:
Lismore Stony Silt Loam
Peak cows:
1045 Kiwi cross
PSC:
4/08/2024
Stocking rate:
3.4 cows/ha
Farm system:
3 (11-20% feed imported)
Wintering system:
100% of the herd wintered off farm for 9 weeks
Production:
490,000 kg MS/year, 1,608 kg MS/ha, 469 kg MS/cow, budgeted
Production (3 year average excluding 2022-23 season):
488,709
Financial KPI 2024-25 budget | |||
Net dairy cash income ($/kgMS) |
Total farm working expenses ($/kgMS) |
Total operating expenses ($/kgMS) |
Dairy operating profit ($/ha) |
$8.28 | $5.75 | $6.02 | $3,617 |
Physical KPI 2023-24 est | |||
Pasture and crop harvested (t DM/ha) |
Purchased N surplus (kg N/ha/yr) |
GHG (t CO2 equiv/ha/yr) |
Six week in-calf rate (%) |
15.4 | 100 | 15.0 | 70 |
Find out more about these KPI's and how to calculate them for your own farm here.
Numbers at a glance
View/download PDF of updated budget
Financial KPI's | Budget | Updated forecast |
Milk Production (kgMS/ha) | 1,591 | 1,596 |
Milk Production (kgMS/cow) | 464 | 462 |
Net Dairy Cash Income ($/kgMS) | $8.05 | $8.80 |
Total Farm Working Expenses ($/kgMS) | $5.42 | $5.74 |
Cash Operating Surplus/Deficit ($/kgMS) | $2.63 | $3.06 |
Gross Farm Revenue ($/kgMS) | $8.27 | $8.88 |
Operating Expenses ($/kgMS) | $5.79 | $6.08 |
Operating Profit ($/ha) | $3,957 | $4,463 |
Comments and points of interest
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.
Strategy and financial
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"
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.
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 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
Feed
Herd
People, health and safety
Environment
Budget revision following milk payout drop
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.
Budget last updated June 2024
INCOME | $TOTAL | $/KgMS | $/COW | $/HA |
Net Milk Sales
The milk revenue is based on 490,000 kg MS @ $6.46/kgMS advance, to April 2025 reiceved May 2025, (based the Fonterra forecast of $7.90/kgMS for the season as at 29-5-2024), and 485,505 kg MS @ $1.15 deferred, (including May 24 milk payment received in June). The Fonterra dividend is $0.30/share in October on 475,738 shares and $0.15/share on 449,738 shares in April (some shares are being sold to one of the other farms hence the different number of shares during the year). A Fonterra co-operative difference of $0.08/kg MS on 485,505 kgMS from 23-24 season is also included. 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.
|
3,958,200 | 8.08 | 3,788 | 12,986 |
Net Dairy Livestock Sales
Net stock income is based on approximately 670-680 bobby calves @ $25-30/hd, 20-25 live calf sales at $100/hd, 241 MA cull cows @ $700/hd and 17 and R 2 heifers @ $600/hd. The plan is to purchase about 50 MA in calf cows from Camden Group, (CG), support/dry stock enterprise, (were carry overs from previous year sold back to CGS). The average price will be about $1,700/head.
|
92,100 | 0.19 | 88 | 302 |
Other Dairy Cash Income
Rental from related entity for shed on boundary.
|
6,600 | 0.01 | 6 | 22 |
NET DAIRY CASH INCOME | 4,056,900 | 8.28 | 3,882 | 13,310 |
EXPENSES | $TOTAL | $/KgMS | $/COW | $/HA |
Wages(incl. ACC)
The farm operation employs 6.7 FTE, made up of one farm manager, one 2IC, two senior farm staff, one intermediate farm staff and one junior farm staff. WIth this level of staffing calf rearing is covered by existing farm staff. This is net of employee accommodation allowances and includes employee ACC and a contingency of about $10,000.
|
524,100 | 1.07 | 502 | 1,719 |
Animal health
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.
|
88,800 | 0.18 | 85 | 291 |
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.
|
115,200 | 0.24 | 110 | 378 |
Farm dairy
Standard dairy plant cleaning and maintenance is followed.
|
30,800 | 0.06 | 29 | 101 |
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.
|
34,000 | 0.07 | 33 | 112 |
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.
|
0 | 0.00 | 0 | 0 |
Supplements purchased
All hay and silage purchases are sourced “in house” from within the Camden Group at market rates. About 800 kg DM/cow will be purchased for the 2024-25 season; 600kgDM/cow of baleage @ $0.42/kg DM, 150 kg DM/cow of proliq @ $0.18/kg DM and 53 kg DM/cow of barley @ $0.45/kg DM.
|
323,000 | 0.66 | 309 | 1,060 |
Calf rearing
About 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.
|
36,000 | 0.07 | 34 | 118 |
Young and drystock grazing
275 heifers @ $17.50/head/week for 52 Weeks and 261 weaners from December to May 1st @ $12.00/week. Per head price includes freight and animal health costs.
|
314,000 | 0.64 | 300 | 1,030 |
Winter grazing
The herd is grazed off on average for 9-10 weeks @$35/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.
|
373,100 | 0.76 | 357 | 1,224 |
Fertiliser(incl. N)
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.
|
151,200 | 0.31 | 145 | 496 |
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. Costs include CPWL water rates and some electricity.
|
406,000 | 0.83 | 389 | 1,332 |
Regrassing & cropping
This season the plan is for 7.0 ha of fodder beet. The crop will be planted in spring 2024. The estimated costs is 7 ha @ $3,000/ha.
The current regrassing plan is for 36 ha of regrassing, made up of 29 ha of pasture sown grass to grass with a perennial ryegrass/white clover mix, and 7 ha of last last winters crop returned to permanent pasture. All regrassing is done in September and is usually back in the grazing rotation by late December.
|
57,500 | 0.12 | 55 | 189 |
Weed and pest | 5,300 | 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.
|
40,500 | 0.08 | 39 | 133 |
R&M (land, buildings, plant, machinery)
Includes $33,000 for irrigation equipment repairs and pivot rut remediation, $25,000 dairy shed repairs, $7,000 drains and effluent, $10,000 plant, $7,500 shelter trees. There is $5,000 included for water supply exploratory work to identify and hopefully fix water flow issue, and avoid costly capital expenditure.
|
105,300 | 0.21 | 101 | 345 |
Freight and general farm expenses
Includes bio security levy of $10,600, dead cow disposal and waste disposal.
|
18,700 | 0.04 | 19 | 61 |
Administration
Includes environmental compliance and irrigation consent monitoring, plus $120,000 for Willsdens share of Camden group services business overheads. This is up nearly 10% on previous years due to rising labour costs.
|
126,100 | 0.26 | 121 | 414 |
Insurance
As per last invoice plus allowance for additions.
|
40,300 | 0.08 | 39 | 132 |
Rates | 25,400 | 0.05 | 24 | 83 |
TOTAL FARM WORKING EXPENSES | 2,815,300 | 5.75 | 2,694 | 9,237 |
CASH OPERATING SURPLUS | 1,241,600 | 2.53 | 1,188 | 4,073 |
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
Anticipating that there will be 14 fewer R 1 heifers, 34 more R 2 heifers and 28 fewer MA cows on hand at the end of the season.
|
-5,800 | -0.01 | -6 | -19 |
Labour adjustment
All owner input is covered by the share of Camden group service business fee.
|
0 | 0.00 | 0 | 0 |
Feed inventory adjustment
Plan is to have no significant change to feed on hand over the year.
|
0 | 0.00 | 0 | 0 |
Owned support block adjustment | 0 | 0.00 | 0 | 0 |
Depreciation
This is as per accountants estimated for the financial statements for the 23-24 season, plus allowance for one years of asset accumulation
|
135,000 | 0.28 | 129 | 443 |
DAIRY GROSS FARM REVENUE | 4,051,100 | 8.27 | 3,877 | 13,291 |
DAIRY OPERATING EXPENSES | 2,950,300 | 6.02 | 2,823 | 9,679 |
DAIRY OPERATING PROFIT | 1,100,800 | 2.25 | 1,053 | 3,612 |
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.