Budgeting, Pete Morgan and Ann Bouma (South West Waikato)
26 min read
This 230 ha, owner operated farm, situated in Pokuru, Waipa, is fully self-contained with 510 cows peak milked and all young stock kept on farm. A more conservative approach with the utilisation of resources will reduce the financial and environmental risks and provide a more resilient business and better environmental outcomes. Being early adopters of technology has enabled efficient use of all resources and is key to ensuring environmental targets are measured and met. All farm systems decisions are research and evidence-based.
Farming using the Halter technology continues to add interest and enjoyment to farming for the owners and the staff on this South West Waikato farm.
Pete Morgan and Ann Bouma have spent considerable time researching and modelling the move to being a fully self-contained system with yearlings and weaners at home. This is being implemented for the 2023-24 season.
This change has in part been driven by a changing attitude to risk over the past decade and the development of a more conservative approach to the utilisation of resources – people, time, land, machinery and finances.
A more conservative approach reduces financial risk from exposure to inflation, and is an insurance against variability of supply. It also improves the ability to manage environmental extremes and limit the adverse effects on pasture and livestock.
The move to being fully self-contained will decrease labour requirements and greenhouse gas emissions for the business as there will be fewer cows and fewer young stock required.
Ripairian planting
1 / 6 images
Cows on break with Causmag.
2 / 6 images
Cows on break with no fence.
3 / 6 images
Low-lying wet areas fenced and planted.
4 / 6 images
Riparian planting.
5 / 6 images
Riparian planting.
6 / 6 images
Business type:
Owner-operator
Location:
Pokuru, Waipa
Farm size:
230ha effective milking platform, no support block
Peak cows:
510 FJX (520 wintered), 100 yearlings wintered
PSC:
18/7/2022 MA cows (15/7/2022 Heifers)
Stocking rate:
2.6 cows/ha including all young stock
Farm system:
2 (1-10% feed imported)
Production:
194,100kg MS/year budgeted, 844kg MS/ha 381kg MS/cow
Production (last 3 years):
355 kg MS/cow and 937 kg MS/ha average
Financial KPI 2023-24 budget | |||
Net dairy cash income ($/kgMS) |
Total farm working expenses ($/kgMS) |
Total operating expenses ($/kgMS) |
Dairy operating profit ($/ha) |
$8.40 | $5.10 | $5.76 | $2,283 |
Physical KPI 2022-23 est | |||
Pasture and crop harvested (t DM/ha) |
Purchased N surplus (kg N/ha/yr) |
GHG (t CO2 equiv/ha/yr) |
Six week in-calf rate (%) |
12.6 | 6 | 7.6 | 63 |
Find out more about these KPI's and how to calculate them for your own farm here.
Numbers at a glance
2023-24 mid-season update as of 5th January 2024.
View/download PDF of updated budget
Financial KPI's | Budget | Updated forecast |
Milk Production (kgMS/ha) | 844 | 803 |
Milk Production (kgMS/cow) | 381 | 355 |
Net Dairy Cash Income ($/kgMS) | $8.40 | $9.40 |
Total Farm Working Expenses ($/kgMS) | $5.10 | $5.53 |
Cash Operating Surplus/Deficit ($/kgMS) | $3.30 | $3.87 |
Gross Farm Revenue ($/kgMS) | $8.47 | $8.37 |
Operating Expenses ($/kgMS) | $5.76 | $6.25 |
Operating Profit ($/ha) | $2,283 | $2,500 |
Comments and points of interest
Key points
• Milksolids to the end of December is 2% up on budget, with peak cows milked up 2%.
• Although unplanned, capital expenditure to upgrade the dairy sheds and plant has improved efficiencies for milking, stock handling and weighing.
• Savings in costs of supplements made, regrassing, cropping and fertiliser have more than offset increases in R & M.
• Conservative budgeting for milk price plus and increase in forecast stock income means income is tracking about 6% up on budget.
• Farm working expenses and dairy operating expense are currently tracking 4% up on budget.
• Operating profit should be on budget or up slightly.
Comments
Milk production to 31st December is 130,580 kgMS, 2% up on the 127,000 originally budgeted. Peak cows milked is 520 which is 2% up on budget, (10 more cows).
The herd peaked at 2.0 kgDM/cow/day in late September. The previous season daily peak per cows was 1.85 kg MS/c/day. This is a very satisfactory performance considering the herd this year consists of about 28% first calvers.
Supplements fed to date are 54 t DM PKE, 30 tDM pit silage, 50 tDM maize and 5 tDM of hay, which equates to about 270 kgDM/cow or 600 kgDM/ha. This is more than double to the same time last season although some of this total has been fed to the 104 yearlings carried on farm.
The PKE has been fed at rates of 1.0-1.5 kgDM/c/d to deliver minerals at rates that will supplement the minerals in the water supply. This enables levels in the water supply to be kept lower so palatability is not impacted.
Pasture growth rates have been good on average but there has been some wide variation particularly in October and December when there were a couple of prolonged drier periods. The main challenges with pasture management have been making good strategic decisions on rotation length this season. We have not managed to control 10% of the farm pasture well and while the 2 dry periods so far this season have pushed the seed heads rapidly, our lack of experience in blending young mobs with the herd grazing decisions has contributed. Some good learning in it for us all.
To date 29 ha, (108 tDM), have been harvested for pit silage and baleage and 3.8 ha, (6.75 tDM), of hay has just been made. This is about half of what was in the budget.
The opportunity arose to purchase 18.7 t DM of hay. It was good quality, a good price, ($700/tDM compared with $760/tDm), and locally grown, so transport costs were low. This 8.7 t DM more than budgeted, but the extra feed will provide additional feed security for next spring as part of a more conservative approach to management.
Nitrogen use is similar to last season with only 25 kg N/ha being applied to date. Nitrogen, (and fertiliser), applications continue to be much more targeted, using information on pasture cover and growth rates from Halter. All nitrogen has been applied with own equipment which has allowed for better timing and placement of applications. All nitrogen applied is as SustaiN or DAP at 23 kg N/ha.
To work around an unplanned absence from the farm in October, (Pete), the cropping programme was revised. Instead of planting 20 ha of chicory, 9 ha of turnips and 7.4 ha of Maize, only 12 ha was undersown with plantain and 10 ha of maize was planted. In addition, about half a ha was undersown with left over chicory seed from last year, and there is 2 ha of last year’s chicory crop that was not sprayed out when regrassed which is growing well.
This has significantly reduced cropping and regrassing and weed and pest costs even with more spent on the maize.
It also has meant that more of the farm is in permanent pasture going into the summer and less will be out of rotation in the autumn for regrassing.
The maize was planted 8th November and growth rates have been a bit behind usual due to cooler and cloudier weather to date.
The updated budget is currently being worked on 185,600 kgMS for the season, (184,600 kg to the end of April, payment received in May), which is erring on the side of caution. This milksolids is actually about 4.3% down on the original budget of 194,100. The spectre of El Nino is large and a long dry summer/autumn is still possible hence the conservative forecast for the seasons milksolids.
Milk income is still looking to be up about $99,000, (6.5%), as the original budget was based on a milk price of $6.05/kgMS and dividend payments of $0.20 /share. It has now been updated to $6.10 advance milk price and $ 0.55/share. The deferred payment was $30,000 up on budget as well.
Total farm working expenses and operating expenses are on track to be up slightly on budget, but on less milksolids could be up $0.40-$0.45/kgMS or 9%.
Repairs and maintenance costs are up over 200% largely due to additional work needing to be done in addition to the capital expenditure for the dairy shed upgrades. This includes replacement milk lift pump and old front gates and upgrades to the roof and guttering of the second shed.
Feed made, regrassing and fertiliser costs are well down and more than offset the increase in R & M costs.
Current situation
Pasture cover as at 5th January 2024 is 2,350 kg DM/ha. Current growth rates are 62 kgDM/ha/day, (as per Halter pasture pro) and rotation length is 31 days. This is longer than usual for this time of year.
A conservative approach was adopted in December, to lengthen the round and try to protect pasture cover earlier than usual when soil conditions were becoming dry and growth rates were dropping. Rainfall between Christmas and New Year meant that with hindsight 31 days was probably a bit long, and now pasture quality is a bit lower as a result.
However, the farm is well set up going into the middle of summer with higher cover than usual and already on a longer round.
There are 515 cows currently in milk, 255 younger and lighter cows with lower SCC that have been on once a day milking since mid-December and 249 older cows on twice a day. A “resting mob” of 11 cows has been maintained all year with cows moving in and out as needed.
Daily per cow production is1.2 kg/cow/day, (average for all herds). This is 14% down on the daily per cow production for the same time last year and is a reflection of the lower pasture quality from being on a longer round, as well as the higher percentage of first calvers in the herd.
The whole herd was weighed and condition scored mid-December. The herd average was 435 kg liveweight, with the first calvers at 395 kg and second calvers at 412 kg. The latter had suffered growth checks as calves and had pre calving liveweights that were 26 kg lighter than the current crop of first calvers. This liveweight and BCS information was used split the herds in mid-December.
The cows are currently being fed about 17kgDM/cow/day made up of pasture and 0.4kgDM/c/d of PKE with zinc supplementation just started. Zinc through the water supply will start soon, particularly if the current high humidity continues.
There are 100 weaners on farm and 104 rising 2 year olds, (R2’s). Their grazing management has been simple with the R2s, (all with Halter collars), moved daily and the weaners behind a fence and getting 1-3 day breaks.
Since all the R2’s are collared, we are experimenting with 11 R2’s running with our young cow mob. The feeding level and access to PKE at the shed should give them an advantage and we will test the assumption on their next weighing. They are all very well handled now and quiet and we are looking to build on this by rotating all the R2s through the milking mob to train them to the shed for next season as well as the PKE and daily routines under Halter.
One part time staff member is responsible for all young stock work. The animals are weighed regularly which gives the opportunity to rotate any lighter weight animals in to a second preferentially fed mob. All young stock are looking good and as at January 7th the weaners averaged 142 kg liveweight and the R2’s averaged 367 kg which is above target so a very pleasing result.
Looking forward
Reasonable rainfall at the end of December means soil moisture levels are OK for this time of year. The farm has light soil types which dry out very quickly so the situation could change suddenly with the return of some hot, sunny weather.
Feed budgeting remains a priority and all decisions from now on will be a balancing act of managing feed supply and demand to ensure end of season targets for cow condition and pasture cover are met so that next season is not impacted.
Silage, baleage and hay on hand at present equate 194.5 t DM. There is also about 160-170 tDM of maize silage to harvest mid-March and 33.3 tDM of PKE still on contract. Of this about 80-90 t DM will be carried over for next season so this leaves about 300-310 t DM available for the summer and autumn or 600 kgDM/cow.
Pregnancy testing is planned for mid-February, and once empty cows are identified a culling list can be made. If de-stocking is necessary the policy is to remove any cows that are not wanted for the next season regardless of production.
Culls have been booked in to the works early again. There are 50-60 cows scheduled to go between 15th February and 31st March. Getting culls away early also means that higher cull prices are more likely as well as it frees up feed for the rest of the herd.
Further culling will be done in stages from mid-March, depending on feed supply. Some of these will be as in A 2 in milk empties and some as empty carry over cows, (these will also be higher than cull price).
Calving and reproduction
• The calving rates for this year were; 3 weeks, 64 %, 6 weeks, 85%, 9 Weeks, 96%. These are similar to last season, (62%, 82% and 99%).
• The 3 week submission rate for spring 2023 was 88%, which similar to last season, but give that 40 of the purchased A2 cows didn’t calve until September, this is a reasonable result.
• The submission rate for the first calvers is 97% which is particularly pleasing given that their live weights were below target going into the winter.
• Mating ended 22 December, with AB used the entire 11 weeks, (short gestation semen used on the last 2 weeks). 6 bulls were run with the 104 yearlings.
• The early estimate is for a 6 week in calf rate of 69% which is up slightly on last year, (67%).
Other points of interest
• Significant capital outlay to upgrade the sheds has helped to make stock work and weighing a lot easier. The information from this means decision making is easier as it is based on fact.
• The plant changes were all in the North shed. With the changes to our farming system and lower peak cow numbers, we can now milk all cows through this shed 80% of the time.
• The shed upgrades included rebuilding the plant wash system, a new milk lift pump, adding automatic cup removers and automatic teat spraying.
• The main benefits of investment and ability to enhance our use of Halter would come from making the North shed the most efficient.
• We also have plans to put auto drafting Protrack in there but have delayed as manual drafting, (“Bro-track”), is simple and can be done with the collar lights from Halter easily.
• The combined cost of drafting and the modifications to the yard, (>140k) was outside our current capex plans.
• The changes to the North shed have enabled us to either remove one person from the shed or increase the amount done during milking, (tail trimming, drafting, lame cows etc…).
• In addition, the cows are milking out well and getting thoroughly teat sprayed resulting in a vast improvement in teat condition. We had not realized how variable we were in our judgement of milking time even using Tmax.
• Both sheds have had their vet/AB races modified to improve their ease of handling the regular weighing and managing of young stock along with AB and general cow work.
• Information from Halter is continuing to improve decision making processes. The pasture management modelling has been upgraded to now model and predict responses to changing round length, stocking rate, feed intakes, nitrogen applied and supplements fed. The model is using growth rates predicted from local and actual farm data which provides much better output, and is not impacted by overcast days and cloud cover like some other systems.
• It has allowed a better understanding of the feed situation at any one moment and the ability to better predict the feed ahead.
• Based on this improved modelling the decision was made to drop other formal forms of pasture cover assessment.
• Rumination data was used again this season to aid with decisions about keeping cows in the colostrum mob. It has been more successful this year, (that is, less issue with cows going into the herd too soon).
• Springers and colostrum cows were fed more hay to increase their rumination. This has resulted in much reduced clinical metabolic issues during calving and transition. Numbers of animals and metabolic treatments used is similar to last year but we have been very liberal in treating preventatively any at risk animals (old, difficult calving, light BCS…). Losses to date are below 1%.
Environment
• This year the focus is on maintaining the riparian areas that were planted previously, particularly the 17,729 plants planted in the autumn and spring of 2023. This large number of plantings was only able to be done with support from two local industry bodies who helped willow removal, planting, and providing plants at a subsidised cost: Waipa Rerenoa Restoration Project is a Waikato River Authority funded project and Puniu River Care our local marae based river care group (https://puniuinc.org/)
• There is a long maintenance list including preparing future planting areas. This can have a 2-3 year lead in. For example, controlling blackberry and moving fences out 5 m from waterways.
• We have committed to panting another 5,000 plants, (about 0.5 ha and 4,000 plants of new riparian area plus 1,000 bigger trees planted into existing riparian areas).
Future Plans
We continue to be involved in industry projects including a field day on farm in the autumn as part of DairyNZ’s Step change project. This is a follow up on work done a year ago with modelling for the farm changing from a system 2 to a system 1 with all young stock home.
Another industry project is the Resilient Pastures project that was initiated in Northland by a group of farmers, industry bodies and scientists to collectively design a research and extension programme. It will address the declining pasture persistence and develop proven adoptable adaptation strategies for farmers to future proof pastoral farming across Aotearoa.
We will all be challenged to continue maintaining healthy pastures from the threats of climate extremes, pests, diseases and weeds as well as our own management, (overgrazing in summer). This project looks to build long term resilience through research, extension and collaboration.
Strategy and financial
Farm policy and infrastructure
Feed
Herd
People, health and safety
Environment
Strategies for managing a dry summer
October 24th, 2023
How has the season been so far?
What are cash flow forecasts looking like? How will a drought impact this?
Has the NIWA El Nino forecast changed how you are approaching this summer?
NIWA’s El Nino forecast has not changed our summer management plans as dry summer conditions are always factored into the farm plan and budget.
What strategies do you have this season for when a drought comes early, late, or is prolonged?
Budget last updated April 2023
INCOME | $TOTAL | $/KgMS | $/COW | $/HA |
Net Milk Sales
Milk income is based on 194,100 kgMS at and advance rate of $6.05/kgMS, (including a premium for supplying all A2 milk), and 220,000 kgMS at a deferred rate of $1.40/kgMS, (working on a final milk price for 2022-23 of $8.20/kgMS). The Fonterra dividend is estimated at $0.20/share on 237000 shares. The Fonterra capital dividend estiamted at $0.50/share is excluded from this budget. This is net of The DairyNZ levy of $0.036/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.
|
1,522,900 | 7.85 | 2,986 | 6,621 |
Net Dairy Livestock Sales
Stock sales are made up of 90 MA cows/R2 heifers @ $660/head, 20 heifer calves @ $60/head, 360 bobby calves @$45/head.
|
76,800 | 0.40 | 151 | 334 |
Other Dairy Cash Income
Employee rent received for 3 houses.
|
31,000 | 0.16 | 61 | 135 |
NET DAIRY CASH INCOME | 1,630,700 | 8.40 | 3,197 | 7,090 |
EXPENSES | $TOTAL | $/KgMS | $/COW | $/HA |
Wages (incl. ACC)
Covers 1 farm manager, 1 assistant manager, 1 farm assistant and 0.6 FTE for casual for calf rearing, and throughout the year, as required. Halter technology has changed work routines and resulted in much improved work efficiencies. At the peak of calving, the staff hours worked is now under 45 hours per week.
|
270,000 | 1.39 | 529 | 1,174 |
Animal health
Focus is on prevention with minimal veterinary intervention required. Includes blood tests and copper supplementation. SCC for 22-23 is 129,000. The policy is to teat seal the whole herd, and use a selective programme for dry cow therapy. High SCC cows get long acting antibiotic, mid-range SCC cows get short acting antibiotic and low SCC cows are just teat sealed.
|
45,000 | 0.23 | 88 | 196 |
Breeding and herd improvement
Includes anoestrus and synchronisation treatment for non-cycling cows and 3 weeks AB plus 2 days to cover returns from cows treated for anoestrus. The top 20% of the herd on genetic merit are mated with sexed semen, the lowest 20% are mated to AB short gestation, (SG), Hereford semen and the rest of the herd is mated with premier sires. AB will continue for a further 5-6 weeks using SG Hereford semen. The last 2 weeks of mating is with AB using short gestation bull semen. Total mating length is 11 weeks, but with the use of SG semen the actual calving period is about 9 1/2weeks. The aim is to be finished calving by September 20th. Herd tests are 4 times per year, (drought permitting), with once a day testing. Cost also includes herd recording and identification, (including freeze branding of heifers coming into the herd). The budget at this stage includes mating the heifers to AB. Halter technology will provide all information for heat detection this season so no tail painting will be required.
|
45,000 | 0.23 | 88 | 196 |
Farm dairy
Rubberware is changed once a year, standard detergents used. Does cover the use of 2 sheds during the year. Twice a day milking till mid-December and then once a day for the rest of the season. While the plan is to only use one shed at a time apart from during calving both sheds will be used during the year depending on proximity to where the herd is grazing. Therefore both sheds need to be fully commissioned and operational.
|
9,000 | 0.05 | 18 | 39 |
Electricity (farm dairy, water supply)
Use hot water washes daily. Both sheds have a heat recovery unit fitted to the chiller so hot water is cheaper.
|
30,000 | 0.15 | 59 | 130 |
Supplements made (incl. Contractors)
This includes $52,800 for stack silage made on farm. It is estimated that 60 ha will be made, (2 t DM/ha @ $440/t DM). If there is a surplus of pasture in summer this will be made as small bales of hay to use for calves and springers. All harvesting is done by external contractors. Supplements made costs also includes $25,000 for 7.4 ha of maize silage grown on farm, ($3,300-$3,400/ha), using strip tillage and direct drilling. Yields of 18 t DM/ha are expected.
|
77,200 | 0.40 | 151 | 336 |
Supplements purchased
100 t PKE, (wet weight), @ $450/t landed, already contracted. 10 t DM hay @ $760/t landed.
|
52,600 | 0.27 | 103 | 229 |
Calf rearing
100 replacement heifer calves reared plus 5 beef. Calves are reared on colostrum and whole milk along with meal. Budget includes 7.0 t calf meal @ $1400/ t plus $3,000 bedding and dehorning and equipment. 380 bobbies will also consume colostrum for 6 days.
|
12,800 | 0.07 | 25 | 56 |
Young and drystock grazing
All yearlings and weaners are grazed on farm.
|
0 | 0.00 | 0 | 0 |
Winter grazing
All cows and in-calf heifers are grazed on farm.
|
0 | 0.00 | 0 | 0 |
Fertiliser (incl. N)
Have done individual paddock testing in the past so this information is used to be more strategic with fertiliser applications. Information from Halter technology has been used to modify grazing patterns and a redistribution of fertility is already evident after 30 months. This has resulted in lower requirements for synthetic fertilisers and more targeted applications. Fertiliser is largely applied with own gear, which allows for more targeted applications. The budget allows for 20 t DAP @ $1,600/t, 22 t sustaiN @ $1,150/ t and 20 t muriate of potash @ $1,550/t plus 40 t lime, (for 30 ha of crop paddocks), @ $40/t plus $6,000 cartage. This will deliver 60 kg N, 174 P, and 44 Kg K. DAP is used in the spring and urea the rest of the year. Effluent is applied to 75 ha - this area gets less fertiliser. Crop fertiliser allocation and cartage and spreading costs are included.
|
95,900 | 0.49 | 188 | 417 |
Regrassing & cropping
The budget is for planting 20 ha of chicory and 9 ha of turnips plus the regrassing of these areas in the autumn and the 7.4 ha maize area. There is some allowance for patching and undersowing of other pasture as needed. The areas to be planted are fluid and will depend on weather, soil conditions and pasture growth rates at the time of planting.
|
66,900 | 0.34 | 131 | 291 |
Weed and pest
Californian thistles are still a problem in some paddocks. Treatment includes topping so that regrowth is all at the same flower bud stage before spraying with an appropriate weed spray. Other weeds that are an issue are white daisy and yellow bristle grass. Includes about $6,000 for planting preparation and maintenance of existing riparian plantings.
|
14,000 | 0.07 | 27 | 61 |
Vehicles & fuel
Includes $18,000 for fuel, (with discounts from FarmSource), and $22,000 for service and repairs for tractors and other farm vehicles. Have very few vehicles - tend to use contractors for bigger jobs.
|
40,000 | 0.21 | 78 | 174 |
R&M (land, buildings, plant, machinery)
Have a policy of doing big maintenance jobs in good payout years so here is no major R and M planned for this year. Includes $16,000 for dwellings and other buildings, $1,000 for fencing, $3,000 for water supply, $15,000 plant and machinery, $15,000 for tracks and yards.
|
50,000 | 0.26 | 98 | 217 |
Freight and general farm expenses
Includes $5,000 for dog expenses, protective clothing and sundry, plus $4700 for bio security levy, ($0.024/kgMS).
|
9,700 | 0.05 | 19 | 42 |
Administration
Do own budgets, GST and PAYE. Covers for accountancy, communication, computer, subscriptions and mail, legal and consent costs and fees and subscriptions. Includes monitoring subscription for milk temperature, fuel levels and water flow.
|
20,000 | 0.10 | 39 | 87 |
Insurance
Reviewed every couple of years to ensure it is still relevant.
|
17,000 | 0.09 | 33 | 74 |
ACC
Owner ACC only. Employer ACC is included in wages.
|
5,000 | 0.03 | 10 | 22 |
Rates
Includes Council rates and regional environmental rates. Farm has multiple titles so rates are a bit higher than similar sized properties.
|
26,000 | 0.13 | 51 | 113 |
Other expenses
This covers the 12 month lease for Halter hardware, (neck halters), and software support for the Halter technology; $16/cow/month on an average number of 490 cows and 100 yearlings for the year, less a discount for one payment upfront for the year. This is the first year for the heifers so the final cost may differ from budget.
|
104,000 | 0.54 | 204 | 452 |
TOTAL FARM WORKING EXPENSES | 990,100 | 5.10 | 1,941 | 4,305 |
CASH OPERATING SURPLUS | 640,600 | 3.30 | 1,256 | 2,785 |
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
Expect to have similar number of animals on farm at the end of the season, but there will be more MA cows and fewer in calf heifers. Values used are 2022 IRD NAMV.
|
12,400 | 0.06 | 24 | 54 |
Labour adjustment
This covers 0.4 FTE of unpaid management input from the owners. The owners have stepped back more from hands on farming and are spending more time in a management role and pursuing off farm interests. This also allows more time to focus on learning about, and integrating the use of Halter into the farm business so maximum benefit can be gained from using this technology.
|
40,000 | 0.21 | 78 | 174 |
Feed inventory adjustment
With the good 2023 autumn, more supplement will be carried into the winter than usual so it is expected there will be 40.8 t DM less on hand at the end of the season than at the start of the season. This is valued at $440/t DM.
|
-18,000 | -0.09 | -35 | -78 |
Depreciation
Depreciation is based on the 2021-22 actual values plus allowance 2 further years depreciation and for asset purchases and sales for 2022-23 and 2023-24.
|
70,000 | 0.36 | 137 | 304 |
DAIRY GROSS FARM REVENUE | 1,643,100 | 8.47 | 3,222 | 7,144 |
DAIRY OPERATING EXPENSES | 1,118,100 | 5.76 | 2,192 | 4,861 |
DAIRY OPERATING PROFIT | 525,000 | 2.70 | 1,029 | 2,283 |
2020-21 Season review
2020-21 Numbers at a glance | ||
Financial KPI's* | Budget | Actual |
Milk Production (kgMS/ha) | 931 | 936 |
Milk Production (kgMS/cow) | 339 | 349 |
Net Dairy Cash Income ($/kgMS) | $6.54 | $7.60 |
Total Farm Working Expenses ($/kgMS) | $3.99 | $4.25 |
Cash Operating Surplus/Deficit ($/kgMS) | $2.05 | $3.35 |
Gross Farm Revenue ($/kgMS) | $6.49 | $7.54 |
Operating Expenses ($/kgMS) | $4.11 | $4.42 |
Operating Profit ($/ha) | $2,173 | $2,916 |
*These KPI's are based on cashbook actuals to 31 May 2021 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.
Click here for PDF of 2020-21 budget v actuals
2019-20 Season review
Financial KPI's* | Budget | Actual |
Milk Production (kgMS/ha) | 936 | 817 |
Milk Production (kgMS/cow) | 349 | 309 |
Net Dairy Cash Income ($/kgMS) | $6.93 | $7.56 |
Total Farm Working Expenses ($/kgMS) | $3.87 | $4.56 |
Cash Operating Surplus/Deficit ($/kgMS) | $3.07 | $3.01 |
Gross Farm Revenue ($/kgMS) | $7.02 | $7.46 |
Operating Expenses ($/kgMS) | $4.05 | $4.78 |
Operating Profit ($/ha) | $2,782 | $2,193 |
*These KPI's are based on cashbook actuals to 31 May 2020 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.
Click here for PDF of 2019-20 budget v actuals
Feed situation May 2020
Dry off date: 50% on 13/3/2020 and 50% 16/3/2020.
Culls still on farm: 9 empty heifers and 2 cows (slips) – will go before late May if possible.
% Milking area regrassed: 12% of farm (67% in annuals and 33% permanent pasture) due for first graze soon. Sown mid to late April which is 2-4 weeks later than usual due to lack of moisture.
N applied this autumn to date: 50% of the farm @ 30kg N per ha, with autumn fertiliser. Application started late April (about 10 days late) as access to contractors was held up.
Planned N application to end of month: 25% of the farm @ 30 kg N per ha.
Current situation | Target for 31/5/2020 | Target for PSC | |
Stocking Rate | 2.79 | 2.74 | 2.74 |
Body Condition Score | 4.75 MA cows 5.2 Heifers | 4.8 MA cows 5.3 Heifers | 4.9 (none less than 4.7) MA cows 5.5 Heifers |
APC kg DM/ha | 2100 | 2450 | 2300 |
Growth rates kg DM/ha/day | 38 | 36 is minimum to get to target | Average is usually 18-20 |
Supplements on hand | 50 kg DM per cow wintered | 21 kg DM per cow wintered | 15 kg DM per cow wintered |
Actions taken to address the feed shortage
Plans to achieve target APC and BCS and PSC targets
Concerns and plans for the upcoming weeks
2018-19 Season review
Financial KPI's* | Budget | Actual |
Milk Production (kgMS/ha) | 936 | 899 |
Milk Production (kgMS/cow) | 338 | 323 |
Net Dairy Cash Income ($/kgMS) | $6.35 | $6.47 |
Total Farm Working Expenses ($/kgMS) | $3.65 | $3.76 |
Cash Operating Surplus/Deficit ($/kgMS) | $2.69 | $2.71 |
Gross Farm Revenue ($/kgMS) | $6.45 | $6.40 |
Operating Expenses ($/kgMS) | $3.90 | $4.02 |
Operating Profit ($/ha) | $2,384 | $2,144 |
*These KPI's are based on cash book actuals to 31 May 2019 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.
Click here for PDF of 2018-19 budget v actuals
2017-18 Season review
Financial KPI's* | Budget | Actual |
Milk Production (kgMS/ha) | 971 | 943 |
Milk Production (kgMS/cow) | 347 | 340 |
Net Dairy Cash Income ($/kgMS) | $5.45 | $5.78 |
Total Farm Working Expenses ($/kgMS) | $3.80 | $3.66 |
Cash Operating Surplus/Deficit ($/kgMS) | $1.65 | $2.18 |
Gross Farm Revenue ($/kgMS) | $5.21 | $5.55 |
Operating Expenses ($/kgMS) | $4.02 | $3.78 |
Operating Profit ($/ha) | $1,158 | $1,669 |
*These KPI's are based on cash book actuals to 31 May 2018 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.
Click here for PDF of 2017-18 budget v actuals
Spring was cold and relentlessly wet so got off to a slow start. Conditions improved from late September and because our farm drains well we had caught up lost production and were ahead by late November. Then the dry hit and production crashed precipitously! We put the cows onto once-a-day in early December and had no good quality feed to put them on so they didn't hold production levels as well as usual. Late summer things started to improve. We dropped only a proportion of our empties early as we had lots of feed all of a sudden. We had almost caught up with production again when we started feeding the maize. Unfortunately we had a new contractor this year and forgot to ask for a longer chop. It was fed out as we normally do but because it was a very fine chop and the grass was growing a lot more rapidly than normal - almost like spring pasture, a significant proportion of the herd developed ruminal acidosis to a greater or lesser extent. This dropped production precipitously again and it took a long time for the cows to pick up again this late in the season. We ended up with production 5,000 kg MS below budget but equal to last season which was not a particularly good season either!
The cows have picked up well since drying off and we are happy with their condition and have good pasture cover for next season. Have had a bit of an issue with lameness as the races have taken a hit with all the wet weather and cows have been stood off a bit as well.
Financially the year has gone reasonably well, with a slightly higher milk price offsetting the 3% lower than budget milk production.
Farm working expenses for the year finished at $3.66 per kg MS (including $1.15 per kg MS of owners PAYE wages). This is 3.7% less than budgeted with the main variation being that 100 t DM of maize budgeted to be purchased in the autumn was not needed as some extra Maize was grown, 5 ha more grass silage was made and very little was needed to be fed in the autumn due to exceptional pasture growth rates.
Despite the lack of deferred income of about $1.20 due to the 17-18 season being the first year of operation under this equity partnership, the business generated enough cash surplus to be able to repay the early season working capital borrowings, plus put aside sufficient funds to tide us over the 2018 winter and early spring.
Other points of interest
The maize was again planted with minimum tillage – spray and direct drill which does impact yield. It was slow establishing because of the dry conditions but despite that still gave 16-17 t DM per ha.
We are very happy with the minimum tillage approach as the soil structure is much improved and will continue with this method in the future.
N use was 85 kg N per ha which was similar to the previous season but up on budget, again largely due to the cold wet weather in the late spring period.
Somatic cell count for the season is 132400 which is up a little on the previous season but still reasonable given the cows were on once a day for so long and just how wet it was in the spring.
The first round of mating went well with good submission rates, however the very hot weather and poor quality pasture through late November and December resulted in above average numbers of late empty cows.
2016-17 Season review
Financial KPI's* | Budget | Actual | Physical KPI's | 2016/17 |
Net Dairy Cash Income ($/kgMS) | $4.67 | $6.29 | Milk Production (kgMS/ha) | 923 |
Total Farm Working Expenses ($/kgMS) | $2.69 | $2.95 | Pasture and Crop Eaten (t DM/ha) | 12.2 |
Cash Operating Surplus/Deficit ($/kgMS) | $1.98 | $3.34 | Imported Supplements & Dry Cow Grazing (% of total feed eaten) | 5% |
Gross Farm Revenue ($/kgMS) | $4.69 | $6.33 | Six Week In-Calf Rate (*A=Actual E=Estimated) | 78% A* |
Operating Expenses ($/kgMS) | $3.35 | $3.65 | First Calvers on Farm End of Season(% of first calvers at start of season) | 88% |
Operating Profit ($/ha) | $1,303 | $2,517 | Milksolids per Labour Unit (kgMS/FTE) | 68,472 |
*These KPI's are based on cash book actuals to 31 May 2017 and estimated non-cash adjustments. The final financial performance based on financial statements may differ.
Click here for PDF of 2016-17 budget v actuals
The 16-17 season was one of two halves;
A cold wet August followed by a very dull, wet October with poorer pasture growth and quality due to less sunshine had an impact on production and costs for the first half of the season. Production was down 6,000 kg on budget by the end of December and more supplement had been purchased in early spring.
Better than average summer/autumn rainfall meant less supplement was needed and the decline in production was halted.
Below average pasture growth rates and very wet soil conditions in May 2017 has meant that the season has finished with cows in condition score 4.8 and pasture cover of 2,100 kg DM/ha, both of which are a little behind target. Continued slow pasture growth for the early winter and dull wet conditions are impacting our target pasture cover at calving.
A deliberate decision to carry out additional R &M in response to the increase in milk price accounted for $0.10 /kg MS and unplanned repairs to farm vehicles accounted for another $0.07/kg MS. This combined with production being down 3% on budget gave farm working expenses (FWE) for the year of $2.95 per kg MS ($0.26 /kg MS up on budget).
Keeping a close watch on the budget as the season unfolded meant that decisions could be made quickly as circumstances changed.
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.