Friday, March 29, 2024

Achieving more with less

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Having your every move scrutinised might be a daunting prospect but Jason and Amber Templeman told Anne Hardie being Marlborough Monitor Farm for the past four years has helped them identify opportunities to make their business as profitable as possible. 
Reading Time: 8 minutes

Income has halved since Jason and Amber Templeman opened their gate and books for scrutiny as the Marlborough Monitor Farm but their improved pasture performance means they achieve the same production with less supplement.

The monitor farm project was the result of several farmers seeking local data to demonstrate the possibilities and options for other farms in the region. It kicked off on one farm with Jason chairing the committee, before it swapped to their own farm four years ago.

Their farm decisions, cows and pasture have been analysed, questioned and discussed in great detail as the business went through the payout high of $8.40/kg milksolids (MS) to today's low close to $4/kg. The May field day was the last before the project wound up.

It's not the easiest dairy farm to manage, rolled out in jagged chunks from near the edge of an inlet in the Marlborough Sounds to the far reaches of the valley about 3.5km away. To make it worse, the dairy sits right at the bottom edge of the farm and the cows often face a long, hot walk in summer which takes its toll on condition, feet and possibly reproduction. They move from twice-a-day milkings to three milkings every two days and once-a-day milkings through the season to try to avoid those issues.

The farm covers 117 effective hectares and they have a support block of 125ha further out in the labyrinth of hills and inlets of the Marlborough Sounds. On the milking platform they milked 375 cows at the peak this season – down from 405 cows three years ago – and produced close to 160,000kg MS, which was 1367kg MS/ha and 426kg MS/cow.

The Templemans bought the 60ha family farm in 2010-11 after being lower-order sharemilkers on it for a number of years, then leased a neighbouring 60ha dairy farm to expand the operation, so they run the business with a high level of debt.

But the self-confessed perfectionists are driven to lift profitability by getting all the paddocks up to good fertility, reducing their reliance on supplements by growing and harvesting more home-grown feed, and decreasing costs.

"We wanted to know more about our business. So we had to know we were as profitable as we could be and look for opportunities where we could make more money and be more profitable."

When the payout was high, they were putting about two tonnes of supplements a hectare into the system but knew it was unsustainable. The monitor farm project gave them the opportunity and expert advice to lift pasture production.

In 2012, when they became the monitor farm, they began soil testing every paddock on the farm and found 30% of their paddocks were below the optimum phosphate level, so capital applications of fertiliser were spread on all those paddocks. It cost an extra $7000, but now every paddock on the farm has reached optimum levels, so fertility doesn't limit production.

Half the paddocks were also below the optimum pH level, so lime was applied strategically. By reaching optimum fertility in all the paddocks, they got a better response from any nitrogen they applied.

Soil testing across the farm cost about $3000 but they consider it money well-spent and combined with a targeted, objective pasture renewal programme, has resulted in better and more uniform pasture performance

To show farmers the importance of objective measurement, Agriseeds pasture systems specialist Graham Kerr asked those at the field day to choose the better performing of two paddocks. It was a pretty even split of farmers choosing different paddocks, but results showed one paddock had significantly more grass production. Likewise, choosing the "ugly" paddocks for renewal often lacked the information to choose the paddock and ensure the fertility was right first.

"It's as simple as doing your soil test and don't be put off by the initial costs, because the gains are really a no-brainer. Take it to a per-paddock level and you see results."

The Templemans have divided the farm into three areas based on productive potential and within each group recorded the actual tonnes drymatter (DM)/ha yield, the potential yield, which is the equal to the best paddock less 2t DM/ha, and then the difference between actual and potential yield. They can then identify which paddocks will give the greatest returns from renewal, while looking for the reasons for the poorer performance of those paddocks.

Irrigation covers 95% of the farm now and combined with fertility and renewed pasture, the best paddocks are producing up to 22t DM/ha, while flat irrigated paddocks with new grass average 20.3t DM/ha. Other irrigated paddocks drop to about 15t DM/ha and by working out their potential yield, the Templemans know they should be able to grow another 193t DM. If they managed to achieve even 93t DM of that, it would equate to an extra 9000kg MS.

During 2014-2015 the cows munched through 15.1t DM/ha of pasture and crop, and 1.3t DM/ha of imported supplements.

Though it would be cooler to walk the cows longer distances in the morning, the Templemans choose to have their night paddocks close to the dairy to keep staff happy and then switch to three milkings in two days as the summer heat kicks in.

They employ two full-time staff, making labour the farm's biggest expense. But a distant runoff and wintering the cows adds to the workload and with four young children the Templemans want to get a work-life balance that caters for their family.

It's a juggling act at times, getting the balance right. And it's just the same for major decisions on the farm, which Marlborough veterinarian Nick Hansby discovered by being involved in the monitor programme.

There are still reproduction hurdles to overcome, but a low payout spreads money thinly and the vet profession needs to look at the overall farm plan, he says.

"This season there wasn't any money to do some things. The cost to a farm in achieving the final output, from fertiliser to vaccination, staffing costs, etc, and the vet profession has to move away from just animal health to look at the overall farm plan. That's what being involved in the monitor farm has taught me."

And then, successful reproduction is a matter of everything falling into place for that six-week in-calf result, he says.

This season, 68% of the herd was in-calf by six weeks and 74% by nine weeks. It was the 2013-born cows, or first-calvers, that pulled the figures back. Only 52% of those cows were in calf by six weeks and 66% by nine weeks.

Jason and Amber say the biggest reproduction challenges on the farm are walking distance, heat and getting the intakes exactly right at that time of year, especially with limited or no supplements. They believe cutting out spring supplements has affected their in-calf rate this year.

Next season they plan to put their first-calvers and other at-risk cows on once-a-day (OAD) milking about 30 days before the start of mating and then preferentially feed them.

Despite the challenges to improve reproduction, the herd has made huge gains in breeding worth and production worth and the result is a great herd that Jason and Amber are proud to own. Initially, the herd was a mix of large Friesians, Jerseys and everything in between, with those crossbreds between F8 and F12 performing best.

Young stock are ideally weighed at every second drench, so every 12 weeks, with weights recorded on Minda Weights, which Jason says give them the information to help justify decisions. They weaned 154 heifers this year, which are run on their support block. The distance makes it hard to run the young stock in two herds of different sizes, so the Templemans aim to keep it simple and just feed them well.

The 125ha support block is bigger than their needs, so each year they breed or buy in 30 to 40 AI heifers to grow out and give them more livestock sales down the track. Last year those bought-in calves also brought rotovirus into the unvaccinated herd and it quickly spread through their own calves.

Hansby says vaccinating the herd helps the earlier calves, but farms run out of sufficient colostrum to build up immunity in the later-born calves.

"They have to have the milk from a vaccinated animal as a portion of their diet and there's too much dilution of colostrum after six to eight weeks. The best supply is the milk from their mum, but the ongoing protection is from your stored colostrum. As you run out of colostrum, the rotovirus starts to show through."

Despite the challenges, their 2014-15 Dairy Base figures show a profit of $2197/ha compared with the Marlborough-Canterbury benchmark of $1643/ha and a Tasman-West Coast benchmark of $511/ha. One of the aims of the monitor farm was to get it into the top 10% for their region, but because only a few farmers have put financial data into Dairy Base, that remains an unknown.

 

Analysing the system

In the past 17 years, the average farm working expenses (FWE) (excluding debt, drawings, tax, etc) on farms has averaged 61.1% of milk payout. Last year it was close to 100% and this year FWE at $4/kg MS will gobble up 93% of a $4.30 payout.

It's the grim reality outlined by Top of the South Farmwise consultant Brent Boyce, who says incomes have halved in the past three years, while expectations from suppliers to the dairy sector have remained high.

This season the Templemans managed to get FWE down to $3.68/kg MS, which was worked out on Rural Cash Manager and adjusts labour and depreciation to compare it with other farmers. They've pared it right back for "survival mode" by cutting out capital expenditure and holding back on maintenance, but acknowledge that isn’t sustainable long-term because vehicles and implements are key to running an efficient operation.

It is very different to three years ago when the goal for the monitor farm was to improve profitability at the $6.15/kg MS payout. Brent put together the figures to show how the farm would be performing today on a $6.15 payout.

Three years ago milking 405 cows to produce 161,215MS at $6.34/kg MS produced an operating profit of $304,718, with FWE making up 73.1% of the gross farm income (GFI). If it had been a $6.15 payout, they would have achieved an operating profit of $274,088 with FWE making up 75.1% of GFI.

For the 2015-16 season, it is estimated they will achieve an operating profit of $110,330 on a estimated final payout of $3.95/kg MS and FWE will make up 86% of the GFI. On a $6.15 payout, they would be achieving a substantial lift in profitability at $461,081 and their FWE would take only 59.5% of the GFI.

They have improved profitability when the figures are put on an even playing field of a $6.15 payout, and Brent is hoping the payout will improve soon.

What do they do in the meantime? Brent did a full-system analysis of the Templemans’ business using FarmWise's SystemWise programme. From that, he recommends they grow more summer crops, in particular chicory on the irrigated areas and use fodder beet as late lactation feed instead of the more expensive maize they use now. Once-a-day (OAD) milking all season would match family needs and help the herd's reproduction. Or they could have varied milking regimes through the season such as twice-a-day (TAD) until Christmas, then three milkings in two days with summer crops, followed by OAD for the last 45 to 75 days of lactation.

He did the figures to compare the different scenarios by calculating the expenses for various systems, then used a $4.30/kg MS and $6.15/kg MS payout to come up with a net margin for each.

Carrying on with the system they followed last season, milking TAD for most of the season and adding some palm kernel, they would end up with a net margin of about $2409/ha at $4.30 ($4983/ha @ $6.15). Going OAD, but otherwise running a similar system, would drop it to about $2338/ha ($4768/ha @ $6.15). If they went OAD and added chicory and fodder beet, they would have slightly higher costs but the end result would be about $2658/ha ($5,302 @ $6.15). Staying with TAD and adding chicory and beet would lift it to $2779/ha ($5,586/ha @ $6.15), whereas dropping to 350 cows on TAD and low inputs would result in $2131/ha ($4,425/ha @ $6.15).

Whatever the system, it has to be sustainable at all payouts and cow condition has to be non-negotiable, he says.

"Harvest as many nutrients and ME (metabolisable energy) inside the farm gate and minimise buying in any feed if possible, but be prepared to pounce if there is a margin.

"Farm to 90% perfection. The last 10% can cost 30%-plus of your income and energy. Go 100% all-out when it pays."

 

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