“And the first question was – are we growing and harvesting as much feed as possible?” James says.
The next was about how much risk they were prepared to shoulder when it came to bought-in feed levels and what that meant for stocking rate.
The review was more one of optimising the farm system and returns as well as limiting risk in the volatile environment rather than simply slashing costs.
While it’s only the second season on the 128ha Kinloch Dairy near Culverden they’re no strangers to the area, having been involved in the wider Rutherford family farming business for nine years.
They’ve worked with Belinda’s family including brother Duncan and brother-in-law Kevin O’Neill to grow the business, mainly through conversion of dairy units on tracts of the long-held family farm, Leslie Hills.
James also acted as overseer for corporate farming entity Craigmore Farming during the conversion phase of two of its farms in the area and is deputy chairman of the Hurunui-Waiau zone committee set up as part of the Canterbury Water Management Strategy.
When James and Belinda bought Kinloch they did plenty of work at the front end, planning and modelling systems with volatility and risk in mind.
Along with the wider family enterprise they were looking at bringing fodder beet into the system and in their case considering wintering half the cows at home.
With his experience on the zone committee James knew how important it was to set up the system so having cows on over winter didn’t unduly increase their nitrogen losses.
They also had to consider while the crop could produce high tonnages and cows would be transitioned on through autumn using it as a supplement, the area was essentially out of the grazing round during much of the milking season.
Up to 450 cows had been peak-milked on the farm before they bought it which meant a stocking rate of close to 3.8 cows/ha.
James has completed an Overseer course and his analysis showed with the beet in the system a cut in cow numbers was necessary to both achieve their nitrate loss target and deal with the loss in milking platform.
They peak-milked 400 cows in their first season, giving a stocking rate of 3.57 cows/ha if the seven hectares of fodder beet isn’t counted in the milking platform area and 3.36 cows/ha if it is.
They used close to 690kg drymatter (DM)/cow of palm kernel and 160kg DM/cow of silage in that first season as well as about 150kg DM/cow of fodder beet through autumn.
Production for the season came in at 493kg milksolids (MS) per cow with farm working expenses at $3.89/kg MS.
The high per-cow production helped dilute costs and while tight pasture management to ensure cows were consuming high-quality feed was stringently followed, feed other than pasture was almost one tonne DM/cow.
Levels of bought-in supplement, particularly palm kernel were higher than other farms in the family business.
“Last year we sat down at a governance level and asked, although we’re profitable using this amount of palm kernel how comfortable are we with the risks around that?” James says.
As part of that discussion James and Belinda challenged their own farm system further on Kinloch.
“That’s when we asked, are we growing as much feed as possible?”
That had to be the first question, he says.
Grazing management is already a very high priority so harvesting as much of what’s available every day is the focus.
“But we had to look more closely at just how much feed we had available.
“We looked for the easy wins first and did an audit of the irrigation system. Straight away we found it wasn’t putting on what it should have been.”
Over the years various sprinklers had been replaced with new ones of a different nozzle size and the sprinkler system was only delivering about 75% of its original design.
A distribution uniformity test revealed that overall the pivot was also performing well-below its potential with only five or six nozzles in the correct position on the pivot against the design.
“For spending not much we got a huge improvement in terms of getting the right amount of water on more evenly.”
They also looked at their paddock records in MINDA Land and Feed and, coupled with their own knowledge of the state of paddocks, they targeted the regrassing programme to the poorest performers.
By March the new paddocks had already grown 50% more grass than the remaining worst paddock.
“When we look at our pasture harvested figure this season it looks like focusing on those two areas has delivered an increase of about 400kg DM/ha – from 12.8t DM/ha to 13.2t DM/ha,” James says.
During their system re-think last year they also looked at stocking rate for the current season.
“Once we’d identified the things we wanted to do to make sure we were growing and harvesting as much feed as possible we looked at stocking rate and again questioned our reliance on palm kernel.”
It’s been a cost-effective supplement but there was a level of risk attached to it.
“If it suddenly wasn’t there we’d have to rely on grass silage and that can be expensive and of varying quality.”
Given they were tightly managing pastures, harvesting high-quality pasture with the cows, dropping out bought-in feed meant lowering stocking rate, James says.
By dropping 30 cows and peak milking 368 cows they reduced the stocking rate to 3.07 cows/ha and have limited palm kernel to 450kg DM/cow.
They’ll feed about 100kg DM/cow of home grown silage having made 40t DM off the milking platform.
That’s a similar quantity of silage cut on the milking platform as the previous season but the lower stocking rate meant they’ve been able to regrass 18% of the farm so far this season, adding to their ability to grow high-quality pasture.
The increased pasture production thanks to regrassing and re-tuned irrigation along with the cut in cow numbers and reduced bought-in feed costs have all helped cut costs for this season to $3.60/kg MS based on production of 480-485kg MS/cow.
James says they’re on track to achieve budgeted costs and production but warns that pulling back cow numbers has made it more challenging to manage feed quality through high-growth periods.
“There is a real management risk at lower stocking rates. If the feeding management isn’t dead-on then you could very quickly end up in a worse position than you were in at a higher stocking rate.
“The critical thing is having the skills to run the system as efficiently as possible. If you drop the stocking rate there’s some very real risk – if you expect your per-cow production to go up and it doesn’t, your costs stay the same and your debt servicing is the same, you’re looking at a bigger hole than before.”
There are more decisions to be made managing surpluses than deficits and that’s why it’s even more important to be checking cows and the status of the paddock covers through the day and not just when getting the cows in.
“You’ve got to have people 100% focused on feed quality, residuals and cow behaviour. All staff take responsibility for monitoring feeding and are expected to ask the questions:
‘Are the cows up on their break or are they spread back out? Have they hit an even residual, can we get a bit more into them before milking?
‘If the paddock’s still clumpy is there a good reason such as rain or mud? Will I starve these cows by making them clean this up?’”
Because pasture quality is paramount, James will get the mower out to tidy up a paddock if needed. He prefers to mow in front of the cows but will also go in behind them.
“You have to be making decisions every day at a lower stocking rate so the skill-set of the people you have making them is very important.”
It can be even trickier at a low payout because you have to deal with the added pressure of not wanting to get into a feed hole and having to put supplement in.
“When the payout’s good and you do the farm walk and the forecast is looking good you might drop a paddock out and be aggressive to keep feed quality.
“But when it’s low you might be inclined to wait that extra day or two to see how the weather goes because you don’t want to risk having to put in extra feed.
“It’s a fine line because when you’ve dropped stocking rate and the aim is to lift your per-cow production, you know chasing a high per-cow (production) you can end up wasting some grass to do it.
“You really have to be comfortable in yourself and your ability to get that right.”
Cutting costs
When they were reassessing stocking numbers they also looked hard to see if there was a critical point at which they could reduce labour costs but they weren’t able to do that.
They have two full-time staff – Hamish Kilpatrick as manager and Marcelo Menna – and use casual or part-time labour to help in peak periods, bringing their total labour to 2.5 full-time equivalents.
In light of dismal milk returns additional culls have released some cash from the balance sheet and the use of sexed semen allowed the sale of an extra 35 artificially bred heifer calves along with a few bull calves last spring.
James says they’ve looked hard at all their costs, trying to take 5-10% out of each line.
There’s buying power in the larger family group and that’s helped with some bulk purchases.
Maintenance phosphate hasn’t gone on any areas where Olsen P levels are already adequate and effluent has been applied more precisely from an underslung line on the pivot.
Repairs and maintenance have been slashed and some preventative animal health such as teat sealing heifers has been taken out.
Two of the regrassed paddocks have been put into the tetraploid Italian or short-term ryegrass Feast II.
James expects it will give better cool-season production and, providing the fodder beet yields 25t DM/ha or better as it did last season, the couple has the option of keeping 90% of cows onfarm this winter.
“If we found cheap-enough grazing we could send more cows off but based on the feed budgets we’ve done we can keep 90% at home.”
That’s helped drag budgeted costs for next season down to $3.40/kg MS.
