They’ve looked closely at their business and reduced their bought-in feed from 1140kg/cow to 150kg/cow.
Many farmers will be in the same position as the Simmonds, which is why theirs is a good example to look to as we head into another year with a low milk price.
The couple own a farm of the Central Plateau, close to Rotorua. For the past 18 months they have shared their journey as part of DairyNZ’s Tactics campaign, aimed at helping farmers get through a tough season.
For Nick and Bec the crunch came when Fonterra cut its milk price forecast to $3.85/kg milksolids (MS), down from $5.25 in August last year.
At that point their budgeted farm working expenses were set at $4.09, with interest payments and living expenses on top of that. Seeing their budget in the red prompted some serious number-crunching.
When they really got down to analysing their business through their budget it became very apparent a system change was required.
The initial budget for the 2015-16 season, back in February 2015, had them running a system four farm that relied on purchased feed of about 1140kg/cow, producing 140,000kg MS.
When the forecast price dropped to $3.85, Nick and Bec ran the numbers and found focusing on driving production was going to negatively impact the profitability.
“It became clear that we needed to follow our heads rather than our hearts,” Bec said. “We had previously been rather more driven by production than profit.”
They decided to reduce bought-in feed to 150kg/cow. By doing this, they accepted they will lose a total of 25,000kg MS. However, the numbers showed that this one decision, bolstered the budget by $37,000.
The Simmonds acknowledged the system change provided a big mind-set shift from their previous desire to see their cows fully fed and high-producing. However, the changes have been positive in more ways than just the budget, with Nick commenting the cows in general seemed happier and they had experienced less lameness and mastitis.
They had also been concerned about the impact the reduced feed inputs may have on their pregnancy rates.
However, their recent scan results have come back at 11% empty from 10.5 weeks mating, as opposed to 14% from 11 weeks last season.
“We have gone back to focusing on the basics and becoming better at growing and eating grass,” Nick says. This season, they are on track to harvest 13 tonnes DM/ha, a whopping 2t DM/ha up from 11t DM/ha last season. Nick says this all equates to saving on purchased feed.
The changes to their budget, however, didn’t stop there.
Remembering something from her grandfather, Bec said “if you look after the cents, the dollars will look after themselves”. With this in mind, they went through their budget with a fine-tooth comb and trimmed every expense they could.
Other areas that have come under the knife include:
- repairs and maintenance – they only spend on absolute essentials
- fertiliser – nitrogen has been applied at the same frequency but at a reduced rate
- fuel – they are very conscious of which vehicles are most expensive to operate, if it’s high cost, it stays in the shed
- animal health – Bec says for the first time ever they have received the odd monthly vet bill for less than $100.
Top tips from the Simmonds
Monthly monitoring of actuals against budget is essential. This allows the Simmonds to know exactly where they are at. Because they have become so focused on their budget, they have identified areas where they can further reduce spending.
Through close monitoring of their budget, they have been able to fine-tune every aspect of their business. Bec said lots of little bits add up to something big.
As they look towards next season the Simmonds are setting their budget up for a $4.50 milk price. They have included some repairs and maintenance and phosphate expenses, because they can’t defer these for another year.
DairyNZ is holding a series of Tactics field days in March and April to help farmers achieve what Nick and Bec have through better decisions around feed and pasture.
For more information visit dairynz.co.nz/tactics.
Kim Reid is DairyNZ consulting officer for Central Plateau.
