Friday, March 29, 2024

No fear of the unknown

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Awhitu Peninsula dairy farmers Andrew and Liisa Hamilton not only have a budget drawn up for next season, they’re already predicting what the payout might be for the two following years.
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“Budgeting means there’s no fear of the unknown,” Andrew says.

“You don’t have to be scared of the short term.”

His parents owned the 110ha property near the Manukau Heads lighthouse, from where there’s a clear view of Auckland city from the runoff. They farmed sheep and beef and dabbled with goats, but in 1989 they converted to dairying. 

Andrew was the only one of his parents four sons interested in farming, completing a Bachelor of Commerce at Lincoln University. He worked for wages on Hauraki Plains dairy farms before returning home for a time. 

He then spent six years in Canada where he met Liisa, a builder, at the wilderness resort her family owned. For the last 18 months of his time in Canada he worked on an 80-cow dairy farm on Vancouver Island.

“That was a pivotal moment for me,” he says.

“Per-cow production averaged 38 litres a day and at peak they were doing over 60l.”

It was a cut-and-carry system where he describes the pasture harvesting as “clinical”. “Production was all to do with the quality of the feed delivered to the cow’s mouth,” he says.

“I saw a significant and immediate drop in milk per cow if there was even a small decrease in the metabolisable energy of the feed.” 

The farm, relatively large for that region of Canada, was heavily mechanised with eight tractors used. But operating under that country’s subsidies meant milk couldn’t be over or under-supplied on a daily basis.

“Some days you’d do a milking and then watch the milk pour down the drain,” he says.

There were also lameness issues in the herd and high vet expenses.

“One day there were three different vets on the farm for three different reasons.”

But the importance of feeding quality pasture was very much taken on board when they returned to Andrew’s parents’ farm, seeing an opportunity to advance through the industry, something that was not possible in Canada.

“I would have needed to marry a farmer’s daughter,” Andrew says.

They bought the 135-cow herd and started 50:50 sharemilking. Then they were able to lease a neighbouring farm of 101ha of which 38ha was effective and a further 10ha adjoined the home farm so could be used as part of its milking platform. They bought around 70 of the cows from that farm before buying the property in 2007.

“We thought we had bought a herd of pygmy cows after what we’d seen in Canada,” Liisa says.

“But they’ve got larger as time has gone on and that’s purely based on feeding. We’d seen what cows were capable of in Canada.”

Intelact consultant, Ross Beale, had been hired and was ready to start work the day they came back to the farm.

“We didn’t want to step back into how I had done things because that would have been frustrating,” Andrew says.

In their first year they fed 20 tonnes of palm kernel from trailers in the paddocks to fill feed gaps, boosting the home farm production from an average of about 40,000kg milksolids (MS) to 56,000kg. And they embarked on a long-term pasture renovation programme, tackling 10% of the farms’ predominantly kikuyu pastures every year.

“We wanted to take slow, steady steps,” Andrew says.

They grew turnips for a summer crop as part of the programme but because of continued insect attacks have now switched to chicory. About 11ha of pasture was sprayed out in October and direct drilled. Then it will be sprayed again in March to eliminate kikuyu regrowth and new pasture sown. They used a Bealey diploid and Mainstay clover mix but have now moved to Halo.

“Using a tetraploid has been a turning point,” he says.

They use a few beef cattle they rear to control the remaining kikuyu on the hills.

They don’t platemeter but Andrew has a good eye for pasture residuals.

“I look more closely at what they come out of than what they go into to see if they were fully fed,” he says.

He aims for residuals of 1700kg drymatter (DM) and uses mowers on each farm to top pastures behind the cows, making sure levels are low enough.

“If the cows won’t eat it the first time around, they won’t eat it on the second,” he says.

“It’s all about offering quality over quantity.”

Because the cold September then a windy and dry October he’s not had to top pastures so far this year on the home farm. They’re very much prepared for the predicted El Nino weather pattern to reduce their normal rainfall of 1200mm.

“We plan for a drought every year because we consider ourselves part of Northland,” he says.

They’ve used the UDDER programme for the past 12 years and rely on its data when it comes to pasture growth rates at different times of the year. 

“It’s easy to look back and see what we had to do in drier years,” Andrew says.

“I care about milksolids/ha because that’s crucial. Land’s our fixed asset we can’t change.”

That’s now sitting at 1390kg MS/ha over both farms, with the smaller property having a high stocking rate of 3.5 cows/ha. Pasture harvested has gone up along with production per cow which hits 2.4kg/cow/day at peak.

“Palm kernel isn’t a substitute for grass, but it allows the cows to get a bit more into their gut,” Andrew says. “We know we’re making money on it.” 

They also see the supplement as very much part of their animal health strategy because they add magnesium oxide and lime flour to it and in summer, a seaweed extract to improve their herds’ heat tolerance. They also use a mineral mix to soak hay they fed their springer mob, reducing calving problems.

Whangarei Interlact consultant, Paul Martin visits 10 times a year to measure grass growth and cow condition. 

“It’s the single best investment we’ve made in the business because it gives you great peace of mind and you can see a path forward,” Liisa says.

They also believe in using contractors to get jobs done on time and well, so once a month for eight months a fertiliser truck comes on the farm to spread nitrogen with a little muriate of potash (MoP).

“It seems expensive but we reckon it makes us money by getting the fertiliser spread on time,” Liisa says.

“We’re growing all the grass we can.”

When they undertook the task themselves, applications often ended up being 10 days late because of more pressing jobs onfarm, meaning they missed out on optimum grass growth.

Around 2.5t of lime goes on every third year to keep pH levels up.

They rear all their replacements and don’t keep empty cows, also culling on age and low production. Their mainly Friesian herd now has a Breeding Worth (BW) of 132, Production Worth of 128 and recorded ancestry of 99%.

Calving date is around July 15, having been shifted back slightly to prevent calving starting in June, and calving is kept to a 10-week period. They use LIC Friesian semen with Kiwicross used on their heifers which are synchronised. The herd on the smaller farm is picked by lower BW and was previously synchronised as well and sexed semen was used. But this year they just ran six Hereford bulls with them.

On the home property they took part in Fonterra’s Genes on Legs programme as they have for the last several years. They see it as a good way of eliminating risk by sending these calves off the farm from four to 10 days old. They’re happy with the way AI went this year with their use of five straws of sexed semen a day for three weeks which was then reduced to two a day for a couple of weeks more. It’s the third time they’ve used sexed semen and with more than 100 heifers to choose from for the 75 they require that has allowed some increased pressure on calf selection.

Liisa is in charge of calf rearing and has guru Bas Schouten to thank for her last-minute decision to switch from plans to build small calf shelters to putting up a purpose-built calf-rearing shed.

“We were using calfeterias in the paddocks but we couldn’t control how much milk the calves were getting,” she says.

The shed has 12 bays, each used for eight calves with their own individual feeding troughs. They are fed a maximum of four litres/day and adlib meal and as the milk drops they get into their meal, being weaned at six weeks old or when they are eating 1kg of meal/day.

“I use one quarter of the milk I used to and now it’s really a one-person job,” she says.

 The Hamiltons have paid a lot of attention recently to growing out their young stock. They’re grazed on two runoffs of 50ha in total which are too steep for making hay. Some of the lighter animals were falling below target weights by the end of June and it was difficult to get them back on track. 

But now they’ve invested in scales and with regular weighing separate out those under 100kg by November 1. Those over 100kg go onto palm kernel while those 90kg to 100kg will receive 1kg of palm kernel and meal/calf/day, fed out in mobile troughs. Those under that weight will receive 2kg of meal/calf daily to catch up..

“We aim to give our young stock quality grass as long as we can,” Andrew says.

To this end he’ll boost growth with nitrogen and MoP going on from a spreader towed behind their quad bike.

“We’ve grown some awesome grass and when that happens we don’t need to give them palm kernel in June. We figure the fertiliser is cheaper now than having to use the palm kernel later to catch up on underweight stock.”

Farm facts:

  • Owners: Andrew and Liisa Hamilton
  • Location: Awhitu Peninsula, south-west of Auckland
  • Area: 110ha (70ha effective) and 101ha (38ha effective) with large areas of retired land and bush 
  • Herds: 190 and 125 mainly Friesian 
  • Production: 2014/15, 152,900kg milk solids (MS), forecasting 150,000kg MS this season due to dry conditions
  • Dairies: 16-aside and 12-aside herringbone dairies
  • Supplements: 540 tonne of palm kernel fed all year round, grain fed to calves and young stock to reach target weights
  • Forecast farm working expenses (FWE): $3.33/kg MS.

An efficiency test

 

Andrew and Liisa Hamilton have dropped their farm working expenses to $3.33/kg milksolids (MS) this season from $4.60/kg last year and $4.70kg for 2013-14.

 

“A low payout makes you test the efficiency of your business,” Liisa says.

 

“Our costs were quite high but now we’re down to the bare bones.”

 

They’ve done this through deferring capital spending, with one of the items that had a red line drawn through it being replacement of the roof on one of their dairies.

 

But Liisa is clear.

 

“FWE of $3.50/kg is sustainable, $3.33/kg MS isn’t.”

 

While she’s sticking with the ANZ estimate of $4.60/kg MS for this season she’s basing next year’s budget on a $5.50/kg MS return, including dividend, and then $7/kg for the 2017-18 season. But a poor payout might be in the
offing for the following year, she believes.

 

She took over managing the books when she had their daughters Gwen, now 16, Merle, 13, and Erin, 11. She also has an older son Liam, 20.

 

“Andrew started budgeting but we didn’t know where we were financially,” she says.

 

The advice of their bank manager saw them sign up for Accomplish Cashmanager software 10 years ago.

 

“It absolutely changed our business and lives,” she says.

 

“It took the stress off.”

 

Andrew’s concerns about a mounting overdraft without the knowledge of a balancing of the books later in the year became a thing of the past. 

 

“We can budget two years ahead which helps our planning.”

 

Liisa will check figures once a week for about 15 minutes, then once a month will download their bank statement to make an end-of-month reconciliation.

 

“It gives us certainty as we go,” she says.

 

“By the end of the year we have very accurate figures and they go into tweaking the budget for the next year.”

 

So for next season she’s able to factor in a predicted $117,000 profit, which she says is not a bad recovery from their predicted $60,000-loss this year.

 

“We’ll be able to put the deferred fertiliser back in and some repairs and maintenance but there may be a slightly higher palm kernel price.”

A big no to factory farming

Liisa and Andrew Hamilton are both strong in their view that New Zealand dairying should stick to what it does best.

“The advantage NZ has is its low-cost, mainly pasture-based system,” Liisa says.

“We don’t want to go down the housed-cow route. That’s factory farming. And it concerns us that when the payout is up around $8/kg milksolids (MS) we just can’t compete with overseas supply.”

Even at a long-term average of $6/kg MS she worries about more highly geared NZ dairy farmers.

“I don’t know how many would be profitable and does that allow for succession?” 

The couple are constantly reviewing their profitability and see that as very much a team operation involving bank manager, accountant, consultant and Fonterra. They are both co-op networkers, reasoning that they want to get all the information they can and that NZ without a large dairy co-op “is not a pretty picture”.

Onfarm they’re strong on pasture management and controlling costs.

“As soon as you have a silo or a feedpad the cost of feed goes up,” Andrew says.

“You can increase your production 25% through an in-dairy feeding system but you might not have made any more money.”

“When there’s a high payout feed and fertiliser costs have tended to follow that,” Liisa says.

“But there are no excuses – you just need to hold the purse strings tightly.”

As proof of that they haven’t culled lower-producing cows this season as many other farmers have.

“If things turn around we want to be in a position to take advantage of that. Our way through will be by making money.

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