Friday, March 29, 2024

Southern Dairy Hub in holding pattern

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The Southland Demonstration Farm at Wallacetown near Invercargill has extended its lease another year.
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“We’re very grateful to the owners to allow us to do that,” the demonstration farm’s business manager Stacy McNaught said.

It was announced mid-February a new site had been found for the farm but it would not be up and running until spring 2017, a year later than planned.

McNaught said by extending the lease, the transition between the demonstration farm and what will be known as the Southern Dairy Hub would be eased with staff, the 700 cows and the public focus days staying put.

“We’re very excited about the new site and everyone else will be too when it’s announced where it is,” he said.

A conditional agreement on two properties in Southland had been reached “pending the satisfaction of a number of minimum requirements for both parties”, Southern Dairy Hub (SDH) chairman Maurice Hardie said.

It’s expected due diligence might take up to six months, which Hardie said would still give the hub the time to build a state-of-the-art dairy, offices and public meeting rooms and to re-fence the land so multiple herds could be run.

A collaborative project between AgResearch, DairyNZ and the Southern Dairy Development Trust, it will cost $26.5 million with more than $1.3 million of that cost pledged by southern farmers last year.

Hardie said finding a suitable site for 800 cows had taken longer than first thought because of the specific requirements which included location, scale and a balance of soils that reflected the farms in the region to ensure research and demonstration was relevant.

‘We’ve done a survival budget and will next year as well but it’s not the way to run a business for four or five years. It’s not sustainable.’

Extra cows that have been bred by the demonstration farm in the past few years for the hub will be leased-out this coming season.

“However, it’s going to be tough for us economically for the coming year with the payout predictions,” McNaught said at the February focus day in Milton.

Farm working expenses (FWE) were cut in January from $3.67 to $3.62/kg milksolids (MS) and he expected to have to come-up with a budget of $3.20 for the next season.

“We’ve gone through line by line, code by code, and that’s 18 pages of codes. But if you’re not doing it that way you don’t know what everything is costing you so how can you cut it?” he said.

By the end of May he expected the farm to produce 325,000kg MS (464kg MS/cow) and to have a total farm income of $1.346 million with costs at $1.175 million “which is too close for us”.

“We’ve done a survival budget and will next year as well but it’s not the way to run a business for four or five years. It’s not sustainable.

“It will start to affect our cow genetics and cow health and there’s very little repairs and maintenance in that budget.”

On top of the payout woes, the farm is growing less grass than its historic average.

“At one stage we were a tonne down on the average but rain at the right time since Christmas has made the figures a little better.

“Some of our late-summer growth rates have actually been better than our spring growth rates and we’ve just made 25ha into silage.”

Planting winter crop paddocks back into grass earlier had also helped.

“We were grazing them at Christmas this season which is a first for us. Usually we’re not on them until late January but this time we’d had about three feeds off them by then.

“We’ve also sprayed the weeds in them for the first time before that first grazing and they’ve turned into our best young grass paddocks ever.”

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