Thursday, March 28, 2024

Meeting the nutrient challenge

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It’s early days but Lincoln University Dairy Farm’s (LUDF) new farm system, revised to meet potential nutrient caps, has come through its first spring achieving or exceeding its productivity targets.
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The dive in forecast payout has sent the management team back to the budget and, with little room to cut costs further, operating profit expectations have been trimmed back to $2794/ha.

It’s a major slump from last year’s $7578/ha with a record $8.50/kg milksolids (MS) payout but when compared on a status quo payout basis, using $5.30/kg MS for last season too, operating profits were very close.

The new farm system for the 160 effective ha irrigated farm has cut the stocking rate to 3.5 cows/ha, with peak cow numbers reduced from 630 to 560.

The aim of the new nil-infrastructure, low-input, low-nitrogen loss, high-profit system is to keep nitrogen losses below the farm’s baseline loss number, which is the average from 2009 to 2013 based on the Overseer model, while maintaining a high level of profit.

As well as fewer cows it has to operate with less nitrogen fertiliser, keeping it to 150kg N/ha. It also has to pull supplementary feed inputs down to a maximum of 300kg drymatter a cow.

Cows have to produce an average 500kg MS/cow if farm working expenses (FWE), budgeted at $1.12m, are to be held to the target of $4/kg MS and the profit target met.

The table shows just how crucial milk production is and how important it is to achieve it by utilising high quality pasture very well.

South Island Dairying Development Centre executive director Ron Pellow said an exercise of ranking FWE from highest to lowest showed how little room there was to move when it came to cutting costs further to try and achieve profit targets.

Employment ranked highest at 23% of total FWE, while winter grazing ranked second and accounted for 17%, and replacement grazing accounted for 11%.

“Those top three ranked expenses made up just over half our costs but at this stage of the season, and without another serious system change, they’re effectively locked in or fixed costs,” Pellow said.

The farm’s management team has previously set the number of staff employed at four and, with all staff employed on permanent contracts, there was no plan to reduce numbers this season.

If a staff member left mid-season the farm’s staffing levels might change.

Pellow said that if there was a fundamental shift and payouts continued at a lower average, a staffing review for future seasons would be likely, along with another look at the farm system.

“Because of the volatility we see in payout we have to run a low-cost, highly efficient system year in and year out. So if we get an $8.50/kg MS payout one year we can bank a lot of profit and if we get a $5.30 milk price the next year we run a lot closer to the margin than we’d like but we’re not jumping in and reacting to either payout situation on an annual basis.

“We make sure we’ve set the system and the budget for long-term profitability of the farm and that’s where we think four staff members is the appropriate staffing level.”

Replacement grazing could be reviewed if the payout continued at a lower average but the replacement numbers were set based on the farm’s policy to rear extra heifers to give it more options in terms of productivity gains. The herd had a breeding worth (BW) of 146 giving it options to sell the lowest BW animals, DNA-proved, at a level that would offset the cost of rearing more replacements.

The other 49% of costs, while significant, were trimmed when the budget was set.

Care was taken when tightening up on some cost centres that future productivity wasn’t compromised. Costs such as animal health, breeding, fertiliser and regrassing all fell into that category.

Some savings would be made on breeding costs this season as heifers won’t be artificially inseminated, though this was influenced  by the lack of suitable facilities at the current graziers.

The farm has made significant genetic gains by AI’ing heifers in the past and this year the replacement stock are particularly well-grown.

So far the season has been kind with dry, although cooler, spring conditions allowing excellent utilisation.

That, coupled with a slightly slower calving rate in the first three weeks of calving and the judicious use of silage during the first grazing round, meant the first round pushed on until September 23.

That was about 13 days longer than the farm’s typical first round and had the added advantage of helping keep nitrogen use down.

Cows are followed with low rates of nitrogen (25kg N/ha) in spring to help boost pasture production, so saving almost half a round’s worth of nitrogen was a big bonus in the farm’s reduced nitrogen fertiliser regime.

Pellow said pasture walk data showed the farm had grown less grass by the end of September than it had in previous years, mostly because of cooler spring conditions, but a strict adherence to the spring rotation planner and dry ground conditions meant cows had utilised more grass.

Having milking platform pasture covers in a smooth wedge from highest to lowest cover at the start of calving also made it easier to manage quality through the early spring period.

LUDF keeps a small number of cows on the milking platform to manage covers and maintain a good wedge. Even the longest paddock on the farm at calving had been grazed once early in the winter.

Pellow said the early part of the season was probably the easiest part to manage in the new farm system because, up until balance date, they were dealing with a deficit.

“The challenging part is going to be maintaining pasture quality from now on with fewer cows so that we can keep cows well-conditioned, so we can in turn get enough days in milk, at a production level high enough to achieve our milk production target for the season.”

The farm is again employing a strategy of tactical mowing in front of cows to aid pasture quality but would also make silage if needed and continue a regrassing programme targeting the poorest performing paddocks.

Wetland option

LUDF is investigating whether developing a wetland on part of its 73ha South block could improve productivity and enhance water quality.

The South block has been plagued by drainage issues in some paddocks with poor drainage often behind lower pasture performance.

This year another paddock from the block was earmarked for regrassing because it couldn’t achieve the required pasture covers.

South Island Dairying Development Centre executive director Ron Pellow said grazing records showed it got to about 2700kg drymatter and then seemed to stop.

The paddock was being resown in a short-term hybrid ryegrass, Shogun, to give some improvements to pasture quantity and quality while the wetland project was developed.

It would be a significant project on a large scale, working with several partners, to improve the quality of water leaving the farm.

“It’s likely that we will give up say 1ha of land to get much greater return in terms of better production out of the remaining land on that block,” Pellow said.

Figure differences

Lincoln University Dairy Farm reports its financials on an “in season” payout basis so it doesn’t take into account wash-up payments from last season.

Pellow said if the extremes in volatility continued it might have to look at reporting budgets using a cash basis to aid comparison with other farms. 

The Southland Demonstration Farm, by comparison, reports cash income received and this year is forecasting a total income including milk income and stock sales of $7.23/kg milksolids (MS) compared with LUDF which expects a total income of $6.01/kg MS including stock sales.

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