Friday, March 29, 2024

Pine to pasture

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Some people like to buy existing farms, but West Coaster Colin van der Geest and wife Rachel don’t mind starting from scratch. They talked to Anne Hardie about their latest project, a block of cut-over pine plantation that is fast becoming a productive dairy farm.
Reading Time: 7 minutes

Colin van der Geest doesn’t choose the easiest blocks to convert to dairying, choosing cheap blocks of bush and scrub on the West Coast to turn into productive grazing land.

The latest, with the help of investors, is a 663 hectare chunk of land on the hills above Lake Brunner. It was a cut-over pine plantation until July 2013 when the diggers and bulldozers moved in and created a 255ha milking platform that milked 550 cows through the 2014-15 season for an expected 190,000kg of milksolids (MS). By 2018-19, all going well, he hopes to milk 1200 cows on 530ha for a seasonal production of 440,000kg MS.

Milk payout has fallen from about $8/kg MS to a forecast of less than $5/kg MS since the venture began and he budgeted on a $6/kg MS payout, but he shrugs that off as part of the growing pains the development will go through to reach its goal. By next season it will have 800 cows with a budgeted production of 296,000kg MS.

“We have a new enterprise on a pretty rugged piece of dirt. So the best way forward is to continue investing in growing production. We have to position ourselves so that when the payout comes up we’ll be in a good position to maximise returns on it. The land is what makes you the money – growing the grass. So you want to get as many hectares as you can into grass.”

Colin and his wife Rachel are old hands at converting rugged blocks of land into dairying and earlier tackled big chunks of bush including mature beech forest, swamp and rubble on 730ha at Atarau near Blackball, turning it into two dairy units milking 1100 cows.

With that completed, it was time for another challenge to expand the business and that led to the 663ha property near Lake Brunner. It’s a mainly family-based venture with 10% of the capital brought in with outside investors because it costs between $5000 and $12,500 a hectare to develop – and most of that is funded by the bank. Undeveloped land in the area is worth about $3000 a hectare and by the time it is fully developed, Colin reckons it will be worth between $21,000 and $25,000 a hectare. 

“It was very raw with no fences or infrastructure and that’s probably what scared most people off it. Half of it was semi-developed but all overgrown with gorse and reverting and the other half was cut-over pine forest, with about 100ha of mature pine.”

Contractors are still digging over the land to remove stumps and large rocks before readying more of it for grass. Colin says using their skills is a better option than buying a digger and beavering away on the development work themselves.

“It’s a false economy buying a digger and doing it yourself because the contractors have the skills and are more efficient and do a better job.”

At the beginning of the 2014-15 season they calved 550 cows on the 255ha that was grassed and though it wasn’t fully ready to go, Colin says they had to draw the line in the sand and decide when to launch. Initially, he stocked it lightly at 2.1 cows a hectare, but the ground grew a bit more grass than they expected and with 530 cows milked at the peak of the season, issues with grass quality arose.

“We couldn’t get the mower over a lot of the paddocks because of the stones and it hurt us big time as we couldn’t control the pasture quality. And there was a lot going on with getting the water supply in and fences up. So we’ve been back over it with a roller and had it over a fair bit of the farm now and stocking rate has increased to about 2.3.”

Another 50 cows were leased from December and they dropped the number of milkings to protect the cows’ condition; milking twice one day and then one leisurely 10am milking the next day to give staff a bit of a bit of a break. 

It’s a liquorice-allsorts herd run on a simple pasture-based production system with minimal reliance on imported feed, which is a System 2 on the DairyNZ scale. By the time the development is fully established, Colin suspects it will settle around System 3 with 10-20% of feed imported to extend lactation.

For the grass-based system in place, Colin sowed 30kg/ha of oats with the later-sown grass last year to add bulk and has upped that to 40kg/ha with the new grass this year. Summer turnips also add to the feed budget. Through the 2014-15 season, the cows consumed 11.3 tonnes DM/ha of pasture and crop and from that they will end up producing about 350kg MS/cow and 770kg MS/ha. Next season Colin expects it to lift to 370kg MS/cow and 830kg MS/ha. To lift production in the longer term, he plans to improve the pasture density by oversowing paddocks.

So far the farm has one dairy – a 50-bail rotary with all the labour-saving technology to make it a one-person operation – and down the track as the development reaches its final stages, another dairy will be added so it can be run as two 600-cow units. So far, a farm manager is employed with a 2IC and dairy assistant, but the need to cut costs has meant only three staff houses have been built and a fourth has been put on hold.

Water is collected from a stream further up the hill on the farm in a 4m deep pond, with a pipe buried a metre into the soil to cool the water before it reaches the dairy. At the dairy, water heads through filters and is treated with ultraviolet light before being used to wash the plant, while the green water is used to run the flood wash.

A view of the work-in-progress.

As expected, the farm working expenses have been high for the 2014-15 season, adding up to about $5.53/kg MS (operating expenses $5.74/kg MS), so with the gross farm revenue down to $4.65.kg MS, the farm will end up with an operating loss of $1.09/kg MS. Though next season that is expected to turn into an operating profit of about $1.22/kg MS based on a $5.80 payout and 800 cows putting milk into the vat.

The low payout has meant more strategic use of fertiliser, with capital fertiliser applied where needed and maintenance rates elsewhere, while nitrogen is only applied when optimum responses can be obtained.

“Nitrogen is a big cost for us, but on new ground I’m reluctant to cut it out.”

This past season, 330kg N/ha was applied and next season Colin estimates between 275 and 300kg/ha will be applied.

A DairyNZ field day in March was a chance for local dairy farmers to take a look at the development and also do some brainstorming with ideas for saving costs during the low payout. One of the ideas Colin discussed was wintering at least part of the herd on the farm.

He had intended wintering 800 cows off the milking platform, but that is likely to change to save costs and they will probably retain 500 cows on the platform using autumn-saved pasture and winter 300 cows off the farm. Retaining cows on the farm will affect lactation length, and require straw and palm kernel to winter the cows, but working through the figures shows they could make an overall saving of $91,000 by wintering 500 cows on the farm. That’s worked out on grazing at $35 a head per week which is $280,000 for 800 cows. Buying 150 tonnes of palm kernel for 500 cows at home would cost $290/t, a total of $43,500 and 250 bales of straw at $80 a bale is $168,000. Those 500 cows would be dried off nine days earlier and that’s losing 1kg/MS/day at $4.65/kg MS, a total of $21,000. Work all that out and there’s the $91,000 that doesn’t have to be spent.

It does carry the risk of a cold snap destroying growth of the young grass that will be needed for early spring feed in the new season.

To protect the paddocks and pasture through winter, the cows will spend time on the grass and then go off the paddocks to an area of milled trees that will be developed in the future. Another option suggested at the field day was drying all the cows off earlier to allow the feed to build up and winter the entire herd on the farm.

Or, to offset the lower payout he could continue milking into June using purchased feed, but with no stock housing and climatic uncertainty, Colin is not keen to follow that path.

Young stock are already run on the milking platform until their first winter before being grazed off until they return as in-calf heifers for the start of the season.

Another expenditure cut this year has been casual labour, opting instead to focus on effective and efficient use of permanent staff. And where possible they service equipment and machinery themselves.

“You can get a bit lazy about it and then you look at those bills like changing the oil in the tractor and think, ‘we could be doing that ourselves’.”

On a low-cost system, Colin says there are fewer opportunities to cut costs with a lower payout. This year they will continue soil testing every paddock, but if the payout stays about $5/kg MS next season, that might be one more factor to be sacrificed. Another cost-cutting measure he has considered is herd testing, though there was plenty of argument against that.

More lease cows will be brought in to lift cow numbers to 800 for next season. It means they have a very mixed herd, with Friesian-type cows struggling a bit and variable cow condition, but Colin says leasing is their best option for building numbers by retaining replacements.

From here, it’s a matter of working through the development work to get as much of the farm into productive pasture as quickly as they can, leaving pines on the steep hillside at the rear of the property. 

More work will need to be done on some of the developed land because areas of glacial sands don’t allow the high rainfall to drain away. The farm already has some humped and hollowed land to cater for the 3.3m of rain that falls annually on the farm, but Colin says more contouring is needed to enable the water to run off.

In short, development will continue, despite the pressures of a low milk payout.

“It would be easy to shut up shop and do nothing. But the easiest way of digging yourself out of a hole is to set yourself up to produce as many milksolids as possible.”

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