Wednesday, 10 December 2014 00:00

US mega farms offer lessons

Written by 
Crowe Horwarth managing principle, Neil McAra Crowe Horwarth managing principle, Neil McAra

THE HIGH-INPUT housed dairying that predominates in the US should be a pointer for New Zealand farmers on managing such ventures, says Crowe Horwarth managing principal Neil McAra, Southland.

 McAra, recently home from a GEA/ANZ tour of farms in Wisconsin (a leading dairying state), says the visit underscored that New Zealand farmers must be clear on what they want to achieve by spending capital.

“They must know how their international competitiveness stacks up against the US because their farmers are using mega farms, with 2000-plus cows, to sell into the same markets we do,” he says.

These mega farms are competitive due to scale (40% of the US dairy supply), precision agriculture, modern technology, cheap labour (90% Hispanic, paid NZ$11.40-15.90/h), lower capital expense (US farmland half the price of NZ) and farming systems that suit the environment and economy.

“NZ land cost [requires] farmers to consider the return on investment in, e.g. irrigation systems, feed pads, cow houses and automated milking,” says McAra.

Also affecting spending decisions are skill requirements, setting realistic production budgets and environmental management, he says.

NZ farmers can counter the US threat with innovation and precision agriculture, up-skilling employees, leading well, adapting economically to manage environmental aspects, and by consolidating farms.

But McAra cautions that poorly managed high-input systems generate less cash than poorly managed low-input systems. DairyNZ research shows that fewer than 5% of farmers profit from running intensive systems. 

Operating profit is the key to farm success, he says. Low operating costs/kgMS and high production/ha lift profit.  

“Generally it takes 1kgDM to produce 1L of milk, so it’s essential to choose the cheapest, most efficient feed, especially in a low pay-out year when, based on the current milk price forecast, farmers will only receive 45c/L.”

More like this

Council tasked with making unworkable work

Following a meeting between farmer representatives and environment and ag ministers, Environment Southland will be setting up a local advisory group for freshwater rules.



Back the sector that backs NZ

OPINION: The biggest issue currently facing our industry is environmental policy, writes Beef+Lamb NZ chief executive Sam McIvor.


Machinery & Products

Let aura feed the mob

In a move that appears to have been repeated by many equipment manufacturers, Kuhn confirms it currently working on several…

Battery charger range recharged

Projecta's popular ‘Charge N’ Maintain’ automatic battery charger range has now been recharged – with the introduction of new features…

» The RNG Weather Report

» Latest Print Issues Online

Milking It

Eyes have it

OPINION: Painting eyes on the backsides of cows could save their lives, according to new research by Australian scientists.

Walkers versus cows

OPINION: A North Yorkshire teacher has become at least the second member of the public to be trampled to death…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter