Thursday, 28 July 2016 08:55

Higher input systems can be profitable

Written by  Ian Williams, Pioneer forage specialist
Higher input farms keep performing well. Higher input farms keep performing well.

The Dairy Business of the Year recognises leading farms with high achievement in financial performance, people productivity and environmental management.

The recently announced supreme winner for 2016 (judged using farm data from the 2014-15 dairying season), was Landcorp's Ruapehu Farm at Moutoa, near Foxton. This property also won the Best Manawatu Farm Performance, Lowest Environmental Impact and High Input Farm with the Best Financials Awards.

Waikato farmers Rex and Sharon Butterworth were named runner-up and they won the regional award for Best Waikato Farm Performance. See http://dboycomp.com/file/pdf/2016/finalist-results-2016.pdf for the full competition results.

Landcorp's Ruapehu farm manager Glenn Weitenberg says the decision to lock in guaranteed milk to Fonterra during that season paid off for the farm, with a superior return on capital in comparison to the other eight finalists. Their pasture management and animal performance were extremely good and their supplementary feed costs very low.

Supplements, including Pioneer brand maize silage, comprised 27% of the feed on Landcorp Ruapehu and 36% of the feed on Butterworths' farm.

The 2014-15 DairyNZ Economic Survey was released in May. It contains data on the average physical and financial performance of 296 randomly selected owner-operator herds during the 2014-15 season.

It was the start of the tough times for most farmers. While weather was generally favourable and seasonal production was up 3.6%, the milk price was on its way down. The average cash payout was $5.76/kgMS supplied for 2014-15 (net of the industry-good levy, including advance, final payments and dividend). This was 25% lower than the average milk payout received in 2013-14.

Higher input farms (system 4 and 5) feeding at least 20% imported feed kept performing well despite the challenging times. They produced more milk per cow and per hectare, had higher operating profit and a better total return on assets than low (4 - 14% imported feed) or medium (10 - 20% imported feed) farms.

The ten year average data shows that across a range of seasons and payout conditions, higher input farms were the most profitable (see table here).

Events like Dairy Business of the Year show the industry what is possible under good management conditions. The DairyNZ Economic Farm Survey shows there are huge variations in the profitability of all dairy farm systems. Every farmer must find the optimum balance between controlling costs and maximising milk production in their system.

Finally, I want to encourage farmers not to be tempted to make major systems changes as a response to low payout conditions. You run the risk of being worse off while you adjust your management to a new way of farming. A better option is to look at what you are already doing and see how you can do it better.

More like this

Woke and broke?

OPINION: Speaking of woke, Government-owned entities that love wasting public money and producing fluffy PR pieces, the Hound sees that Landcorp - known as Pāmu - has just released its 2021 annual report.

Why should we do more?

OPINION: Managing our dairy sector's impacts inevitably attracts a range of views. Should we do more, less or stay the same? We produce the lowest emissions dairy products in the world, so why do more?

National

Why should we do more?

OPINION: Managing our dairy sector's impacts inevitably attracts a range of views. Should we do more, less or stay the…

Cattle sale with a difference

Innovation, loss and resilience have brought the Singh family to the point where it is poised to honour its patriarch,…

O'Connor's overseas odyssey

Agriculture Minister Damien O'Connor continued his overseas odyssey in the past week with multiple meetings in the US, Europe and…

Machinery & Products

Protective tint

Now available in New Zealand, Wildcat Static Cling Tint adds a protective layer to the windows of your tractor, harvester…

New owner for stoll

German company Stoll, the well-known manufacturer of tractor front loaders and attachments that claims to be the second largest producer…

Fert spreaders get a revamp

Kuhn has updated its MDS range of fertiliser spreaders, giving farmers more options to upgrade machines as situations change, rather…

Mowers spring into action

With spring upon us, thoughts turn towards shutting up paddocks for conservation and maybe the purchase of new machinery to…

» The RNG Weather Report

» Latest Print Issues Online

Milking It

Feeling the heat

US dairy farmers have a new threat to their business - heat waves.

Class action

The news has gone from bad to worse for a2 Milk - the company Synlait had hitched its wagon to.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter