Dairy sector profit still on the table, but margin gap tightens
DairyNZ’s latest Econ Tracker update shows most farms will still finish the season in a positive position, although the gap has narrowed compared with early season expectations.
After an initial silence, looking at ‘retain’, the audience suggested animal health and staff – plus, flippantly, “oxygen and alcohol!” ‘Reduce’ prompted more answers, including replacements, regrassing and feed: “lower cost and quantity,” commented one farmer.
Regrassing reappeared in the ‘defer’ list, alongside capital expenditure and machinery replacements, including vehicles.
‘Remove’ included cow numbers – “we removed ten in one day on fodder beet,” quipped one delegate dryly – herd testing and a couple of the ‘retain’ items from earlier: labour and animal health.
“Get rid of vets from the farm… I’m serious!” For example, vet metrichecking could be replaced by DIY observation and testing, someone suggested.
Speaking to Dairy News afterwards, SIDDC director Ron Pellow acknowledged a danger that knee-jerk reductions in feed, without appropriate cuts elsewhere, will likely see some farms worse off than if feed had been maintained this season. “Across New Zealand I don’t think we feed our cows adequately on pasture,” he stressed.
Dairy NZ project leader large business Adrian van Bysterveldt urged extra vigilance on pasture management, particularly coming out of deficits. “People are great at spotting the beginning of a deficit but the real difficulty is spotting where the deficit is going to end…. If you think it’s going to be gone in a week, then the supplement should have been taken out yesterday.”
Modern high genetic merit cows are much more capable of “bouncing back” when feed quantity and quality is increased after a brief deficit, he added. “But older-style cows, the cows of the 1980s or 1990s, will just go fat on you.”
Another tip Van Bysterveldt shared with Dairy News and farmers after the focus day was to “offer contractors a discounted cash price as they leave the paddock”.
In a season where some farms might struggle or choose not to pay bills on time, those that can pay on the spot should be able to negotiate useful discounts, he explained.
To see where Lincoln University Demonstration Farm is cutting its costs or spending more this season, and how it compared with the half dozen top farms it benchmarks against, go to www.siddc.org.nz and download ‘focus day handout’ from the ‘latest news’ area.
