Focus farm delivers results despite falling milk prices

But the 212,285kgMS from their 620-cow herd was still below their target of 233,000kgMS because of those issues. But despite “hurting” from the milk price, Michael and Megan Webster were happy with a number of pluses from their first of three years as the P3 Focus Farm.

They saved $37,000 on feed, successfully introduced chicory which helped with a regrassing programme and “nailed” residuals on their 217ha (eff) farm at Ngatea. 

The increased monitoring, record keeping and budgeting as part of being a focus farm helped them know their farm business much better, they said. Both agree grass and feed was the highlight including the success of chicory (Dairy News, June 23). 

“We also have a much greater understanding of our business – where we are and where we are heading,” Michael says. 

As part of being a focus farm, advisers asked them to model results on an “average” payout of $6/kgMS. Under this scenario they would have boosted profit by $100/ha in their first focus farm year.

Webster Farms is owned by parents Richard and Gillian Webster, and Michael and Megan, who are also responsible for overall operations as contract milkers. The farm is operated as two neighbouring farms with a 26-aside herringbone and the other a 32-bail rotary. Hauraki P3 is a trust formed by local farmers and stands for ‘Productive and Profitable Plains’. It has several projects, run with DairyNZ.

Michael told a June field day the spring health issues were metabolic issues. No one could exactly diagnose it but it was a vicious circle where the cows were low in energy and became ketotic. The first half of calving the cows was fine, but in the second half they went through calving and colostrums, but health issues started when the cows reached the milking herd. It hadn’t happened before on the farm. 

A meeting was called with the vets. “They couldn’t put their finger on it and say exactly what went wrong,” says Megan. “So we have come up with a plan to cover all the bases.”

Michael says mineral levels including magnesium were low but that did not appear to be the full explanation. In the coming season they will make sure everything is 10/10 – searching for sick animals, magnesium dusting and putting it in the water supply. 

“We have done liver biopsies before drying off and made sure the mineral levels are up to scratch. We will also do another round of blood tests leading into calving to make sure the gap isn’t opening up. We will be quite pedantic about it because it is hard to put our finger on exactly what was happening.”

Working through the figures, Megan said production was 212,285kgMS against a target of 233,000kgMS. Milk production to May 31 was 978kgMS/ha. On top of health issues, the dry period over January and February took its toll. “We were actually going really well and it took a nosedive and from then on it was hold on for as long as we can – it felt like that,” Megan said. Total gross income was $1.244m compared to $1.66m in 2014; they had a budgeted profit of $1.37m. “So the payout hurt us and it is obviously hurting everybody,” Megan said. 

Overall income was $5.86/kgMS compared to $7.84/kgMS in 2014. Gross profit did not include cost of stock but included dairy sales, dairy purchases and other farm revenue like dividends and milk check. They had early culls and stronger-than-anticipated prices at the works. They were under budget in milk solids/ha and the dividend income was 15c, not the 20c budgeted for. “It wasn’t super pretty this year and I don’t think it’s going to be super pretty next year.”

Operating expenses at $892,000 were $45,000 less than 2014. However they were over the budget of $855,000 because grazing fees were higher than originally budgeted and unexpected vehicle expenses.

Onfarm Michael said there was focus on pasture and pasture utilisation. “We feel we have made good strides in this area. We have used chicory for the first time this year planting 20ha; this has provided good yields over the summer. It has also been a good tool for our regrassing programme. So we will definitely continue this next year.”

They had a 71% six week in-calf rate and a 10% empty rate. There was minimal intervention due to the milk price.  The heifers returned home in very good condition but this time last year the young stock were 55kg underweight. They did “soul searching”, found a new grazier and put a rigid plan in place and they are “over the moon” with how they look at the moment. Megan said it was a lesson learnt because they thought they had done their homework with the grazier and had a plan in place.

Bank balance not as bad as some

The Websters are well aware how tight this year will be and they will need to be on top of their budgets.

A graph of their bank balance (numbers excluded) shown at the Focus Farm field day shows predicted cash movement from March 2015 to May 2017 based on the forecast payout of $5.25/kgMS. 

Megan says it shows “a horrible gap until it starts ramping up and we hopefully get some good returns from Fonterra”.  It won’t cross over into the black until April 2017. 

A comment was made that anyone who had been to a DairyNZ Tactics for Tight Times workshop would have seen worse graphs.

“It is better to know what you are facing in the next two years than ‘guestimating’ your way through,” says Megan. 

They are stripping budgets and have spoken to the bank, which is supportive of their strategy.