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.

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

Featured

Brendan Attrill scoops national award for sustainable farming

Brendan Attrill of Caiseal Trust in Taranaki has been announced as the 2025 National Ambassador for Sustainable Farming and Growing and recipient of the Gordon Stephenson Trophy at the National Sustainability Showcase at in Wellington this evening.

National

Machinery & Products

Farming smarter with technology

The National Fieldays is an annual fixture in the farming calendar: it draws in thousands of farmers, contractors, and industry…

RainWave set to cause a splash

Traditional spreading via tankers or umbilical systems have typically discharged effluent onto splash-plates, resulting in small droplet sizes, which in…

» Latest Print Issues Online

Milking It

Misguided campaign

OPINION: Last week, Greenpeace lit up Fonterra's Auckland headquarters with 'messages from the common people' - that the sector is…

Fieldays goes urban

OPINION: Once upon a time the Fieldays were for real farmers, salt of the earth people who thrived on hard…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter