Owl Farm gets a pass mark in half year review

Owl Farm is forecasting a 20 per cent improvement in cost of production from last season, demonstration manager Doug ...
Gerald Piddock

Owl Farm is forecasting a 20 per cent improvement in cost of production from last season, demonstration manager Doug Dibley says.

OPINION: 

As we pass the half way mark for the 2016/17 dairy season, I thought it appropriate to stop and reflect on our progress so far this season.

The struggles from last season are well documented. We had underweight heifers, a long and cold winter, a large number of non-cycling cows, significant staffing concerns, pasture quality issues and some of the worst eczema experienced. Bundle this up within one of the lowest dairy pay-outs on record and the picture wasn't pretty.

We set ourselves three clear objectives this season, to significantly lower our farm working expenses, increase home grown feed and reduce our reliance on brought in feed, all of which are intimately linked. So how are we tracking?

Last year we posted a very heavy deficit, down almost $320,000 when including debt servicing. Farm working expenses of almost $4.70 a kilogram of milksolids (MS) compared with a payout of $3.47/kg MS is where the damage was done. The high cost of production was down to both an underwhelming milk yield and significant unexpected expenses.

READ MORE: 
Production up at Owl Farm following the wet winter 
Owl Farm looks to cut costs as dairy slump continues

The key to this season was getting ourselves back in black. To achieve this, we re-worked the budget and identified cost savings of more than $120,000. Our higher budgeted milk production in conjunction with cost savings put our budgeted farm working expenses at $3.80/kg MS, still some way off our eventual target of $3.50/kg but a massive improvement on the previous season.

Key to achieving this financial target was reducing our reliance on brought-in feed. Our feed budget modelled that we required 180 tonnes of palm kernel (PKE), down 50 per cent on the 350t of PKE feed last season.

We have fed 94t of PKE for the season so far, compared with 200t at the same point last year for a reduction of 53 per cent.

Take into account our 6 per cent less cows and we have effectively fed 47 per cent less PKE this season.

To minimise our reliance on brought in feed, we also needed to maximise home grown feed.

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Having only harvested 11.5t drymatter (DM) last season, our land was an asset which was well and truly underperforming. We set about undertaking our extensive pasture renovation programme, which involved putting 15 hectares into an annual/chicory cycle as well as undersowing more than 30ha.

Given this is a staged approach over a number of seasons, we aren't expecting significant improvements over night. Our conservative modelling at the season's outset had the feed budget harvesting 12.5t DM, an 8 per cent improvement.

This was made possible because of annual pastures and assumed improvements in growth rates resulting from new pasture. Using the Farmax system, we have been tracking what has actually been harvested on a monthly basis, a figure determined through calibrating feed intakes based on average growth rates and pasture covers against milk production with other known supplements included.

At the end of November, we have harvested 6.7tDM/ha compared with a budgeted 6.3tDM/ha, 6 per cent better than modelled and therefore on track for as much as 14 per cent more home grown than last season.

Based on pasture performance being up and brought in feeds being down, how is the budget tracking?

Our expenses are currently up 2.5 per cent, mostly the result of increased animal health costs after the wet spring and modelled cash flow regarding repairs and maintenance.

Unfortunately production is also down so our cost of production is up. Our reforecasted budget, which includes changes to both expenses and production has our farm working expenses at $3.93/kg MS.

So, are we hitting the mark? Yes, I think we are, although our financials are slightly higher than desirable, we are still forecasting a 20 per cent improvement in our cost of production from last season.

Yes, we have a long summer to go, but here and now we are confident we can achieve favourable results across all three objectives.

  • Doug Dibley is the demonstration manager at Owl Farm.

 - Stuff

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