University farm among region's best performers
Out of five top dairy farms the Lincoln University Dairy Farm came third in profitability during the 2012-13 season.
A profitability margin of more than $4600 a hectare was described as a solid result by managers of the commercial demonstration farm at a focus day attended yesterday by farmers.
The 160-hectare farm at the university campus, run by the South Island Dairying Development Centre (SIDDC) and milking 630 cows at peak milking, measures its performance against four top privately run Canterbury operations.
Top among the farms was the Hinds operation of the Slee family which delivered about $5200/ha from 2500 cows on more than 600ha. This was 12 per cent up on the university farm's profitability.
Next in line was $4800/ha by Alan and Sharon Davie-Martin at their Culverden farm.
SIDDC executive director Ron Pellow said the two top farms had delivered impressive profitability and the university farm team always liked to benchmark its performance against the best.
"LUDF has been pipped again by two other farms, but the reliability of irrigation at LUDF has helped to retain its profitability at over $4600/ha. It's an acceptable return on the value of the assets, but leaves little room for extensive mitigation if required."
Pellow was referring to the farm possibly having to deal with restrictions such as nutrient limits in the future.
The university farm was a close second in the 2010-11 season and third in 2011-12.
Profitability results were varied on Canterbury farms because of the hot and dry summer and early autumn. Irrigated farms with reliable water such as the university operation have come through with better profitability than farms with disrupted water sources and forced to buy more feed.
Pellow said the university farm had made a small increase in milk production compared to some of the other top benchmark farms producing less milk.
This had been achieved by focusing on the basics of grass intake for each cow and concentrating on growing as much high quality grass as possible.
Good cost control was achieved with the university farm running slightly under budget, partly from not using the nitrification inhibitor, Eco-N, this autumn, lower employment costs from a staff member starting later in the season and lower replacement costs from bringing fewer new cows into the herd. Fertiliser costs were down 10 per cent and only two-thirds of a budgeted area was regrassed because the payback could not be justified for the rest. About 10 per cent of the university farm was regrassed.
A profitability result of $4600/ha, less farm working expenses and depreciation, but before tax and interest, ranks high nationally.
The LUDF's most profitable season was in 2007-08 when it posted $8284/ha in the first of the high payouts of $7.87 a kilogram of milksolids.
Yearly comparisons are difficult as payouts vary each season. Costs rose to $3.84/kg of the $6.12 payout, including a dividend, in 2012-13 from $3.37/kg in 2007-08.
Pellow said the team remained focused on maximising sustainable profitability. "The lessons this season are highly productive farms come into their own in more variable climatic conditions like we had this summer. Pasture grown on the farm remains a key component of highly profitable dairy farming. Our future challenge is to retain the productivity and profitability in the self imposed nitrogen constrained environment we have chosen to operate in."
The team will continue to push being as sustainable as possible to help farmers. Pellow said this would place the farm at a disadvantage in profitability benchmarking but was needed for the dairy industry.
160 hectare farm
630 cows at peak