'Follow the model' for dairying success
Colin Armer, of $900 million dairy farming enterprises Armer Farms and Dairy Holdings, believes it is a good time to buy into dairy.
Mr Armer shared his business philosophy with Marlborough and Nelson dairy farmers at a field day in Linkwater near Havelock this week.
From sharemilking 140 cows in the Bay of Plenty, Mr Armer and his wife Dale have grown their business to 16 farms milking 13,000 jersey friesian-cross cows in the Central Plateau and Bay of Plenty districts of the North Island. The couple are also one-third shareholders in New Zealand's biggest farming conglomerate, Timaru-based Dairy Holdings, which milks 44,000 cows on farms from Murchison to Invercargill.
"There are more opportunities for dairy farmers now than I have ever seen," Mr Armer said.
More debt and more people needing to exit the farming industry was good for those in a position to buy in.
Their farming model was easy to duplicate, Mr Armer said. Each farm ran about 900 to 1000 cows, on any day overseen by one operator and three staff. Bigger herds offered economy of scale but lost intensity of grazing management.
He aimed to feed cows well through the peak of the growth season, then dry off non-performers if necessary.
Culling started in January or early February after the first round of pregnancy testing.
Cows' intake was rationed immediately after calving in early August, then they were fed on a rising plain through September and October, similar to flushing ewes.
Next to no supplements were bought in because it was not profitable, Mr Armer said.
"If you go out to the market the market sees you coming."
The companies bought and sold as many products as possible through co-operatives, which offered control through the supply chain. If the going got tough, a golden rule was never stop applying, especially phosphate fertiliser.
Together, Armer Farms and Dairy Holdings employ about 370 staff including 20 50/50 sharemilkers.
As his farming enterprise has grown, staff were empowered to make their own decisions within clear parameters, Mr Armer said.
Peer pressure was used to motivate. For example every 10 days managers had to walk and measure pasture and post the results on the Livestock Industry Council website. Names were highlighted if they were four days late and after six days, flags went up.
Marlborough District Council environmental scientist Nicky Eade asked Mr Armer whether while pushing production, he paid attention to environmental effects.
In May this year, Armer Farms pleaded guilty to unlawfully discharging dairy effluent from a split pipe on a Bay of Plenty farm in October 2010.
As soon as the company bought farms it fenced streams and started lining effluent ponds and converting effluent irrigators to K-line sprinklers, Mr Armer said. However, there were no easy solutions to cows urinating on land, which polluted waterways.
"If we have to build 14,000 herd homes around New Zealand to mitigate, that would be a sad day for New Zealand," he said.
In August, Mr Armer resigned from the Fonterra board, days after John Wilson was appointed chairman. He holds 49th place on the 2012 National Business Review rich list.
Produce 800kg of milk solids/hectare by the end of January, the district average for the whole season.
Calve on August 5, two weeks earlier than the district average.
Run 3.3 cows/ha, 0.5 above the district average.
Clock up 590 days in milk per hectare by January 31, vs the 462 district average.
The company aims to increase cow numbers numbers by 7 to 10 per cent/year as seed stock for new farms.
The Marlborough Express