Tools to Manage the Dry

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dryLast week I drove right across the Waikato and, apart from a couple of irrigated paddocks, it was brown all the way. Dairying here and elsewhere in the country isn’t looking too wonderful at present, and farming leaders are saying so. Tim Mackle, the CEO of DairyNZ, recently commented: “We’ve got a real squeeze going on. We’ve seen the profit margins on dairy farms going down quite significantly in the nearly four years since the [NZ Dairy Industry] Strategy was launched”.

I am pleased the industry is reviewing its strategic plan because its practices and policies need serious review. Amalgamations, larger herd sizes, nitrogen, maize and PKE were supposed to be the answer to diminishing profitability, but in most cases they have merely increased or maintained production.

Dairy farming has become a guessing game that is causing too much financial stress and personal pressure with serious consequences for individuals and families.

Despite the pressure on margins and the drought most of the dairy farmers I work with have increased their profit by about 30% each year for the past four years. Even now they have acceptable pasture covers.

Of course the drought is bad, but we had one in 2008 and I have experienced many others since my industry debut with 90 Jersey heifers in the 60s. Setbacks come along regularly, and that fact spurred me to use research experience and practical farming knowledge to develop a process that would take the guesswork out of farm business management.

Over the years I’ve seen a lot of skinny cows, many herds that are too large for the properties they are on, and many farmers scratching their heads wondering why they can’t make ends meet despite putting on more nitrogen, growing maize and resowing pastures with high octane hybrid grasses. They wonder why the stock don’t do well, animal health costs are high, and bought-in supplementary feeds eat away any extra income.

Unfortunately much of the advice they are getting is coming from people who have a vested interest in selling something or boosting production rather than profit.

The real answer is to base decision making on predictions of how much profit can be made from feeding stock, and the measure that eCOGENT members use is cents per kilo of dry matter eaten daily. Their experience in most cases is that pasture-based feeds are the cheapest and most profitable and many now avoid maize and PKE.

As part of a strategic management process they accumulate very good data on feed availability on their farms over time, in good seasons and bad, and this allows them to predict accurately the critical points in the season at which they need to make changes. They use new online software that indicates the optimum herd size for their property week by week along with the best calving dates and the trigger points for drying off and/or quitting stock.

Carbon pointWhen that sort of information and analysis is readily available they can look at innovative “what if” possibilities – maybe split herd calving, or winter milk, or reducing herd size and finishing lambs when there is surplus feed, or something else.

I am not suggesting that all this makes dairying a breeze. Droughts are more difficult to deal with than, say, a cold winter because even the best trigger points don’t give a lot of warning and time to prepare. The first week in December is usually the optimum assessment point in the season.

Of course, saying that doesn’t help any farmer right now. Once-a-day milking? Maybe, but you need to run the numbers to be sure. The prime focus now should be on spring and getting cows to a condition score of 5.0 for calving. Farmers need to be questioning herd size and looking hard at expenditure on fertiliser and supplements. Do they really need them? A strategic approach assisted by online tools will provide answers.

Yes, it’s tough out there but the industry can and must do better, and that is why I am all for the current review of strategy. I just hope it is focused on permanent pastures rather than short term supplements, on high residuals and high quality rather than intense grazing, and on carbon rather than nitrogen. I trust it will highlight profit rather than production, include the right profit measures, and aim at benefiting farmers and their families rather than vested interests.

Peter Floyd is the managing director of Cogent Farming Business Systems Ltd

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