NZ dairy accelerates profit

15 Nov, 2016 12:00 PM
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You can keep things nice and simple, it's easy to run and it's got good profits.

Some ugly numbers in a bumper payout year convinced the Ferris family to take the palm kernel truck off speed dial and go all-grass dairyfarming.

It was 2014, Fonterra's payout was a record $NZ8.40, and the owners of Piriaka Farms were crunching the season's numbers when an unpleasant truth jumped out: They'd spent more than $NZ1 million on supplementary feed and had only $NZ80,000 to $NZ100,000 "true" profit to show for it.

The family, who farm 1100 hectares (980ha effective) as three dairy units totalling 2300 cows, were already uncomfortable with the pressure supplementary feeding was putting on hard-to-come-by staff in their non-traditional dairying district south of Taumarunui. Tractor repairs and maintenance bills were mounting, and staff had to be on tractors for too long.

Patriarch Murray Ferris recalls in-shed feeders were being considered for the three dairy sheds when he contacted all-grass farming advocate Colin Armer, Fonterra's biggest shareholder who has a run-off bordering the Ferrises, about another matter, and was invited to Armer's big operation near Lake Taupo.

"We put all our figures together and showed Colin," Murray said.

"He pushed them aside and said it (supplement) never pays. Then we went through his figures. We spent half a day there."

Son Robbie, who with brother Marc will become a shareholder in the business this year, says by then Fonterra had forecast a new season milk price of $NZ7/kg milksolids and it had pretty well been decided to ditch supplements.

To balance Armer's view, the family visited an all-grass system farm at Matamata surrounded by supplement-feeding neighbours. Again, what they saw was positive.

So system 3-4 farming became a system 2, the farms are making better profits and the family – and their cows and staff – are much happier.

"We had always pushed per cow production," Robbie said. "We were starting to focus more on that almost at the expense of per hectare production. That was the big mindset change. It's about production per hectare because that's essentially the limiting factor on any farm – how much grass you can grow and harvest."

The system change worked because it was for positive, not negative, reasons, he said.

"Our contract milkers and management were into it as well," Robbie said. "It was a positive. We were going to be better off for doing this system, not because the milk price was down."

Contract milker John Steele, with the family several years, helped implement the change.

Silage is only made if there is a genuine surplus. "We plan not to make silage," Robbie said.

Production for Fonterra last season was 690,000kg of milksolids, about 1040kg per hectare. Pre-system change it was 1150-1200kg/ha.

The family budgets on operating expenses of $NZ3.50/kg. Operating profit minus tax and interest costs for the current season is budgeted at $NZ2289/ha. Operating expenses could previously rise to $NZ5.40/kg in a drought year.

Murray's wife Christine said the biggest change had been in the cows.

"The cows were better through calving – we didn't have the metabolic problems we used to have," Christine says.

Murray said: "You've definitely got to get used to a leaner, meaner machine but all the key indicators have improved. Cell counts are really low and downer cows are pretty much non-existent. Mating's still good. We were getting up to a 8 to 9 per cent empty rate, it's now down to about 7 per cent. The cows are healthier. We don't have fat cows."

Robbie said the vet had been out just twice in two years to calve a cow. "And we hardly ever have to calve a cow," he said. "We used to often be up during the night before."

He said the family had been slightly worried about the impact of the system change on cow health.

"There's this stigma that all-grass cows are generally skinnier and therefore must be unhealthy and therefore mastitis and empty rates will be much higher," he said. "It just hasn't happened. Our mastitis bill has been cut in half and cell counts averaged 120 in the first year over all three farms. They probably averaged 150 to 180 before. We've also halved dry cow therapy."

Murray said he believed cows were healthier for the same reasons leaner people were healthier.

"The perception is cows should be big and fat and shiny," he said. "We know ourselves we don't want to be big, fat and shiny."

Rotational planning is essential to all-grass farming success, he said. "We don't deviate from that, and pugging is an absolute no-no. That's a cost. Our rotations are pretty set and we are very stringent on the spring rotational planner."

Annual fertiliser application – superphosphate, potash and urea - is also non-negotiable. Summer crops have been replaced by winter kale, and swede is a possibility this year.

The stocking rate is about 3.5 cows/ha. It used to be 3-3.2. "The higher the pasture harvest the higher the profitability," Robbie said. "On a lot of this country the only way we can eat the grass is with cows so our stocking rate has to be such that we eat all of our spring surplus milking cows and keep hitting the residuals as well."

Before Christmas, 20 to 30 non-performing cows may be culled from each farm and on January 20, cows are pregnancy tested to give a nine-week in-calf rate. Any cows not in-calf are culled unless they are young and sound, in which case they're carried over to calve the following season or late. "We're uncomfortable culling good young cows," he said. "But a cow only gets one chance at this.

Murray said: "From the 20th of January we have to drop cow numbers pretty quick to keep up with the reducing grass growth rate so we go hard out to get down to our winter rate in February." The farms usually finish milking at the end of April.

Robbie said round speed ruled. "We're very strict through spring with the rotation planner, then it's roughly 25-day rounds through to December," he said. "When others are cutting silage (to handle surplus) we just slow the round down. February is 35 to 40 days, March is 45 to 50 days and on the first of May we are on 80-day rounds."

There's no intervention in mating, though they have cup removers and Protrack systems in all sheds, which would fail the Colin Armer no-frills test.

Spring calving of the mainly kiwi-cross herds starts on July 24 with 88 per cent completed within six weeks this year. Artificial insemination is done by LIC using kiwi-cross semen. High genetic Jersey bulls are mated to heifers. Follow-up bulls are usually Jersey though Angus bulls have also been used because they have provided a better return at the works. "It also gives us the benefit of selling some calves to the beef market but it affects cows in that they have bigger calves. I'm not sold on it," Robbie said.

Marc runs the operation's 310ha run-off farm for replacement heifers.

Keepers are all heifers from AI and most heifer calves out of heifers. Marc gets calves at two to three weeks. They get milk once a day – this year each calf had four litres a day. No meal is fed. Marc weans heifers at 80kg and takes them through until they go to the dairy farms as rising two year olds.

Murray reckons an all-grass system – providing it's done right and the farm owners implement it correctly - works because it is repeatable. And farming is more enjoyable.

"You can keep things nice and simple, it's easy to run and it's got good profits," he said.

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