Anne Lee

An impressive pasture harvested figure is continuing to drive profits at the Lincoln University Dairy Farm (LUDF).

Farm consultant Jeremy Savage from Macfarlane Rural Business says the farm’s operating costs (excluding depreciation) for the 2018-19 season ended up at $3.86/ kg milksolids (MS).

That’s well below the $4-plus figure predicted earlier in the year with the drop largely as a result of the identification and exclusion of extraordinary costs associated with the running of the farm as a demonstration farm.

Some costs associated with running lysimeters for instance had been included in the farm’s working expenses.

Jeremy says based on a $6.45/kg MS payout the farm is on track for earnings before interest, tax and depreciation (EBITD) of $7089/ha.

“The key drivers of that are a very high pasture harvested figure of 15.2t drymatter (DM)/ha based on Farmax calculations, low supplement use of 232kg drymatter (DM)/ cow of silage and high milk production per cow of 502kg MS/cow.”

Production – both milk and pasture – is achieved with low levels of nitrogen, 165kg N/ha/year, which is low compared with other Canterbury farms.

“What we have here is very, very efficient system,” he says.

Grazing management is allowing high breeding worth (BW) cows to express their genetic merit showing just what high BW cows can produce on what is very much a grass-based system.

This season (2019-20) production targets have been set slightly lower at 491kg MS/ cow from similar cows wintered.

“The challenge we have with the farm system we’re operating is that it’s very sensitive to how the season goes – climate wise.

“Two seasons ago we saw that when pasture covers got too high, due to the mild winter and spring, and cows didn’t peak well.”

That in turn put pressure on the financial returns, lifting costs on a per kilogram milksolids basis.

“We need to factor in a level of resilience there in terms of what our expectations are, hence we’ve come back to 491kg MS/ cow.”

Asked whether the farm’s stocking rate had dropped too low, Jeremy says the management team has done the modelling exercise to look at that question.

They found a higher stocking rate brought per cow production back to 475kg MS/cow but total production remained at 275,000 and the cost structure and profitability came out about the same too.

Given farm manager Peter Hancox’s high level of skill in managing the farm system the farm’s advisory board is happy to continue as it is.

“The reliance on achieving high per cow production is a risk but the system is highlighting what cows on an all-grass system can do.”

Last season only two cuts of silage were taken off the farm totalling 48 tonnes DM so it wasn’t running at a major surplus.

Jeremy says another key factor helping the farm’s cost structure is its relatively low irrigation electricity cost of $250/ha.

Those costs in Canterbury can be as high as $800/ha for deep water or water from irrigation schemes where principal and running costs are required.

Gravity-based, piped surface schemes can have costs as low as $180/ha, typically irrigation costs sit around $500/ha.

“The combination of relatively shallow bore water, well controlled water use and heavier soils means irrigation costs on LUDF are pretty low.”

Fertiliser costs are also low at $550/ ha largely on the back of low nitrogen fertiliser use.

Feed and grazing combined is $1.03/kg MS compared with about $1.50/kg MS Jeremy sees as a more typical cost amongst other clients.

“That’s largely because of the low levels of supplement used on LUDF – other costs such as winter grazing are similar.”

On the other side of the equation though LUDF does have some costs that sit significantly higher than average.

Animal health costs, at $240/cow are well above a more typical $170-$180/cow figure due mainly to the no bull policy for heifers and cows last season.

LUDF also has a “high end vaccination programme” with a full range of diseases vaccinated against.

Repairs and maintenance is high at $600/ha compared with $350/ha more typical in his wider client base, Jeremy says.

The university has high expectations for how the farm is presented.

The farm also has a very high number of visitors as well as people from numerous organisations coming and going on the farm, using it for research studies.

That means even minor hazards are rectified quickly and the spend on health and safety related issues deemed repairs and maintenance is higher than a commercial farm where visitor numbers are low.

Upgrades have been carried out on irrigation systems which should reduce repairs and maintenance costs this season.

Mating moving to minimise bobbies, move to A2 A2

Details of the mating plan for this season will be presented at LUDF’s next focus day on October 10.

Jeremy says unlike last year when all artificial breeding (AB) was used on the heifers, this year they will use bulls to follow up a two-week AB programme, providing they can source Mycoplasma bovis-free bulls.

The plan is to mate 160 yearlings using the A2 A2 bull team semen for 10 days with late heifers given a progesterone shot and AB’d for four days.

The main herd will again have a no bull mating programme.

Over the first three weeks –

  • Cows mated to sexed Kiwi cross A2 A2 semen.
  • Low BW cows will go to Hereford short gestation semen – estimated that will involve 25-35% of the herd.
  • Nominated A2 A2 semen will be used on first cycle late calving cows, about 56 of them.
  • That will be followed by four weeks of Wagyu beef for a First Light supply contract with calves picked up at four days old.
  • The final three weeks will use short gestation dairy semen.

This will mean the only bobby calves will come from the heifers and last three weeks of mating in the mixed age cows.

Jeremy says the move to A2 A2 is because the herd profile shows it can be done easily without limiting genetic gain rather than a major policy shift.

2018-2019 SEASON

  • Production: 277,293kg MS
  • Peak cows: 552 cows
  • Production per cow: 502kg MS/cow
  • Production per ha: 1733kg MS/ha production
  • 232kg DM/cow of silage used
  • Operating cost structure: $3.86/kg MS (excl depreciation)
  • Nitrogen applied: 165kg N/ha

2019-2020 SEASON

  • Production: 275,000kg MS
  • Peak cows: 560 cows
  • Production per cow: 491kg MS/cow
  • Production per ha: 1719kg MS/ha
  • Operating cost structure: $3.90/kg MS (excl depreciation)
  • Nitrogen use: 165kg N/ha/year