|Beneath the surface
with David Law
I read an article before Christmas which asked: ‘Why are farmers so despondent?’ Although, by all accounts the season was looking great, I felt this was a very one-dimensional approach to the challenges farmers face each season. One good season does not erase the uncertainty farmers have had to contend with since 2008.
Pre-2008, the milk payout was set in May and it was guaranteed. Farmers budgeted with this in mind.
However, in 2008 that all changed. The milk price was set at a very respectable $7.50 kgMS in May, but in November Fonterra dropped the payout to $5.50 kgMS.
For our family, that meant a $400,000 loss in income. And because farmers had always been guaranteed what was forecast, many had already spent or committed that money, and then found themselves in debt. Since then, any extra money has gone toward paying down that debt.
Farmers now have little confidence in milk payout forecasts, and coupled with effluent and waterway compliance issues, nutrient budgeting, Mycoplasma bovis and the weather even the most seasoned, optimistic farmer can find themselves beaten.
So, how do we survive in a future of uncertainties? The most practical way to survive is to be smart.
A lot of farmers fall into the trap of false economy. If you cut back on feed, fertiliser, trace elements or dry cow therapy you create a reactive, rather than proactive, business model – and, as a rule, reactive business models cost a lot more in the long run. Here’s a few examples.
If you reduce your fertiliser, the farm will stop growing grass and you’ll be forced to buy in feed.
If you fail to utilise what’s already on-farm and have a too-short rotation length, you’ll also end up buying in feed to fill these gaps.
So if you do need to buy feed, make sure it’s not rubbish. There’s a big difference in the quality of feed available, although comparable in price, and sellers should be open to it being tested. Grass silage, although touted as a great feed, is one of the most expensive around due to the extra costs of baling and wrapping. At .45c/kgDM, you may be better off to spend your money on feed that increases cow performance.
It’s a tough ask of a cow to calve and be ready for mating six weeks later. Without a good trace element and feeding programme, she won’t be in good enough condition to calve, milk and cycle. If she doesn’t cycle, farmers are forced to use Controlled Internal Drug Release – known as CIDRs. There’s a $1000 difference in value between an in-calf cow and an empty cow; a small fortune when it’s multipled by a number of empty cows.
Also, watch stocking numbers. On a farm with 430 cows and enough stored feed to get the herd through a drought, you’re better to keep numbers static than increase cow numbers and be short of feed in summer. To produce milk a cow has to maintain its body weight for one year. If you increased cow numbers by 70 and fed a maintenance level of 12kgDM per cow per day, that’s 840kgDM. Multiplied by 365 days is 306,600kgDM. And at an average maize silage price of .32c kgDM that’s $98,000 of feed those 70 cows will consume just for maintenance – and that’s before they start to produce any milk. Alternatively, that amount of feed in the stack would cater for 430 cows at 8kgDM per cow per day for 90 days.
To be proactive you need to plan ahead – and, now is the time to start looking at next season.
The largest profit window is July to December, so the number one priority is to get cows to a body condition score of five before calving so they’re ready to perform after calving.
An important part of looking forward is making structured decisions and being proactive and planning to survive – not just hoping you’ll survive.
For more advice on farming smarter, give us a call.
David Law is the managing director of Forward Farming Biological Consultancy.