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The Dairy Bulletin - September 2011
Northern Irrigation and Southern Riverina
"As for butter versus margarine, I trust cows more than chemists." Joan Gussow
The Dairy Bulletin is produced by the DPI Dairy Services Branch
Inside this issue:
- Dairy Industry Farm Monitor Project results for 2010-11
- Dairy feed test service to continue
- Focus Farm Update - Andrew and Rebecca Phillips
- Think heifers when ordering straws
- New method of measuring dry matter
NORTHERN VICTORIAN DAIRY INDUSTRY COMES BACK TO BLACK
Daniel Gilmour, DPI Bendigo
The latest survey of dairy farm profitability commissioned by the Victorian Government and Dairy Australia, has revealed a stunning return to form for the state's dairy producers after a sustained period of low milk prices and more than a decade of drought.
The 2010-11 Dairy Industry Farm Monitor Project has found that last financial year was the best for dairy farmers since 2007-08.
As part of the Dairy Industry Farm Monitor Project, the Dairy Services Branch surveyed 74 farms across the state's three key dairy regions of northern Victoria, southwest Victoria and Gippsland.
The results reflect a widespread and dramatic improvement in the profitability of dairy operations in each of the three regions, helped by rising milk prices and better seasonal conditions.
The survey found that earnings before interest and tax (EBIT) across the three regions had surged from 65 cents per kilogram of milk solids or $507 a hectare in 2009-10, to $1.73 per kilogram of milk solids or $1,260 a hectare in 2010-11.
This is a phenomenal improvement in the financial performance of our dairy farmers who have battled long and hard against more than a decade of drought and a period of low milk prices.
Some Surprises from Northern Victoria
While it didn't record the highest returns, the stand out region in the 2010-11 survey was northern Victoria. Earnings before interest and tax increased more than seven fold from $0.20 per kilogram of milk solids or $153/ha, to $1.52 per kilogram of milk solids or $1,172/ha. EBIT is shown in figure one as the distance between the price received and the breakeven price required. The graph shows that in 2010-11 all farms recorded a positive EBIT, compared to 2009-10 when the average EBIT was negative. Return on assets (excluding capital appreciation) in the north also recovered strongly from 0.8 per cent on average to 7.0 per cent, with a range of 0.6 per cent to 16.4 per cent.
This was helped by farms in the north recording the highest average net milk income of $5.69/kg MS, which was higher than the other two regions. The north also recorded higher variable costs than the other two regions however, mainly resulting from increased spending on fodder purchases, hay and silage making, and unsurprisingly, irrigation. Whilst farms in the north reported the lowest average herd size, they had the highest production per cow as shown in table one, which lists some of the key physical characteristics of the farms surveyed in each region.
Compared to 2009-10, variable costs only increased slightly, while overhead costs rose by 13 per cent. This was mostly driven by a rise in repairs and maintenance costs, which suggests that with the improved cash flow farmers are taking the opportunity to undertake works that have been delayed over the past couple of years due to the tight financial situation.
While the 2010-11 show great results for the dairy industry in Victoria, it is important to remember that it follows a number of tough years in which many dairy farmers made a loss; as many as half of the producers surveyed across the state in 2009-10 posted negative returns.
What the better results in 2010-11 will do is enable many farmers to consolidate their businesses, reduce debt and attend to essential farm maintenance and improvement works they have had to defer because of the tough operating conditions over recent years.
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Figure 1: Breakeven milk price required per kilogram of milk solids sold. |
The top 25 per cent of producers in northern Victoria highlighted the strength of well run dairy businesses, recording profitability levels well above the average. In the north these farms on average recorded an EBIT of $2.39 per kilogram of milk solids, $2,688/ha and a return on assets of 12.1 per cent.
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Confidence in the industry is also very strong with the majority of farms indicating they are likely to increase production during the 2011-12 season. Many are also confident that the milk price will remain stable, or increase.
Similar to the 2009-10 results, milk price, climate and water availability continue to be the biggest issues facing farmers in the next 12 months. Over the longer term, milk price and input costs are the biggest issue facing farmers, while policy decisions around both water and carbon are a major concern to be addressed.
Electronic copies of the 2010-11 Dairy Industry Farm Monitor Project annual report are available by emailing: Farm.Monitor.Project@dpi.vic.gov.au
Hard copies of the report will be available from August 31.
For more information on the project please contact Daniel Gilmour or Claire Swann at DPI Bendigo, telephone (03) 5430 4444, or via the project email.
| Farm physical parameters | State-wide | North | South West | Gippsland |
|---|---|---|---|---|
| Number of farms in sample | 74 | 24 | 25 | 25 |
| Herd size (ma. no. milkers for at least 3 months) | 305 | 261 | 369 | 285 |
| Annual rainfall 2010-11 | 1,021 | 916 | 1,095 | 1,047 |
| Water used (irrigation + rainfall) mm/ha | 1,104 | 1,089 | 1,099 | 1,123 |
| Total useable area (hectares) | 236 | 196 | 322 | 190 |
| Stocking rate (milking cows per useable hectares) | 1.4 | 1.5 | 1.2 | 1.6 |
| Milk sold (kg MS/cow) | 493 | 495 | 491 | 494 |
| Milk sold (kg MS/ha) | 719 | 762 | 585 | 811 |
| Milk price received ($/kg MS) | $5.64 | $5.69 | $5.62 | $5.59 |
| People productivity (milking cows/FTE1) | 92 | 89 | 89 | 97 |
| People productivity (kg MS/FTE1) | 45,504 | 43,717 | 44,587 | 48,138 |
STAYING POSITIVE AFTER A RUN OF TOUGH YEARS
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Phil Shannon and Rebecca Phillips fielding questions from the support group. |
Andrew and Rebecca Phillips are looking forward to their involvement with the Murray Dairy Focus Farm project. They see it as an opportunity to put the business under the microscope and reap the benefits from a supportive network.
The Phillips moved from New Zealand in 1998, where Rebecca was working as a consulting officer and Andrew was sharemilking.
They started dairying in Australia through leasing a farm at Katamatite. They took the leap into farm ownership by purchasing their current business in the same area in 2001. As all locals would know it has been a ‘baptism of fire' with the volatility the region has faced over the last 10 or so years. The Phillips hope the tough years are behind them so that they can get on with building their business.
Rebecca and Andrew have a young family and want to achieve that balance between spending quality time with the kids and keeping the farm business ticking along nicely. They have four children – Michael is 11, Bianca 9, Anneliese 7 and Emily 5.
Rebecca says "After achieving our first goal of farm ownership, the first season was promising with good water allocations and relatively high milk price. As a result, like many first time, proud and enthusiastic farm owners, we dived into upgrading the farm through fencing, improving water supply and pasture renovation. However the drought followed, and like the rest of the dairying community, we struggled to meet the costs of running the business."
The Phillips have been involved in a local dairy business group – but believe the focus farm project will provide them with more opportunity to explore their business in detail.
In the first few months of the project they have recruited a support group which involves a balance of trusted local farmers and advisors to the business. The support group is facilitated by Phil Shannon, a senior dairy extension officer with the DPI Dairy Services Branch and participants range from the business banker and accountant, through to a local agronomist, milk factory field officer and importantly respected local farmers that are focussed on helping the business set and achieve realistic goals.
So far the support group have been getting to know the farm – exploring historical physical and financial performance figures and understanding the Phillips' farming philosophy. Through this process the support group have helped identify a number of practical goals for the business. The aim is to improve farm physical and financial performance, and get the business back on track after a run of tough years. Andrew says "One of the highest priorities for us is to re-build equity to create a buffer against future industry challenges – and we are looking forward to drawing on the support group to help us meet this challenge."
For more information about the Murray Dairy Focus Farm project, please contact Tori Rath, telephone (03) 5833 5927.
DAIRY FEED TEST SERVICE TO CONTINUE
Due to popular demand, the dairy RAPID Feed Analysis service will continue to be available to dairy farmers across Victoria and Tasmania.
Dairy Australia's Grains2Milk program leader Dr Steve Little said the dairy feed testing service was now being offered by George Weston Technologies after a successful 18-month trial the trial in northern and western Victoria proved it to be commercially viable.
"Feed test results mean you know what the cows are really getting in their diet or exactly what a potential feed supplier is offering," Dr Little said.
The service provides an analysis of the most important nutrients including dry matter, metabolisable energy, crude protein, fat and ash for a range of feeds including pasture, silage, hay, straw, grains, meals and pellets.
"The RAPID Feed Analysis kits are simple and easy to use. The information on the package is self explanatory and the samples get picked up by the tanker driver from the dairy," Dr Little said.
"Most results are available within two days from George Weston Technologies and are sent via fax and email. The quick turn around time means you can make decisions quickly."
Dr Little said farmers could also get help interpreting test results by using the My Feed Report tool on the Dairy Australia website.
For information regarding nutrition talk to your factory field officer or nutrition advisor.
For more information on the RAPID Feed Analysis service please contact Steve Little, telephone 0400 004 841, email slittle@dairyaustralia.com.au or visit http://www.dairyaustralia.com.au/Animals-feed-and-environment/Feeding-and-nutrition.aspx
Sampling Tips:
- Ensure a representative sample
- Sample from a ‘fresh face' of pit silage
- Take care to seal baled silage well with silage repair tape
- Sample and send at the beginning of the week
- Remove air from the sample bag
- Keep the samples cool - don't expose them to heat as this will affect the result
- Label the samples accurately
TICKLERS
"You never get anything right," complained the teacher to her student. "What kind of job do you think you'll get when you leave school?"
"Well, I want to be the weather girl on TV," replied the student.
Where do football directors go when they are fed up? The bored room!
Why did the chicken get sent off during the game? For persistent fowl play!
What is Draculas favourite fruit? Neck-tarines.
What kind of snake is good at math? An adder.
NEW METHOD OF MEASURING DRY MATTER
Dairy researchers have found a new way of estimating dry matter (DM) consumption in dairy herds called ‘feeding systems' and claim it is more accurate than the current methods.
Janna Heard, a research scientist with DPI Future Farming Systems Research, led the team of Victorian and West Australian scientists studying how farmers account for energy requirements of Australian herds.
The ‘Pasture Consumption and Feed Conversion Efficiency Calculator' has been developed to provide the Australian dairy industry with a robust, scientifically sound method of calculating on-farm annual pasture removal (t DM/ha) and estimated annual feed conversion efficiency of the milking herd (kg energy corrected milk/kg DM; grams fat plus protein/kg DM). The estimate of home grown feed consumption may be for the total pasture and forage production area on the farm, or for the milking area (area grazed by the lactating herd).
The primary purpose of estimating pasture or home grown feed consumption on the farm or milking area, is to benchmark performance of the farm over time, and it is particularly important as cow genetics and/or the feeding systems on individual farms are continually changing. A secondary goal may be to benchmark performance against other farms.
This program is based on generalised equations of ruminant requirements for metabolisable energy (ME, MJ/kg DM) for various physiological processes published in ‘Nutrient Requirements of Domesticated Ruminants' (CSIRO, 2007), and differs from other approaches which do not fully account for ME requirements. The equations used to estimate ME requirements are described in Heard et al. (2009).
As a result of this work, a simple computer program has been developed to help farmers estimate on-farm annual pasture removal and feed conversion efficiency of the milking herd. DPI Research Manager of Dairy Production Sciences Dr Bill Wales, said this could be used to benchmark farm performance over time. "You need to measure pasture consumption accurately to make sensible decisions on purchasing expensive supplements," Dr Wales said.
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"However, estimating the amount of pasture consumed is difficult, and is influenced by the interrelationship between animals, plants and overall feed management." When researchers analysed the sensitivity of both techniques using a stylised dairy farm in Australia's temperate zones, pasture consumption using the current approach was 8.6tDM/ha, while the feeding standards approach measured 12.44tDM/ha.
The research was supported by the Geoffrey Gardiner Dairy Foundation, Dairy Australia, DPI Victoria and the Western Australian Department of Agriculture and Food.
Farmers can access the new program at: www.new.dpi.vic.gov.au/agriculture/dairy/pastures-management/calculator
THINK HEIFERS WHEN ORDERING STRAWS
Dairy farmers are being encouraged to think differently when ordering artificial insemination (AI) straws this season.
For every heifer replacement needed in the herd, order six straws.
While the obvious question most people ask is ‘how many to order?' the more important question is ‘how many replacements do I need in three years time?', according to the Australian Dairy Herd Improvement Scheme (ADHIS) and Dairy Australia's InCalf project.
Michelle Axford, from the ADHIS, said that in the short term, AI straws are the key to getting cows in calf. But the real value of AI straws is the genetic merit of the heifers when they enter the milking herd.
"Decisions on semen selection today affect the genetic merit of the herd in years to come. We encourage farmers to select bulls from the Good Bulls Guide which meet their breeding objective," Mrs Axford said.
In reviewing the number of replacements required, InCalf's Barry Zimmermann suggests farmers look three years ahead and decide how many replacement heifers they'll need entering the herd.
"The number should include any extra heifers to expand the herd size or for sale or export," Dr Zimmermann said. "Then it's just a simple rule of thumb – allow six straws for every replacement heifer," he said.
For example, a 400 cow herd with a 25 percent replacement rate, will need 100 heifer replacements every year, so 600 AI straws should be ordered to maintain the herd size.
This rule of thumb allows for:
- a 50 per cent conception rate;
- 10 per cent loss of cows prior to calving (eg. pregnant cows that are culled for other reasons);
- 50 per cent female calves;
- 5 percent loss of heifer calves prior to weaning;
- 5 per cent loss of heifers prior to joining;
- 90 per cent heifer conception rate;
- 3 per cent losses prior to calving (deaths, slips); and
- 3 per cent heifers exiting the herd in the first 30 days post calving.
"This approach helps you think about where you want the herd to be in three years time and ensures you'll have enough replacement heifers without scratching around at the last minute buying extras," Dr Zimmermann said.
The ADHIS website will soon have a simple calculator tool that allows the user to change the percentage rates of the various allowances for their herd.
For more information visit www.adhis.com.au or contact ADHIS ph (03) 8621-4240.
ADHIS is an initiative of Australian Dairy Farmers', with most of its funding coming from Dairy Australia through the Dairy Services Levy.
InCalf is Dairy Australia's extension project to help dairy farmers improve the fertility of their herds.
MONTHLY REMINDERS
Pastures
- As pasture growth rates increase rapidly at this time of year, both the rotation length and grazing pressure need to be managed to maintain pasture quality.
- Be organised to conserve any excess fodder - it will be a valuable feed source later in the year.
- The best responses to nitrogen can be achieved during spring. Just make sure any extra feed grown is utilised otherwise money will be wasted.
Cows
- The cow’s intake is at 75 per cent of peak appetite after she has calved. Make sure the cow’s dietary requirements are being met so that target milk production and good fertility can be achieved.
- If making a big change to the diet, make sure that it is gradual so that the bugs in the rumen can adapt.
- Ensure that purchased feed is of sufficient quality to maintain production
- With spring pastures coming on, check that there is still enough fibre in the diet.
- Be on the watch for bloat and other metabolic disorders that can occur in early lactation.
Calves
- Start the calves on water, straw and concentrates as soon as possible.
- The calves can be weaned once they are eating about one kilogram of concentrate per day.
WHAT’S ON?
NCDEA Courses
Plan production for the while farm/land-based business (Diploma)
Bringing all the components together
Start date: 26 October.
Design and Manage the Enterprise Quality Management System (Advanced Diploma)
The process of designing and managing the quality management system for a dairy farm.
Start date: 22 September.
For more information please contact
Carol McFadzean, telephone (03) 5824 5535 or email cmcfadzean@ncdea.edu.au
Want to learn computer skills from the comfort of your own farm office?
The National Centre for Dairy Education Australia at Tatura is offering the Computer School.
The Computer School is comprised of two short courses designed to improve computer skills.
The course is run out of your own home or office, and is backed up by people who understand both farming and learning.
For more information please contact: Peter Juers, telephone (03) 5824 5504 or email pjuers@ncdea.edu.au
2011 Elmore Field Days 4-6 October
For more information visit www.elmorefielddays.com.au or telephone (03) 5432 6176
