Gippsland - How Now Gippy Now - July 2010 Edition
GippsDairy Focus Farms
Developing Production and Financial Budgets for 2010-2011
Focus Farm families and their support groups and facilitators have been preparing Production and Financial budgets for the 2010-11 season.
Part of this process is to determine the number of cows and heifers they will be milking. What commitment is there to service debt, essential capital expenditure, and expected family living costs? What production (Kg Fat + Protein) can be reasonably produced by the dairy farm business, and what inputs and their estimated costs will be required to reach that production?
By the time that you read this article, all opening milk prices will have been announced. Your expectation of the final price for the season and your family's attitude to exposure to risk should then become part of the decision making.
This whole exercise, including the nip and tucking process will lead to production and financial plans that you can confidently start the new season off with. Reviewing and amending can take place over time to meet significant changing circumstances.
Note: In these Focus Farm budgets an Operating Surplus is shown. This is not the farm Profit figure.
Foster Focus Farm
Focus Farm family Kevin and Helen Jones, facilitator John Mulvany and their support group members discussed the farm budget for the 2010-11 lactation.
Their budget is set on 380 cows producing 570kg MS (Milk Solids). Cows being fed 2.05t grain, plus a 'sniff' of high quality hay. Two labour units are included in the budget. Milk income is based on $4.90/kg MS (36.9 cents/litre).
The milking area is 85ha dryland pasture plus 40 ha irrigated. Pasture consumption is calculated at 11.7t/ha (3.8t/cow). There are two turnout blocks, 60 ha and 40 ha.
Farm Income
Milk income 1,061,104
Stock sales 46,000
Calf sales 4,000
Rebates 3,955
Total Farm Income $1,115,059
Farm Expenses
Herd Costs $ per Cow
AB and Herd Test 19,760 52
Animal health 23,560 62
Yearlings 5,700 15
Calf rearing 11,400 30
Total Herd Costs 60,420 159
Shed Costs
Shed power 15,960 42
Dairy supplies 6,840 18
Total Shed Costs 22,800 60
Feed Costs
Fertiliser ($500/ha) 47,850
Grain/pellets ($255/t) 198,645
Additives 11,400
High quality hay ($270/t) 8,618
Irrigation 11,600
Pasture silage and hay 24,300
Lease/agistment incl fert 49,988
Nitrogen/Pgibb (285kgN/ha) 41,800
Pasture/crops/pests 17,560
Fuel & oil 10,500
Freight & cartage 6,080
Total Feed Costs 428,341
Overhead Costs
Rates 9,692
Farm vehicles 3,715
Farm insurance 4,200
Repairs & maint farm 18,500
Repairs & maint plant 17,800
Other O'head eg Admin 7,800
Total Overhead Costs 61,707
Labour Costs
Gross wages 85,000
Workcover 3,400
Superannuation 7,650
Training courses 1,000
Protective clothing 885
Staff Amenities 775
Total Labour Costs 98,710
Total Farm Costs $671,978
Operating Surplus $443,081
Percentage of farm income on production costs: 60.3%
Farm working expenses: $3.10/kgMS
Total production cost: $4.36/kgMS.
Financial Indicators
Per Cow Per Ha
Income 2,934 8,920
Herd costs 159 483
Shed costs 60 182
Feed costs 1,127 3,426
Overhead costs 162 493
Labour (Paid) 260 789
Finance costs 555 1,688
Gross Margin 1,588 4,828
Operating surplus 1,166 3,545
Budget surplus 223 678
Total Labour (Paid + Imputed) 522 -
Physical Features
Total kg BF 117,466
Total kg PR 99,085
Total litres 2,872,040
Litres per cow 7,558
Stocking rate cows/ha 3.04
Fat + Protein kg per ha 1,732
People Productivity: Labour
Paid hours 3722
Imputed hours 4090
Total hours 7812
Kg MS/Hour 27.7
50 hours labour units 3.0
Kg MS per 50 hours labour unit 72073
Willowgrove Focus Farm
Mick and Paula Hughes and their young family lease this property. Along with facilitator Jeff Urie and their support group, they have adopted their budget after discussing it at the last two monthly meetings at the farm.
Calving starts on 15 July. Their 320 head including 30 carry over cows and 88 heifers is expected to pull back to a 300 head milking herd this season.
The budget is set up to be conservative on income and high in costs. Milk price is based on $4.56/kgMS (34.2 cents/litre).
The budget shows a deficit of $34,006 after debt reduction of around $70,000. This deficit could easily be eliminated with a 5 cents/litre price rise. (5 cents/litre increase adds $74,520 to the bottom line.
Some assumptions in the budget:
- 300 cows producing 380kg MS/cow
- Feeding 1.5t/cow grain. Budgeting $200/t through to 31 Dec, then $250/t to 30 June 2011.
- Purchasing 200t hay costing $240/t
- Consuming 10t Drymatter (DM)/ha pasture on the 85ha milking area and 8tDM/ha on the nearby 57ha turnout block.
- Applications of urea costing $640/t, applying 700kg/ha urea on the milking area and 200kg/ha urea on the turnout block.
- Employing relief-milking labour for 5-6 milkings per week.
Farm Income Total Per Cow
Milk income 554,039 1,846
Cull cows 38,190 127
Calves 3,188 10
Other farm income 4,842 -
Share dividends 525 -
Total Farm Income $600,784 $2,002
Farm Costs
Herd Costs:
AI 10,307 34
Herd test 74 -
Herd health 26,776 89
Calf rearing 14,033 46
Total HerdCosts $51,190 170
Shed Costs:
Shed power & heating 6,297 21
Dairy supplies 19,051 63
Total Shed Costs $25,384 84
Feed costs:
Fertiliser/nitrogen 49,972 166
Fodder 64,871 216
Agistment/rent 42,936 143
Grain/concentrates 101,250 337
Fuel and oil 10,966 36
Weed and pest 3,699 12
Other 10,619 35
Total Feed Costs $284,313 947
Overhead costs:
Labour 16,000 53
Administration 11,787 39
Vehicle Reg & Insurance 6,427 21
Repairs & Maintenance 15,739 52
Farm lease 59,334 197
Total Overhead Costs $109,287_____ 362
Total payments $470,138 $1567
Operating Surplus $130,646 $435 per cow.
A surplus of $118,707 is required to meet their debt servicing, capital, and living expenses.
The Focus Farms Project is an initiative of GippsDairy and supported by Gardiner Foundation and Dairy Australia.
For more information about the Focus Farm project, please contact: John Gallienne Mob 0407 863 493.
