John Mulvany, Focus Farm Facilitator
The August meeting of the Tallangatta Focus Farm support group was a busy one. There was a brief farm tour to review the physicals (herd, farm and spring strategy) and then it was time to have a close review of 2011-2012 costs and prepare the budget for 2012-2013.
In regard to last season's costs, Narelle McDonald provided a copy of the business profit and loss statement with all costs listed. As with many dairy farms, repairs and maintenance costs were high, because of some one off expenses that hopefully will not be repeated this year. Power for the season was much higher than expected and this will be investigated with the assistance of Jo Duffy (MG) who will organise an energy audit to see if there are options available to reduce this escalating cost. Insurance is another area that has ballooned, but is essentially beyond Mark and Narelle's' control if they want adequate coverage including income protection and accident insurance with a young family.
Recent soil tests have shown very good fertility levels, so this season only maintenance levels of phosphorous (20 kilograms per hectare) and potassium (50 kilograms per hectare) will be applied. Nitrogen will continue to be used, particularly as grain prices rise. Feed grown in spring using nitrogen (to boost silage or feed) costs about $80 per tonne, which is good value - if you need the feed!
Additives were very closely examined. This is an area that is very difficult to objectively assess. Mark and Narelle spent $94 per cow last year or $36,848. Additives will be fed in 2012-2013, but the cost could reduce to $60 per cow depending upon how carefully they are used and varied during the year. The problem is that individually it is only a few cents per cow per day, so why not? Moderate production cows (450 -550 kilograms milk solids per cow) should not need additives that cost more than 17 cents per cow
per day; if this is eased back in less stressed times of the year, it should be closer to 14 cents or $42 per cow. Higher production targets might require more sophisticated additives. This is an area Mark and Narelle will be monitoring very closely this year.
The McDonalds now have a labour structure that allows some time off and hopefully a holiday is not far away. The existing labour force, including Mark and Narelle, can cope with additional cows without an excessive increase in anyone's hours. This was a topic for further discussion in regard to cow numbers in 2012-2013. It appears the optimum cow number for the McDonald enterprise is 470 - 500 cows, conditional upon part of the area now leased for young stock being incorporated into the milking area. Table 1 indicates a partial budget on milking an extra 100 cows over the next two years, compared to the 392 milked in 2011-2012.
The "settings" for the Focus Farm for 2012-2013 are as follows: 470 cows producing 555 kilograms milk solids per cow and being fed three and a half tonne dry matter pasture or home grown silage, two tonnes of concentrate and, if required, 300 kilograms of purchased hay.
The debt servicing and leasing total for the year is $246,443 or $524 per cow - reasonably high, representing 17 per cent of income.
The target Operating Surplus, to service debt and cover all leases, is $424,138 or $902 per cow. This is based on an end of season milk price of $5.25, which includes a 48 per cent DI and also a growth payment.
This will be reviewed as the year progresses. Anyone who would like a copy of the budget please contact John Mulvany, email email@example.com or telephone 0409 935 578.
|What will change if we go ahead with the proposal of increasing cow numbers?|
|1. Extra Capital.|
|Total extra capital||$327,500|
|2. Extra Income and Costs to Operate.|
|Total extra income||$292,500|
|Lease Incl fertiliser||$40,000|
|Total extra costs||$212,000|
|3. Return on Marginal Capital.|
|Extra income minus extra costs||$80,500|
|Return on marginal/extra capital||25%|