Dairy farm budget break even critical

It is vital that dairy farm budgets for next season break even financially reports The ODT. Dairy NZ's South Otago consulting officer Caroline Hadley said it was too late to adjust this season's budget, but farmers should be thinking about preparing next season's. Cashflow was tight this season given there would be no increase in Fonterra's advanced payout of $4.05 per kilogram of milk solids until July. She said opportunities existed to improve the operating surplus through increasing the volume and quality of pasture grown, because it was the cheapest form of feed. That could be achieved through pasture management, soil fertility, pasture species, drainage, irrigation, cropping or regrassing and pasture quality. Only quality feed should be bought, above 10.5 ME (metabolisable energy). Mrs Hadley said income could be maximised by using pasture demand to pasture growth, optimising stocking rate and managing surplus feed. This could be influenced by having a tight calving period. Cow efficiency could also influence the operating surplus, with efficiency a factor of feed quality, cow condition (especially at calving), cow quality and days in milk. At calving, she said, cow condition score should ideally be 5 to 5.5, while cow quality should be based on birth weight and weight of young stock. A shortage of farm labour had hampered the dairy industry until now and Mrs Hadley said the focus now needed to shift to labour efficiency, such as improving milking routines and cow-shed washing technology. She said farmers needed to calculate the true cost of supplementary feed. As a general rule, it should not cost more than 5% of the payout, or 25c per kilo this season, including transport, storage, feeding out and wastage. "It may be more profitable to accept lower per-cow production in times of feed deficits," she said. Fertiliser was one of the largest expenses and Mrs Hadley said regular soil testing would determine fertiliser requirement and ensure that only the fertiliser needed was applied.