Dairy focus september 2015 by Ashburton Guardian

Dairy Focus SEPTEMBER, 2015

DIFFERENT PRODUCTION SYSTEMS Canterbury dairy farming diversity

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INDEX

COMMENT FROM EDITOR

The diversity that is Canterbury farming: Bruce Turpie’s hybrid barn/grazing system

Pasture based for Synlait Premium

Herringbone still efficient

Dairy NZ on barn systems

A consultant’s view

International dairy news

New Zealand dairy news

Going big at the risk of being great

Around the traps

CONTACTS We appreciate your feedback. Editor Email your comments to michelle.n@theguardian.co.nz or phone 03 307 7971.

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E E R F NG HEARI

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Human nature dictates bigger, more, faster, quicker equates to success and that has certainly been true of the dairy farming intensification in New Zealand over the past decade. While prices were high we were quite happily converting and pumping in an effort to turn over as much milk as we could. That’s not a bad thing – it’s entrepreneurial and what this country was built on. But as margins shrink or, in this season, entirely disappear we are left holding the milk can, unsure and a little less confident than we once were. That’s also not a bad thing. A downturn can be seen as one diabolical negative or it can be housed and looked at for what it offers us long-term – a healthy attitude towards all our production costs and a willingness to seriously discuss and implement efficiencies. We have been focusing on governance, China and how we can best survive next month’s cashflow. But at the same time we must keep provoking discussion around production. We must constantly seek to understand the global consumer and where our future markets lie. Farming is not simply a heads down, bums up business, particularly if you are supplying a co-operative you own. Do we want to continue to push our

Nadine Porter

EDITOR

Tweet us @farmjourno

milk yield up on our individual farm and in essence push ever onwards in a commodity frame of mind or do we want to pull back a little and direct ourselves towards the premium end of the market? Can we do both? These are all questions we must raise and in this issue we look at dairy systems as our first on-farm check. How does a hybrid barn/grazing system stack up against a grass-fed pasture-based dairy farmer receiving a premium on the back of US customer demands? Who wins and who loses now and in the future? And what is the market likely to command us to do, because we are at the mercy of all customers, at all times, in every part of the world. Change is good, it re-vitalises us. The current change in milk price will give us the impetus to be smart, strong and innovative just as we were a decade ago.

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THE DIVERSITY THAT IS CANTERBURY FARMING

Hedging bets with hybrid system Nadine Porter

EDITOR

Tweet us @farmjourno

While the handful of New Zealand dairy farmers who operate full TMR barn systems are suffering significant financial loss this season, one Mid Canterbury farmer is finding a hybrid system, along with a winter milk contract, is balancing his risk. Lyndhurst farmer Bruce Turpie had only one stipulation as to which

dairy company he would work with when he set up his housed system four seasons ago – they had to offer a winter milk contract. Synlait now pays Bruce an extra $3.70 per kilogram MS and in a season like this one it is the difference between feed costs “blowing you to bits” and survival. continued over page

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THE DIVERSITY THAT IS CANTERBURY FARMING From P3 It also enables him to run a split calving system, with 900 calves in the spring and 400 in the autumn. Without the contract he says he would go back to spring calving and his $1.5 million free-stall barn would only be used for wintering. Following the sale of his 470 hectare Wakanui cropping farm Bruce looked at robotics but soon changed his mind when he looked at a fully robotic system and realised it was not as simple to operate as he first thought. Although having farmed sheep and beef in South Canterbury and grown crops in Wakanui, Bruce made the decision to go dairying due to the plateauing of arable profitability. “I wasn’t interested in buying more land and going harder and harder all the time. I still enjoy the machinery and growing crops but I enjoy the animals as well.” So, he researched all options including equity partnerships before settling on a hybrid

FARM FACTS ■

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Left – The free-stall barn houses 730 cows in split shifts on Bruce Turpie’s farm.

110915-AK-026

mix that would enable him to grow up to 50 per cent of feed required while cows were housed for half the day. Bruce’s 1300 holstein jersey crossed herd spend half of their time indoors and half their time on pasture. Fully

housing them as other dairy barns in the area have done did not appeal. “At the end of the day you have to accept that having cows in the barn 24/7 is just such an expensive system and you have to have the right

cows to do that. It’s going to take us five years to get the cows we want for our system with genetics.” One-third of Bruce’s cows will be mated with American jerseys as the mid-sized black cow has shown itself to be

Operating a hybrid dairy farm system with freestall barn, housing 730 cows. Half the 1300 holstein jersey crossed herd housed at night, the lower performing half during the day. Split calving in spring and autumn to gain winter premium contract with Synlait. Grows 50 per cent of feed including all grain and straw. Ten staff, including arable workers

more robust than black and white Kiwi crosses. “It’s just hybrid vigour.” Selecting and breeding the right cows for his system has been an ongoing process with Bruce buying cows from several different places.

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EVERYONE’S AFFECTED

The team at the 80 bail rotary.

“New Zealand genetics don’t suit our system but American genetics don’t suit New Zealand pasture systems… at either end of the spectrum they don’t really fit our system. Those big American cows don’t really suit walking and are hard to breed.” At the end of the day Bruce said it was all about feed conversion efficiency and trying to achieve production of 1 kg/ms for every 9kg dry matter fed through his 80 bale rotary shed. Typically he wanted a 570-580 kg cow producing 600 kg/ms. “If we can do 105 per cent

out of a cow’s bodyweight we are happy. We would love it to be more.” However in a herd of 1300 some are only reaching 90 per cent, although culling continues to reduce the poorer performers. This season around 40 per cent of heifers will be replaced – and in two years Bruce believes the entire herd will be able to be replaced with their own genetics. Initially Bruce had hoped to run the farm as a standalone unit but as the 700 herd grew so did the need to expand and utilise the investment in the

barn. Growing all of his own grain and straw means he only relies on outside neighbours to buy in maize silage While concentrating heavily on production, Bruce has his eyes on a move into A2 milk in the future for a part of his herd. “We did think we would go to 1500 cows and target one million milksolids but we’re happy with doing 750,000 to 800,000ms from 1300 cows.” The prospect of A2, his winter contract premiums and his ability to grow much of his own feed means that he has spread his risk well.

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“We are still held back by Fonterra and commodity prices. “They are going to have to make a better job of what they are doing – whether it is added value, they’re going to have to give the farmer a greater return. “If Fonterra were responsible they wouldn’t take any more suppliers on. The lid has to be put on production … I don’t think the downturn will do any harm in the end. It’s making everyone work a lot harder at their business. “We need them to give us a bit more of a heads up as to where they think they can market to.” Bruce Turpie

THE GOOD AND BAD ADVANTAGES:

■ ■ ■ ■

Maximised production from cows in a reasonable pay-out year. Calving twice a year means the entire system is efficient. Field to yield helps to focus on production costs. Increased attention to detail including at breeding.

DISADVANTAGES

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Initial set-up costs. Need for experienced staff as a high input system needs a different set of skills to those on a pasture based farm.

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THE DIVERSITY THAT IS CANTERBURY FARMING

Value-add the key to standing out by NadiNe Porter The New Zealand dairy industry should look at every way it can stand out from others, including value adding, according to a Dunsandel sharemilker. Purata Farms (formerly Synlait Farms) 50/50 sharemilker Michael Woodward said while cheap milk sells itself, just a 1 per cent increase in United States milk production could “blow our exports out of the water”. Michael and his wife Susie are among the first Synlait Milk suppliers to take up a pasture-based grass-fed premium contract offering 25 cents with Munchkin – a US baby infant formula manufacturer. Munchkin plans to launch a new grass-fed branded retail-ready infant formula into the United States and China that will be manufactured exclusively by Synlait. The contract has been part of Synlait’s strategy to look at opportunities that reduce its exposure in China. The raw milk used to

manufacture the unique infant formula is subject to a new grass-fed standard co-developed by Munchkin and Synlait. It requires cows to be exclusively grazed on a pasture and crop-based diet, with no feeding of grain, or feed not grown in New Zealand. Farmers will be independently audited to ensure they meet and maintain the standard. Michael said the contract was a natural fit on their farm as it was what they were doing anyway. However, it did mean supplements could be more expensive, particularly in a year when the North Canterbury drought has affected the amount of grass silage and baleage available. “It does take away some of those options like PKE if you need something cheap and nasty to fill a gap.” In order to get through Michael has ensured the farm has enough feed supplements on hand at present and has his fingers crossed the price will come down by next autumn and spring because of a lack of demand. continued next page

FARM FACTS ■ ■ ■ ■ ■

50/50 sharemilkers at Dunsandel under Purata Farms. 1000 cows milked in a 50-bale rotary shed. Receiving premiums for Synlait’s Lead with Pride programme and Munchkins. Grass-fed pasture-based contract. 450,000kg/ms per year.

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Michael Woodward is positive about his future share-milking under Synlait despite this PHOTO NADINE PORTER 150915-NPseason’s poor returns.

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from the pack From P6 “The winter we’ve just come through saw the highest we’ve ever paid for winter grazing, but now with Central Plains Water coming through we are hoping we get a levelling off of the price.” In their first year of sharemilking at Tapatoru Dairies – a 300-hectare property – the couple hasn’t had it easy following contract milking at Purata’s 600-hectare Robindale farm. With costs of production between $4 and $4.50, the couple will take a hit this season, but believe the future for value-added milk will be bright. At its peak the couple milk 1000 cows through a 50-bale rotary shed. It’s a different life to the one Michael’s parents had on their angora goat farm back home in Pukekohe, but one which he hopes

will eventually lead to farm ownership. Although not aiming to be a dairy farmer, after completion of his Lincoln University studies Michael ended up working on a dairy farm and then took a paper in dairying. Before long he won a role at the then Synlait Farms Robindale farm. From there, as well as meeting Susie, he worked his way up from farm assistant to 2IC and, by December, 2007, he and Susie moved to Tapatoru to manage the farm bought by Synlait Farms as a going concern. A yearand-a-half later they got the opportunity to go back to manage Robindale for a year, before contract milking 2000 cows where he is now for the past four years. Last season was the first moving back to Tapatoru farm in Dunsandel to sharemilk.

Working for Purata Farms has been attractive to Michael and Susie because of the wealth of support on offer. “We’ve always had full disclosure to the companies (Synlait Farms) financials and have seen what the farm operates at.” He remains optimistic despite the downturn – although he knows the payout announcement later this month from Synlait “won’t be nice”. “It’s out of our control. We can’t concentrate on that – we’ve just got to do better with what we’re doing.” He said Synlait Milk was innovative at value adding and liked to work with farmers that were “fired up and excited by their products”. A Lead with Pride supplier (A Synlait programme that recognises and financially rewards suppliers who achieve

dairy farming best practice), Michael and Susan get a small premium at the moment, but hope that will increase as its market potential becomes recognised. His cows will produce close to 465kg/ms each this season with supplements not used to push the peak, but to fill gaps in the season instead. Like all dairy farmers this year, Michael has been striving for efficiency and has found culling the lowerperforming animals from his herd has resulted in improved per cow production and cost per milksolid produced saving. He’s also set his staff the task of raising production from 450,000 to 465,000 kg/ ms while keeping costs static. “This can be achieved through greater attention to detail and that’s why I make sure Susie is very much involved in the farm business. She makes sure

my big picture stuff doesn’t stray from what’s making us money,” Michael said. He believes a lot more work has been bought back on to the farm. “We’ve done a lot of stuff this year that we would normally use contractors for, like laying concrete and building. Not major projects but things we can do and, as a sharemilker, we are burning up a lot of man hours trying to add value to the owners and our business because at the same time we want them to want us around in the future.” However, he did warn against cutting every expense possible to the detriment of the cow’s health and condition as it would only result in lowered production next season. “The biggest thing we can’t do is stop farming our cows properly.”

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THE DIVERSITY THAT IS CANTERBURY FARMING

Herringbone versus rotary sheds While rotary milking sheds seem to dominate on Mid Canterbury’s big-herd dairy farms, in 2013 72 per cent of the country’s dairies were herringbone, according to DairyNZ. As a dairy shed should last at least 25 years, it is important keep in mind plans for further growth when making decisions about putting in new infrastructure. Labour efficiency, cow numbers, capital cost, and other factors such as personal preference and the potential for increasing herd size in the future. Planning is important to ensure that you get a dairy which suits the needs of your business and the people in it. Herringbone milking systems work well with smaller herds, Mid Canterbury farmer Neil Brown says. Mr Brown milks two herds – one 600 head and the other

Michelle Nelson

RURAL EDITOR

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400 – through two sheds with sharemilker Andrew Slater overseeing production. “We use herringbone sheds because of our herd sizes and the farms are too far apart to combine them,” he said. “Maintenance costs are lower because there are far less moving parts to contend with by comparison with a rotary system. Energy wise herringbone sheds are also cheaper to run, again because there are less moving parts.” This also means staff don’t

need to be so techno-savvy to operate the machines. “They don’t need to keep adjusting platform speeds, on a rotary the machine drives the person, because they just stand

there. On a herringbone the person in the shed decides how fast they can milk.” Technology such as automatic teat washing and cup removers work as well in

herringbone sheds as a rotary, saving time and helping to prevent problems such as over milking. “One thing about a herringbone is if you haven’t

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Above – Neil Brown. Left – Herringbone milking sheds have a place in the modern dairy industry.

got enough staff, depending on the number of cups you have, you can just shorten the shed up – you don’t need to have the whole shed in operation,” Mr Brown said.

“That’s handy if a staff member doesn’t turn up for whatever reason, you can only use half the machines if you want to. It would take longer but you can get it done.”

On the downside heat detection can be trickier in a herringbone shed, because the staff are down in the pit, Mr Brown said. Many of the bigger rotary operations have a dedicated person on heat detection during mating but that is not normal practice in the smaller herds going through herringbone sheds. However smaller herd sizes also have advantages. “You can keep better track of your cow’s health, because they are standing in front of you and you are walking up and down behind them. You get to know your animals better, and you pick up on any problems sooner. You get to see them walk in and notice if they are limping or a bit off colour,” Mr Brown said. “In a rotary you put the cups on and the cow is gone and off at the other end.

“At the end of the day it comes down to herd size – if I was milking a thousand cows on one farm, I’d have a rotary. I would say the crossover is about 600 to 700 cows. “The cost of building a herringbone is a lot cheaper – I’m guessing about two thirds of the cost. But per cow they are probably similar because they put a lot more cows through the rotaries, per bail than they do in the herringbones.” Corporate dairy farmer Willy Leferink has sheds operating both herringbone and rotary systems on different farms, as well as a robotic cow barn. He’s a fan of herringbone sheds – he says they create a more social environment. His two herringbone sheds, both in the Orari district, are not suited to rotary technology.

“It wouldn’t work as well and they are not worth the investment of upgrading,” he said. “In New Zealand we are fixated with ramming cows through the shed in a couple of hours, but it’s not necessarily the best utilisation of capital.” Mr Leferink said the low maintenance costs were an advantage. “Our repair and maintenance bills on those two farms at Orari are at rock bottom, but the cost of refrigeration is identical because they are producing the same amount of milk. The main disadvantage of milking through a herringbone shed was throughput, from Mr Leferink’s perspective. “The biggest worry about herringbone sheds is to get rid of the cows – in is all right, but getting them out can be an issue.”

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THE DIVERSITY THAT IS CANTERBURY FARMING

Free-stall vs pasture-based system Benefits of barns: ■ ■

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A significant improvement in feed ration utilisation. All weather facility to control and manage herd comfort, minimising production downturns during adverse weather (heat and cold). Minimises production losses associated with herd travel to and from grazing. Better herd monitoring may be possible e.g. heat detection, animal welfare, BCS. Possible reduction in herd lameness (if cows are not standing in mud or on concrete feedpads for long periods of time). Minimises farm maintenance costs associated with paddock renovation following pugging and compaction. May increase pasture production (if home grown forage retained). Reduces farm maintenance costs associated with laneway surfacing and paddock gate entrances.

FARM FACTS ■ ■

■

Cost: On average $2900 per cow. Number: Around 600 NZ farms with housing facilities – 5 per cent of 12,000 farms. Fewer than 10 houses that are full TMR systems. Opportunities to capitalise on more advanced effluent management with liquid, slurry and solid products more readily available to complement fertiliser applications.

Fewer than 10 of New Zealand’s farms are full TMR systems.

Limitations: ■ ■

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Significant capital outlay to establish the business. Business reliant on high quality supplements and therefore more vulnerable to seasonal price changes. Business has higher input costs and is more dependent

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on stable milk pricing. Large intensive footprint within the property which may trigger separation distances (eg to neighbours). Potential for significant delays in statutory and regulatory planning. Effluent management

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NZ needs to focus on direct links by

NadiNe Porter

It’s a fallacy that Fonterra hasn’t been working on value adding, although, collectively the dairy industry has missed some opportunities in the past decade, according to a leading farm consultant. Macfarlane Rural Business consultant Andy Macfarlane said while it might look like Fonterra had been standing still, it had been dealing with a large milk volume increase and had to invest in stainless steel to handle it. “Fonterra have been growing their added value and I would expect to see a shift in the next five years.” Mr Macfarlane said New Zealand dairy farm cost structures had increased significantly, but had now been brought back into line due to low prices. “New Zealand does have a much better ability to

Andy Macfarlane believes we need to forge a direct link to consumers.

naturally constrain its cost structures compared to the rest of the world, because the rest of the world are mainly producers of fresh milk for local supply and that means less volatility in the milk price.”

Other large exporters like the United States, Ireland and Australia supply a significant proportion of milk to their domestic market, he said. “And if you’re exporting 10 per cent of milk, a 50 per cent variation only affects the average price by 5 per cent.” The cost of transport remains a difficult logistic for future dairy trade here, particularly when considering fresh product as opposed to dried. “Will the market stand the cost of exporting fresh milk is the question mark? What does it cost for New Zealand to go to South East Asia compared to Australia?” Mr Macfarlane believes we could export fresh milk but it would come back to if the customer was willing to pay a sufficient premium for the logistics of getting it there. “I think some of these things will change with more

flights and plane services like South China Airlines coming in. The reliability, frequency and costs of those runs become crucial to the end result. These are value chain movements and up until now the underlying infrastructure and technology hasn’t been there to do it particularly well.” Mr Macfarlane was reluctant to focus on the term value adding, believing it was more about forging a direct link to consumers. “How do we get closer to the consumer portion with fewer people in the value chain and yet keep the costs of getting there realistic?” In terms of markets, New Zealand should not “overemphasise” the role of China. “It’s one of a number of potential markets. South East Asia is a huge market and there are other strong North Asian markets like Korea and

Japan.” Overall he remained optimistic for the future of dairying. “When you get a cyclical price high people get overoptimistic, but when you get a down period all the doomsayers come out and say we are structurally stuffed. But I think fundamentally supply and demand dynamics mean it will be a good performer. However, if we want to make New Zealand wealthier, we’ve got to keep pushing hard on increasing the proportion of our product that can go direct to the consumer.” To do that New Zealand will need small companies for innovation and large companies like Fonterra who have scale in order to get market penetration. “That scale factor is absolutely crucial for New Zealand.”

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INTERNATIONAL DAIRY NEWS UK

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Increase in beef genetics could cause heifer shortage

Subsidy package to help ailing farmers

A genetics company has been warning against a recent trend for dairy farmers addressing cash-flow concerns to use more beef genetics. The increase could result in a heifer shortage according to Cogent. Higher calf values and cheaper beef semen are among the reasons for a “huge swing to beef ” as dairy farms continue to ride out a challenging market downturn.

Half UK farmers to exit A survey carried out by the Royal Association of British Dairy Farmers has found almost half of Britain’s dairy Farmers are scheduled to leave the sector. And 45% of the remaining half who plan to continue dairying have put their expansion plans on hold, the

poll found. Commenting on the survey, RABDF vice-chairman Mike King said: “Forty nine percent of producers see no future for themselves if current farm-gate prices persist for the next six months, leaving Britain with approximately 5,000 dairy farms, of which half have no confidence in immediate investment.

Dairy cull price falls sharply Average dairy cull cow

prices have fallen sharper than last year, as the approach of winter leads more farmers to look to house cattle. Prices in 2015 had been relatively stable until the seasonal dip began in July, with a bigger than usual drop. This put August average prices 7.5% lower than last year at $2.15 per kilogram. As prices normally continue to fall into the autumn, further decreases look likely, particularly as dairy farmers look at winter housing costs given the ongoing pressure milk prices are under.

The EU Commission has acted to try to help farmers hit by the sharp fall in milk prices, bringing forward a €500 million package and implementing some measures to try to stabilise the market. Irish farmers will welcome this, but will remain concerned at trends since the abolition of quotas in March. Milk prices to farmers have fallen sharply and the big question is whether this is temporary or a fundamental price weakness which is set to persist. A rise in supply since the abolition of quotas is no doubt a factor, though supply from other milk producers such as the US and New Zealand has increased more rapidly. Meanwhile issues affecting demand are probably key to what is going on. Russia’s ban on dairy imports – imposed as a retaliation for Western sanctions on

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AUSTRALIA Chinese tensions grow

CHINA Ramping up production An extra three million tonnes of milk were produced in China last year as national dairy production intensified. Since 2008 the number of herds of over 100 cows have increased from 19.5pc to 45pc of all dairy herds last year.

“An important development for the industry has been the increase in large-scale dairy farms, with more than 100 head of cattle, leading to 90pc of Chinese raw milk now produced with a mechanised system,” said Professor Li Shengli, the chief dairy professor with China Agriculture University in Beijing. “It is very important for milk to be affordable in China.”

Tensions over all things Chinese continued to grow with a plan by a Chineseowned dairy in Gippsland to import workers has been condemned by federal opposition and union figures. It was reported that Ningbo Dairy, which trades in Australia as YoYou, was actively recruiting dairy farm workers two years ago causing consternation over the Chinese-Australian Free Trade Agreement. The agreement’s impact on local jobs was the subject of bitter political pointscoring between the federal government and opposition last week. “There’s been widespread evidence of the abuse of [migrant worker] 457 and backpacker visas in a range of rural industries, from food processing right through the supply chain,” Victorian senator Kim Carr, shadow

innovation and industry minister, said. “We need to be very mindful [with the China FTA] of the long history of irregularities that have occurred and why it is so important to maintain Australian standards.”

Outlook not good Lion Dairy and Drinks managing director Peter West had a sobering message for dairy farmers about the effects of Woolworths and Coles house brands on the price of milk and dairy products at this year’s Queensland Dairy Conference. “The prices I get today will be lower next year, they will be the lower year after, and the year after. I can guarantee

you there will be five years of price deflation when it comes to the price that we go into the marketplace.” He said a strategy of pursuing growth opportunities and cutting costs was driving Lion’s response, highlighting that consumer trends towards full fat milk, butter, coffee and natural products was great for the sector. “DARE iced coffee now outsells Coca-Cola in convenience stores,” he said. “This is a market in a period of enormous change and transition (and) is very much the future of a more vibrant dairy industy.” He said the need for authenticity in products – supported by the government’s new country of origin labelling laws –will also bode well for Australian dairy, but urged a word of caution about China as the saviour of industry. “The opportunities are there but it will be volatile and it will be harder than everybody thinks. This market is hugely sophisticated and competitive.”

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NZ NEWS BRIEFS Fonterra Chairman John Wilson said the plant is Fonterra’s largest investment in ASEAN in the last decade and will support the growth of Fonterra’s brands – Anmum, Anlene and Anchor Boneeto – in Indonesia. “Fonterra has been supplying high quality dairy nutrition to Indonesia for more than 30 years and today it is one of our most important global markets. The opening of our new plant is an exciting step forward in our relationship with the country and local dairy industry,” he said.

DairyNZ elections

New plant in Indonesia Fonterra officially opened its $37 million blending and packing plant in Indonesia – its first manufacturing facility in the country.

Ten farmers have put their hands up for three seats on DairyNZ’s Board of Directors – voting for which opened at 12noon today (Monday, September 14). The dairy industry body’s second election involves four candidates for three spots on the Directors’ Remuneration Committee (DRC). The farmers seeking a four-year term as a DairyNZ director are vying for election

following chairman John Luxton and directors Michael Spaans and Ben Allomes retiring by rotation. Mr Spaans and Mr Allomes are standing for re-election but after 12 years, Mr Luxton is standing down from the board. Election results will be announced at the DairyNZ Annual General Meeting in Morrinsville on October 13. The Board of Directors candidates are: Murray Jamieson (Hamilton), Steve Hines (Mangakino, Waikato), Elaine Cook (Hamilton), Grant Wills (Walton, Waikato), Ben Allomes (Woodville, Palmerston North), Michelle Wilson (Waihi, Waikato), Kevin Ferris (Te Awamutu, Waikato), Greg Maughan (Marton, Manawatu), Michael Spaans (Te Aroha, Waikato), Kevin Old (Lincoln, Canterbury). The second election is for three members of the DRC, which annually reviews and recommends changes to directors’ payments and other benefits. The four DRC candidates are: Chris Lewis (Pukeatua, Waikato), David Gasquoine

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A billion spent on the environment Federated Farmers and DairyNZ have conducted a survey on New Zealand dairy farmers’ environmental investments, revealing an estimated spend of over $1billion over the past five years. Five percent of the nation’s dairy farmers responded to the survey and reported on the environmental initiatives they had invested in such as effluent management, stock exclusion, riparian planting, upgrading systems and investing in technology, retiring land and developing wetlands. “It is encouraging to see the significant investments farmers are putting into protecting and improving the environment,” says Andrew Hoggard, Federated Farmers Dairy Chair.

Government needs to improve local rates Federated Farmers want the government to give immediate attention to the Local Government New Zealand’s ’10 point plan’ for rates reform. Federated Farmers Local Government spokesperson Katie Milne says the disastrous

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dairy payout prices in particular mean farmers want urgent action on inequities in the rates they pay to their local bodies. “We farmers can’t control international prices. Neither can the government. But the government can legislate rates reform. It all helps, and the sooner the better,” Katie Milne

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Westland Milk Products says it is conducting a review of staff roles throughout the company which is likely to result in some redundancies. The milk cooperative has around 400 farmer suppliers in Canterbury and the West Coast and has a turnover of $830 million. It employs more than 500 people, producing a range of products including infant formula, yoghurt and butter. Chief Executive Rod Quin said the company must reduce costs to realign its finances with the new reality of lower international prices.

It’s official – NZ Dairy Farmers among the lowest paid New Zealand dairy farmers are the lowest paid farmers in the world according to AgriHQ which analysed milk prices around the world and then converted to $NZ/kilogram of milk solids to allow valid comparisons, although some dairy farmers’ incomes in other countries are boosted by subsidies and support schemes. Fonterra’s forecast farmgate milk price, which is the price setter in the New Zealand dairy industry, is $3.85/kgMS for this season, the lowest in a

decade. That compares to China at the other end of the scale at $11/kgMS, the United States at $8.15/kgMS, Argentina at $7.57/kgMS, and the UK at $6.95/kgMS. Of the countries analysed, Ireland’s payout of $6.10/ kgMS was the closest to New Zealand’s. Across the ditch, Fonterra buys milk from Australian suppliers as part of its strategy of having diversified milk pools but is being forced to pay a lot more than it will to their New Zealand counterparts because of greater farmgate competition.

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Farming Dairy Focus

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Going big at the risk of being great? by Maurice Myers

Left – Why is it starting to feel like New Zealand farming is more focused on the volume game?

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New Zealand’s produce is deemed to be some of the best in the world. Although we still need to get a lot better at telling our story, our produce from milk powder to seafood is highly sought after. This is because of our clean green image, the perception that we produce by using the land and the thought that our animals roam free grazing on luscious pasture. This is not only an attraction but something that international consumers are willing to pay a premium for. The real value and opportunity for New Zealand is to be the world’s delicatessen, not the world’s bulk foods market. So why is it starting to feel like New Zealand farming is more focused on the volume game and is prepare to put at risk the premium of our produce? Being the biggest or producing the most does not always translate into being the best, nor does it give

an essence of value. Most importantly, it doesn’t meet the perceptions of many of our international consumers willing to pay a premium for

our product. To gain high output requires high input and this comes at a high cost, a lack of flexibility, high risk and a dependence on spiking

commodity prices. It’s no secret we have a finite amount of land in New Zealand to farm on. For example, all cropping

land in New Zealand is a third of the size of one farm in Russia – for this reason, no matter how much we want to play in the volume game, we will never produce enough to earn the right to make the price. We will continue to be price takers and at the mercy of the commodity price fluctuations. In times of high commodity prices, undoubtedly, those with high-producing units benefit the most, but it’s not the highs that are the concern – it’s the critical lows we have now that create the major problems. The lack of flexibility to “wind back” the high input systems to save cost within efficient timeframes creates massive risk and a limit to how well extreme downturn volatility can be managed. So why is it that it feels like New Zealand farming seems more focused on getting big at the risk of being great?

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Consent compliance important by GeorGiNa HaMiltoN Tavendale and ParTners

Resource consent noncompliance is an ever-present risk for any dairy farm operation. Human error and equipment malfunction can occur, and when they do, the environmental and financial consequences can be significant. The discharge of dairy effluent that does not comply with a resource consent or a regional plan is an offence under the Resource Management Act (RMA), for which criminal charges may be laid. In reality, only a small proportion of noncompliances are prosecuted in the courts – generally those relating to serious oneoff incidences or recidivist offending. However, other enforcement mechanisms such as abatement notices and infringement notices are also available under the RMA and are readily used by enforcement agencies. It is important to note that liability under the RMA can arise at all levels of a farm operation. Companies,

Dairy effluent consent compliance important.

company directors or managers can be liable even if they were not directly involved in the farm operations that gave rise to the offending. The courts are increasingly taking a hard line with individuals and companies who have kept themselves at arm’s length from day-to-day farm operations. Fines in the

range of $20,000 to $35,000 have been the norm in these cases, but have reached as high as $66,000 for serious RMA breaches by repeat offenders. A key theme emerging from the recent cases is that consent holders cannot avoid liability by entering into contractual arrangements making consent compliance the responsibility

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of a third party, eg a sharemilker or contractor. In other words, consent holders have ultimate responsibility for ensuring there is appropriate equipment and practices in place on-farm to enable those with whom they contract to comply with the RMA and resource consents.

ECan’s latest Dairy Report provides a summary of “best practice” actions implemented on Canterbury farms to improve compliance, and is a recommended read. The actions identified include displaying effluent management plans and consents in a prominent position in dairy sheds and ensuring staff induction on them; and clearly defining staff responsibilities for effluent management and providing training in system operation regardless of staff members’ roles and responsibilities on-farm. Given the present focus in Canterbury on water quality and on-farm nutrient management, consent and regulatory dairy effluent consent compliance will continue to be an important issue in the immediate future. However, the risk of liability arising under the RMA can be minimised by ensuring involvement and vigilance at all levels of farming operations and the adoption of “best practice” effluent management.

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How can teaser bulls influence your herd’s reproductive performance? Teaser bulls look like, behave like and have the same effect as bulls but they have had a surgical procedure to make them infertile (vasectomy), so won’t get your cows pregnant. Teaser bulls are becoming more common as a valued part of many mating plans. Why use teaser bulls? A Canterbury trial demonstrated the effect of running teaser bulls with non cycling cows for the first 3 weeks of mating: • Seven per cent more cows came on heat in the first 21 days when running with teasers compared to the control groups. • Six per cent more cows were in calf after four weeks of mating when run with teaser bulls. The time taken to get cows back in calf after calving was reduced on average by 2.7 days in the groups using teasers. Some farmers already realise these benefits by running entire bulls with their non-

cycling cows. This results in white face calves born at the start of calving, meaning you miss out on valuable replacements. Because teaser bulls don’t get your cows pregnant, they will enable non-cycling cows to be seen on heat and inseminated, so you won’t miss out on AB calves.

Teaser bulls can also be run with the whole herd for the month prior to PSM to reduce the number of non-cycling cows at PSM. Teaser bulls will help with heat detection in your herd once AI has started. They will pick up ‘quiet’ cows, and will always be interested in cows that are on heat even when the

number of cows coming on dwindles in the second round. We suggest farmers use a ratio of one teaser per 100 cows. Our bulls are: • Fifteen months old, crossbred or Friesian. They are fully mature at this age, have a high libido and are less likely to damage themselves or your cows.

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Keep laminitis effects ‘flu to a minimum Last month I wrote an article on white line disease, the most common hoof problem that we have with dairy cows, and I mentioned that the commonly believed theories are difficult to support and that there has to be an underlying issue. If stones and pushing were as detrimental to the hooves as what we are led to believe then we wouldn’t be able to farm cows, and deer and mountain goats would have been extinct a long time ago. The underlying issue that we face, with probably 80 to 90 per cent of our lame cows, is laminitis. Laminitis is by far the biggest cause of lameness and in dairy cows most of the damage by laminitis is seen on the walking surface of the claws, the sole and white line region. The next biggest cause of lameness is nowhere near as great as laminitis. Not yet at least, even though we may potentially get one if we don’t keep digital dermatitis under control. DD is potentially going to be a major problem for you if you don’t manage it

Fred Hoekstra

VEEHOF DAIRY SERVICES

well and that should start now. I will address that more in a future article, but let’s focus on this white line issue first. Laminitis is a multi-factorial disease that basically results in unhealthy live tissue in the hoof – the predominant causes being diet and stress. If the live tissue becomes unhealthy in both claws then the claw that is bearing the greatest share of the weight will struggle more than the claw that doesn’t bear as much weight. For example, it’s the same as if two people walk along the road - one carrying a 30kg backpack and the other carrying a 10kg backpack. After a 40km walk the person with the 30kg backpack will have to work harder than the one with the

10kg backpack. These two people may be able to handle their individual load for that distance if they have trained for it but when they both come down with the ‘flu the difference in weight will be more evident. This explains why we see more lameness in the outer claw than what we see in the inner claw. You will find that the outer claw is usually bigger than the inner claw, and therefore bearing more weight than the inner claw. Even if the claws were the same height and size the outer claw would still get more fluctuation in weight than the inner claw due to the swaying of the body from left to right to left to right as the cow is walking. So, if the outer claw is becoming bigger than the inner claw it will become more vulnerable as it will be overloaded with every step the cow takes, and even when the cows are standing still in the yard. So, what can you do to minimise lameness? Well, the answer to that question

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is to minimise the effect of the factors contributing to laminitis – namely stress and diet. If a cow has no laminitis I am convinced you can push that cow as hard as you like on a really rough track and it won’t cause any issue for her. Unfortunately, there are very few cows in New Zealand that do not have laminitis to some degree. Treatment for laminitis is primarily through hoof trimming. When you get a professional hoof trimmer in to do some preventative trimming for you, he or she will not be able to stop the laminitis but the trimmer should be able to trim the claw in such a way that the effects of laminitis are kept to a minimum, and therefore

the productivity of the cow is kept high. These issues are discussed in greater detail on our hoof trimming workshops, so call us if you would like to register on one near you. Laminitis is seen on the walking surface of the claws, the sole and white line region.

2 20

Farming Dairy Focus

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Around the traps Federated Farmers and Rural Support Trust Meeting – Ashburton

From left Tory Pedersen, Kurt Snook and David Montgomery

Charlotte Glass and Hayden Robinson

Andrew Robinson and Tom Bell

Rob McConachy and Dave Whillans

Allan Baird and John Falloon

Richard O’Sullivan and Grant Polson

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