Southland SMASH info day supports sharemilkers

BUSINESS SMASH

Southland SMASH info day a success

Story and photo by: Karen Trebilcock

The first SMASH (Smaller Milk and Supply Herds) day came to Southland in mid-February after postponement last year due to Covid-19.

It almost didn’t go ahead again with Auckland going into level 3 and the rest of the country level 2 the day before.

But with 60 farmers attending the outdoor event, and hand sanitiser on the sign-in table, the Southland sun shone as Te Aroha sharemilker and SMASH committee member Will Rolton introduced SMASH and the day’s speakers.

“It started out about 10 years ago for farmers with a couple of hundred cows and then it grew to 300 and 400 cows and now we welcome everyone even if you milk 2000 cows,” he said.

“It is simply an information day held for farmers by farmers.”

He commended DairyNZ for running a discussion group in Southland for farmers with fewer than 450 cows since 2016.

The day was at James and Darnelle Smith’s Gorge Road farm that has 420 cows and son Hayden managing the dairy.

Farmers investing in houses rather than land

Farmers, used to riding the capital gains wave, have switched from land to houses.

Campbell Wood, of Southland-based accounting firm AgriFocus, said he had helped “a ridiculous number” of farmers, especially contract milkers, apply for loans to buy houses recently.

With banks more willing to lend on residential property than cows and rural land, farmers were seeing it as a viable way to retain earnings made from farming.

“We have debt-free contract milkers and sharemilkers and at the stage when they should be buying a farm they are buying houses instead,” Campbell said.

“It’s not good because instead of the money being reinvested in farming, it’s fuelling the already hot housing market.”

The accountancy firm, which has about 400 farming clients, for the first time last year had none of its 35 50:50 sharemilkers progress to farm ownership.

It has 160 contract and lower-order sharemilkers as clients and last year only one stepped up to 50:50 sharemilking. Three were doing so this year.

In Southland, DairyNZ said there were only about 85 50:50 sharemilker positions left. Continues pg31

“When you are making lots of milk per cow, that’s when your business becomes profitable.”

“For those who are smaller farm owners, these are the people who are going to be buying your farm in the future,” Campbell said.

He said the situation wasn’t helped by disillusionment among contract milkers and sharemilkers about the industry.

“Farm owners are becoming divorced from the realities of running a dairying business, especially when it comes to what sharemilkers have to pay as wages to staff.

“Because of the minimum wage increases over the past few years, most are seeing wages as the biggest price hike for farm expenses.”

Grazing costs were also going up, with May-to-May yearling grazing now costing $14/week in Southland and cows about $35/week for wintering.

“Freight pushes that up to about $40/ cow/week now.

“Graziers need to be paid that much to make their businesses sustainable, especially with the new environmental issues.”

He said the farmers who were doing well looked at every line of the budgets and concentrated on making the most milk per cow.

“Each cow has to produce as there are fixed costs per cow. When you are making lots of milk per cow, that’s when your business becomes profitable.”

Annual accounts for tax purposes were “rear-view mirror looking”, but having updated budgets showing where you were heading were what farmers should always be looking at.

“Take every little bit, every line, and make it better. People who really understand numbers do best.”

However, having a low repairs and maintenance budget was a recipe for disaster.

“If you are not making profit then your spend on R&M will be low and that is a downwards spiral that is hard to stop.

“It means you’re not looking after your dairy plant and your effluent and everything else, which means your farm will be harder to sell when the time comes.”

Farm owners could help contract milkers by offering them smooth monthly payments for the first season.

“They used to be able to get overdrafts easily from the bank but that isn’t happening any more and many contract milkers are embarrassed to ask for it from farm owners.

“But it’s in the farmer’s interest to do it. You don’t want your lower order sharemilker or contract milker going bust doing the hard graft on your farm.”

Campbell Wood of AgriFocus.

Ways to improve in-calf rate

Farmers should look at their calving pattern to target cows most at risk of not getting in calf.

LIC senior reproduction solutions advisor Jair Mandriaza said cows that calved late, within two weeks of the planned start of mating, had about a 40% chance they would end up empty and be culled by the end of the season.

“Looking after those cows well improves their chances,” he said.

Cows that calved in the first six weeks had only about a 15% chance they would be empty at the end of mating.

Age also affected not-in-calf rates with cows nine years and older having a 31% chance of being empty.

“Cows nine years and older are a handbrake on your reproductive performance.”

He said farmers should categorise their empty cows by age, calving pattern and BW to find where the weaknesses were.

Cows in the bottom quartile of BW in Southland had a 19% chance of being empty, while those in the top quartile were at 13%.

He said looking at lactation worth (LW) destroyed the myth that cows