Realising the ownership goal

SYSTEMS OWNERSHIP

Michael and Cheryl Shearer with their family of five kids.

A partnership with his parents means Marlborough dairy farmer Michael Shearer is on target to farm ownership. By Anne Hardie.

At 29 with five young kids on the go and a wealth of dairy experience stacked up, Michael Shearer and his wife Cheryl now have a 50:50 equity partnership in their first farm, a sharemilking contract on a farm nearby and are in the throes of buying a support block.

The equity partnership is with Michael’s parents on a 62-hectare dairy farm they bought near Canvastown, while a few kilometres down the road they are in a 50:50 equity partnership in a sharemilking contract with a friend who has been his best mate since he was 10 years old.

If his non-dairying parents had not been keen on the equity partnership as a step toward farm ownership, Michael says they would have sought investors to achieve the same result because they were keen to realise their goal but needed more capital.

“We definitely needed that outside equity to get ahead as quickly as we have – I’m pretty impatient.”

The partnership bought the farm five years ago for $35,000/ ha and carries a debt today around $20/kg milksolids (MS). Michael and Cheryl have their 50% share of that debt, plus the debt covering 50% of the costs to set up for the sharemilking contract down the road. Their goal now is to buy out his parents’ share of the partnership in five years or so, with income from the sharemilking contract making that more achievable.

They may have more debt nowadays, but their dairy business is simpler than ever. They milk once a day (OAD), have few inputs, no crops and the platemeter that was once Michael’s pride and joy only gets an outing in winter when the cows are on rations.

Best of all, Michael is enjoying being his own boss and being accountable just to himself for the most part, while consulting with his parents on the big spends. Coming from non-dairy careers means they can offer a fresh approach to the business which Michael sees as a positive in their partnership. For day-today management, Michael needs no staff and Cheryl manages

‘Even managing a farm, you know it always had ramifications on the owners and you always wondered what they thought about your decisions’

the calves in spring around the kids which includes 18-month-old twins and homeschooling.

“Even managing a farm, you know it always had ramifications on the owners and you always wondered what they thought about your decisions. Whereas when you own a place it only affects you, so it’s far more relaxing. You are less accountable to someone else and I don’t mind being accountable to myself. It makes the decision-making easier.”

In a sharemilking contract, Michael says there is always some tension because some decisions benefit only one party, whereas all partners benefit from decisions in an equity partnership.

He never intended a career in dairying and initially got a job on a 1000-cow herd near Nelson as a way of funding training for a pilot’s licence. That short-term job changed his career path and at 19 he won the West Coast Top of the South dairy trainee title. Two years later he won the Taranaki Farm Manager of the Year, before returning to Tasman for a 50:50 sharemilking contract.

Their 400-cow herd was in the Teapot Valley when the massive wild fire of 2019 forced them to evacuate their home and walk their cows to a nearby hop farm where they could milk their stressed herd in a disused dairy. They continued to milk the cows there for a few weeks with just donated supplementary feed keeping them going, returning home after the fire was finally quenched to miraculously milk to the end of the season.

It didn’t dent their ambitions though and five years ago they took up a sharemilking contract on the Canvastown farm with the knowledge they would buy it in a 50:50 equity partnership with Michael’s parents, Geoff and Rosalie. His parents also live on the farm, though both have had their own careers with no involvement in dairying and are happy to leave the day-to-day management decisions to Michael and Cheryl.

Down the road, his mate William Marshall manages the day-to-day management of the 375-cow herd they brought from Teapot Valley – which they originally brought down from Taranaki as a mixed-age crossbred herd to form the basis for their first sharemilking venture. The partnership pays a manager’s salary to William and an administration wage to Michael who says the setup works on the trust in their relationship.

Typical of the majority of farms around Canvastown and the Rai Valley, the farm they bought with his parents is a mix of flats rising to rolling hills and then steeper slopes bordering the forestry above. It’s a steep catchment with a two-metres-plus annual rainfall that brings a lot of water down the hills, but it disappears fast down the slopes and into the Pelorus River on the other side of the state highway.

They bought the 200-cow Jersey-cross herd with the farm and have dropped cow numbers to 168, with the aim of settling around 175 which should be a good fit with the farm’s pasture harvest of about 12 tonnes drymatter (DM)/ha per year. This year they battled an excessively wet

The herd has been bred from a Jersey stud and still has some J16 cows.

Chloe Shearer checking on the pasture. Checking out the bike.

spring, plus a few cows that didn’t calve, so numbers are a little below where they plan to be.

The herd harks back to a Jersey stud and some J16 cows still remain in the herd. The aim now is to put more Jersey genes back into the herd to chase the J12 F4-type cow and lift the percentage of cows producing 90% or more of their liveweight.

“It’s surprising how many of the herd are producing over 100% of their bodyweight on once-a-day and without sticking a lot of feed in.”

Genetics is his new passion and he says OAD provides more potential for faster genetic gain because it enables better incalf rates and improved conception rates.

“You can see the difference between your top cows and the bottom cows. It’s massive and once-a-day gives you more time to focus on those things. It’s quite addictive. There’s always something to chase and the big ones for us on once-a-day is the udder and udder support. We want a lower volume but higher milksolids percentage and I like a nice capacious cow – short and wide.

“The more they study fertility, the more effect they find it has down the track. The more cows in calf, the more choice you have.”

On OAD, calving is quick which is good to get it done, but it does mean feed is tight. The first calf was August 4 and the last arrived September 20. That was the result of eight weeks of mating entirely with artificial insemination (AI) and the last two weeks using semen from shortgestation dairy bulls.

During their three matings on the farm, the six-week in-calf rate has been between 76% and 81%, while the end result has been about 10% empty. No intervention is used through mating and Michael says results are due to OAD milking through the season.

When Michael and Cheryl took up a sharemilking contract on the farm before purchasing it, they were still sharemilking at Teapot Valley, so had a contract milker on the Canvastown farm who milked twice a day (TAD) until Christmas. But after that, OAD ticked all the boxes for them.

It is a lifestyle that suits their sizeable young family, plus it means they don’t need to hire staff and it gives Michael the time to tutor level three and four for Primary ITO which is something he enjoys. Importantly, they are counting on OAD being just as profitable as TAD most years.

“We could probably make $10,000 to $20,000 more depending on payout, but is it worth it for the extra effort?”

Cups are on at 7am and milking is done and dusted by 8.30, leaving him the rest of the day for other jobs and tutoring some days. Production has been about 67,000kg milksolids (MS) depending on cow numbers, averaging 370kg MS/cow on grass plus 24t of palm kernel bought in for that early spring period.

Cows get through winter on saved grass and grass supplements but Michael says they don’t need to put on weight because they head into winter with sufficient condition to calve. Half of the herd stays home through winter and the climate enables the farm to grow about 20kg DM/ day through the colder months. Young stock and the other half of the herd have been wintering on a 40ha leased block until the purchase of their own block and it has produced 100t of grass silage and 100 large bales of hay.

Making supplements on a support block isn’t cheap and Michael says those costs are often underestimated. He estimates the cost of the lease, fertiliser, making the supplements and wastage – which is often overlooked – adds up to more than 30c/kg DM. Silage in their pit costs about 25c/kg DM, but that’s without wastage which he says is at least 10%, plus feeding out costs.

Costs across the farm system have climbed this past year including fertiliser, labour and bought-in feed which he attributes to the effect of Covid-19 globally and a good milk payout. A couple of years ago a payout higher than $6/kg MS was a good year, whereas he says most farmers need $7/kg MS now to make a decent profit, depending on the debt and cost structure of the business.

Though supplements might be higher costs than they first appear, Michael says crops aren’t on the menu due to his philosophy of keeping things simple. He views crops as a lot of work for little gain.

“You grow no more feed. All you are doing is shifting feed and it is more effort. Instead, we go on a slightly slower round at the end of the season and dry off one to two weeks earlier.”

It all comes back to keeping it simple.

A twin buggy caters for the twins on the farm walks.