Dairy News 8 May 2012

‘No time for petty politics in DIRA.’ Page 20

dairy bill hearing Full coverage Pages 3-7

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may 8, 2012 Issue 268 // www.dairynews.co.nz

out of reach Is Fonterra guilty of artificially raising raw milk price?

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Dairy News may 8, 2012

news // 3

Fonterra under fire over DIRA peter burke

FONTERRA HAS come under fire from its Westland’s view on DIRA and payout forecast. PG.06

Bulls for once-a-day within 5 years says Massey. PG.26

Focus farm gets results in Far North.

PG.32

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competitors at the primary production select committee hearing into the Dairy Industry Restructuring Amendment Bill (DIRA Bill).

The select committee last week heard submissions from all the major players and some individuals about the DIRA Bill now before Parliament and scheduled to be passed into law later this year. The bill is designed to provide an oversight on how Fonterra sets it farmgate milk price and includes changes to allow TAF (trading among farmers).

In a joint submission, the Independent Dairy Producers Group (IDPG), Synlait, Open Country and Miraka accused Fonterra of being “anti-competitive” because of the way it sets the farmgate price for milk.

A spokesperson for IDPG, Dr John Penno, told the select committee Fonterra set the price artificially high by cross-subsidising this from its profits to the tune of $600 million. This tactic, says Penno, resulted in Fonterra’s profit being substantially lower than a group of international peers and also artificially lowered Fonterra’s share price.

Penno quoted from an analysis by Deloitte of Fonterra’s pricing systems. He says in 2006 Fonterra changed the basis on which it set the milk price from ‘actuals’ to ‘notional efficient producer’ (NFP).

He says the ‘actual’ was what Fonterra could pay for raw milk at the farmgate while achieving a ‘sensible’ return on capital.

Penno claims the NFP, which is based on what an imaginary or ‘super-competitor’ could pay, has seen the farmgate milk price jump to upwards of 50 cents/kgMS. This is more than Fonterra’s own commodities business or a typical independent processor can afford to pay for milk and still make

Independent submitters to the select committee hearing (from right) Steven Smith, chief executive, Open Country Dairy; Dr John Penno, chief executive, Synlait and Kingi Smiler, chairman Miraka Ltd.

a return on capital, and is therefore ‘anti competitive’, Penno says.

The IDPG says the DIRA Bill effectively enshrines the ‘super-competitor’ concept and will permanently lock in an artificial farmgate milk price.

“Fonterra’s artificially high farmgate milk price is having a dramatic negative effect on the dairy industry. As well as stifling competition it is sending farmers distorted pricing signals about milk.

This will lead to overpriced dairy farm land, accelerated rates of dairy conversion and over-production on existing farms,” says Penno.

The IDPG wants changes to the legislation to stop Fonterra doing what it is doing now. “Unless the legislation is changed it will prevent TAF from bringing about normal market pressures that

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would normally solve these sorts of things. So there are some quite specific things written into the act that allow them to do some of the things they do which is distorting the milk price,” says Penno.

The raw milk market in New Zealand is not a competitive market, he says. “We have a very dominant player put there by legislation. What we are asking for is a milk price that approximates what would happen in a competitive environment rather than a dominant player setting that in an unfettered way.”

Kingi Smiler, of Miraka, told the committee the IDPG wants a level playing field and not legislation that supports a monopoly in the market. The IDPG has collective export revenues of $1.3 billion dollars. – Fonterra’s response, P5

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Dairy News May 8, 2012

4 // news

Feds seek clearer DIRA Bill sudesh kissun

FEDERATED FARMERS says it wants the

DIRA Bill to be very clear and unambiguous.

In its submission to the primary production select committee, the federation said that during the past ten years there have

many court cases over the interpretation of the current DIRA Act and it wants greater clarity in the DIRA Amendment Bill.

Andrew Hoggard, representing the federation, told the committee Feds is looking to the new bill to deliver a “settled and successful industry” and the new law would not be

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challenged until it eventually expired or was amended.

He said the federation agrees with the Commerce Commission overseeing the act – but only if it was a true oversight and “not merely calculating something based on inputs so open to gaming as to be able to give any answer.”

Hoggard says the base price for milk is the key to a successful dairy industry.

“We need to ensure the milk price is correct and a fair and accurate reflection of the value of the milk in a

Fonterra farmer’s vat.

“Over the last year there have been four inquiries into the milk price with Fonterra’s competitors railing against it, as well as a series of other complaints. The milk price affects the livelihood of every farmer in the country so we need to ensure it’s not a political football any more. We need the price to be set in concrete… a fair and accurate milk price that hopefully removes all of those issues.”

Like the IDPG, Feds

Andrew Hoggard and Feds chief executive Conor English (right) presenting their submission to the primary production select committee.

wants the milk price set on ‘actuals’ rather the notional efficient factory costs. “We believe we would get a lot more certainty and clarity and a lot less argument if it just used the average cost of Fonterra’s production. It’s pretty simple to calculate and generally when you

keep things simple they don’t get made a mess of,” Hoggard told the committee.

In its submission the federation also made it clear their members want full ownership of Fonterra remaining in farmers’ hands. They also expressed concern

at the “truncated submission and select committee process the DIRA legislation is being subjected to.”

The DIRA Bill is vital for the whole dairy industry and due consideration must be given – not submissions drawn up in haste, Feds said.

Council not keen on oversight peter burke

THE DISAGREEMENT the Fonterra Shareholders Council has with the co-op management over the milk price oversight provisions in the DIRA Bill surfaced at the primary production select committee hearing last week.

Though council chairman Simon Couper appeared alongside Sir Henry van der Hayden, Theo Spierings and board member John Monaghan, it was made clear Couper had a different perspective

on the milk oversight issue.

Couper told the select committee that the council’s role was to view the bill though ‘farmers’ eyes’.

He said it did not believe the oversight provisions were necessary.

“There has always been an incentive for setting an efficient milk price. We have a track record of arriving at a correct milk price – proven by three reviews: the Commerce Commission, the parliamentary commerce select committee, and an interdepartmental review.

“The council has seen the milk

price become more robust with the development of the Global Dairy Trade auction platform, which brings transparency. We believe the government’s policy objectives will be best served by allowing this process to continue to operate without statutory intrusion.”

Couper said if the Government was to have a milk price oversight regime, the milk price panel should not appear in the legislation. “Additional regulations run the risk of over-politicising the milk price.”

The Shareholders Council also argued for the removal from the bill

of a provision dealing with calculating Fonterra’s share price. Couper said no case for this provision had been made.

“It is likely to lead to a price being set for Fonterra shares greater than [what would] apply between a willing buyer and a willing seller of a restricted share. This will place a barrier on entry to Fonterra for new and growing suppliers.

“It will cause uncertainty and may impact negatively on farmers’ balance sheets and borrowing costs.”

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Dairy News may 8, 2012

news // 5

Dairy bill pivotal – van der Heyden Peter Burke

FONTERRA HAS told the primary production select committee it is ‘broadly supportive’ of the DIRA Bill and says it’s pivotal to its future.

Heading Fonterra’s

team at the committee hearing, chairman Sir Henry van der Heyden noted that at a principle level the board thinks it’s the right thing for New Zealand, the right thing for the co-op and the right thing for its farmers.

“We’re actually quite

‘Let’s get on with it; we’ve been waiting for this for a long time and we’re excited.”

Unsurprisingly, one of Fonterra’s main points was on TAF, saying it will ensure Fonterra has the stable, permanent capital base it needs to protect

excited it’s finally coming into the back straight, especially around TAF which we think can deliver a hellava lot for New Zealand.

“There is a silent majority of farmers out there who email and phone me every day saying

Fonterra team; Simon Couper, John Monaghan, Henry van der Heyden and Theo Spierings.

itself from future shocks and to invest and grow.

Van der Heyden told the committee “TAF ensures permanent capital – a balance sheet that allows the board to execute strategy that will deliver value for all new Zealanders, the cooperative itself and farmer shareholders.”

Most of the changes the co-op had put forward in TAF were of a “technical nature,” van der Heyden said. But he noted concerns about “behavioural” provisions in section 109K which he claimed could “impede conduct that is part of operating a well functioning market.”

He also voiced concerns about the milk oversight provisions in the bill.

“Fonterra’s position on the milk price oversight is that we don’t think it’s necessary, but we can live

in that space. The Shareholders Council has a different view. From our perspective we’ve always had a transparent, robust process in setting the farmgate milk price so we don’t see the need for oversight, but we can live with it.”

Chief executive Theo Spierings told the committee Fonterra as a co-op was now at a crossroads in respect of where it was going.

Growth during the past

ten years had been unprecedented and the organisation was well placed for the future. But nothing could be taken for granted, and the DIRA Bill is seen as a defining moment for Fonterra.

“We welcome the legislation as it enables us to go forward and deliver our strategy. I have viewed Fonterra for about 25 years from the other side of the world as a competitor and I’ve always regarded it as the envy of the world.”

Fonterra disputes IDPG claims cessors’ claims had any basis, Fonterra’s earnings would have decreased following the introduction of the farmgate milk price and this hasn’t happened.

“During the three years before making this change, Fonterra’s average earnings were 38 cents/share. In the three years since, average earnings have been 58 cents/share. The position of the independent processors amounts to an argument that Fonterra should be able to recover all its costs, including a return on investment, from its oldest and most out-dated plants, and pay the residual as a milk price.”

Alex Duncan says no competitive market operates this way, and basing a milk price solely on actual cost would therefore harm farmers and all New Zealanders.

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“Since that time, the farmgate milk price has been based on Fonterra sales of whole milk powder and skim milk powder and associated by-products. Almost all incremental production and investment in New Zealand over the last decade has been devoted to these products,” Duncan says.

The farmgate milk price reflects that reality. “It is calculated by deducting from international prices (sourced almost entirely from GlobalDairyTrade) the costs of producing those commodities. Costs are those associated with building, running and maintaining modern processing equipment on Fonterra’s average scale, including a return on capital and Fonterra’s actual logistics and transport costs.”

Duncan says if the independent pro-

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FONTERRA HAS disputed a claim by the Independent Dairy Processors Group (IDPG) that it has been artificially inflating the farmgate milk price by 50 cents/ kgMS. The IDPG made this claim during the primary production select committee hearing on the DIRA Amendment Bill.

But this claim does not stack up, says Fonterra general manager strategy and corporate finance, Alex Duncan.

He says from the 2008/09 season, Fonterra introduced a more transparent and realistic basis for setting the milk price, as opposed to the wholly theoretical and notional approach used until then.

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Dairy News May 8, 2012

6 // news

Westland wants level playing field peter burke

WESTLAND MILK Products chief executive Rod Quin says the DIRA Bill as it stands disadvantages his co-operative. But he says he is broadly supportive of it.

Presenting Westland’s submission to the primary production select committee, Quin emphasised the need for a level playing field which allowed for genuine competition.

“We see in the bill some aspects which favour Fonterra over other industry processors and we want to see a level playing field.”

Quin says Westland, in common with the IDPG, wants the milk price setting done off ‘actuals’.

“By that we mean actual product mix, actual prices and actual operating costs. We’ve seen arguments from Fonterra saying it’s driven mainly off prices. I accept they are using actual

Westland lawyer Catherine Walker and chief executive Rod Quin at the select committee hearing.

prices – they are not using actual product mix and they are not using operating costs. It’s a very theoretical model they have designed and are implementing but that’s not a healthy outcome from

our perspective.”

Quin submitted that Fonterra’s dominance has necessitated DIRA and is reflected in its ‘purpose statement’.

“But to date DIRA has failed to regulate

Fonterra’s activities effectively and further direct intervention is required to support the development of a competitive market for farmers milk. The bill must not permit the setting of a base milk price by Fonterra using an ‘optimised model’ which produces a higher milk price than Fonterra’s actual performance. Instead what is required is a base milk price that reflects their actual performance.”

Quin posed a question to the Government members on the committee, asking them just what they wanted – one large dominant player or genuine farmgate competition.

“We have struggled with some of the comments in the amendment bill to see what the Government is actually after here. Some parts of the bill appear to give Fonterra a competitive advantage and we are concerned about that.

“It’s not a case of Westland saying it wants Fonterra weakened; all we want is a level playing field.”

Forecast cut FALLING COMMODITY prices and the continuing strength of the New Zealand dollar prompted Westland to cut its payout forecast range 30c/ kgMS for the current season to $6.30-$6.60 late last month.

The Hokitika cooperative says production is 13.5% ahead of last year thanks to increased efficiencies and output from West Coast farms and, for the first time, supply from Canterbury.

“A combination of falling commodity prices driven by increased global supply, and a strengthening kiwi dollar has meant that now is the time for a prudent adjustment to our payout forecast,” chairman Matt O’Regan said.

Will winter test NZDL’s cashflow? andrew swallow

WHEN THE milk stops

flowing this winter, will New Zealand Dairies be able to keep paying?

That’s the question suppliers to the Russianowned South Canterbury processor will likely be asking as the season

draws to a close, following the bankruptcy of Nutrinvestholding, the parent company of NZDL owner Nutritek.

The 5t/hour plant at Studholme was officially put up for sale 18 months ago, though it was rumoured to be for sale well before that.

Former NZDL director

Richie Smith, who retains a role as Nutritek’s spokesman in New Zealand, has repeatedly said negotiations with prospective buyers are ongoing.

Dairy News understands interest has come from overseas and domestic buyers, some with existing processing plant.

But Smith’s remain-

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ing tight-lipped on who the suitors are, saying only that “there has been plenty of interest in the sale [and] part of any prospective buyer’s due diligence is to visit the site.”

Clearly the suppliers – some of whom are contractually locked in for up to five years – are keen to see the drawn out sale concluded. They hope the buyer will have sufficient funds not only to purchase the business, but invest in further processing facilities to add value to product from the existing dryer, and possibly install a second one on the Studholme site.

That’s always been part

of the NZDL plan and in March 2008, when Nutritek revealed it had applied to the Overseas Investment Office to take 100% ownership, Nutritek chairman George Sazhinov promised further investment in NZDL to produce high value product, such as baby food, following OIO approval.

Approval wasn’t received until May 27, 2008, despite the OIO having passed its decision to then Minister of Finance Michael Cullen and Land Information Minister David Parker, in February that year.

In May 2008, prior to the ministers approving

the sale, NZDL chief executive Aidan Johnstone expressed his frustration that the delay was holding up further investment.

“We need to start on our stage 2 expansion and the OIO decision is critically important to that, in all aspects,” he told Dairy News at the time. But stage 2 never happened.

The global financial crisis did.

Late last month, local paper the Timaru Herald reported John Coles, mayor of the Waimate District which includes NZDL’s Studholme site, as saying the saga has lessons for how New Zealand handles foreign investment.

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“When the Russians came in we thought, ‘Great; this is something we are going to treasure’.

It does raise the question of how well they were vetted and how well you know what is going on for the company in other areas,” he said.

Coles said he had met the prospective Chinese buyers of the factory and had thought the deal was nearly finalised. He would not name the Chinese firm but said it bought New Zealand dairy products.

NZDL suppliers’ group chairman Ian Moore has met prospective buyers, but is also staying mum on who they are.

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Dairy News may 8, 2012

news // 7

Early days, but bank pencils in $5.80 PAM TIPA

THE BNZ is making early

predictions of a $5.80 milk payout for the 2012-13 season – and it could even go lower.

“It is very early days, but we have penciled in $5.80 for total 2012/13 payout but sense more downside risk than upside at present,” says BNZ economist Doug Steel in the report ‘Rural Wrap – The Commodity Cycle’.

Average dairy product prices have fallen about 17% over the past three months, the report says, mainly through surging global supply and renewed concern about the global economy.

“Prices could fall further in the near term, especially with increasing risk of intervention from the EU,” says Steel.

“Lower prices, coupled with a stubbornly high NZ dollar, will see the 2012/13 payout materially lower

than for the season just ending.”

Steel earlier says favourable weather conditions in the 2011/12 season boosted dairy production by 10%, much stronger than the “healthy enough” pre-season estimate of a 5% gain, with the extra milk worth about $500 million.

“But, equally, while dairy revenues have been good this year, it is important to recognise they will still be down on last season’s record given the reduced price/payout per kilogram of milksolids,” he says.

Global commodity prices are “clearly heading in the wrong direction,” he says. “The 10% drop in international dairy prices at the recent Global Dairy Trade auction is the latest example. But dairy prices were drifting lower before that…”

The exceptional weather for pastoral production is unlikely to

remain. This, with the falling international commodity prices and the “stubbornly” high currency, all point to lower food exports in general ahead.

“Lower food exports form a significant part of the $3 billion decline we anticipate in the annual value of overall goods

exports over the coming year. It could well be more,” Steel says.

“The general reduction in food export revenues will become a drag for economic growth.”

Steel says lower com-

modity prices could suppress growth to the point of inducing action from the RBNZ. But while the commodity downswing risks further delay in interest rate hikes – even a possible OCR cut – other

indicators are pointing firmly the other way.

Lower commodity prices will also see a decline in New Zealand’s terms of trade, with the bank forecasting a 10% decline in the coming 18 months.

While that would exert downward pressure on the dollar, other factors

include foreign central bank actions, global risk appetite, and the domestic growth outlook relative to the rest of the world.

Interestingly, Steel says the Christchurch reconstruction effort will be equivalent to twice the annual export returns of the dairy sector.

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‘Legislation unnecessary’ PETER BURKE

ers need it like a hole in the head.

That’s how Fairlie dairy farmer Leonie Guiney, a campaigner representing 600 supporters against the legislation, told it to the primary production select committee hearing submissions on the DIRA Amendment Bill.

Guiney has been at the forefront of opposition to the legislation and in particular TAF which she described as a ‘public float by stealth’. She also told the committee the legislation as it stands could hand over 25% of the equity of the Fonterra cooperative to outside investors and this is not what farmers want.

“A proposed float in 2007 was resoundingly rejected by farmers. Fonterra have now put another proposal on the table that says that redemption risk is so significant that we need this TAF proposal.

“Farmers including myself voted for TAF in 2010 on the basis that it was trading among farmers and we got a promise of 100% ownership and control. The mistake then was that co-op members were asked to vote for something in the absence of enough information and there is something to be learned from that.”

Guiney says the DIRA Bill is putting the cart before the horse.

“Why do we have legislation for something that farmers don’t yet know what they’re looking at. Farmers asked for and are finally going to get a second vote on this TAF proposal. They need good information on which to base their vote. So why should legislation be shoved through Parliament in a hurry before farmers even know what this looks like?” she asked of the select committee members.

Guiney concluded by saying her group rejects the “interventionist tone” of the DIRA Bill.

“We absolutely reject the need for TAF related provisions in the legislation to help facilitate the ‘gradual demutualisation’ of our cooperative.”

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Dairy News may 8, 2012

news // 9

Supply surge pushing prices down ANDREW SWALLOW

AN OPENING payout

For the time of year, volume cleared in last week’s auction was quite high, so the overall 2.4% drop wasn’t that bad a result considering, he adds.

Fonterra’s $6.35/kgMS forecast for the current season is “still pretty safe on that basis,” he believes.

However, contracts three to six –

forecast starting with the figure five for the 2012/13 season looks increasingly likely in the wake of another fall in commodity markets.

Last week’s Global Dairy Trade event saw the all products, all contracts trade weighted index back 2.4% on the April 17 sale, which in turn was 10.1% down on the April 3 result.

Anhydrous milk fat (AMF) took the biggest hit, down 13.6% in the May 1 sale, to average $2,852/t, the commodity’s lowest value since it was launched on GDT in November 2009. In FebANZ National Bank rural economist ruary last year Con Williams. it averaged August through to Novem$6486/t. ber delivery – were “quite Whole milk powder a lot weaker than previ(WMP) and skim milk ously”, back 4.2% to 6.5% powder were down overall, “which is a con2.2% and 4.6% averagcern.” ing $2776/t and $2825/t “It means [Fonterra] respectively. will probably set a more The SMP average is conservative advance rate also the lowest since it and starting payout forewas launched (March cast.”

2010), though last week’s Typically the cooperamean was dragged down

by Dairy America and Arla tive releases its first pre(European) product which diction for the coming season in late May. sold at a discount to New Westland has already Zealand origin SMP. forecast $5.70-6.10/ WMP remains well kgMS for 2012/13 with above its GDT nadir, an an advance rate of $3.80/ average of US$1829/t in July 2009, though the New kgMS, notes Williams.

“Competitive pressures Zealand dollar was 28% mean Fonterra won’t be stronger last week than far away.” it was then (US82c/NZ$ Williams’ pick is for an today v US64c/NZ$ then) narrowing the gap in local opening figure of $5.75/ kgMS with a dividend currency terms to $3385/t range of 40-50c. versus a low of $2858/t.

“That dividend range Only cheddar and laccould be slightly better tose achieved gains last with lower commodity week, up 3.1% and 3% prices.” respectively, the latter Other commentators’ being Australian product were suggesting an openfrom Murray Goulburn. ing Fonterra forecast anyANZ National Bank thing from $5.50 to $5.90/ rural economist Con WilkgMS even before the May liams puts the continuing slide in prices down to 1 GDT event, he notes.

The May 1 event surging supply, rather than “means there’s possibly easing demand.

“The big thing is a very a little downside on that.” strong finish to the New New Zealand’s 2011/12 Zealand season colliding with the European and season looks set to finish 11% ahead of last year from US peak season and their increased production,” he only 2.8% more cows, hence about 8% is from told Dairy News. increased yield, with pro“Demand continues to duction per cow on course hold up reasonably well.”

for an all time high of 362kgMS. A more normal season will likely see that yield figure fall next year, particularly as farms may well cut spending on fertiliser and feed in light of the likely lower forecast and advance payments.

“If seasonal conditions are more moderate next

year I’d expect to start to see an improvement [in prices] towards the back end of 2012.”

Another possible price positive is currency taking a correction due to New Zealand’s ongoing 4% current account deficit.

“That release valve is coming but I’m not sure what the trigger is.”

Commodity

May 1 mean

GDT peak*

WMP

US$2,776/t

US$4,619/t (March 2011)

SMP

US$2,825/t**

US$4,372/t (June 2011)

AMF

US$2852/t**

US$6486/t (February 2011)

* Average price for all specifications and contracts. ** Lowest average since launching on GDT. WMP’s low as US$1829/t in July 2009.

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Dairy News May 8, 2012

10 // news

Auction a microcosm of global market Jo Bills

After a long period of

relative stability, helped in part by increased frequency of auctions, it has been an action-packed month for the GlobalDairyTrade (GDT) platform.

Now, all in the industry are once again awaiting the next event for an indicator of the market heading into the 2012/13 season.

How has the GDT developed over the past year and how much does it reflect the wider market?

In mid-April the GDT-TWI (Trade Weighted Index) indicator fell 9.9%, the largest fall

since July 2010.

At the latest event on May 1, the GDT indicator fell a further 2.4% - with anhydrous milk fat (AMF) and milk protein concentrates (MPCs) suffering the greatest falls.

The question is: How representative of the wider market are these changes in the prices of products sold through the GDT? Around 788,000 tonnes of product have been sold on the platform over the past 12 months, representing under 9% of world trade in all dairy products.

However for whole milk powder (WMP) the GDT share is just under 25% - a significant share of trade for this product.

Fonterra’s auction platform is broadly representative of what happens in the wider market.

trated and generally more valuable form of dairy fat.

Based on this analysis it would have to be said that the GDT provides a much better indicator for WMP prices than for cheese or AMF. There are currently 620 buyers registered to

There is no butter sold on the GDT platform and the volumes of cheese and AMF (anhydrous milk fat) are relatively small.

AMF sells at a significant discount on GDT to butter spot prices which is difficult to explain, as AMF is a more concen-

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buy product on GDT, however the number of participating bidders is typically a fraction of the number registered.

The last two events have been characterised by large volume offerings and the lowest participation rates from registered bidders for some time.

With new sellers joining GDT over the past year, and New Zealand enjoying a bumper season, volumes offered in the past two auctions are around three times the

amount on offer at this time in 2011, while the number of registered bidders has doubled.

In broad terms the past month of GDT activity does characterise the nature of the wider dairy market at present.

There is lots of supply – due to all exporting regions enjoying favourable seasonal conditions.

Buyers are indeed holding back, with falling prices and high product availability there is a reluctance to commit too far forward, so many are only covering their immediate requirements.

However, some caution needs to be used when

assessing these results for commodities that are not sold in large volumes on GDT or in spot markets generally such as cheese.

In addition, the structure of the GDT auction itself - with each auction starting at a 15% discount from the price determined in the previous event means it tends to reinforce downward trends in a weakening market.

So while the GDT does provide an increasingly useful indicator it is not the only one, and needs to be viewed in a wider market context.

• Jo Bills is strategy and knowledge manager at Dairy Australia.

Dairy awards fever NEARLY 700 people will attend the 2012 New Zealand Dairy Industry Awards annual dinner on May 12 to hear who’s won Sharemilker/Equity Farmer of the Year, New Zealand Farm Manager of the Year and New Zealand Dairy Trainee of the Year awards.

National convenor Chris Keeping says the 36 finalists, in 12 regions, are now being judged. They will be in Auckland next week for activities and the final judging component – an interview.

“It’s an exciting time for the finalists, especially once the pressure of final judg-

ing is off. They enjoy meeting each other and… doing activities out of their comfort zone.”

The dinner will be at Sky City Auckland Convention Centre. Winners will get $140,000 in cash and prizes. MC is TV3 news presenter Mike McRoberts. Some 680 people are expected to attend, including farming and farm-politics leaders.

The awards are sponsored by Westpac, DairyNZ, Ecolab, Federated Farmers, Fonterra, Honda Motorcycles NZ, LIC, Meridian Energy, Ravensdown, RD1 and AgITO.

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Dairy News May 8, 2012

12 // news

Call for ‘open and full’ debate

TAF critic Donna Smit from Whakatane.

sudesh kissun

A GROUP of Bay of Plenty farmers unhappy with TAF (trading among farmers) is calling for “an open and full debate” before the second shareholder vote next month.

TAF Whakatane group spokeswoman Donna Smit hopes Fonterra will hold meetings throughout the country.

“We are interested to know the detail

about the final proposal – the risks, the rewards and the costs,” she told Dairy News. “We look forward to an opportunity for a postal vote.”

Smith wants Fonterra to take opposition to TAF seriously rather than shrugging it off as a vocal minority.

Over 150 eastern Bay of Plenty Farmers had signed the petition calling for a second vote. Smit believes the minority Fonterra talks about might be bigger than the co-op realises.

“A lot of shareholders voted on the original proposal without fully understanding that TAF is actually trading among farmers and outside investors and the Fonterra Shareholders Fund is actually a fund for Fonterra shareholders and outside investors.

“Over the ensuing months Fonterra has spelt out that they intend to have a dual fund system which introduces outside investors’ participation – a matter which brings in two classes of

Your farm, your future REGISTRATION IS open for the

second DairyNZ Farmers’ Forum to be held May 23 and 24 at Mystery Creek Events Centre, Hamilton.

DairyNZ chief executive Tim Mackle says a lot has changed in the two years since the last event. The forum is a chance to share what’s

changed, what’s working well and what needs to be addressed.

The first-day speakers include Minister for Primary Industries David Carter, Fonterra chief executive Theo Spierings, ANZ-National Bank’s chief economist Cameron Bagrie, and Maori trustee Jamie Tuuta.

Day two is entitled ‘Your farm, your future’ and includes local farmers discussing their business strategies.

The DairyNZ Farmers’ forum is free to levy paying dairy farmers and their staff. Registration is essential. www.dairynz.co.nz/farmersforum.

shareholding. This will start pressures by the outside investors for a share in the control of Fonterra.”

Fonterra’s board has agreed to a second vote after holding out for several months.

Co-op chairman Henry van der Heyden says it has agreed to give shareholders “a final vote and unify the cooperative.”

He says the board is in a challenging position because while the majority of shareholders urges directors to get on with TAF, there is a small group of shareholders who have concerns and are particularly vocal in the New Zealand media.

“Firstly, this is in danger of splitting the shareholder base and is not in the best interest of Fonterra’s future,” he says.

“Secondly, instead of having the

discussion among farmers and resolving the matter in the family, the debate is now spilling into the international media and damaging Fonterra’s reputation and our global partnerships.”

Van der Heyden and chief executive Theo Spierings say that during a recent visit to Asia most people they met asked if the debate was impacting the cooperative’s stability and reliability as a partner. “We have to put a stop to this and use the special meeting to unify the shareholder base so we can get on with implementing the new refreshed business strategy,” says van der Heyden.

“At the moment all we are doing is destroying value and compromising potential business opportunities.”

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Dairy News May 8, 2012

14 // news

Better grain buying a win-win andrew swallow

DAIRY AND cropping farmers are

being encouraged to develop better business relationships and understand each other’s position when dealing in grain.

To that end the Foundation of Arable Research (FAR), with Dairy NZ support, last week held a seminar in Gore, the first such event in Southland. It follows two similar meetings in Canterbury and FAR plans to run two North Island meetings, most likely in Manawatu and Waikato.

“The aim is to try and encourage good business relations between dairy and cropping farmers, informing dairy farmers about the quality and attributes of grain, and cropping farmers about what dairy farmers are trying to do with it,” FAR chief executive Nick Pyke, told Dairy News.

That’s echoed by DairyNZ developer in productivity, Steve Lee, who spoke at

the Gore seminar.

“The event was about helping dairy and arable farmers to form business relationships and contractual-type arrangements to buy and sell grain.”

Developing longer-term supply arrangements will benefit both parties, says Lee. While the dairy farmer may not always get the cheapest deal on the day, he or she will have security of supply and avoid spikes in price should a shortage develop.

Quality control should be easier too.

Lee says when buying look for a uniform sample and get an ME test done.

“You need to be checking every line you buy and recalibrate the rollers to make sure they’re doing a decent job and you’re not just feeding the ducks.”

High screenings mean rollers need to be screwed down to crack the small grains and prevent them going straight through the animal, but in doing so larger grain gets pulverised, wasting energy and increasing the risk of acidosis.

Steve Lee

“You need to set the mill to just crack the grain. You don’t want to over mill it.”

Taking a sample for an ME test needs to be done carefully to ensure it’s representative, but compared to the cost of feeding 200t or so of grain, spending $80 to get an ME result is “a nobrainer”, he adds.

“It gives you that bit more informa-

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tion which will allow you to be more enlightened about what you are doing.

You do see some variation in grain quality and if you have [the ME value] it just makes it easier to get feed allocation right.”

It can also be used to make informed cost comparisons with other – typically lower-ME – feeds such as silage or PKE, but in making such comparisons realis-

tic estimates of waste for the alternatives must be factored in.

“One of grain’s real strengths is it needs to go through a feed system in the shed so you can control the intake and there’s very low wasteage. With silage there might be 25% waste, or a whole lot worse in bad conditions, whereas with grain you can budget on 5% waste and if it’s well managed it can be well under that.”

The seminar also covered market information sources, such as the quarterly Arable Industry Marketing Initiative (AIMI) grain report and Australian grains website Profarmer, and advice on setting up contracts.

Lee says about 25 farmers attended, mostly cropping, but at a subsequent DairyNZ meeting in the region several dairy farmers he spoke to said with hindsight maybe they should have gone.

“Most new sheds in Southland have a feed system fitted and a number are putting in feeders, particularly in the wake of the snow last season.”

Clean-up cash in hand A GRANT of $685,000 from DairyNZ

will fund its managing and monitoring of the dairying environment in the Karapiro area.

The three-year project is to reduce nutrient and sediment loads in the upper Karapiro catchment of the Waikato River.

Dairy farmers will pay two thirds of the money – through DairyNZ – and the Waikato River Authority will pay the other third.

The authority was set up by the Crown and Waikato River iwi to restore the river, with funding committed by the government for 30 years.

DairyNZ chief executive Tim Mackle says the project will show farmers’ sustainability and competitiveness can be further enhanced, and it will benefit the Waikato River and the Waikato region in respect of its economy. Securing the funding is gratifying, Mackle says, given

that the Waikato River Authority is only just getting underway.

“For the dairy industry to be able to connect with this new authority so quickly and so substantially augurs well.... We have been involved in a number of catchment projects around the country; this will be the largest. We are expecting significant benefits for farmers and the Waikato River.

“This is an industry led project and we will be working directly with individual farmers to explore all options and to identify maximum on-farm benefit. We will then ensure there is oneon-one support to implement plans.”

The scale of the project suggests major on-farm and industry capability building as a result.

Farm consultants and industry advisors will advise and support farmers individually, adding to the sum of expertise in the region.

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Dairy News May 8, 2012

16 // world

UHT Almond Milk made by Australian processor, Freedom Foods.

Oz processor eyes Asia AUSTRALIAN FOOD

company Freedom Foods Group Ltd is to build a new milk processing plant to cash in on growing demand in Asia.

The plant, to be built in southeast Australia, will be the first Australian greenfields expansion in UHT in 10 years.

Freedom’s wholly

owned subsidiary Pactum Australia will run the plant. Some of its products will be sold in Australia.

The company says given Asian consumers’ rising incomes and improving diets, demand there will grow for quality dairy products from low-cost production bases such as Australia, whose

milk is well regarded.

The new plant will allow Pactum to meet growing demand for UHT dairy milk, and add to capacity for valueadded beverages at its Sydney factory. Pactum is expanding its capabilities at the Sydney plant to provide portion pack (200-330ml) configura-

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Dairy holds up CanadaEU deal CANADIAN DAIRY industry protection is the key hold-

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tion for beverage products.

The NSW location will provide access to the most sustainable and economic source of milk. Pactum has strong links to the Australian dairy industry and will expand its arrangements with dairy farmers for supply of milk. The new plant will increase scope for Australian milk supply – value-added, sustainable and export focused.

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up in a Canada-EU free trade deal. The EU’s ambassador to Canada wants the heavily protected dairy sector – mainly in Ontario and Quebec – exposed to greater foreign competition.

Ambassador Matthias Brinkmann told journalists he is confident of a Canada-EU trade deal this year. But he points out dairy is a key barrier to successful negotiations.

Brinkmann also warned Canada it will likely have to lift its visa restrictions on three former Communist-bloc countries – the Czech Republic, Bulgaria and Romania – before the trade deal can be ratified.

These cautions come on the eve of a public relations campaign by the Federal Government to promote the proposed deal, with Tory MPs fanning out across the country to speak in favour of liberalising trade and investment with Europe.

Canadian beef producers are eager to access 500 million EU consumers. But this could take time, warns Brinkmann.

“For the Prairies the beef issue is a big one, and there will be no beef without dairy – it’s almost a foregone conclusion.”

He confirmed formal offers haven’t even been exchanged on the sensitive agriculture issue despite negotiations since 2009.

“It’s a big obstacle, like all international trade negotiations,” he said, adding that it’s “normal” for negotiators to leave the toughest issues to the final talks.

Rudy Husny, a spokesman for Trade Minister Ed Fast, wouldn’t comment on whether Canada is prepared to expand foreign competition in the dairy market.

Countries in AsiaPacific, especially New Zealand, are also demanding greater access to Canada’s domestic dairy market as a price of participation in the proposed TransPacific Partnership (TPP) trade deal.

“All countries approach negotiations with a view to protecting their interests. Canada is no different,” Husny says. “Canada will seek to defend and promote its interests in every sector of the economy.... only signing an agreement that is in the best interests of Canadians.”

Brinkmann said the EU and its 27 member states aren’t demanding Canada end its supply-management system, which provides production quotas to dairy producers and shields them against competition by charging high tariffs on imports. But he said Brussels is pushing aggressively for an increase in the Canadian imports quota limit – 20.4 million kg of cheese. EU exporters get about two-thirds of that quota, and all foreign producers must pay a prohibitive 245% tariff on products above the quota.

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Dairy News may 8, 2012

world // 19

Milk price cut uproar BRITISH FARMERS

are crying foul over a 4c/L drop in farmgate milk price.

NFU dairy board chairman Mansel Raymond says the decision by processor Dairy Crest is outrageous.

Dairy Crest says market pressures are forcing the drop in milk price. It will affect 575 farmers supplying into its non-aligned liquid contracts. The NFU says it will be difficult for the affected farmers.

Raymond says it’s clear from its recent trading statement that Dairy Crest finds itself challenged in the marketplace, unable to get fair market value for fresh milk from its customers.

“But this is no excuse for paying a farmgate milk price 6-8c/L below the costs of production.

“This reinforces the need for balanced and

fair milk contracts. Farmers supplying Dairy Crest liquid contracts are now forced to accept a price cut they have not agreed to, for at least the 12-month notice on their contract.

“This is sheer exploita-

out mutual consent, must have break clauses which allow farmers to leave earlier.”

NFU president Peter Kendall wants UK Farming Minister Jim Paice to act over unfair milk contracts.

“The exploitative position farmers find them-

tough trading conditions.

Last month it shut two dairies to reduce costs and sustain profitability.

The company has also lost a lucrative liquid milk contract with supermarket chain Tesco. About 3% of Dairy Crest’s liquid milk sales in 2011-12 were made to Tesco.

Dairy Crest chief executive Mark Allen says the

Dairy Crest has lost a milk supply contract with Tesco.

“Dairy Crest finds itself challenged in the marketplace, unable to get fair market value for fresh milk from its customers.”

– Mansel Raymond

Mansel Raymond

tion and the clearest demonstration yet that those dairy contracts, where buyers have the discretion to change price with-

selves in will continue to be used against them by milk buyers unless we see either a robust code of practice or legislation put into operation very soon.”

Dairy Crest is facing

challenges in the liquid milk industry are further underlined by the disappointing loss of the Tesco contract.

“However it represents just 3% of our total liquid milk volumes and has not driven [our] restruc-

turing decisions. Tesco remains a large and important customer for our key UK brands Cathedral City, Country Life, Clover and Frijj.”

Allen says Dairy Crest is a broadly based business which is succeeding

despite a tough market.

“Our foods business has performed strongly and sales of our five key brands continue to grow.

However, along with the rest of the sector, our dairies business is under sustained pressure and we have to continue to act decisively.”

He says the decision to consult on the closure of Aintree and Fenstanton facilities has not been taken lightly.

“But it’s the right decision for the long term. We

will do all we can to help employees who may be affected by these proposals,” says Allen.

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Dairy News May 8, 2012

20 // opinion OPINION Ruminating

EDITORIAL

No time for petty politics in DIRA

milking it...

Just good ole’ boys

On the bus or off it?

All’s well that ends well

Saws to oust cows

THE MICHAEL Fay-led consortium wrestling for control of the Crafar farms has not given up, but must be running out of options.

They have played every possible angle and the spin they put on everything is crafty, to say the least. They have drafted iwi money into the deal to give it an air of righteousness and give their bid political weight, they continue to paint the Chinese bidders as unfit buyers with no farming knowledge, unlike “our guys” who are all farmers, if you believe the spin, and they criticise the Chinese for “paying above the odds”, as if being the highest bidder is a crime.

THOSE OPPOSED to TAF (trading among farmers) have been granted their day after months of stirring.

Fonterra will put TAF to the vote – probably against its better judgement – one last time this June.

ATTENDEES AT the Kapenga M dairy field day in Rotorua recently were promised an adventure tour of the sprawling 330ha unit. And the organisers stuck to their promise.

Two buses were hired for a tour of farm. But in pelting rain, the buses found it tough weaving through the cattle races.

The farm’s tractor was summoned at least four times to pull the buses to safety.

But the hair-rising bus ride was soon forgotten and there was praise all round for the drivers. And the lunch was great!

US FEDERAL forest officials are thinking of using hand saws to break up the carcasses of frozen cows that died inside a cabin at 4000m near Aspen, Colorado.

The US Forest Service had been exploring whether to burn the cabin or blow it up with explosives to get rid of the whole mess. But a plan explored this week involves using hand saws to cut up carcasses of six cows frozen inside the cabin and four or five buried in the snow outside.

Rangers believe the cows wandered into the cabin near the popular Conundrum Hot Springs during a snowstorm but couldn’t find their way out.

Air Force Academy cadets found their frozen carcasses while snowshoeing in late March.

Forest officials want to remove the carcasses before they thaw.

Fair enough, the cooperative needs a resolution so it can move forward as a cohesive whole and retain market confidence.

But will the TAF critics respect that need for solidarity if they lose the vote?

Milking It hopes that, if they don’t get the numbers, they opt to fall into step for the greater good.

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ISSN 1175-463X

ONE OF the most important and, to some, controversial pieces of legislation affecting the dairy industry moved yet another stage last week.

The primary production select committee heard submissions on the Dairy Industry Restructuring Amendment Bill – or DIRA Bill as it’s commonly known.

All the heavyweights from the dairy industry and many others were there. Some, including Fonterra chairman Henry van der Heyden, were making their first appearance before a select committee. Shane Ardern, chairman, did a good job, ensuring submitters had a fair say and that MPs got to ask questions within reasonable time constraints.

The various groups and individuals all presented well and made the most of their time before the committee.

They took the opportunity to put across to the MPs their key messages and there were outbreaks of friendly banter.

In respect of the DIRA Bill there is a perception among some submitters that the process is being rushed and that not all farmers are sure of what they are getting or not getting.

‘Confusion’ is probably a bit strong a word for it, but DIRA clearly means different things to different people. Fonterra seems to be the happiest which probably means their competitors aren’t happy, although interestingly, no one completely rubbished the bill.

But despite the process, the real test will be in the final draft of the bill. Will all the concerns of the submitters be taken into account and if so which ones and to what extent? Will Fonterra get its wicked way or will its opponents get theirs and what, if any, compromise will be brokered?

Clearly the overriding intent of the DIRA Bill will remain.

While it might be reasonable to expect some ‘technical’ changes to the bill, major change is probably a bridge too far.

The DIRA Bill is an important one for farmers, the dairy industry and NZ Inc and it’s important that politicians focus on framing and passing a piece of legislation that is fair, workable and beneficial to all – not one that’s tainted by petty politics.

– Peter Burke

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Dairy News may 8, 2012

opinion // 21

‘No silver bullets’ FINANCE MINISTER Bill English will deliver the Budget 2012 later this month. He spoke recently about economic challenges facing the Government. Here are excerpts from his speech:

OVER THE past three-

and-a-half years, we’ve successfully steered New Zealand through the domestic and global recessions we inherited in 2008.

We continue to stand beside the people of Canterbury after the series of devastating earthquakes.

We’re making good progress in putting the economy on a more productive and competitive footing. And we’ve made early progress dealing with long-term, structural challenges [such as are] facing many countries around the world.

In particular, we need to break our old habits of debt and consumption that marked much of the 2000s. And we must build our future on innovation, higher savings and exports. That’s the only way we can create a more competitive economy selling more to the rest of the world to deliver more jobs, higher incomes and opportunities here at home.

As one of the most indebted developed economies in the world, we don’t have a choice about that.

Global markets will remain extremely nervous about debt for years and banks won’t be prepared to lend on the scale of the previous decade.

As we’ve seen recently, sustainable growth and new jobs in New Zealand won’t come from the

Government. This can’t happen. The Government cannot afford to keep borrowing and spending at the rate of the past 10 years. Instead, growth and new jobs must come from businesses like yours having the confidence to invest, grow and hire new staff.

This Government is working hard to give you that confidence. That means doing a lot of things well, rather than trying to find one or two silver bullets. One of the Government’s economic priorities is to build a more competitive and productive New Zealand economy. The Government’s main role in this is to look out over the next five years or more and set a policy framework that helps the economy become more competitive and productive in the longer term.

I’m confident this will improve New Zealand’s international competitiveness over the next few years and give businesses like yours the confidence to invest and create new jobs. Take, for instance: Our tax package in the 2010 Budget which increased taxes on consumption and property speculation, and reduced taxes on work, companies and saving.

Our changes to regulations, for example, resource management laws, building laws and industrial relations laws.

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Do you think Fonterra farmers will approve TAF during the second vote on June 25? ● Yes ● No

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Our multi-billion dollar infrastructure scheme for rail, roads, electricity transmission and ultrafast broadband.

Our focus on changing the incentives for welfare and work.

And reducing Government-imposed costs on business: ACC levies on employers and the selfemployed will fall by 22% this year, reducing total costs to business each year by about $250 million.

All of these long-term policies are aimed at building a more productive and competitive economy.

Looking ahead, the Government’s Business Growth Agenda will continue that momentum.

Bill English

Dairy News May 8, 2012

22 // agribusiness

Colostrum beverage set to sparkle COLOSTRUM BASED products to be made at a new $10 million New Image Group plant in Auckland are an example of “more of where New Zealand’s primary industry is going,” says Trade Minister Tim Groser.

“We are blurring some interesting lines between food as food… food as nutrition and health and the step beyond that is into pharmaceuticals or nutriceuticals,” he said last week at the plant’s official opening.

Natural products are a billion dollar industry and over-

New Image executive chairman Graeme Clegg (left) shows Trade Minister Tim Groser (centre) around the new $10 million plant at Ellerslie which includes HPP technology for colostrum drinks.

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“Natural products are a billion dollar industry and overwhelmingly export orientated.” – Tim Groser The 28-year-old company had long-established relationships in other parts of Asia but had now developed new wholesale-retail channels in China with branded products, especially colostrum blends, nutraeuticals and infant formula.

Among new capabilities of New Image’s Penrose plant is HPP technology used to make its new health drink called Col + colostrums.

Instead of being pasteurized at a high temperature, the dairy-based beverage is produced using high pressure to preserve the activity of heat sensitive bioactives. Col + is a fruit flavoured dairy “shot” to support the body’s immune system. It goes easily in lunchboxes – or handbags.

Clegg says the halal and 99.9% fat free drink is quickly finding favour in China, Taiwan and South East Asia. It is also selling in the New Zealand market, first through selected Asian supermarkets.

“The shelf longevity of the product, combined with the fact that it does not have to be refrigerated, gives us an edge over our competitors in Asian markets.”

The new plant also includes automated can making (200 cans/minute), a form-and-fill packaging line, tableting and capsulating equipment, and sachet packing.

New Image has also built a spray dry milk powder plant at Paerata, south of Auckland. It has a packaging plant at Avondale and headquarters and warehouse at Mangere.

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whelmingly export orientated, he said.

“It doesn’t receive the attention of our wine industry, but there is probably a bigger future for this industry when you look at the resource based strength that underwrites this,” he says.

New Image Group’s new Penrose plant is part of a multi-million dollar strategy described by executive chairman Graeme Clegg as meaning the company is “starting to gain some serious new traction in China”.

BACKYARD

E S S ALE

NEW ZEALAND needs to “run like a hare” to take advantage of our FTA with China before other countries negotiate their own, Trade Minister Tim Groser told Dairy News.

Not only does New Zealand have an FTA with mainland China, it is also the only country with an FTA with Hong Kong and is working towards an agreement with Chinese Taipei (official speak for Taiwan), he says.

If New Zealand achieves this, it will be the only country to put the three dots together on that Chinese economic triangle.

So New Zealand is now in a “good space” in its trade relationship with Asia, Groser says, and he is surprised Australia has not been quicker off the mark in taking advantage of our joint FTA with South East Asia.

“We need to seize the moment,” Groser says. That is why he had been on four trade missions in the last few weeks he told Dairy News, at the opening of New Image Group’s $10 million factory in Auckland.

Groser says he is confident New Zealand will get an advantage from vertical integration strategies for products, but only when they make economic sense.

Companies such as New Image are developing high technology solutions for primary products, he says.

“This will hedge against commodity price and currency fluctuations.”

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Dairy News may 8, 2012

management // 25

For the land and people sudesh kissun

THE KAPENGA M dairy farm has a simple philosophy: maintain ownership and grow its people’s expertise in farming.

Located 20km south of Rotorua, the 330ha property is owned by the Kapenga M Trust – 915 shareholders of Tuhourangi descent. It owns 1858ha, including a sheep and beef farm and a deer farm.

The dairy unit is one of three finalists in the 2012 Ahuwhenua Trophy competition which incorporates the Maori Excellence in Farming Award.

Kapenga M won the Ahuwhenua Trophy for sheep

New chief judge AWUWHENUA COMPETITION chief judge Doug Leeder will step down after six years in the role.

He will be succeeded at the end of the 2012 competition by Hawke’s Bay farmer Dean Nikora.

The Awuwhenua Trophy will be handed over at a gala dinner in Auckland on June 8. The competition committee chairman Kingi Smiler says tickets for the finals have sold out and people are on a waiting list.

and beef farming in 2003.

Trust chairman Roko Mihinui says key to the trust’s success is a fundamental determination to maintain the ownership and guardianship of the land for future generations.

It also aims to grow expertise among its own people, expecting that eventually all its staff, including farm consultants, sharemilkers, managers and ›› Milking area 334ha. farm hands, will see ›› Production their lineage in the 372,000kgMS. land. ›› Peak cows milked Kapenga M’s 998. sharemilkers, ›› Stocking rate 2.99 Edwin and Maricows/ha. anne Schweizer, have been in the role ›› N applied during the for four years. year 141kg/ha.

Mihinui says Kap-

farm facts

enga M has operated under a 50:50 sharemilking arrangement since the conversion of the farm to dairy in 1995.

“The arrangement is structured to give the sharemilker incentives to invest in the farm and its herd, a strategy which has proved positive for both parties and led to consistently strong performances.

“While the good relationship between the trust and its sharemilker is seen as critical to the farm’s success, the trust tries, where possible, to employ and train staff who [see their lineage in] Kapenga M.” The current second in charge, Eddie Coward, is of Tuhourangi descent.

Kapenga M has a mixed

The 330ha property has excellent pasture quality.

Jersey/Friesian herd of 1020 cows. Its stock performance results from a strategy of developing high-breeding worth cows that can harvest high levels of pasture.

Since 2009 the farm’s total milk production has increased steadily from 241,44kgMS in 2008 to 371,169kgMS although its herd has only increased by nine cows. Production per cow has gone from 246kgMS to 372kgMS. Considering farm contour and altitude, milk production/ha is high at 977kg/ha. Central North Island average is similar at 982kgMS/ha however Mihinui says its assessment is that the ‘average’ central North Island dairy farm has greater grass growth potential The amount of pasture consumed by the cows / ha is 1 tonne higher than the central North Island average, indicating efficient pasture management and correct stocking rate, he says. Pasture quality appears good on the farm.

“It has been a challenge, on some farms, keeping on top of quality due to the high pasture growth rates. Pasture is scored fortnightly from October to March with the aim of keeping average cover between 2000 kgDM/ha and 2300kgDM/ ha,” he says.

Kapenga M emphasises environmental sustainability, for example, ensuring water that runs through the farm is of the highest quality. The effluent system is ‘future-

Kapenga M dairy unit’s staff.

proofed’ with good storage and spreadable areas.

Nitrogen use is limited to 150kg/ha and not used during high-risk times and P use has been reduced, given that current high soil fertility levels and direct drilling also reduces soil run-off to waterways.

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the dairy unit is above the national average when comparing all New Zealand farm owners with 50% sharemilkers – an excellent result given land contour, says Mihinui.

The farm is considered a System 3 operation, with the aim of harvesting as much high-quality pasture

as possible. The trust sets an annual target of <500kg DM/ cow of imported feed (excluding grazing).

Mihinui says consistent grazing residuals are the key to the farm’s grazing management, with cows given a “refresher” on how to graze in the first round of each lactation.

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Dairy News May 8, 2012

26 // management

Special bulls for OAD cows PETER BURKE

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still not delivering to the potential many OAD farmers believe is possible.

Tom Phillips, Massey University Centre of Farm Excellence, says a group of OAD farmers are keen to push ahead with plans for breeding special bulls that will suit New Zealand.

OAD farmers will firstly have to clearly identify their breeding objectives, he says.

They can then develop a breeding plan to enable them to work with one of the breeding organisation such as LIC to develop a sire proving scheme.

“Producing such bulls is not a quick process but, with DNA, a bull can be used at a much younger age and a very severe selection criteria can be applied,” he says.

“I think it would be possible to produce such bulls within five years.

“In terms of traits for such bulls, fertility will need to be an absolute focus. The ability of their daughters to conceive in a pasture grazing systems will be very important and the cow needs to be fully adaptable to the OAD system.

“A trial in Ireland some years ago illustrated that cows are ‘bred for systems’ and I think the OAD is a low input system.”

Phillips says OAD cows have to be able to produce a high quantity of solids from pasture. “They must be vigorous, active grazers.

I think a legitimate target for such animals is 1kgMS per 1kg/LW. The cow

needs to get in calf ideally within the first three weeks of mating and also needs to have very low cell counts and resistance to mastitis,” he says.

Phillips says the OAD bull and his progeny will almost certainly be cross breds because of the advantages that offers, he says.

“In NZ most of the cross breeds are with the three main breeds but if you go overseas, farmers are experimenting with an number of different breeds and in particular a number of crosses,” he says. “Those crosses might be a Montbeliard/ Jersey cross. But if that cross is not suited, it disappears very quickly, but if it is suited, it may lead to further use of that genetic combination.”

Phillips, who has spent a lot of his consulting life in Europe, says a few farmers there are using the Swedish Red because they have reputation for very low cell count.

But unless these animals are sufficiently fertile, then they will fail one of the main economic criteria for selecting that animal.

If New Zealand is able to develop a super OAD bull, the benefits may not only be for New Zealand OAD farmers.

“That may also open the opportunity of exporting that semen because OAD milking is being used in the UK, France, Australia and South America,” he says.

overseas breeds The Montbeliard is described as an excellent dairy cow which has its origins in Switzerland. It’s believed to have been bought to France in the 18th century by Mennonites when it was known as the ‘Alsatian’ breed.

The present name of Montbeliard was derived from the principality of that name in France and was officially recognised in the herd book in France in 1880.

Cows weigh about 685kgs and bulls 1,050kgs. They are brown and white in colour.

The Swedish Red is closely related to the Red-Eastland breed in Norway. They are brownish to yellowish red in colour and the cows weigh up to 450kgs.

“We’ve learned more about mastitis in the past two springs than in the previous ten years.”

When James Machin took over as herd manager on a South Otago property in March 2010, he knew his work was cut out for him. The previous sharemilker hadn’t been aggressive enough with early detection and treatment of mastitis cases, and the BTSCC’s were up around 380,000.

James attacked the problem in the spring of 2010, but the bulk tank cell count was 800,000 at the first pick-up. Challenges with the treatment used and environmental conditions just weren’t bringing the problem under control.

At a dry period seminar hosted by Clutha Vets, James heard about whole-herd treatment with Cepravin®. The turnaround has been stunning. By late October 2011 the cell counts were around 100,000. Milk production was up 23 per cent on last season.

Says James,”I’ve learned more about mastitis in the past two springs than in the previous ten years! We’ll definitely be sticking with the Cepravin – there’s no question about it.”

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Dairy News may 8, 2012

management // 29

DWN workshops to focus on staff ception of the work environment is set. nationwide to help dairywomen better That’s the time to focus on the environmanage staff, say the organisers, Dairy ment you want to have on your farm.”

The workshops include small group Womens Network.

The ‘autumn dairy days’ train partic- exercises to allow participants to share ipants in ideas and methods to help them orientate new staff or contractors and to refocus existing staff from ‘day one’ of the dairy season. They are running at 10 locations, timed to help farm owners and managers prepare for the start of the dairy season.

The trainers are expert in leadership, people and performance and business strategy.

Justine Dalton is presenting in the North Island; Justine Dalton, Sarah Watson, Gillian Searle and Lee Astridge are leading in the South Island.

A finalist in this year’s Dairy Woman of the Year award, Dalton knows about the complexity of staffing a dairy farm. Sarah Speight She has worked in the dairy industry good and bad experiences, Dalton says. since graduating BAgSc in 1993.

She and colleagues at BEL Group Dairy, And she hopes to see all participants leave where she is business manager, last year with a plan for employees’ first two days won the Human Resources Institute of NZ on the job, and for the first week and first 2011 HR Initiative of the Year, which recog- month.

“We will offer real strategies to help set nises HR work benefiting the total perforup a farm culture and environment cormance of a business.

Dalton says she is looking forward to rectly from day one. Whenever we don’t presenting on a topic she is passionate manage, management happens by default.”

Dairy Women’s Network chief execuabout. “We only have one chance to get our new and existing staff oriented cor- tive Sarah Speight says getting orientation right in June will pay off in the long-term rectly for the new season.

“June 1 is a busy time; we need to plan with reduced staff turnover and employees for staff changes before they happen and ready to tackle the season.

Workshop topics are: the critical peoget things right the first time, right away.”

She says the most common mistake ple-success factors; why good orientation farm managers make is leaving a new is important; steps in putting together employee to figure things out on their own. orientation plans that work; setting up an “It is a common assumption that orientation plan for the first month; identipeople learn best by just picking things fying what industry tools are available; and up as they go along. This couldn’t be fur- where to go for further help. ther from the truth. The first two days an Tel. 07 838 5238 employee is new on a job is when their per- www.dwn.co.nz.

WORKSHOPS BEGAN last week

Workshops: when and where

NORTH ISLAND DATE

LOCATION

Tues 15 May

Pukekohe

Wed 16 May

Te Awamutu

Thurs 17 May

Whakatane

Tues 22 May

Opunake

Wed 23 May

Dannevirke

VENUE Counties Inn 17 Paerata Road Te Awamutu Club 542 Alexander Street REAP House 21 Pyne Street Sandfords Event Ctr Tasman Street (opposite Opunake High School) The Hub Allardice Street

SOUTH ISLAND DATE

LOCATION

Tues 8 May

Oamaru

Mon 14 May

Hokitika

Thurs 17 May

Gore

Fri 18 May

Winton

VENUE Oamaru Club 32 Severn Street Beachfront Hotel 111 Revell Street James Cumming Wing Ardwick Street Presbyterian Church 11 Meldrum Street 3599 Metabolizer halfpg vert.ind1 1

9/11/08 9:20:42 AM

Dairy News May 8, 2012

30 // animal health

No need to guess at cow comfort COW COMFORT is not

a product or a tool, it is what is happening on your farm 24/7, says dairy automation company DeLaval.

It is influenced by seasonal variations and must be

Sound footing makes life easier for cows.

judged and managed with knowledge.

“Talking about cow comfort involves listening to and understanding numerous opinions on the issue. You will find

cow comfort an emotive subject for some; everybody holds an opinion on it whether in farming or not.”

But what is real cow comfort? DeLaval asks.

How can it be judged? And how can it contribute to profitable dairy farming?

“Over the years, researchers and milk producers have put more attention into creating a comfortable environment for dairy cows and their replacements. Observation and experience show that cows managed in a comfortable environment produce more milk and generally live healthier, longer lives.

“Cows can’t explain what makes them comfortable. But we can observe and measure cow activity, behaviour and environment – then correlate our observations with what appear to be comfortable cows.

“It is our responsibility – when looking at housing cows, whether just for the winter or a longer period – to ensure the environment we create for the cows is as comfortable as possible.

We need to bring all the beneficial paddock conditions into the barn and leave the non-beneficial ones out in the paddock.”

Mastitis, sore feet, rubbed necks and rubbed or swollen hocks can indicate cow comfort problems, DeLaval says.

Cows should have plenty of quality feed and water, fresh air, a soft and clean resting surface plus sound footing. Cows should be able to behave naturally and stand or lie down easily. That’s cow comfort.

“The most comfortable milking system in the world cannot be efficient if your cows are not comfortable. To help you judge cow comfort on your farm, use a cow comfort approach to guide you in a structured way through your farm.”

Use three main criteria to judge cow comfort, the company suggests. These should include: ■■ Animal signs: see, listen and feel the cow and judge whether she is healthy or not.

■■ Body condition score (BCS): score your cows according to a standardised score method on body fat in relation to lactation stage.

■■ Locomotion score: score the lameness of your cows according to a standardised scoring method. This will help to identify potential problems before a cow becomes obviously lame.

Checking these three areas gives valuable data on herd health and helps a farmer decide which areas of a dairy operation need to be adjusted or improved on, says DeLaval.

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Dairy News may 8, 2012

animal health // 31

Mixing antibiotics in milk is a risky practice TAKING SHORTCUTS

when medicating calves greatly increases the risk of antibiotic residues.

Dairy Australia has been investigating the causes of antibiotic residue detections in dairy calves sent for processing over the past two years.

According to programme manager Kathryn Davis, most violations involve antibiotics used to treat calf scours, particularly the oral ‘sulfa’ products such as Scourban, SD333, Streptosulcin Forte and Neosulcin tablets.

The most common mistake identified by the on-farm investigations is accidental use of contaminated equipment to feed calves destined for sale, she says.

“To save a few min-

utes farmers may mix a calf scour treatment in milk and put it in a multifeeder to medicate a group of heifer calves, without realising the antibiotics contaminate the equipment and are difficult to

administration should always follow the labeled directions instead of relying on memory or habit,” Davis adds.

“If a calf is ill enough to need a dose of antibiotics, it should be injected

allows you to physically separate replacement calves from sale calves and treated animals from nontreated animals.”

More information is contained in Rearing Healthy Calves – how to

Antibiotics commonly used in Australia to treat calf scours.

“It’s also important your calf housing system allows you to physically separate replacement calves from sale calves and treated animals from nontreated animals.” remove, even if the feeder is thoroughly washed.”

A good way to prevent accidental contamination of sale calves is to buy separate feeding equipment for bull calves, label it accordingly and use it only for this purpose.

“Dosing and route of

with antibiotic or dosed individually with a syringe or a pill dispenser to ensure it receives the correct dose. This equipment should also be clearly labeled and used only to treat calves.

“It’s also important your calf housing system

raise calves that thrive, a guide to calf management in Australia. This manual devotes a chapter to the managing residue risks in dairy calves, based on the findings of at least 50 residue investigations. www.dairyaustralia.com. au/healthycalves.

Oz floods raise leptospirosis risk AUSTRALIAN VETERINARIANS are advising farm-

“Diseases like leptospirosis can spread through coners to protect their cattle against disease following the taminated water and can have serious consequences for livestock, including reduced reproductive performance.” recent flood crisis.

Controlling leptospirosis requires prevention. “VacAustralian Cattle Veterinarians past-president Dr Rob Bonanno says the deadly livestock disease leptospirosis cination is the safest and most cost effective way of procould threaten cattle as the bacteria can flourish in the tecting livestock against this disease, particularly during this post-flood recovery period.” moist paddocks and flooded The leptospirosis bacterium regions of NSW, Victoria and Good hygiene and use is spread through urine and body Queensland. of personal protective fluids and can survive in stagnant Farmers should also be equipment is important. water for several weeks. Infected concerned for the health of their staff, themselves and others in contact with cattle, cattle may present with fever, abortions or the birth of as leptospirosis can also spread to humans. The disease weak or stillborn calves. “[But] farmers can easily protect themselves, their staff in humans is a moderate-to-severe illness with ‘flu-like’ symptoms; it can develop into more serious conditions and their herd through the use of vaccines... which prevent cattle becoming a source of infection.” including meningitis.

Good hygiene and use of personal protective equipBonanno, who recently contracted leptospirosis, says the current moist and humid conditions are ideal for the ment is important when working around cattle, in stagnant water or in areas affected by flooding. spread of life-threatening livestock diseases.

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Dairy News May 8, 2012

32 // animal health

In-calf success pleases new focus farmers Gareth Gillat

GOOD COW condition

and delayed calving times increased the six-week incalf rate by 20% for Far North couple Alister and

Lyn and Alister Candy.

Lyn Candy.

The Candys run a 479ha, 310 cow farm 10 minutes west of Okaihau.

They increased their sixweek in-calf rate from 40% in 2010 to 63% in 20011 with the help of a DairyNZ

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put more condition onto cows; it didn’t come without cost.

Baynham says the farm’s production was hit early in the season when the cows were put on OAD to bring up body scores, but they picked up from October.

The herd’s production is currently 4.1% ahead of last season even though the management team estimate that the shift to OAD milking cost the Farm details couple up to 5000kgMS. ›› Farm location: 10 “Production isn’t as minutes west of Okaihau, Northland. good as it could have been but we’re bank›› Total area: 479ha. ing on the farm being ›› Effective area: 186ha (106ha milking platset up for next season,” form, 80ha runoff). says Baynham. ›› Herd: 320 Jersey, Jersey It appears to be Cross. paying off as the ›› Calving: spring calving. three-week in-calf rate increased too, from 33% to 54%. ment team first looked at “Increases of 20% for our cows they said they three- and six-week in-calf probably wouldn’t get rates are unheard of within into calf; we thought they a space of 12 months,” says looked all right,” says Baynham. “You’d expect Candy. “But we’re really to see a 5% increase so this happy with the results.” is huge.”

Former Far North Another thing the DairyNZ consultant and management team did to Candy focus farm project improve in-calf rates was facilitator Gareth Baynmove the mating dates ham says when they first back 10 days to October went onto the farm the 1 for the first calvers and cow condition was one of the first things they identi- October 10 for the remainfied as something needing der, with the aim to get cows to calve from July 18 to be increased.

“When we first came in onwards.

Other suggestions were March they were averaging fielded to bring up in-calf BCS 3.7 and now they are at BCS 4.2,” says Baynham. rates, including getting bulls from other farms to Condition of the anirunning bulls beside the mals was improved by herd to encourage oestroonce-a-day milking from September to October and gen in the herd. But the management team felt it the feeding of 22 tonnes was more a case of getting of meal, 65 tonnes of the cows’ body conditions palm kernel and 8 tonnes good enough. of other supplements to management team.

The couple are the latest focus farmers for DairyNZ in the Far North, running their first field day on the property on April 19.

Alistair says they initially signed as focus farmers to improve the way the farm was running; so far they are impressed with the results.

“When the manage-

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Dairy News may 8, 2012

animal health & stockfeeds // 33

Transition feeding spurs lactation success Understanding the why and how of transition feeding helps the dairy farmer to use this important animal nutrition technique, and to benefit in herd health and milk production. Animal nutrition company Rivalea Australia reports.

IN SIMPLE terms, tran-

sition feeding ensures a smooth, hassle free and healthy progression from the late stages of pregnancy to lactation, in turn helping to ensure a successful lactation.

Transition feeding provides exactly the right balance of nutrients needed by a cow in late pregnancy so she can make the ‘transition’ to lactation without difficulty or complication during calving, without loss of body condition before or after giving birth, and – very importantly – avoid milk fever and its many resultant complications, such as mastitis and grass tetany.

Bridget Kase, territory manager animal nutrition, at Rivalea Australia, explains that the three weeks prior to calving bring major change and adjustment for a dairy cow.

“In fact, some simple yet careful and timely changes in animal management, and using a well formulated complete feed... will provide the pasture results dairy farmers are looking for.”

“The foetus is growing rapidly at this stage and major shifts in hormones and metabolism occur.

These metabolic changes can be actively managed by providing optimal diet.

There are several key components to this strategy, and understanding them gives farmers the background they need to provide a cow in transition with the diet she needs.”

Manipulating dietary electrolytes with anionic salts helps calcium utilisation and reduces the risk of milk fever. This is achieved by optimising the balance of sodium, potassium and magnesium

Nutrients eaten, milk production increases DAIRY FARMERS Brad and Bridget Missen wanted to see whether their transition feeding programme affected concentrate intake post calving.

Says Brad, “Post calving, no pellets were left in the trough, which means no wastage costs [and intake of] all available nutrients.

“Plus, new heifers adjusted better to the milking ration. I used to use transition feeding as a training tool to get new heifers used to the shed, but this is no longer necessary as they were already used to pellets, aiding a smooth transition into the herd.”

Importantly, milk production increased as a result of this trial. 309 cows were tested late October 2010. They produced an average of 23.1L/ cow, with 0.82kg/cow of protein and 0.95kg/cow of fat.

The same test was done in late October 2011, this time with 302 cows. They produced an average of 27.2L/cow, with 0.93kg/cow of protein and 1.11kg/ cow of fat.

Says Bridget, “Brad achieved excellent results and is pleased with the outcomes.”

Says Brad, “Every downer cow costs me half a day. And with every three or four, you lose one.

Reducing milk fever cases from 20 to two or three is a massive saving in time and in money. Plus, subclinical milk fever is a hidden cost because it lowers production.

“The biggest thing is realising there is a problem with milk fever – not just the clinical cases but the sub-clinical cases as well – and doing something about it.”

relative to chloride and sulphate, while also maximising the phosphorous and calcium available to the animal.

Calcium pathways are also mobilised by feeding cereal hay or straw. These feeds are low in calcium and help the cow utilise her own calcium stores at calving. Increased salivation helps leave the system acidic which also helps the bones to release calcium.

The next steps involve feeding supplementary grain to help prepare the cow’s rumen for the high level of grain in the postcalving ration, as well as including by-bass protein to help with the increased demand for protein at this critical phase.

During this time it’s also vitally important to restrict access to lush pasture, as this can enhance the risk of milk fever. A springer paddock is the ideal solution during the transition period.

Says Kase, “This might all sound complicated and seem like a lot of work, but it doesn’t have to be. In fact, some simple yet care-

Bridget Kase, territory manager – animal nutrition with Rivalea Australia and Brad Missen, dairy farmer in central Gippsland, worked together during a transition feeding trial.

ful and timely changes in animal management, and using a well formulated complete feed... will provide the positive results dairy farmers are looking for.”

Brad Missen is one such dairy farmer. Close to Maffra in central Gippsland, his 320-cow farm is in the Macalister irrigation area.

Like many dairy farmers, Missen saw milk fever in his herd – 15-20 cases in 2009. These occurred with no discernible pattern.

Added to this, some cows experienced birthing problems and some had trouble adjusting to concentrate levels once back in the milking herd.

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Dairy News may 8, 2012

animal health & stockfeeds // 35

Using the internet to tackle lameness AUSTRALIAN DAIRY

farmers can now learn how to tackle livestock lameness without leaving their farm.

In an industry first, Dairy Australia and the National Centre for Dairy Education Australia (NCDEA) are next week offering an internet seminar to update farmers with information and bestpractise recommendations on lameness and maintaining dairy cattle hoof health.

The ‘webinar’ will start at noon on May 10, running for 90 minutes. Featured experts will include New Zealander Neil Chesterton speaking on farm management to prevent lameness.

Karl Burgi, US, will address issues on dairy hoof health and preventative trimming.

Jakob Malmo, Australia, will talk about treating lameness.

Dairy Australia animal welfare

manager Bridget Peachey says lameness challenges the industry and must be minimised.

“Getting the latest information

into your lameness programmes will ensure better outcomes for cattle,” Peachey says.

“Lameness affects the welfare and productivity of cows. It is imperative all farmers are on top of [managing it].”

Dairy Australia spokesman Shane Hellwege affirms the internet as a way to reach farmers and service providers.

“At the NCDEA, we know how difficult it can be for framers to leave the farm to attend relevant information sessions.

“A webinar is an interactive, real time event where you can see, hear and ask questions of presenters from your own home. This format will make it easier for farmers and service providers to access information that will benefit their businesses.”

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Transition feeding He did some research and rather than simply feed out hay to the springers as he had in the past, he introduced magnesium chloride to the water trough and fed out a half ration of crushed grain.

“This lowered the incidence of milk fever, but it was also a catalyst to aim for even better results,” Missen says.

In response, Missen, Dairy farmer Brad Missen said he felt that the 2011 transition feeding trial contributed to overall herd with Kase, developed a health and wellbeing, and therefore calving ease. Post trial protocol to ascercalving, these cows are thriving. tain whether a balanced limited access to 1-2kg of grass (dry culties in spring 2011 compared to transition feeding prothe previous year, perhaps because gramme that included Rivalea matter).

In 2011, this programme was the 2011 transition feeding trial conOptimilk pre-calving pellets would reduce the number of cases of milk altered to include 3-4kg of Opti- tributed to overall herd health and milk pre-calving pellets instead of wellbeing, and so to calving ease. fever.

“Overall we appear to have Kase says the trial’s primary the triticale.

There was no need to include a had fewer calving issues. With the objective was to reduce the number of cases of milk fever amongst all supplement, as the Optimilk pel- improved energy-to-feed ratio cows cows in, and heifers coming into, lets are a balance of anionic salts, calved more quickly and easily. the milking herd. An important sec- cereal grains, by-pass protein, ion- There was lower calf mortality. And ondary objective was to see if tran- ophores for better feed conversion that means less work for me.”

Missen feeds out the entire sition feeding contributed to fewer efficiency and organic minerals for springer ration in the evening. calving difficulties and improved dietary balance.

At spring calving in 2010 there This results in 99% of calves born concentrate intake post-calving.

The results are reported positive were five cases of milk fever in a between 5.30am and 8pm.

“I’ve done this for many years and likely to encourage other dairy herd of 200; in 2011 two cases in a and I find the [high percentage] of farmers to include this type of tran- herd of 170.

Says Missen, “We started off a calving in daylight hours gives me sition feeding.

Missen’s 2010 transition feeding reasonably low base and improved the opportunity to better observe, program included a 3-4kg ration of on it. I’m happy with the results there are fewer cross-mothering mistakes and disease control is triticale, 7-10kg of cereal hay, mag- achieved.”

He also saw fewer calving diffi- easier to manage.” nesium chloride in the trough and

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Dairy News May 8, 2012

36 // animal health & stockfeeds Within a herd, there is always a range of BCS, as each animal has different metabolism, feed intake and milk production.

BCS range vital THE RANGE of body condition scores (BCS) is as important as average BCS at calving on New Zealand dairy farms, says DairyNZ. The ideal BCS of 5.0 for mixed age cows and 5.5 for first and second calvers is a target for each individual

animal, as well as a herd target.

The cows at greatest risk of poor reproductive performance are the first and second calvers. Within a herd there is always a range of BCS, as each animal will have a slightly different metabo-

lism, intake and milk production.

The challenge, says DairyNZ, is to get the spread in BCS at calving as small as possible around the targets. Aim for at least 90% of mixed age cows being BCS 4.5-5.5 at calving.

Strategies for getting every cow close to her ideal BCS at calving include:

date. This allows for preferential feeding to get all cows to target BCS. Even if not enough feed is available to put on extra condition, creating herds is still a good idea, as it protects the younger cows from competition from the older more dominant cows. If supplement is going to be fed then feed it to the herd you want to gain the most condition

The key is to go on OAD early enough to have an impact on BCS, as milking OAD for a couple of weeks or a month before drying-off has little impact Drying-off low producing, fat cows early.

These cows put fat on their back instead of milk in your vat. When feed is short, herd milk production commonly increases by drying-off the low producing fat cows as the other more productive cows are fed better. In addition there is often an area of low quality feed on the farm where these cows can be put to maintain themselves, such as steep sidlings or gullies.

Ensure heifers are on track for weight and BCS. Check every four-six weeks that replacements are gaining enough weight and remedy any shortcomings (see DairyNZ Technical Series, Heifer Rearing pg 11). Aim to have these at BCS 5.5 when they return from grazing, as they will put little weight on – and often lose weight – while they adapt to being in the herd. Well grown heifers introduced to the mixed age cows during the dry period will compete well as milkers.

Give the first calvers more time dry than older cows. Young cows are still growing to reach their mature weight and often have lower intakes. Therefore, they are only able to put weight on slowly, and require more time to get to target condition.

Split dry herds on BCS and time until calving. If you dry off all at once then it is necessary to split the dry cows into herds based on condition and expected calving

or that needs to put it on fastest.

Staggered dry-off based on BCS and time to calving. The principle here is that every dry cow can be fed the same, but the difference is how long she is dry for. In low input systems, the dry-off decision rules work well.

In higher input systems, where dry cows are well fed on a mixture of pasture and supplement, cows at BCS 4.5 or better only require 50-60 days dry; cows at BCS 4.0 or worse need about 80-90 days dry.

Part season once-aday (OAD) milking for all or part of the herd. Cows milked OAD are less likely to milk off their back than cows milked twice-a-day, and when well fed will put more weight on during lactation. Groups of cows particularly vulnerable to not reaching BCS targets, such as first calvers and early calving cows, are ideal candidates for part season OAD milking.

The key is to go on OAD early enough to have an impact on BCS, as milking OAD for a couple of weeks or a month before drying-off has little impact.

The reduction in daily milksolids production can largely be made up by milking on for longer, as cows do not have to be dried-off as early due to BCS. OAD milking is unwise where the herd already has a high SCC, as it will increase when starting OAD. – DairyNZ

Dairy News may 8, 2012

machinery & products // 37

Cow flow, yard washing done with ease TONY HOPKINSON

KAIAWA FARM Ltd,

at Roto-rangi, near Cambridge, is nearing the end of its first season in a Herdflow dairy and is well pleased with the choice.

The Robinson family has owned the farm at least 100 years; the pres-

ent manager Jonathon is the fourth generation running the property – 145ha (eff) on land flat to rolling. It milks 490 crossbred cows at the peak. The farm is a seasonal supplier to Fonterra. Each year sees 600 wrapped bales fed out, some harvested and some bought in. Robinson feeds PKE in porta-

The rectangular yard slopes from the shed and angles left to right.

ble troughs from October to February. He plants 8ha of maize for silage and buys in another 6ha. All is stored on the home farm and is fed in the paddock mainly during autumn.

“We formerly had cow flow issues in the old herringbone shed and it could not be altered,” Robinson says.

“I especially liked the Herdflow gate system so after some deep and meaningfuls we decided [two years ago] to build a new shed and yard.”

The dairy is a 54-bail rotary with a Milfos milking plant including automatic cup removers and teat spraying on the platform. All cows have EID

Jonathon Robinson, fourth generation managing farm.

tagging linked to a Protrack drafting system, and the milking plant has automatic washing.

“Cows being beasts of habit took a little more effort to convert to the rotary but the heifers were a lot easier and the shed has been operated by one man since October.”

Robinson likes the Herdflow gate and the built-in yard washing. The rectangular yard (60m x 12m) slopes from the shed and angles left to right, directing all material to one drainage point.

The gate is raised at

the start of milking, all the cows enter, then it is lowered, stopping at cow back height to allow them to move away. It can either pulse forward in steps 1-10m with auto stopping, advance under manual control, or be programmed to advance when each 10th cow enters the platform.

It has two-speed forward and reverse so when the gate touches a cow it backs off 1m until another command is given. An audible alarm sounds when the gate is moving.

As the gate moves for-

ward a sprinkler on the back wets the yard. When returning, a Dung Buster is lowered on the back of the gate, breaking the droppings, and a series of jets hose all the material to the right and down the yard.

This pumps 400L/min.

“The washdown is terrific as most milkings we only need one run back and the yard is almost spotless.”

If needed the gate can be brought forward and started again anywhere on the yard.

Tel. 07 343 7929 www.herdflow.com

Dairy News May 8, 2012

38 // machinery & products

New effluent storage tank “We had been considering upgrading our effluent system for a while on one farm which is 50%

TONY HOPKINSON

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an above-ground Kliptank,” said Sharon.

Installation required placing a 600mm deep,

➧

regional councils and dairy companies on dairy shed effluent is that holding capacity must be sufficient to ensure that, during wet weather, effluent spraying can be avoided, so minimising risk of ponding and runoff to waterways.

Councils’ and Fonterra’s ‘effluent storage calculator’ allows for cow numbers, soil types and weather patterns, to show farmers what storage capacity they need.

Graeme ‘Grimmy’ and Sharon Martin, who own three farms within 10km of Morrinsville, were facing, on one farm, the limit of its effluent storage capacity with effluent being pumped directly to pasture.

peat and 50% Tauhei clay, and after discussion with the Fonterra sustainability team we decided to install

truck exerts 25psi, so there is no worry about the Kliptank sinking.”

Sharon estimates it has 60 days capacity. The tank was erected in two days; the liner installed in one.

Martins have upgraded their entire effluent handling system. Now the

Kliptank’s North Island sales manager David Parker told Dairy News the tank is 385m2 in area and weighs 655t when full.

“This exerts ground pressure of 2.4psi. For comparison, a 90kg person with a size-10 shoe exerts 11psi ground pressure; a utility

level pad of dry peat on top of the ground, compacting it with a tractor and erecting the Kliptank directly on this. The tank, situated 45m from the dairy, holds 655,330L in a liner 75 microns thick.

It measures 2m high x 22m diameter.

➧ ➧ Starting from scratch: Kliptank construction cycle on the Martin farm.

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Dairy News may 8, 2012

machinery & products // 39

ticks all the boxes material passes from the yard through a stone trap to a 15000L holding tank.

If an emergency prevents pumping the tank can hold effluent from two milkings.

It has a 3.7kW pump with float switch, and a 1.1kW stirrer. The stirrer starts two minutes before the pump, emptying the sump daily to the Kliptank. Covering all eventualities, if this holding tank overflows the material will be directed to another sump for pumping direct to the Kliptank.

The storage tank has a stirrer on a floating pontoon operated by a manual switch. The outlet is at the bottom of the tank.

A Rovatti 15hp pump shifts the effluent around the farm via three lines and a travelling irrigator.

The lines have snap couplings.

Sharon reckons running a 2 x 140-cow split herd has lessened effluent on the yard. “With 140

head, 40 are immediately in the shed and the rest are only on the yard for a short time.”

The Martins acknowledge the whole

system must be well managed, with the correct procedures in place for spraying at the correct time.

“We will operate the pumps and irrigator manually and when we see fine weather ahead we’ll do as many paddocks as possible, aiming to have no ponding or run-off,” says Grimmy.

Graeme ‘Grimmy’ and Sharon Martin.

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Dairy News May 8, 2012

40 // machinery & products

Lift your game on milking GEA FARM

Technologies has developed a flexible lifting floor system for group milking parlours and milking carousels.

The company says this is an important component to extend its EGO (the ergonomic pit) floor product range. It says despite an improved milking technique and lower physical strain, they are observing an increasing number of musculoskeletal disorders.

“Even in modern milking parlours, we see repeated movements of the body, static positions, stretched or bend body postures in conjunction with a higher pace of work and longer milk-

ing times. The EGO lifting floor product series

by GEA Farm Technologies enables an ergonomic position of the milker during all works in the milking parlour.”

The EGO lifting floor is available in different versions for group milking parlours, internal and external rotaries. The working area may be set to the desired level by means of a push button.

A huge lifting height up to 380mm enables continuous matching of the body height to the pit depth.

The centrally raised floor with 3% slope ensures additional relief of the muscles in group milking parlours.

For group milking par-

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12 persons when stationary and six persons during raising and lowering, is

also adapted for larger milking parlours.

The EGO product

series is hot-dip galvanised or available in stainless steel. There are hardly any

wear parts since the lifting floor is operated without chains and ropes.

Feedpads with roof

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• Reduce the risk of accidently failing to comply with effluent application consents

lours a version without height adjustment is also available. This spring floor provides the usual comfortable walkways and standing positions and may be retrofitted with a height adjustment later on.

GEA Farm Technologies develops lifting floors according to individual dimension sheets – for new milking parlours as well as for retrofitting of existing systems. Installation in subway systems is also possible.

The modular system consisting of support frame, expansion frame, scissors system and plastic grating enables a fast and simple assembly. The load bearing capacity, of up to

This has been improved on with a new roof design

by HerdHomes which can now span up to 16m or be looped together for larger widths.

By adding a HerdHomes roof to a standard concrete feed pad, effluent is reduced markedly, simply by keeping rain off the pad. Effluent is then scraped to a covered bin at the end of the pad – this can be 75% smaller than a pond – and stored risk-free

until conditions suit application on land.

This dry effluent product is excellent for crops and can be used as the sole fertiliser for maize to achieve yields of at least 25 tonnes/ha.

The company says covering a feedpad can also reduce animal feed requirements and lead to production increases of at least 10%, by sheltering stock from cold and wet in winter and heat in

HerdHomes team demonstrating the strength of the new roof truss.

summer (with the addition of shade cloth).

“There is a large range of low cost roofs that can add value to any existing standoffs or feedpads,”

the company says. “These should be considered seriously for any new feedpads going onto a farm.”

Tel. 07 857 0526 zoe@herdhomes.co.nz

Dairy News may 8, 2012

machinery & products // 41

Serving flexible and fresh feed LELY HAS launched a new automated feeding system.

The Lely Vector is the next major step in automating working methods within dairy farming and as such, it matches the impact of the milking robot, the company says.

The Lely Vector makes sure that correct rations are fed to cows consistently and on time, allowing cattle farmers to achieve efficient and high-grade milk and beef production. This new system has been developed in close cooperation with Lely’s customers.

Lely says the system ensures a constant supply of feed in a flexible manner, 24 hours a day, seven days a week.

The process is fully automated and ensures optimal flexibility for cattle farmers using the system.

The Lely Vector enables cattle farmers to define and adjust their feeding strategy for different groups of animals, it says.

“This results in improved animal health, improved feed efficiency resulting in optimal milk and beef production.

“The feed is stored in the feed kitchen; an open area without any obstacles, in which all kinds of feed can be stored, each in its own location.

Depending upon the size of the feed kitchen, feed can even be stored for a three-day period. This means that that there is sufficient feed for more than a weekend, so that cattle farmers and their families can enjoy more free time.”

A grabber moves over the kitchen to select the feed, and load it in onto the mixing and feeding robot.

The grabLely ber scans the Vector part of the storage area that has been designated for a specific feed and collects the it from the highest point.

A concentrates dispenser monitors the quantities, which can be established and measured with the utmost accuracy. In addition, minor quantities of minerals and additives can be mixed with the concentrates. A user interface with touch screen is used to set up the feeding plan and the feed kitchen. It is also possible to programme rations and view a variety of reports.

The feed level sensor is a technological tour de force.

The robot knows exactly how much feed there is at the gate and it determines when and where it is required, without any intervention from the cattle farmer required.

Because there is an ongoing supply of feed, it is not necessary to measure large doses, and therefore the feed is always fresh.

The company says the Lely Vector saves money, labour, time and energy.

“It uses much less energy than many other feeding systems and is therefore less expensive to operate. Test farms have shown that labour savings are huge when feeding two or more different rations. The Lely Vector also saves dairy farmers a lot of hassle. Filling the feed kitchen is all that remains for them to do.

“Furthermore, thanks to the electric control system, the Lely Vector is noiseless and environmentally-friendly, and does not disturb either man or animal.”

For Lely the Lely Vector is as groundbreaking as the introduction of the first Lely Astronaut milking robot.

To safeguard a professional roll-out and development of the Lely Centre distribution network, Lely has opted for

a roll-out in phases over different countries.

The first countries include the Netherlands and Scandinavia where Lely has been testing this concept, and France.

For other countries, such as Germany, Australia and New Zealand no offers will be made yet, not even for deliveries in the future, it says.

The Lely Vector ensures correct rations are fed to cows.

Dairy News May 8, 2012

42 // motoring

Ideal for our rural roads A HIGHER-riding Subaru

Legacy, launched recently at the Beijing International Automotive Exhibition, will be ideal for New Zealand rural roads, says the company’s managing director, Wallis Dumper.

The 2013 model rides 60mm higher than predecessors. And it has a new grille, front bumpers and sporty sills with chrometype highlights, and exclusive 18-inch wheels.

“This new Legacy variant will be ideal for kiwi rural roads,” said Dumper. “We have a huge percentage of unsealed surfaces and the extra ride height adds to its capability in regional and rural areas.”

Interior detail changes

include black metal-type centre panel, centre console and steering switch panel, the electronic park brake and SI-Drive switches are relocated for easier use.

“Another key aspect of this new Legacy variant is that the hip point is 70 mm higher than the current sedan, making entry and exit easier, which should really suit some of those traditional Calais and Fairmont drivers you see climbing out of their ‘gravel-rashed’ vehicles in most rural communities.

“Only three markets in the world – Australia, China and New Zealand – are getting this new variant.

“A lot of our rural roads are

unsealed, about a third in fact.

Obviously our all-wheel-drive Legacy is a great choice for these conditions and the new variant with its extra ground clearance makes an even stronger case, plus it provides a suitable environment for the farming executive of today.

“We see its main market to be in rural areas, but it will also be ideal for those with tricky driveways, those who travel with trailers, boats and caravans, or just those who want a sedan where you can sit a bit higher.

“The new variant will initially be available in New Zealand with a 3.6L engine with potential for the smaller 2.5-litre engine later.”

The new Subaru Legacy.

Jaguar gets graffitied JAGUAR DISPLAYED an XKR coupe

with a difference in New York recently.

The XKR coupe with a unique paint scheme came courtesy of renowned local graffiti artist Kaves at the invita-

tion of Jaguar.

Ian Callum, Jaguar’s director of design, who had earlier visited Kave’s studio to add his own finishing touch

to the XKR said: “I love it. It’s a fascinating

contrast of beauty and drama. There’s a real edginess to it that we can enjoy at Jaguar.”

In addition to painting the XKR, Kaves – a graffiti artist since the age

An XKR coupe tagged in New York.

of ten – used his talents to produce a series of works for Jaguar celebrating its sporting bloodline of C-, D- and E-Type, each being represented on a canvas displayed at the function.

During the evening, Kaves then fin-

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ished a fourth canvas based on the F-Type name to complete the series.

Asked about his work with Jaguar, Kaves said: “I was enlisted to come up with something exciting and spontaneous. I went back to my roots and picked up the spray cans.

“Seeing the car itself and its great lines, it inspired me.”

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Milk is money, more to the point — it’s your money. That’s why Herd Testing is so important, without the data from regular scheduled herd tests you can’t get the most out of MINDA Milk. It means you can’t get the most out of your herd, you can’t get the most out of your farm, and ultimately, you don’t get the maximum benefit from all your hard work.

Arrange your herd test by calling your local Customer Relationship Manager, and access MINDA Milk at MINDA Home.

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Working. Together. New Zealand.

Understanding the feed requirements of your herd this winter is paramount to ensure peak performance into the productive spring months.

It is essential that following dry off, cows have access to sufficient high quality feed to support maintenance, pregnancy and liveweight gain to achieve a Body Condition Score (BCS) of 5 by the start of calving.

Being able to have quality conversations around issues like these and understanding daily herd ME requirements, and the effects if poorer quality feed is being used, is vital to your farming system.

Maintenance needs are related to liveweight (0.55 MJ ME/kg LW 0.75), with heavier cows needing more feed.

All across New Zealand, everyday, the PGG Wrightson team spend time with farmers talking about these important issues. If you are serious about increasing farm productivity then contact us. Weâ&#x20AC;&#x2122;ll work with you to provide quality animal health, forage and agronomic solutions to fit your farm system and ensure farm profitability and productivity are of top priority.

Offering sufficient feed to hit BCS targets early in the winter period is the priority. BCS targets must be achieved before the nutritional requirements of pregnancy take priority over liveweight gain in late pregnancy. The energy requirements for pregnancy increases rapidly later into pregnancy and will more than double in the last 6 weeks of pregnancy.

www.pggwrightson.co.nz

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