Dairy News Australia October 2011 by Rural News Group

Succession planning: Avoiding the pitfalls Pages 12-13 Krone improves efficiency

SA Business of the Year Page 25

Page 33

issue 19: october 2011

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DAIRY NEWS AUSTRALIA // october 2011

This issue Issue 19: october 2011 Gippsland farmer Steve Ronalds has cut his annual power bill by $3200 with his Green Cleaning machine.

The Charles family won the Tasmanian Dairy Business of the Year award.

Gippsland farmer Cam Delbridge continues to save money with his Muck Runner.

News ��3-15 Opinion ��16-17 Agribusiness ��18-19 Management ��20-24 Animal Health ��25-29 Machinery & Products ��30-33 motoring ��34

NEWS Bega seals Tatura Milk deal Bega Cheese will complete a merger with Tatura Milk Industries (TMI) by the end of the year. Bega bought 70% of TMI in 2007 for $38.8 million and will purchase the remaining 30% for $42.7 million. The southern NSW-based Bega bought the northern Victorian company in 2007 during a time of losses and prolonged drought. Bega Cheese executive chairman Barry Irvin recently told ABC Radio that TMI has turned into a profitable growth area of the Bega group. TMI contributed $15.6m to Bega’s full-year net profit of $21.7m last financial year. “TMI gives us a good balance and expands our not only our geographical footprint within Australia, but also our market reach internationally,” he said. “TMI is famous for nutritional infant formulas, growing up milk powders, and cream cheese.” A meeting of Tatura shareholders is scheduled for December, and the deal is expected to be completed before the end of the year. Irvin outlined the proposed deal to the Australian Stock Exchange this month. In a statement Irvin said the Merger Implementation Agreement had been signed and would be subject to approval by TMI shareholders and a court later this year. “The merger will involve the issue of two Bega Cheese shares in exchange for each Tatura Milk redeemable preference share,” he wrote. “This will result in the issue of 24.1 million new Bega Cheese shares to approximately 320 current Tatura Milk RP shareholders. Once issued, these shares will rank equally with existing Bega Cheese shares including entitlements to dividends.”

Bega Cheese executive chairman Barry Irvin expects the deal to buy the remaining shares of Tatura Milk Industries to be finalised by the end of the year.

approved by shareholders in order to enable the merger to proceed,” he wrote. He said the scheme booklet would be sent to shareholders in The merger will involve the mid-November for a issue of two Bega cheese meeting to be held in mid-December. shares in exchange for each It’s the second Tatura Milk redeemable major announcement in less than a month preference share. from Bega, who signed a contract with Coles last deputy chairman Rick Cross said month to supply 19,000 tonnes shareholders would vote on the of cheese to Coles to fill its entire plan at a formal meeting. range of Coles branded cheese “Changes to Tatura Milk’s products. constitution will also need to be Two TMI supplier directors will join the Bega Cheese board following the merger. In a letter to shareholders, TMI

That agreement will see Bega increase its milk demand by 70 million litres. This will be sourced from existing and new suppliers in NSW and Victoria. Bega will manufacture and package natural cheddar, processed cheddar and mozzarella cheese products for Coles under a five year contract. The cheese had previously been sourced from New Zealand. This Coles deal will represent about 10% of the Bega Cheese business and Bega plans to upgrade its Coburg plant, which it purchased in 2008, to meet the contract requirements.

DAIRY NEWS AUSTRALIA // october 2011

news

Good seasons, poor economies hurt local prices The faltering US and EU economies and favourable milk production conditions across the world are placing downward pressure on Australian farmgate prices. No Australian processors have announced price stepups since June. Dairy Australia has maintained its $5.10 $5.50kg milk solids (MS) forecast range for southern full year prices in last month’s Situation & Outlook update but its expectations are now toward the lower end of that range. DA industry analyst Damian Richardson has told Dairy News Australia there are three main rea-

Damian Richardson

sons why prices are softening. “The US and EU economies are struggling; the seasonal reduction in China imports; and increasing supplies from US, EU, NZ and Argentina,” Richardson said. “Perhaps the biggest risk

to commodity prices is lower dairy consumption in the US and EU. “The US and Europe are experiencing dampened domestic demand at a time of strong growth in milk production. “Both economies are stagnating into potential economic recessions, and as a result, consumer demand is softening. US consumers look to be shifting away from fluid milk. “If demand weakens in the US and Europe, these conditions are likely to result in surplus dairy product and a downward affect on dairy commodity prices.” Richardson said these

Increased international supply, particularly from the US, EU, New Zealand and Argentina, could negatively impact local farmgate prices. Photo: Clancy Burn

factors are not supporting a positive environment for strong farm-gate price growth in Australia and farmers should keep an eye on these markets to track where commodity prices are headed. He said China remains the primary driver behind global whole milk powder

markets but that imports have been light over the last few months. Reduced volumes have cozme off a very high demand period in prior months and reflect a seasonal slowdown, he said. The improving supply outlook is also acting as a burden on international

prices with milk production in the US, EU, New Zealand and Argentina increased. After a tough season last year, New Zealand milk production has increased 12.2% on the same period last year. “Output is expected to remain well above a year ago with solid growth in milk

flows for the balance of the season,” Richardson said. Milk production in Argentina has also been very strong, increasing by 15.9% increase compared to the same period of 2010. The forecast for total 2011 is a rise of around 10%. World changes soften farmgate forecast, p19

Global prices drift but still historically high While global dairy commodity prices continue to drift lower, there are positives in the data, say analysts. The first Fonterra GlobalDairyTrade auction of the month saw average prices fall for an eighth consecutive time. The average price fell 1.6% compared to the sale held a fortnight earlier. The average winning price fell to $US3449 ($A3631) a metric tonne, the lowest since August last year, when prices reached $US3080 a tonne. Whole milk powder fell 0.7% to $US3309/t in the latest sale. Skim milk powder dropped 0.3% to $US3193/t. Anhydrous milk fat sank 3.5% to $US3703/t and milk protein concentrate rose 0.5% to $US6713/t.

Rennet casein fell 7.2% to $US8181/t, butter milk powder rose 3.2% to $US3075/t and cheddar fell 4.9% to $US3800/t. However, BNZ economist Doug Steel said prices are still about 20% higher than the 10 year average. While the GDT result was “more of the same” and a “continued drift lower” it was quite encouraging it hadn’t dropped more given the pressures on the market, he said. Those include a strong start to the NZ season, a 2.1% jump in America’s August production year on year – higher than expected – and high export volumes from both the EU and US. Low stocks relative to consumption is

the reason dairy commodity prices are “by and large holding pretty firm, as are grains too,” despite the supply side pressure and demand concerns due to the financial fears weighing on the US and EU economies.

Dairy commodity prices are drifting but still about 20% higher than the 10 year average. Steel notes the US Department of Agriculture is forecasting a fall in production in 2012 due to higher feed costs. “That’s probably the main reason why the long-term contracts (March-May

2012) are at a premium to the shortterm.” However, Steel said given the world financial market worries, he wouldn’t put “a great degree of certainty on anything at present.” Rabobank’s Dairy Quarterly report, released mid-September, spells out the uncertainty, and paints a bearish picture of prices. “As we enter Q4 (October-December) market pricing will be heavily influenced by the size of the surpluses generated by the EU and US, the strength of the Southern Hemisphere spring peak, and buying activity by key importers, especially China and Russia.

“Balancing the market will likely prove challenging without further price falls.” China is expected to resume import buying “with vigour” but while Russia also faces supply shortages its demand is likely to be down on a year previously. “Solid buying” from the Middle East, North Africa, South East Asia and Brazil is expected. “Rabobank expects key importers to soak up almost record volumes of production in Q4 but pushing above the levels set 12 months prior appears to be beyond their capacity. And that, for sellers, is likely to be a problem.” The report says outlook hinges on China’s demand. 50 Years of excellence

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National herd, milk production rise Declining cull cow and live export sales point to a rebuilding of both the national herd and annual milk production. Latest figures show a gradual improvement in milk prices last financial year and a similar price predicted this financial year have encouraged farmers to stop culling and get milking. The recent Dairy Australia National Dairy Farmer Survey – where 340 of the 1000 dairy farmers surveyed in the February-March survey were reinterviewed in late August – showed cull cow sales were down 7% compared to the same time last year. This is down 16% on the 8-year average as farmers retained cattle where

possible to take advantage of relatively strong milk prices and improved seasonal conditions around most of the country. Live dairy cattle exports eased 9% to 73,800 in the 12 months to June 2011. 60% of those surveyed anticipate their herd numbers to remain the same as predicted in March, 25% expect a smaller herd size while 14% intend to increase their herd. Australian Bureau of Statistics herd size data also indicates higher numbers of heifers at June last year, suggesting some herd rebuilding may occur this year. Dairy Livestock Services auctioneer Brian Leslie said demand for

replacements has increased since August but farmers are sticking to presale budgets. “I see a strong demand for cows around $2000 but once the price moves to $3000 it changes,” Leslie said. “People want to buy cows but they still have a budget. Ordinary cows are making more than they should compared to top cows.” Leslie said good chopper cow prices are enabling farmers to sell two cull cows for a good quality, younger replacement. “In August/September, once it became clear there would be water in northern Victoria and the paddocks in Gippsland and the South West dried

out, and people could assess their feed, demand increased. “A lot of farmers still have a lot of silage from last year too, which helps their cost of production. If you have feed, you can afford to get some extra cows to help fill the vats.” Australia’s milk production finished 1% higher at 9.1 billion litres at the end of the season – with the last five months in positive territory. DA’s current forecast milk production remains on track with growth of around 1.5% to 9.25 billion litres expected for the current financial year. The greatest challenges farmers identified over the next six months included seasonal conditions

Brian Leslie

(nominated by 20% of respondents), milk price (18%) and cost of inputs including electricity and fuel (10%). Expectations for growth have changed little since the earlier survey – at least nationally. By 2013/14, 47% of resurveyed farmers expect herd production will be greater than 2010/11, slightly more than they had forecast in February-March (44%). However, there were more significant regional shifts with fewer farmers expecting to increase production in western Victoria and Western Australia than previously, while more farmers were contemplating growth in southeast Queensland and South Australia.

Holsteins make $7200 as Glenmar disperses Holsteins sold to $7200 and averaged $2777 at Glenmar Holsteins ‘Changing of the Guard’ dispersal sale, near Mount Gambier, SA, late last month. The Youngs sold 165 registered Holstein and 20 commercial cows and heifers as well as nine bulls, to a top of $7200, and average of $2777. The top price Holstein, Glenmar Tallent Rosebloom, was rejoined to Ginary Jack and was by a Tallent dam out of Durham. Buyers were repeat clients Chris and Mary Gleeson, Elmbanks stud, Koroit, Victoria. At the time of sale, the cow was producing 54.5 litres of milk, with a cell count of 52 and a class of 90. “We came back to

support Adrian and Sue Young after purchasing quality cows in the past that have gone on to do extremely well,” Chris Gleeson said. “She was our only purchase for the day and we are extremely happy to come away with such a top Holstein.” Other top sales included $6300 for Glenmar Durham Rosebloom, also rejoined to Ginary Jack, producing 42.9 litres with a cell count of 67, and $5700 for the rejoined Tiger Farms Tallent Ding. The Glenmar herd consistently averages over 9000 litres, with many lots sold producing over 11,000 and 12,000 litres annually. Calving dates ranged from mid-to-late October, through to April next year. The commercial lots attracted an average of $2091

and the bulls averaged $2533 for an overall total sale reaching $488,700. Auctioneer Brian Lesley, Dairy Livestock Services, said the sale was “very strong” and “an indication of where the market is currently at”. “Over the years, Glenmar has selected several outstanding females and

males from the successful Donach herd of Keith Gordon, these bloodlines set a wonderful foundation and have bred extremely well,” Lesley said. Attributing the sale to promising seasonal conditions, he said it was well supported by local, as well as Gippsland, northern Victorian buyers.

Glenmar stud principals Sue and Adrian Young with Chris Gleeson, Elmbanks Stud, Koroit, Victoria, who paid top price of $7200 at the Glenmar dispersal sale.

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DAIRY NEWS AUSTRALIA // october 2011

news: labour shortage

Brothers forced to plan transition Rick Bayne With more than 20 grandchildren spread across four dairy farms owned by the Place brothers around Camperdown, Victoria, you’d think there would be a few aspiring farmers ready to take over the reins. Apparently not. The offspring have other careers in mind, leaving the brothers to ponder what will happen to their farms when it’s time to move on. Terry Place, along with his brothers Ray, Glen, Chris, Stephen and Peter, raised the issue of succession planning when they took part in WestVic Dairy’s `kitchen forum’ program. Between them the six brothers own four dairy farms in the area, continuing a family tradition that reaches back to their grandfather who was a soldier settler in the area. WestVic Dairy’s new investment plan for 2011-12 has taken up the succession planning issue, with a `managing transitions’ program set to be rolled out using farmer levy funds early in 2012. Managing transitions is an extension and research project to assist farm businesses to plan and move from one business phase to another, such as; from self operation to `employing’ a share farmer, from leasing to farm ownership, or transferring between generations. Terry Place said he was pleased that the ageing population of farmers and the need for transition planning was being addressed. “Everyone is in the same boat when it comes to planning for the future,” he said. “It’s getting harder and harder for a young bloke to get started in farming. The costs are becoming prohibitive and they can’t get the backing. It’s not just the cost of the land; it’s also the infrastructure and the cattle and the price of

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The six Place brothers are looking at transition planning with none of their grandchildren likely to take up farming.

labour to give you a hand. “It’s a matter of trying to build up some capital and then finding a way to ease your way into the industry, maybe through share farming or similar programs. “The average age of farmers around here is over 50 so it’s something we need to think about.” The Place brothers fit into this category. “Between the Place family we have 34 grandchildren but at this stage not one of them wants to go on the farm.” Terry himself has four children; two are nurses, one an electrician and one a builder. He milks 380 cows on his Pomborneit farm. Between them the brothers milk more than 1500 cows within 10 kilometres of each other.

“No one wants to milk cows anymore,” he lamented. “People look back and see how hard the previous generation worked. It’s not like that today but they want to go off to uni or into trades.” “It’s difficult for a lot of farmers to find people.” Terry also supports another WestVic Dairy initiative In2Dairy, which aims to attract more trained staff into the industry. “Anything that helps grow a bit of interest and get more people with some training has got to be good.” Terry plays his part in trying to advance the dairy industry as a participant in the Cows Create Careers project. “I have been involved with taking calves into local schools for the past four years. It’s a good start to get them interested in dairying.” “I think that any project which introduces young people to the industry should be encouraged.” And Terry says farming is a good career. “It hasn’t been a bad life for me. Like most farmers I love being my own boss and in charge of my own destiny.” Courtesy: WestVic Dairy

Dig deep to address real issues The Government and the dairy industry must look at deep-seated issues in the agricultural sector and regional communities and work together to address them to attract future employees. Farm viability, attractive working conditions on farm and vibrant, supported communities are essential if dairy is to win its fair share of new workers. In the industry’s official submission to the Victorian parliamentary inquiry into attracting and retaining young labour, Dairy Industry People Development Chair Lynne Kosky said all strategies must be based on deep-seated issues. “Farm viability is critical to attracting young people,” the submission said. “Dairy farms will only be attractive places for young people if they are able to achieve an acceptable standard of living, invest to counter the declining terms of trade, and invest to match broader community increases in earning.” The submission said working

conditions on dairy farms must match those of other jobs on offer, or young people who start in dairy will not stay. “Flexibility (in work hours and timing), personal growth and development (including career paths) and enjoyable work environments are reported as key conditions that employees valued alongside pay rates that are competitive for farming.” Vibrant communities are an important factor in retaining a rural workforce as opportunities for partners and family members often make or break the decision to stay. “Access to hospitals, recreation facilities, casual and permanent employment off farm are all needed. “An adequate dairy service sector is also important. This is an interdependent relationship - there must be a sufficient number of farms in a district to sustain a viable, wellserviced dairying community.” Swan Hill agronomist Rob Sonogan told the hearing in Swan Hill that an agricultural pathway through the education system was

necessary. “To give agriculture the importance it deserves it definitely needs a more positive image, and one of the most effective ways would be there.” Sonogan said many ageing farmers have asked him in recent years whether he knew of any young person keen to farm their land. “I really feel there exists a role for some co-ordinating body to “pairup” such situations and this opportunity could greatly assist those younger ones that want to farm but see the initial cost as too great an obstacle.” Sonogan said young progressive farmers should be paid to promote the image of farming. “They are soon over-used and quickly drop away. The main reason for this is that no-one is prepared to pay them what they are really worth and while they want to assist promoting farming, their business suffers and so do their finances. Consultants are often paid $120/ hour for their time in these situations.”

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DAIRY NEWS AUSTRALIA // october 2011

news: labour shortage

Gippsland farms create 340 new jobs GippsDairy executive officer Dr Danielle Auldist says all evidence points to a substantial problem in Gippsland.

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Farmers have also Gippsland dairy farms asked for assistance in created 340 new positions last financial year. The real knowing how to recruit people and then manage problem was filling them. them effectively. They It’s a story repeated want a central register for across the country. Many employers and employees farmers find it hard to and share farmer or lessee attract and also retain opportunities. employees, from farm Auldist believes the assistants to managers, industry must create the stifling growth of the individual business and the right conditions to attract workers and retain them on national industry. the farms. A Victorian bipartisan “Good employers parliamentary inquiry into farm employment visited Gippsland dairy farms last month and heard Farmers want help in submissions recruiting people and from the region’s stakeholders. managing them. Gippsland produces 1/3 of Victoria’s milk and 23% of the nation’s develop their staff and milk. The 2.1 billion litres give them every reason of milk produced by its 1700 dairy farms in 2010/11 to become long term and highly valued employees,” is valued at more than Auldist said. $840 million at the farm GippsDairy has gate, and over $1.2 billion developed a project, after processing, making based on discussions with it the largest agricultural hundreds of farmers, that commodity in Gippsland. it hopes will find long term GippsDairy executive answers to the employment officer Dr Danielle Auldist told the inquiry demand for problem. The project, which is employees on Gippsland being supported by Dairy dairy farms is currently Australia aims to: outstripping supply. • Create a stream of “All the evidence points replacement milkers that to a substantial problem in can address immediate Gippsland,” she said. problems and late em“The number of dairy ployed full-time by local farms wishing to employ farmers. people increased from 57% • Support farmers in being to almost 70% in the three good employers by use years to 2010, with one in of employment tools five dairy farms planning and attendance at courses. • Supply a supportFarms wanting ed job advertising employees rose from process using the GippsDairy web 57% to 70% in three site and promotion years. in the local media. • Raise awareness of career pathways in the dairy industry by to hire more staff in the building relationships past financial year. with schools to promote “At the same time, the industry as a career research shows the option. strongest dairying districts • Boost training in dairy in Gippsland have lower farming systems by unemployment rates than linking interested people the rest of Gippsland, with with appropriate trainstrong competition in ing options through the job market from the National Centre of Dairy construction industry.” Education Australia. Research conducted over Auldist said the project several years has revealed that more dairy operations has been developed this year and now is a perfect were looking to employ workers, but there were not time to collaborate with the State Government to always enough employees implement it. to fill positions.

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DAIRY NEWS AUSTRALIA // october 2011

NEWS: Milk Wars

Cheap milk unsustainable: Parmalat A senior Parmalat executive says milk sold for $1/ litre is not sustainable in the long-term. Parmalat supply chain manager Vince Houlihan told the Queensland Dairyfarmers Organisation conference last month that Coles had deliberately used milk in its “Down, Down” discounted products advertising campaign because it would appeal to customers. “They discounted 6000 products, the one they focussed on was milk,” Houlihan told the audience

of 200 farmers. “Milk matters. They picked on it because it matters. “They had to single it out if they wanted to win the battle. Without milk, people will not go to the supermarket.” Parmalat owns the Pauls brand of drinking milk, which has lost market share since Coles and Woolworths slashed their house brand milk prices to $1/l in January. Beaudesert farmer Peter Biscoff told the conference

“Coles discounted 6000 products, the one they focussed on was milk. Wihout milk, people will not go to the supermarket.”

Parmalat supply chain manager Vince Houlihan

that supermarket discounting will see the demise of the Queensland fresh milk industry if it is allowed to continue. “With the price signals we’re getting, there is no confidence in future investment. “Coles say they are concerned about food miles, if

we let this continue, they can fire up more trucks as more milk will be needed from a lot further afield.” Greg McNamara, chairman of northern NSW-based co-operative Norco, said Coles will not achieve its goal of lifting its Queensland milk supplies by 100m litres by cutting prices. McNamara said it needed to work with the Queensland industry while it was still here. “That $1 a litre devalues us, it is a lack of recognition in what we do,” McNamara said. “Farming based skills are learned, they are passed down through the

generations. Young Farmer Groups want to be told they’re doing a good job. “Look at the pork industry. Retailers are now saying we need to restart the pork industry. Do you know how hard it is to do that once it’s gone?” McNamara said a sustainable dairy industry in Queensland and northern NSW requires on-farm investment; processor investment; research, development and extension; a long-term commitment from retailers to create a sustainable industry; and strong leadership. McNamara said processors must invest in the last litre of milk they receive. Lion, formerly National Foods, now pays its suppliers a Tier 1 price for milk it has a market for, and a lower Tier 2 price, which is effectively cost price and shipped on.

QDO annual conference

Andrew Burnett, Gympie; Ken and Susan Rough, Kenilworth; Stephen Siebenhausen, Pittsworth.

Julie and Errol Gerber, Lockyer Valley; Adrian Peake, QDO CEO.

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DAIRY NEWS AUSTRALIA // october 2011

NEWS: Milk Wars

Durkan sticks to script in Qld Coles merchandise director John Durkan stuck to the company line in front of a hostile crowd at the Queensland Dairyfarmers’ Organisation annual conference last month, stating that his company was committed to supporting the dairy industry. Two hundred farmers filled the room, waving placards reading “A fair price for milk”. It was the first time they had the opportunity to question Coles management about its decision to drop its generic milk price to $1/litre on Australia Day. Durkan took to the stage to the backdrop of the 1980s hit song, The Only Way Is Up. A large backdrop of the infamous Coles “Down, Down” logo (with the big red hand) was placed behind him. Durkan was defiant, opening his address by saying “it’s been a tough year for us as well”, in reference to flooding of some Coles stores in Queensland in January. Coles sells 341 million litres of milk products in Queensland, including 100m litres of drinking milk. “We have to ship in some milk from interstate. We would love to do it all here,” he said. He said the decision to cut prices on 6000 of their items in store was to win the trust of customers who said they did not trust supermarkets to give good value. Durkan said Coles paid its contracted processors more money before it dropped the price of retail milk in its stores. “One of the largest increases we gave was in Queensland. More money has gone back into the industry from our perspective in terms of milk.” In closing his presentation Durkan said: “We are committed to supporting the dairy industry.” Harrisville farmer Paul Roderick took Durkan to task when questions were taken from the floor.

“I think you need to acknowledge that there has been some affect, that it’s been a direct result of that discounted milk,” Roderick said. “We’ve seen a shift from branded sales into the private label and with a cheque that’s linked to branded milk sales then that’s had an effect and I think that’s a point that you need to take on board. “I want to put that point across whether Coles is in a position to acknowledge that.” Durkan said from Coles’ figures, its decision to cut prices shouldn’t have affected farmers that supply milk to its contracted processors. “I’m not trying to avoid (the question), I just don’t have that information.”

Roderick responded: “Well if you weren’t aware, you are now.” Since the Coles decision and the response from Woolworths and other supermarkets to drop their milk prices, Australian Dairy Farmers say retail milk value has lost $77m, while the QDO says for every two litres of supermarket branded milk sold at $1/l, 22-28c is stripped from farm gate returns. Gympie farmer Andrew Burnett described Durkan’s performance as “well rehearsed”. “He had done his homework. He danced around the hard points like supply and demand for the Queensland industry and the emotional points about how vulnerable the supply chain is. “Delegates didn’t take much substance from his presentation.” Burnett said his business had lost tens of thousands of dollars since the price wars started.

“It’s been so disheartening that the announcement was made on Australia Day only a week or two after flood waters subsided from our property. “The timing couldn’t have been worse. So emotionally and finan-

cially we’re over this year already.” Burnett said with production costs in Queensland of 54c/l, supermarket brand milk should be 50c/l dearer to increase value in the supply chain to provide a return to the farmer.

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DAIRY NEWS AUSTRALIA // october 2011

news

Market corrupted by milk price war Australian Dairy Farmers president Chris Griffin told a public hearing of the senate inquiry into the impacts of supermarket price decisions that the market had been corrupted by supermarket discounting. “Coles is trying to spin the line that they are absorbing the cost of their unsustainable market tactics,” Griffin told the inquiry. “Dairy farmers do not believe them because this is not the effect that we are seeing in the market.” Griffin told the senate committee the price war was reducing sales of branded milk, bringing less money into the supply chain. “Processors and dairy farmers who supply the drinking milk market rely on the margin from branded milk sales for their profitability,” he said. “Competition from unsustainablypriced Coles home brand milk is taking market share away from branded products and thereby reducing the overall return on the fresh milk supply chain.” Griffin also said consumers were purchasing less long-life milk and more fresh milk because “they can

afford to buy extra and then throw some out”. Queensland Dairyfarmers’ Organisation president Brian Tessmann told the inquiry more than 20 Queensland dairy farmers have left the industry since the price war began in January. He said although Queensland had been short of milk supply since January, with milk being imported from interstate at a higher cost, the price of milk had dropped. “Unlike the prices of fruit and vegetables, where prices have increased dramatically with the loss of supply, milk is short but prices have actually dropped. “We see this as a market which is not functioning properly and in fact, is failing.” Griffin told the inquiry the pricing strategy would have long-term impact on farmer returns. Farmers in northern NSW, Queensland and WA were already being impacted with some being offered contracts at lower prices this season. Griffin said the decision has had very little impact in Victoria, where 10% of the state’s milk is used for the drinking market, but a reduction in farmers in the north could skew the market. He said there was a 1 million litre milk deficit

in Queensland as a result of natural disasters and farmers exiting the industry and this had to be found from other sources. “This milk is shunted up from NSW and NSW milk is replaced by Victoria and Tasmania,” he said. “That is now potentially taking milk from a very buoyant export market, which Victorian and Tasmanian farmers are experiencing now. “We don’t want milk to go into an unviable structure created by supermarkets and away from the lucrative export market.” Griffin said milk was being used as a loss leader to get customers through supermarket doors. “We haven’t seen any loss of profitability from supermarkets across the board because they can make their profit from other items, in their case. “We’re hopeful the Senate will take into consideration recommendations we’ve made and have a mandatory and enforced code of conduct enforced by an ombudsman that covers the entire value chain so everyone in that chain gets a fair price. “If that’s the case, we will get benefits from the industry as a whole.” The deadline for the report has been rescheduled to November 1.

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DAIRY NEWS AUSTRALIA // october 2011

news:succession planning

External advice aids smooth transfer Liz Cotton Seekingprofessional

advice from a range of sources and starting early are important factors in planning for the future of a family’s dairy farm business, according to an industry expert. Pauline Brightling, leader of Dairy Australia’s The

People in Dairy program, says planning for the future of a dairy farm business involves complex financial, legal and operational issues. “It is important to seek professional advice to deal with the complexity involved and to get a range of perspectives,” Brightling says. “Plans need to consider

the unique circumstances of the people and the business.” Brightling says there are numerous important issues to take into consideration when looking into succession including taxation implications and options, retirement income planning, personal risk management insurances and contingencies

(income protection and death cover), provision for active and nonactive family members, financial implications of transferring ownership of the business and people joining or leaving the business and appropriate structures. “Each adviser has their own area of expertise. Rarely will one individual,

Pauline Brightling

or a single profession, be able to provide all of the advice that is required.” Brightling says dairy advisers with human resource training specifically tailored to the industry are a great first option and The People in Dairy website (www. thepeopleindairy.org. au) contains a full list of advisers in each state. “These consultants can help with the people issues that occur on a dairy farm, as well as defining objectives, evaluating the business and exit strategies; reviewing financial implications; helping resolve conflicts and confusion; assist in employee transition management and help develop the business continuance plans and strategies. “They can also have input into the overall operations planning.” Accountants can assist with issues such as minimising capital gains tax, estate and other taxes for all parties. There are two professional accounting bodies, both of which represent accountants across a broad range of skills: the Institute of Chartered Accountants and the Certified Practicing Accountants Australia. “Given the regional basis of dairy farming, it is often the case that the accountants who have most experience in our industry will operate from regional centres,” Brightling said. “Word of mouth from other farmers or advisers may be the best way of connecting with the right professional accounting assistance for each individual farm business.” Financial planners can provide a broad range of financial advice. Advice can be given on investment strategies for personal assets outside of the business or for funds from the sale of

the business. The adviser can help develop an appropriate strategy for investment and retirement funding. Many financial planners can assist with Centrelink advice and insurance matters (income protection and death cover). Rural Financial Counsellors offer a free service to farm businesses under financial hardship on a range of issues; the federal government has announced that funding for rural financial counselling services will continue at least until 2015. A legal adviser can help the team chart a course of action by advising on legal issues as they arise. Once a succession strategy is determined, the legal adviser can play a key role in drafting partnership agreements, buy- sell agreements, employee equity agreements, create trusts and restructure corporate capital. A key role for the legal adviser is assisting with the development of the estate plan for distribution of assets upon the death of an individual. A bank or fund manager will have an interest in the impact of succession on the business debt and future performance. They may also play a role if financing is a requirement in the plan. “When planning for the future of the dairy business it is important to recognise ‘who owns what’ from a business perspective, and the level of equity each individual may have in the business,” Brightling said. “For some businesses this can be quite complex. “The ‘Taking Stock’ program can make this easier. You can either complete the Taking Stock worksheets, or have an accountant or external adviser do this for you. Follow the links from The People in Dairy website.”

Useful weblinks The Grains Research and Development Corporation has developed a comprehensive guide to succession planning titled: A Guide to Succession: Sustaining Families and Farms. It can be downloaded from www.thepeopleindairy.org.au Youth central has some resources to help manage your finances: www.youthcentral.vic.gov.au Rural Law on line has some excellent information and an online forum: www.rurallaw.org.au/resources/ FarmSuccessionPlanningForumReport.pdf The Conflict Resolution Network has a range of practical tips and reading materials (DVDs and CDs): www.crnhq.org

DAIRY NEWS AUSTRALIA // october 2011

news:succession planning

Dispersal signals changing times Keeping it simple and being proactive about succession planning can take the stress and uncertainty out of passing on the family farm. “Every family’s situation is different, but we wanted to open the lines of communication and make sure everybody’s views and opinions were heard before making any changes,” Glenmar Holsteins’ Adrian Young said. Late last month, Adrian and wife Sue, Glencoe, SA, took their first step in the succession process when they held their on-farm ‘Changing of the Guard’ stud dispersal, to make way for daughter Angela and her husband Ben to run the family dairy farm. “It was quite an event, for the stud and for the family,” Adrian said. “We sold the entire herd – bar around 100 cows that we will lease to Angela and Ben so that when they begin, they can maximise their production – and it was mixed emotions as we parted ways with over 20 years of breeding and work. “But we want to give them the best start on the farm and a chance to pave their own path and so from that aspect, it was exciting.” The Youngs have three children; 26 year-old Josh, who works locally at paper mill Kimberly Clark, Dillon, 19, an apprentice boiler maker and Angela, 28. Adrian’s father purchased the original 90ha Glenmar property on prime dairying land at Glencoe, near Mount Gambier, some forty years ago. Adrian joined the family business after leaving school at 16 and became a partner in the business with his parents. “I was the only child interested in carrying on the dairy so it was a fairly simple procedure to creating the partnership. We transferred all the cows into the partnership and 23 years ago, mum and dad wanted to retire so Sue and I took over. It was a fairly simple process back in the day.” The Glenmar dairy has been improved over the years with the purchase of three centre pivots and a new 20 aside double up herringbone dairy in 1998. The Youngs also purchased 120ha of land opposite their farm in 2002, which bought

Adrian and Sue will lease the farm and 100 cows to Angela and Ben, which will bring the herd up to 330. Adrian has work lined up on a beef property, handling and managing younger cattle and Sue may look for part-time work locally, but the couple will help out on Glenmar while Angela and Ben get settled. Adrian concedes timing was the “biggest challenge”. “Once things were put in place and we’d gone over aspects of the changeover, it all became a lot clearer, but there is always uncertainty about the unknown, especially when you have known a certain way of life for over 30 years.” The Youngs didn’t seek out succession planning advice initially, “because we didn’t want to make it hard – the thought of lawyers and mediation seemed unnecessary in our situation”.

“We spoke to our accountant and bank manager, friends, people at the industry level and gained information from Dairy Australia’s succession planning guides,” Adrian says, but concedes that there is value in getting specific succession advice before entering into a succession plan. “Perhaps we should have gone through a course initially, as speaking to other families, there seems to be good value in getting advice at the outset. “It is certainly something we will look to do when we do decide to retire permanently. “For the meantime, however, I am confident that we’ve reached a point where everyone is happy with the changes taking place. “We really want to see more young people taking up a career in dairy and feel that we’ve perhaps contributed to that in some small way.”

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Ben Largo and Angela Young, with children Connor and Shae. Angela is the next generation of the Young Family to run Glenmar dairy, Glencoe, SA.

the total holdings to over 200ha, including 92ha of dryland and 30ha under pivot. The dairy milks around 300 cows. In 2002, Angela was due to complete her two year advanced diploma in agriculture, majoring in dairy farming at a Victorian university. Her partner, Ben Largo, was in partnership in his family’s dairy in Victoria. “We had early discussions with the family about what everyone might want to do and it was evident that Angela was interested in the dairy industry. Josh was happy in his work and Dillon was also heading in a different direction but also helps around the farm,” Adrian explains. Some 18 months later in 2004, after Angela had completed her studies, she and Ben began buying their own cows,

some of which came from Ben’s family dairy and some from Glenmar. Later that year the couple took on a small share of the Young’s family farm after talking with both families, their local accountants and banking institutions. “Although this was a good arrangement at the time, Ben and I wanted to be our own bosses and so decided to lease land half an hour away at Allendale, where we could expand the herd and try our luck,” Angela says. “After five years, we began to look more seriously about succession at Glenmar. We were contemplating leasing a farm in the Western District but mum and dad were keen for us to take on the family property and it seemed to be the right fit for all of us.”

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Specialist livestock agency servicing Australia’s dairy industry Vicstock, with its head office located in Geelong Victoria covers the dairying districts of Gippsland, Western and Northern Victoria, the Riverina in NSW, Tasmania and the South East of South Australia. Our core business of supplying various domestic and export abattoirs with dairy cows and calves is continuing to expand, as does the export heifer market and the private sale market which enables us to supply a complete service for the dairy/beef industry. Our newly appointed Tasmanian team has also expanded, with 7 agents now servicing the whole of Tasmania, specialising in dairy, but also servicing the beef and sheep grower sector. We offer a personalised agency service through our one to one on farm dealings, benefitting both the vendor and the purchaser. We have a good market for cull cows, bull and bullocks, as well as some exclusive export heifer markets into China and South East Asia that are being cemented through our Vicstock International team consisting of Mr Will Crozier (Managing Director), Mr Harold Sim and Mr Bruce Tang.

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Bonlac delivers share dividend BONLAC SUPPLY Company’s 1300 dairy farmer shareholders in Victoria and Tasmania will receive a fully franked dividend of 8.4 cents per supplier share this month. BSC chairman Tony Marwood said the dividend was equivalent to an unfranked dividend of 12 cents per share. “BSC was in a position to pay the dividend as result of interest payments on the Unsecured Capital Notes we have invested in Fonterra Australia,” Marwood said. “Fonterra’s Australian business has managed better than some to manage the perfect storm of recent high commodity prices which had to be absorbed and retail price wars pushing down the consumer prices of dairy products. “While dairy margins have been under pressure for everyone, a solid performance by Fonterra’s commodity business acted as a natural hedge to the retail margin squeeze helping to deliver a closing milk price from Fonterra for the 2010/11 season which was the second highest milk price ever. “Now, with this dividend coming on the back of the strong closing price, BSC suppliers are experiencing a good financial boost to their business.” The dividend applies to shareholders who currently supply milk to Fonterra and

Tony Marwood

will be paid as part of Fonterra’s milk payout on October 15. At the same time, Mr Marwood said that BSC was commencing a shareholder consultation process to consider its future milk supply arrangements and investment in Fonterra as the current supply agreement with Fonterra expires in 2014. “We would like to understand from our shareholders what they want from any future arrangement, what sort of organisation they want to be part of, how their business can best be supported and what sort of commercial options may be open to us.”

WestVic Dairy earns $700,000 of external funding WESTVIC DAIRY has attracted nearly $700,000 of external funding during the 2010-11 financial year. The regional dairy development agency has been able to successfully supplement industry levy funds to develop local programs to address needs identified by local farmers. WestVic Dairy chairman John Dalton said feed, fertility, people issues and milk prices were the top concerns listed by local farmers at 15 kitchen forums held during the year. “We have framed our operating plan for 2011-12 to address these issues,” he said. During the past year additional funds have been sourced from local, state and federal governments, CMAs and other sources to add value to the levy contribution made by the region’s dairy farmers. “We aim to double the level of cash we have to invest in dairy products and support farmers and their priorities,” Dalton said.

Farm, careers coordination, financial literacy, milk from moisture and young dairy development programs. Dalton, who started his second year as chairman at the annual general meeting in Warrnambool on September 16, said the local industry had experienced floods and was Feed, fertility, people still recovering from high debt issues and milk prices loading from the were the top concerns GFC step down listed by local farmers. a couple of years ago and a strong Australian dollar. However, he added that managing 15 different good summer/autumn projects that will advance conditions, strong demand the local dairy industry. for products and improving “The dairy industry is milk prices had helped the a third of the south-west’s economy and research and local industry. Lisa Dwyer was elected development is the key to deputy chairman and keeping abreast of the opGraeme Martin, from portunities and challenges near Colac, was elected that confront us,” he said. as a new board member Over the past year WestVic Dairy has invested to replace Peter Musson from Macarthur who stood in a variety of projects down after six years of to address farmer needs, including soil acidity, Focus service to WestVic Dairy. For the first time WestVic Dairy achieved total income of at least $1million during 2010-11. It easily surpassed its aim of doubling the farmer levy contribution by attracting outside funding. Dalton said that at the moment the agency was

DAIRY NEWS AUSTRALIA // october 2011

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through Aquila Group, have spent at least $100 million snapping up thousands of hectares of Southland dairy land in the past 18 months. Their most recent acquisition includes a 417ha property at Riversdale ($14m) and a 220ha farm at Otautau ($6.5m), publicly approved last month by the Overseas Investment Office. Since March 2010 the OIO has approved 12 dairy farm purchases in Southland, totalling 3643ha, for $105 million. Aquila Group manages various funds, providing investment management services to hundreds of German investors. It uses New Zealand-owned dairy investment and management company MyFarm to oversee capital development and manage its Southland operations. MyFarm director Andrew Watters says though Southland land is no longer cheap, it appeals to investors because it is productive, the size of the farms is economic and the climate is favourable. “A farm system will perform in Southland year in and year out at relatively high levels.” And despite local farming community worries he believes the German investors are good owners. “These funds are here for an investment purpose; it’s not about land-grabbing. So as long as the investment goes in... and they’re good local citizens, it should benefit New Zealand.”

MyFarm currently manages 30 farms in Southland – the majority owned by New Zealand syndicates – and in the past year has employed eight extra staff in the province. “The real estate market simply tends to be more active in Southland than in other areas.” He also points out most Southland farms bought by German investors are larger, milking 700 or more cows. “The sales evidence shows New Zealand interest lies in farms of 600 cows or fewer, so this gives us an opportunity in a part of the market that hasn’t been active. Some of these farms need $10 m to $15 m in equity and other than the New Zealand Super Fund there’s been no fund interest in New Zealand, so you’ve got to find larger investors overseas in the absence of New Zealanders.” He also suggests if these farms had not sold to overseas investors the deals might not have proceeded. The sales bring financial benefits to Southland. “There’s a lot of economic activity happening in Southland that might otherwise not have occurred.” The two most recent farm purchases created four new jobs on farm, with $2.5 million in capital development, including the construction of a cowshed, housing and effluent management systems. Although he admits returns from the farms will flow back to the German investors “all of the economic activity happens in Southland.”

Of the land with some foreign ownership, 168,500ha were owned by businesses which had less than 10% foreign ownership, 22m ha were owned by businesses with between 10% and 50% foreign ownership and 23m ha were owned by businesses which had more than 50% foreign ownership. The bureau says it estimates the number of agricultural businesses at 135,600 with 133,600, or 99%, entirely Australian owned. That left 1,300 with some level of foreign ownership and 732 with an unknown ownership status.

ndat

mary witsey

The bureau’s land ownership estimates are based on a survey of 11,000 agricultural businesses. It says the survey results are broadly comparable with levels of foreign ownership of agricultural businesses and land collected in the agricultural census of 1983-84. Estimates from the survey indicated the total area of agricultural land in Australia on December 31, 2010 was 398m ha. Of this total, 353m ha, or 89%, were entirely Australian owned, 45m ha had some level of foreign ownership and 300,000ha had an unknown ownership status.

Fo u

Germans spend $100m on NZ dairies

“It is vital we protect the national interest and continue to strike the right balance between attracting foreign investment and ensuring Australia’s agricultural sector and food security are maintained,” Shorten said. “We will continue to ensure foreign investment remains appropriate to Australia’s current and future policy challenges.” The Senate rural affairs and transport references committee is looking at the Foreign Investment Review Board’s national interest test that does not consider investments worth less than A$231 million.

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FOREIGNERS OWN 11% of Australian farm land and 9% of water entitlements for agricultural purposes. The Australian Bureau of Statistics says all states showed high rates of Australian ownership of agricultural businesses, ranging from 99% in Queensland to 96% in Tasmania. The state with the highest proportion of land held entirely by Australian owned businesses was Victoria, with only 1% of its 12m ha not

Australian owned, while the Northern Territory had the lowest proportion with 24% of its 59m ha foreign-owned. Local ownership of water entitlements for farming is 100% in NT, 98% in SA, 89% in NSW and the ACT and 69% in Western Australia. With Australians concerned over an apparent Chinese agricultural land rush for dairy farming and coal mining, Assistant Treasurer Bill Shorten said the bureau survey provides hard data about the true extent of foreign ownership of agricultural businesses, land and water for the first time since 1984.

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DAIRY NEWS AUSTRALIA // october 2011

opinion Ruminating

editorial

Employment solutions require govt support

milking it... Slick Johnny Coles

merchandise

manager John Durkan left Queensland farmers dizzy with the amount of spin in his presentation at last month’s Queensland Dairyfarmers Organisation conference. He showed more front than Myer by telling farmers: “It’s been a tough year for us as well.” He was referring to the flooded Coles stores throughout Queensland but unsurprisingly he received little sympathy. In summary, Durkan told the placard-waving crowd: “We are committed to supporting the dairy industry.” His 30 minute presentation was remarkable for saying so much without saying anything at all, providing an insight into how he performed at the recent Senate inquiry.

Good point, well made There were articulate arguments made to John Durkan from the Queensland farmers in attendance, as well as some unbridled venom to leave him a little uneasy. The best point came from Harrisville farmer Paul

Roderick who asked Durkan to retract his statement that $1/ litre milk does not hurt farmers’ bottom line. When Durkan said he wasn’t trying to avoid the question, he just had no evidence that it was hurting farmers, Roderick stood up and told him that it had definitely affected his income. “That’s a point you need to take on board. If you’re not aware, you are now.” Durkan can’t say he hasn’t been told – although we’re sure he’ll still spin future answers.

Spread it on thick Good news for those who like

to spread their toast with a thick layer of butter – it could be good for you. New research shows breakfasts rich in regular-fat dairy foods, including cream and butter, have been found to lower the levels of risk indicators for heart disease and diabetes. The research involved 13 overweight or obese adults who were given different dairy meals. None of the dairy foods increased any of the markers of inflammation in blood which

are risk indicators for heart disease and diabetes Breakfasts rich in cream, butter or low-fat milk actually lowered marker levels. Dairy Australia dietitian Glenys Zucco said a growing body of evidence from observational studies suggests regular-fat dairy foods have a neutral or even beneficial effect on risk of heart disease and diabetes. Research like this is going to help Glenys sell the message to consume more dairy even easier.

Richie McCow’s picks RUGBY FEVER has now reached cow paddocks.

Inspired by England’s now-deceased octopus Paul (fabled match picker during the soccer World Cup) New Zealand has its own ‘Richie McCow’. Northland calf owner Kyle Underwood had hoped Richie would follow in Paul’s tentacle steps by picking the winners of each game. But he failed his first test, picking the All Blacks to beat Australia in the recent Tri-Nations decider. (At least he was patriotic, his owner says.) But Underwood retains faith in the young bull, insisting he would rather Richie was loyal than right. “Imagine a black-and-white cow not going for the All Blacks and choosing Australia. That would not have gone down well,” Underwood told the New Zealand Herald.

Despite his wrong prediction, supporters have rallied to the ‘Support Richie McCow’ Facebook page, now showing at least 950 ‘likes’. Richie is also predicting World Cup outcomes for the New Zealand Herald.

The Victorian parliamentary inquiry into farm employment has been flooded with submissions. It’s a credit to the Victorian Government to shine the spotlight on a critical problem that would deter economic growth at farm, state and national levels if left unaddressed. Demand for employees on dairy farms across the country is currently outstripping supply and this problem will get worse if not addressed. Research over a number of years has revealed that more dairy operations want to employ workers but there are not enough employees to fill positions. It also shows creating the right conditions to attract and retain workers are critical. Good employers develop their staff and give them every reason to become long term and highly valued employees. Dairy Australia knows this. Its program, The People In Dairy, provides advice on how farmers can achieve this. The shortage of employees needs addressing but is far from bleak. GippsDairy has developed a project after consultation with hundreds of farmers, which will: • Support farmers in being good employers by use of employment tools and attendance at courses. • Supply a supported job advertising process using the GippsDairy web site and promotion in the local media • Raise awareness of career pathways in the dairy industry by building relationships with schools to promote the industry as a career option • Boost training in dairy farming systems by linking interested people with appropriate training options through National Centre of Dairy Education Australia. It is confident raising the industry’s image by improving and highlighting its professionalism will attract more employees. It is then up to employers, with support, to retain them. The Australian Dairy Industry Council, through Dairy Australia, has already conducted its own research and begun to pilot programs to identify solutions. It has said some issues to be overcome are deep-seated and involve the viability of individual dairy businesses. Affordability of agricultural land is another issue that must be addressed. These are areas which need strong industry-Government relations. A Government that is aware of the strength and problems of the industry can offer critical help when needed. ADIC is confident interventions by industry and government can make a real difference to the attractiveness of the industry to the next generation. It admits it won’t be easy but the solutions are there. It is imperative that the parliamentary committee assess these solutions in its report and that the Government acts.

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DAIRY NEWS AUSTRALIA // october 2011

opinion

Get a grip on your financial risks GRAHAM TURLEY This year’s floods and above average winter rainfall in parts of Australia provide a stark reminder of the importance of understanding and managing on-farm risks. While many farmers clearly understand the operational risks of their businesses, putting a dollar figure on those risks is important to determine the best way to mitigate them. The first step is to understand your farm’s normal ‘cash flow cycle’, i.e. knowing when cash comes in and goes out of your farm’s bank account. For farmers, a cash-flow cycle will typically be one ‘season’ or a year (although account needs to be taken of effects over a number of years, such as destocking for droughts). Once you know what a normal cash flow cycle looks like for your farm, start to consider how to manage unexpected issues that will affect the cash flow cycle. The most important scenario to understand is the ‘break-even point’ – the minimum cash that you can receive during one cashflow cycle without requiring introduction of external cash such as more borrowing. Knowing when and how much cash is going in and out of your farm means you can then start to identify the risks likely to af-

your overdraft facility that can then be redrawn to cover unexpected costs that may arise. This type of working capital solution will typically provide relatively easy access to cash at short notice. Alternatively, invest in a permanent solution, such as irrigation for drought-prone farm areas or conserved feed to call on. This solution usually requires a larger amount of expense upfront and the payoff will come via more consistent and probably increased productivity, as well as potentially reducing the impact between seasons. For example, by maintaining stock condition and It’s important to retaining capital stock in drought conditions you understand the cost may produce more in the of the solution and the seasons that follow. This is often the difcost of doing nothing. ferentiating feature that separates high performing First, understand what inter- farms from those at a medium est rate you are able to afford and and low level. Climatic or ecofor what duration. Knowing this nomic events do not disrupt the will help you to identify the ap- business, and the focus on the long term plan and the concenpropriate solution. The other big risk is about tration on the things that conproduction levels; knowing tribute to high performance is the break-even point is crucial. maintained. There’s no one solution to onMany things could affect your individual production rates, farm risk management. Every such as floods, drought and farmer needs to identify the risks on their farm and deteravailability of feed. Broadly speaking there are mine how much they are pretwo strategies for mitigating pared to pay to address that risk. Remember there is always a cost these risks. First, having a ‘capital solu- to risk-mitigation and it’s importion’ in place. Essentially that tant to understand the cost of means having access to cash or the solution and the cost of doborrowing capacity to cover any ing nothing. Graham Turley is managing unforeseen expenses. By using surplus cash to pay down debt, director, Commercial & Agri at you create debt capacity within ANZ. fect that cash flow, and identify a solution appropriate to managing those risks. One risk for farmers is interest rate changes. Interest rates are now low so it would be prudent to assume they will soon rise. So a buffer should be built into budgets for that likely increase. Also, several ways exist to limit the affect of interest rate increases, such as fixed rate loans and various hedging instruments. If your business is particularly sensitive to interest rates, this increases the priority for using surpluses to pay down debt.

China needs help to overcome problems jacqueline rowarth CHINA’S AVERAGE annual per-person consumption of meat increased from 20kg to 50kg between 1985 and 2000. By 2030 it is estimated the figure will be 120kg per person (similar to that of Americans and New Zealanders) for the urban population, but rural people will still be eating only 40kg; the Chinese average will be 85kg per person per year. Milk consumption is currently no more than 10 litres per capita per year, in comparison with 84 litres for the average American and 90 litres for the

China’s environmental problem is a crisis, and immediate action is required. average New Zealander. The Chinese consumption of butter and cheese is negligible whereas in the US 2.1kg of butter and 16kg of cheese are consumed per person per year, and New Zealanders consume 6.3kg butter and 7.1kg cheese each. If the Chinese westernisation of diet continues to dairy products in the same way that it has in meat, an awful lot of cows will be needed. China is already concerned about environmental pollution and impact of agricultural production systems on waterways. Its constitution stipulates that “the state protects and improves the

living environment and ecological environment, prevents pollution and other public hazard,” but it has a population increase of 13 million people a year. Urbanisation is increasing as well, increasing pressures on the peri-urban productive land that provides about 70% of current dairy and vegetable needs. Now at least 900 local rules and regulations apply to environmental protection and management of resources. However, enforcing the regulations is difficult. The government has acknowledged the rapid growth of the economy has been at the expense of even faster damage to resources and the environment; China’s environmental problem is actually a crisis, and immediate action is required. The government’s goal is to increase agricultural production sustainably and control pollution at source. This is possible with the increasing number of modern housed-animal facilities such as those being developed by Fonterra near Beijing. For these dairies greenhouse gas (GHG) emission per kg of milk solid are best practice and point sources of pollution can be captured. For the traditional small dairy herd, however, GHGs are three times greater than best practice, and the potential for contamination of waterways with effluent is high. The case is similar for piggeries; although there are some efficient production houses. At least part of the problem is that farmers in China are regarded as ‘peasants’. They are mostly poorly educated and because children have been encouraged to seek education in cities, and not come back, the rural population is ageing. Corporate farming with housed animals is being discussed openly. The western world’s greatest potential to assist China in moving into sustainable agricultural production is likely to be through precision agriculture and engineering. Housing animals and processing the edible product (milk and meat) near the population hubs makes sense but only if sustainable methods of bringing in fodder and managing effluent can be developed. In the meantime, animal protein for human consumption can still be exported to China with a small GHG footprint – and the food is known to be ‘safe’. Jacqueline Rowarth is Professor of Pastoral Agriculture, Massey University, NZ. She attended the annual China Association of Science and Technology Conference in Tainjin.

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DAIRY NEWS AUSTRALIA // october 2011

agribusiness

Sungrow buys Hastings Valley dairy factory SHAREHOLDERS IN the Hastings Valley Dairy Co-operative have voted to sell its Wauchope dairy factory to Indian company Sungrow Australia. A bid in June of almost $3 million by Sungrow Australia was endorsed by the board and late last month won the support of 92% of members.

Co-op chief executive Phillip Bryant said the deal – $2 million for the plant, equipment, land and buildings and $950,000 for the value of the stock on hand – is a win for farmers and guarantees the future of dairy processing in Wauchope. The sale does not include the ownership of brand names,

trademarks and recipes developed by factory staff and management, which will be licensed to the purchaser for continuing manufacturing. Bryant said local dairy farmers would benefit from the sale and the future of dairy processing in Wauchope was secure. The Hastings Co-operative Ltd

is owned by at least 8900 shareholders and supports 12 local dairy farms. It was established in 1916 by a group of local dairy farmers who brought their milk to be processed and fresh fruit and vegetables to be marketed. The co-op said jobs at the factory will also be secure. Sungrow has said it will in-

ject extra capital and resources into the factory to increase milk production, build a milk powder plant, and add Indian dairy products to the current range of Hastings Valley Dairy Products. It intends to export at least 50% of its manufactured dairy products to the Gulf countries. Sungrow chairman Chipra-

Record river of cash for NZ farmers BUMPER GLOBAL prices, good work by Fonterra’s overseas businesses and the co-op’s sturdy hedging of the high Kiwi dollar has secured NZ farmers their highest-ever payout: NZ$7.60/kgMS (less retentions) and 65 cents/share distributable profit for the 2010-11 milk season. The payout (before retentions) is NZ$1.55 ahead of the prior period’s NZ$6.70 and exceeds the previous record of NZ$7.90 in 2008. The cash payout (milk price plus dividend) of NZ$7.90 is also a record – NZ$1.53 higher than the prior period’s NZ$6.37. Rural New Zealand will benefit hugely from the NZ$10.6 billion river of cash flowing to farmers, says chairman Sir Henry van der Heyden. (This sum is NZ$2.4 billion more than in 2010 and NZ$1.5 billion more than Fonterra’s previous best year in 2008.) “That money flows back into the local economy as farmers reinvest in their businesses and buy more

farm supplies and equipment. An independent report last December by the New Zealand Institute of Economic Research (NZIER) found the [payout] benefits… extend well beyond farmers, as they spend about 50 cents of every dollar earned on locally produced goods and services.” The farmgate reflects the recent strength of world dairy markets, van der Heyden says. Prices in some categories reached or neared historical highs during the year. And Fonterra’s hedging shielded farmers from the worst of a stronger New Zealand dollar. “We also benefited from record milk production, as some of the best autumn conditions in recent years offset poor weather in many regions earlier in the season.” The 30c/share dividend equates to 69% of adjusted distributable profit, in the co-op’s stated range of 6575% of profit after one-off items and other factors. Net profit rose 13% af-

ter tax, to NZ$771 million (NZ$685 m) even after paying farmer shareholders 29% more for the milk they supplied, says former chief executive Andrew Ferrier. “Although the business was impacted by higher dairy ingredient prices and a fragile global economy, our underlying profitability showed solid growth over last year due to improvements within our ingredients businesses and the strength of our consumer brands.” Normalised earnings from sales of standard and premium ingredients were 36% higher than the previous year, an encouraging result in the face of a much higher farmgate milk price, Ferrier says. Earnings growth reflected higher efficiencies in manufacturing and supply, a refined product mix and growth in higher-margin premium ingredients sales. Consumer business sales hit a new record of NZ$6.1 billion. A standout here is Asia/Africa and the Mid-

dle East, where normalised earnings rose 12%, Ferrier says. “High quality nutritional and foodservice solutions [are leveraging] our power brands Anchor, Anlene and Anmum.” Australia/New Zealand earnings fell 17% to NZ$252m (A$303m) because of “fiercely compressed margins.” Earnings

were unchanged in key Latin American markets (NZ$119m). Forecast payout for the current 2012 season and 2012 financial year is a farmgate milk price of NZ$6.75/kgMS and distributable profit in a range 4050 cents/share, reflecting a “softening of global commodity prices since early

record results for fonterra • 13% higher after-tax profit: $771 million. • 19% higher revenue: $19.9 billion – a record. • Dividend rises to 30 cents/share, a 3 cents/share (11% up on last year’s 27 cents/share). • Strongest-ever balance sheet: borrowing ratio of 41.8% (44.9%). • Record collection of 1346 million kgMS raw milk in the 2011 season (5% up on the prior season). • Dairy exports for the year totalled 2.1 million tonnes, another record.

sean Gulave said in June the company would export cheese to Dubai. “This is a manufacturing company wanting to start dairy business here in dairy cattle and dairy processing making liquid milk and milk powder. All dairy product will be exported to Gulf countries,” he said.

Brands business suffers A MILK price freeze in New Zealand affected Fonterra’s consumer business earnings. The Australia and New Zealand (ANZ) business revenue increased 14.6% to NZ $4.4 billion, but gross profit fell 13.5% to NZ $333 million. Trading was hit by various factors in Australia and New Zealand, the co-op says. “New Zealand operations experienced a decline in volumes resulting from price increases that reflected the cost of higher commodity prices. In February 2011, Fonterra Brands froze the price at which it sells liquid milk to retailers, absorbing cost increases until January 2012.” Ice cream maker Tip Top, a division of ANZ, grew sales strongly but product losses during the Christchurch earthquake cost NZ $3 million. Consumers in Australia and New Zealand remained cautious in their food shopping looking for value and price ‘knockdowns’. Sales in Australia of higher margin products such as cheese, butter and yoghurt helped the business The ANZ segment includes a division collecting milk from Australian farmers and making ingredients mostly for export. This division did well, exceeding the previous year’s earnings because of ingredients prices. Fonterra holds the largest market share in dairy consumer business in Australia and New Zealand and “given its primary exposure to mature markets and the particularly difficult conditions this year, ANZ has done well relative to some of its peers in Australia and New Zealand”.

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DAIRY NEWS AUSTRALIA // october 2011

agribusiness

World changes soften farmgate forecast IN THE Dairy 2011: Situation & Outlook - September Update, Dairy Australia maintained its $5.10 $5.50kg milk solids (MS) forecast range for southern full year prices. However, in recognition of changing market conditions, expectations are now toward the lower end of that range. Several reasons for this are detailed below. At the latest globalDairyTrade auction on September 20 prices dropped to their lowest level in more than a year. The tradeweighted average price for all products was down 2.1% from the previous auction and it was the seventh straight decline. Looking to the future, the September release of the Rabobank Dairy Quarterly forecasts that international dairy prices will ease as major economies slow and dairy product surpluses build on the world market. Further, the latest Dairy Australia survey of spot export prices also saw most products continue their downward trend from the last survey, including butter (-4.3%), AMF (-7.7%), SMP (-4.1%) and WMP (-2.7%). There are three main reasons why prices are softening: the US and EU economies are struggling; the seasonal reduction in China imports; and increasing supplies from US, EU, NZ and Argentina. Perhaps the biggest risk to commodity prices is lower dairy consumption in the US and EU. Both economies are stagnating into potential economic recession and as a result consumer demand is softening. US consumers look to be shifting away from fluid milk and this is reflected in Federal and Californian data showing estimated milk use volume for May to July 2011 being down 2.4% from 2010 and 4.3% from 2009. In the IMF’s biannual World Economic Outlook (September 2011), European growth for 2011 was cut from 2% to 1.6%. The IMF US forecast for 2011 growth reduced to 1.6% from a 2.5% forecast made in June. Reduced growth in both major economies will tend to make local consumers more conservative with less spending on product groups like dairy. China remains the primary driver behind global WMP markets. Imports from China – especially

global impact damian richardson whole milk powder (WMP) – have been light over the last few months. However, the reduced volumes came off a very high demand period in prior months and reflect a seasonal slowdown. The IMF expects the Chinese economy to grow at 9.5% for 2011 and 9% for 2012. This assumes the government’s efforts to curb domestic inflation do not negatively impact the growth. The improving supply outlook is also weighing on market sentiment. US milk production, according to the USDA, for year-to-date at August was up 1.6% at on the same period of 2010. The latest World Agricultural Supply and Demand Estimate (WASDE) report forecasts milk output in 2011 at 86.2 billion litres, an increase of 1.5%. This forecast may be challenged if feed costs continue to escalate and commodity prices fall further. Milk deliveries in the EU are quite strong. Intake in the first seven months has already been about 2.3% or 1.8b litres higher than in Jan-July 2010. Total deliveries in Jan-July 2011 for the EU-27 were 80.5b litres. In the first six months of 2011, New Zealand milk production was up 12.2% from last year. During the period June 1 to August 15, milk production was running ahead of the same period in 2010 by 9.9%. Output is expected to remain well above a year ago with solid growth in milk flows for the balance of the season. Milk production in Argentina has been very strong at 3.4b litres for YTD June. This is a 15.9% increase over the same period in 2010. The forecast for total 2011 is a rise of around 10% to a level of 10.5bn litres. The US and Europe are experiencing dampened domestic demand at a time of strong growth in milk production. Positive signs are also coming from the southern hemisphere indicating a strong dairy season. If demand weakens in

the US and Europe, these conditions are likely to result in surplus dairy product and a downward affect on dairy commodity prices. These factors are not supporting a positive environment for strong farm-gate price growth and are worth keeping an eye on to track where commodity prices are headed. Damian Richardson is industry analyst with Dairy Australia.

DAIRY NEWS AUSTRALIA // october 2011

management

Green cleaning cuts power costs GIPPSLAND DAIRY farmer Steve Ronalds expects to save at least $3200 in annual energy costs after installing Green Cleaning – a new system to clean milking machines that saves energy, water and chemicals. Ronalds is one of the first farmers in the world to have

a commercial Green Cleaning system installed at his Jindivick farm. Early tests indicate savings in electricity for heating water of 74%, water savings of 42% and an estimated reduction in greenhouse gas emissions of 44 tonnes annually.

He expects the unit to pay for itself in about eight years, but with rising power costs and futher refinements to the system, this could be sooner. Ronalds and business partner Andrew Ronalds operate two dairy farms at Jindivick in West Gippsland

The detergent concentrations are automatically monitored and the tanks are dosed with chemicals and topped up with rain water as required. The system only needs a small daily volume (about 700-800 litres) of good quality, clean An early analysis water for the prerinse and to toprevealed the amount the cleaning of electricity used for up solutions. heating water has been An early analysis revealed the reduced by 74%. amount of electricity used for riod should be quite quick, heating water has been reand will justify the capital duced by 74%. Ronalds has also noticed outlay of the business,” he a significant reduction in said. The fully automated sys- the time it takes to cool his tem was supplied by GEA milk since the system was Farm Technologies and was installed. On hotter days commissioned in February. the cooling time is being reThe system comprises duced from 1 ½ hours to an three purpose-built, fully hour. This bonus saving is insulated 750 litre plastic being delivered by the heat storage tanks to separately recovery unit (on the refrigstore the rinse water, al- eration system). The volume of water kaline detergent and the acid sanitiser solutions. A Ronalds uses for cleaning controller, chemical dosing the plant has been reduced system, water supply and by 42%, saving the farm pipework to connect the 0.33ml of good quality watanks to the wash line are ter per year. Greenhouse gas emissions will be rethe other components. The system uses a heat duced in line with the enrecovery unit and is de- ergy savings. Ronalds and his milk signed to utilise waste heat from the refrigeration sys- company rep, Dale Lang, tem. The heat is recovered from United Dairy Power, in a separate 450l tank have been keeping a close which can heat water to eye on milk quality duraround 50 degrees C during ing the start up phase. Aleach milking. This water is though some adjustments used as source water for the are still being made to the rinse tank, to re-circulate chemicals, the plant has and heat the stored alkaline been cleaning well and the solution, and to top up the milk quality has remained in the premium band. This hot water service. Green Cleaning systems is expected after every operate at much lower tem- milking as the system uses peratures than convention- a consistent regime. “With increasing elecal hot wash systems. The primary source of water tricity prices and inconheating for machine clean- sistent water availability ing is the heat re-capture through the seasons, this unit, with the conventional technology makes sense. hot water service available Dairy Cropping Australia for back-up if required. Ex- is always looking to make cellent insulation and en- savings where we can and ergy efficient design mini- improve overall business mises standing heat losses. efficiency.” short in drier years. Power savings, and therefore cost savings, was the other reason Ronalds decided to install the system. “If the price of the units is reasonable, the payback pe-

Holstein cows, peaking at 400 milkers. The recently build cow shed is a herringbone 20 aside double-up with rapid exit gates. Dairy Cropping Australia is one of the first farm businesses in the world to have a commercial Green Cleaning system installed. Green Cleaning systems operate at lower temperatures, re-use the wash solutions and utilise energy efficient principles to deliver substantial operating cost savings for farmers. The potential water savings, allowing Ronalds to make the best use of his high quality water, was a key driver towards installing the new technology. Rain water is collected and stored on farm but can run

under the business name Dairy Cropping Australia. He has been farming for nearly 20 years and is the fourth generation farmer on the 140ha farm he and Andrew lease from his parents. They have a split calving herd of 70% Jersey and 30% Left. Steve Ronalds expects to save $3200 in annual energy costs with his new milking machine cleaning unit. Below. The system comprises three purpose-built, fully insulated 750 litre plastic storage tanks to separately store the rinse water, alkaline detergent and the acid sanitiser solutions.

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DAIRY NEWS AUSTRALIA // october 2011

management

Sexed semen fuels expansion Ensiling after the wet Frances, Peter and Paul McDowell foresaw the advantages of sexed semen early in its introduction to the dairy industry and today they are reaping the rewards.

ALTHOUGH THEY run Holsteins and Jer- around 1000 cows split into two herds, one seys in their herd, the McDowall family managed by Peter and the other by Paul. aims to keep the two breeds as pure as pos- A new rotary is currently under construction. sible. This year they bought in 150 heifers in To achieve this goal they have moved away from the common practice of using order to fast-track the expansion program a Jersey bull over maiden Holstein heifers and these were also joined to sexed semen. With milk factories offering price incenand have instead made a major investment in sexed semen using selected calving ease tives to farmers who can produce milk on a flatter curve, the McDowalls run a split sires from the ABS Sexation program. joining program, submitting Kevin and Frances Mc80% at the end of May and Dowell, with sons Paul and the remainder in November. Peter, milk 530 cows (65% Irrigation enables them Holstein, 35% Jersey) at to grow pasture throughout Childers Cove in south-west the year and to milk through Victoria. the late summer and auThey foresaw the advantumn to take advantage of tages of sexed semen early the higher milk price. in its introduction to the The split calving prodairy industry and are now gram has the added bonus reaping the rewards, with Who: of enabling them to carry a large number of qualMcDowall family over empty cows, and heifity heifers bred for type and Where: ers that are lighter or late, to production traits they wantChilders Cove the next joining. ed to build into the herd. What: Sexation sires are selectThe McDowalls are avSexed semen ed on type, pedigree and eraging 90% heifer calves. calving ease (Holsteins). This year 170 heifers from Sires used over the heifers this year were the herd have been submitted to sexed semen in first-round joining, using both blan- Focus, Isley and Dragon for the Holsteins and Legal for the Jerseys. ket and PG programs. As the cost of sexed semen has decreased Tim and Neville Pulham of ABS Australia are responsible for the AI work on the over the past five years, the variety of sexed heifers and for scheduling and managing sires available has increased. The McDowalls expect to be using sexed the synchronisation program, while the McDowalls undertake most of the AI work semen in preference to buying in replacements in order to ensure the quality of the on the mature cows. Eventually, the family plans to milk herd continues to improve as they expand.

Waiting for paddocks to dry out gives you time to think about cutting crops for silage. Crops such as oats, barley, wheat, triticale and ryecorn which have been affected by unfavourable weather can be ensiled. They are best either cut at either flag leaf/ boot-early ear emergence for a higherquality silage, or at soft-dough stage for a higher yield/lower protein and energy. Advice delivered through Project 3030 suggests that with the carryover stocks of cheaper, poorer-quality hay from last year, many farmers might find it better to sacrifice some yield and go for an earlier cut of higher-quality material. Cereals should not be harvested at the clear liquid/early milk stages. At this stage the soluble sugars in the plant are being converted into starch in the heads. The nutritive value at this stage is often reduced and palatability of fodder made at this stage is sometimes greatly reduced. The stage of growth of the crop at harvest will determine whether it is mown and wilted before harvesting or direct cut and ensiled as a ‘standing’ crop. Cutting height is usually 7-10cm above ground level. Cutting higher will slightly lift the nutritive value, but reduce yields. A higher cutting height will also keep the mown swath higher off the ground, allowing more airflow under the crop and create a slightly faster wilting rate.

A higher cutting height will also reduce the risk of soil contamination from other equipment operations such as raking. However, cutting at greater heights will leave behind increased levels of stubble which creates a problem of removal in the future and preparation for the next forage. Harvesting at the flag leaf/boot to early ear emergence stage (18 to 22 per cent dry matter) will require the crop to be wilted to reach the desired dry matter content before harvesting. Using a roller-type mower conditioner is recommended to crimp/crack the stems which will encourage quicker wilting. Wilting rate will be increased by 20 – 40 per cent compared to mowing only. Conditioned stems will also allow a more reliable and easier ‘picking up’ by harvester and baler pick-ups. Unfortunately highyielding crops will be relatively slow to wilt even if conditioned. In all cases, leaving the windrow as wide and thin as possible, and in a ‘fluffy’ state, will increase the wilting rate substantially. The dry matter content of wheat, barley and triticale at the soft dough stage of growth will be in the desired dry matter range as a standing crop range. They can be either direct harvested with forage harvesters fitted with cutting fronts or pre-mown and immediately picked up by the forage harvester.

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DAIRY NEWS AUSTRALIA // october 2011

management

Farmers spruik chicory success GIPPSLAND DAIRY farmers discussed their success with chicory as a forage option at a workshop at Trafalgar last month. Intelact Consulting’s Neil Lane discussed the latest research results and said chicory has proven itself against the scourge of cockchafers and during longer periods of dry conditions. Chicory does not provide a great feed source through wet, cold winters; it thrives in spring and summer and after autumn rain.

Dairy farmers John Versteden, Darryl Hammond, Andrew Balfour, Tyran Jones and consultant Neil Lane, who all spoke about their success with chicory.

“Ryegrass struggles past temperatures of 27 degrees, chicory will persist long after rye grass shuts down due to heat,” Lane said. Lane has been involved in forage trials in partnership with the Department of Primary Industries 3030 project. He said chicory’s other strengths included resistance to attack from pasture pests, high nutritive value and ease of establishment. Challenges of management include persistence into the second and third

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years and keeping it in a leafy productive state. Lane said ryegrass was still the mainstay of dairy pastures in southern Australia and well managed ryegrass pastures were critical. Chicory is one choice of many forage options and has strengths and weaknesses which must be explored. Willow Grove farmer Andrew Balfour has grown chicory for the past six years. He said it is now an important part of his farming system with about 15% of his farm sown to chicory. He noted that it grows well on his sandy soils but does not persist well on wetter river flats. Longwarry farmer John Versteden turned to chicory when his ryegrass pastures were suffering continual and extensive damage from cockchafers. He has grown chicory for 2 ½ years and has around 20% of his pastures in a chicory and ryegrass mix and an additional 12% in pure chicory stands. He said he was extremely happy with the perform-

ance of chicory on his farm but noted that it did not respond well to irrigation with effluent. “I think the high levels of salt might have knocked it,” he said. Buln Buln farmer Darryl Hammond sowed chicory for the first time a year ago and believes it to be “an outstanding forage option, very well suited to our farm.” In the past Hammond had planted turnip and millet crops but found them difficult due to establishment issues and pests. “It has been fabulous for us, I have never seen anything like it,” he said, noting that his use of chicory had coincided with the best season in 40 years. Sown together with red clover, chicory is proving a success with cows happy to graze it. The information session was run as part of The Future Ready Dairy Systems project. Further notes of the day are available from Gillian Hayman on 0428 345 493 or ghayman@dcsi. net.au

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79 84 115 85

1.50 1.94 2.32 1.78

1.47 1.35 2.04 1.47

5.2 4.2 3.5 2.3

6% 7% 6% 4%

2.76 2.63 2.84 2.81

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Insect pest numbers are at their lowest spring levels for several years but farmers are being warned not to become complacent. Cesar Sustainable Agriculture consultant Stuart McColl told a Grassland Society Pasture Update at Kyneton, Victoria, last month that pest numbers were at their lowest for many years. “Seasonal weather conditions don’t appear to have been conducive to insects but there will be a build up in spring with the warmer weather,” McColl said. “In particular, farmers should start to look out for aphids, caterpillars and snails, but at the same time be careful not to spray the good insects. “There are more beneficial than bad insects. A vast amount of the insects seen in paddocks are not pests to crops and pastures,” he said. “Insecticides are often not selective and when sprayed may kill many beneficial insects as well as the pests targeted. In some cases, chemical sprays are simply a waste of time and money.” McColl said farmers should properly identify insects and try to attain a good idea of their relative abundance across the paddock, rather than “just start spraying when they see a pest”. “Incorrect identification of pests is a common problem for farmers who haven’t been trained in the field,” he said. McColl advocates an integrated pest management system which includes chemical spraying but takes a holistic approach involving cultural controls, such as weed control, crop rotations and altering seeding rates and time of sowing when possible. “The timing of any chemical application can also be very important. You need to be smart in how you use chemicals and it is wise to seek expert advice,” Mr McColl said. “It is important to have chemicals as part of your plan but you must use them wisely. For example if the red-legged earth mite is a common pest, farmers should now be starting to consider spring spraying to achieve some control for next autumn,” he said.

DAIRY NEWS AUSTRALIA // october 2011

management

Advice puts Tas farmers on top Willingness to seek advice and try program since 2000 and enrolled this new management methods is the cor- year in DairyTas cash flow budgeting nerstone of the Charles family’s success. program. They have worked diligently to sucDarron and Veronica Charles, who milk 320 cows on 120ha in partnership ceed in certain areas they believe are with Darron’s mother, Lorraine, at Maw- integral to profitability. They aim to be a banna, northwest Tasmania, won this low cost winter milker – monitoring the year’s Tasmanian Dairy Business of the milk price and feeding only if it is profitable – and are flexible Year award, recording a with their management return on assets of 6.2%. so they can adapt the Darron is the fourth system to the season and generation of his fammilk price. ily to dairy farm in the The farm is now prodistrict. His parents, ducing about 1.6 million Bernard and Lorraine, litres from 350 milkers bought the Mawbanna through a diet of pasture farm in 1989 and enand winter and summer tered a share farming Who: crops. arrangement with James Darron, Veronica and The rotation length is and Tammy White. Lorraine Charles set to coincide with leaf When the Whites left Where: stage of ryegrass. This in 2000, Darron and Mawbanna results in a 16-18 day rotaVeronica made the deWhat: tion in spring, 21-24 days cision to return from Dairy Business of on irrigated pasture over the mainland, where theYear summer with the dryland Darron was working as rotation length dependa diesel mechanic, and ing on rainfall but sometimes as slow as start milking. They started as 30% sharefarmers 60 days. Rotation extends to about 70 with 180 spring calving cows – produc- days in winter. Target grazing residuals are 1500ing about 900,000 litres of milk in their first year. (Bernard and Lorraine moved 1800kg dry matter/ha and dry cows are into Smithton about six years ago, as used to graze the paddocks if target repart of the succession plan, with Ber- siduals are not met. Darron measures the pasture cover of nard passing away three years ago.) They quickly learnt much had the farm using a plate meter, usually on a fortnightly basis, although this can be changed since Darron was younger. “It’s changed a lot, dairy farming, weekly or monthly depending on passince the late 80s to when I came home ture growth and time available. The Charles’ have participated in a in 2000,” he said. “Urea’s a new thing, and stocking soil fertility monitoring project which rates had gone through the roof and eve- mapped the soil fertility of their farm. This map showed that phosphorus ryone had to become more efficient, because the expenses have gone through levels were high on the farm and as a result, fertiliser inputs – and costs - have the roof in the last 10, 20 years.” They realised effective farm manage- been reduced. The regular pasture measurement ment – particularly pasture management and nitrogen use - would be criti- allows growth rates to be monitored cal to their success so began to expand to ensure that there is no reduction in pasture growth as a result of lower fertheir knowledge. They learnt much from their neigh- tiliser inputs. Darron believes preparing bours and took part in TIAR (Tasma- a nutrient budget before any addition nian Institute of Agricultural Research) of fertilisers will save around $30,000activities, including the pasture work- $60,000 a year. They plan to conduct shop and discussion groups. They have regular soil tests, with some selected also participated in the benchmarking paddocks only needing testing every

Veronica, Darron and Lorraine Charles are expanding their operation at Mawbanna in Tasmania’s north west.

Crops are fed to the cows from May to September with the target ration being 4kg DM of crop, 4kg DM of silage, 4kg DM grain and 4kg DM of grass per cow per day during this period. The herd is predominantly Darron believes preparing Friesian but there are an increasing number of crossbreds. a nutrient budget before The herd is split calved with auany addition of fertilisers tumn calving starting on March will save $30,000-$60,000 28 with the heifers and any carryover spring cows, and on April 10 a year. with the mature cows. Calving start date for spring megalitres. Irrigation usually starts in calving heifers is July 20 and for mature cows August 1. About 30% of cows are mid-late October. Crops are grown mainly for winter calved in autumn with the remaining feed (20-30 hectares) but sometimes a 70% in spring. The cows are milked through a 30-acereal crop is grown for summer feed. A paddock is cropped for three years alter- side, swing-over herringbone dairy. A grain feeding system was installed in nating between a brassica and a cereal. two to three years. The farm has 69 hectares of K-line irrigation (29ha was installed this season) with a water storage capacity of 300

2003 and automatic cup removers in 2009. The Charles’ are looking to expand milking numbers to 450-460 and will achieve this through purchases – they bought about 50 young heifers last year – and their breeding program. The herd has been AI’d for about 30 years. This season the Charles’ have used sexed semen with the cows for the first time. There is potential on the farm for further development by clearing trees. Recently a new area of 24ha has been cleared with 10ha being sown to pasture. Continued expansion will depend on who the Charles’ supply next financial year – with current processor National Foods capping how much they will take – but with the right processor behind them, their future growth looks assured.

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DAIRY NEWS AUSTRALIA // october 2011

management

Genomics improving female selection GENOMICS IS expected to fast-track genetic gain in the Australian dairy industry, with predictions that its use for sire selection could double the rate of genetic gain in herds. However, there are also benefits from genotyping females. The initial uses of genomic technology will be seen at the bull level with pre-screening of young sires and marketing of ge-

nomically tested bulls rapidly becoming the norm. However the next application of the technology – the testing of cows – will be at the farm level. Dr Jennie Pryce, a senior research scientist with the Victorian Department of Primary Industries and a key member of the Dairy Futures CRC research team, says genotyping females for pedigree breeders could be a useful tool for heifer

sales, selecting the best replacements, mating plans to control inbreeding and confirming parentage. In time its application as a breeding tool for commercial heifers and cows will increase as both the reliability of the test and increases and costs come down. Genomic testing allows a heifer’s breeding value to be calculated from birth. The reliability of this ABV(g) can

be as high as 60%. “That’s equivalent to a cow with many lactation records and is a much higher reliability than an ABV based on a heifer’s pedigree alone, which is about 30%,” she said. Pryce said genotyping young heifers provides greater reliability and greater confidence to farmers when making breeding and culling decisions. This technology also

enables breeders to evaluate the merit of full siblings which to date would only be based off parent average and therefore the ‘best’ animal could not be readily determined. It will also allow for greater analysis of cow families in breeders herds. As a result pedigree breeders may also use ABV(g)s in their mating plans to select females for flushing and to work out the best combination of

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much more precise estimate of inbreeding than can be achieved with pedigree. So genotyping females may become a useful tool when using mating plans to manage inbreeding.” Genomic testing can confirm parentage with 100% certainty if the parents have also been genotyped. “Using genotyping to work out parentage may be particularly useful for herds where large numbers of calves are born over a brief period, making it logistically difficult to work out the sire and dam of every calf and to control inbreeding,” Pryce said. ADHIS and Holstein Australia are investigating the delivery of such a service with more information regarding parentage discovery to be detailed in the coming months.

Testing highlights genetic variation AN ANALYSIS of Bryan and Jo Dickson’s Holstein herd has highlighted the degree of insight genomic testing gives into a cow’s genetic make-up, compared with pedigree information. Bryan and Jo’s herd, Emu Bank Holsteins, is ranked in the top 10 for Australian Profit Ranking (APR). The couple farms with Bryan’s parents, Graeme and Shirley, at Terang in Western Victoria. Their 700-cow herd is bred entirely to artificial insemination (AI). Dr Jennie Pryce compared the genomics relationship with the pedigree relationship of 49 cows in the Dickson’s herd. She was particularly interested in five full ET sisters (three pictured above). They were daughters of the French bull Roumare and Emu Banks Bullbar Pepita. “Based on pedigree, we’d expect these daughters to share 50% of their DNA, and their ABVs based on parent average would be identical,” Pryce said. But their genotype results revealed more genetic variation than that. There are 70 Australian Selection Index (ASI) dollar units difference between the highest and lowest ASI sisters. Mr Dickson said he would use the information to select the best two sisters to be flushed for embryo transfer. “These cows are now on their first lactation so I’ll use a combination of production and genotype data to select the best two for flushing this season,” he said. “But the real value of genomics will be to genotype young females, so we can be more selective about which heifers to flush.” Dickson plans to have about 30 heifer calves genotyped each year. “We’ll have all our stud heifers genotyped as calves – that’s about 10% of the herd. The information will be really useful for selecting the best young candidates for our embryo transfer program.” He also sees potential value in the use of genotyping females to confirm parentage and manage in-breeding. Dairy farmers can now submit samples for genomic testing for cows in Australia, through the Holstein Australia service.

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bull-cow matings. Pryce said genotyping young heifers would also alleviate concerns over potential preferential treatment as the genomic part of the breeding value would be unbiased. “This could result in higher rates of genetic gain in breeders’ herds and potentially greater sale prices for genotyped heifers or embryos. The idea is to maximise a specific breeding objective – such as APR – while constraining inbreeding.” Pryce expects genomic testing of sires will see farmers using larger numbers of bulls for shorter periods of time. Generations will turnover more rapidly potentially making it harder to keep track of pedigrees. “Genotyping gives us a

19/2/10 3:09:14 PM

DAIRY NEWS AUSTRALIA // october 2011

Animalhealth

Key decisions help battle drought Liz Cotton KEEPING IT simple, making decisions based on labour and maximising onfarm efficiencies has proven a winning formula for third generation dairy farmers Kym and Kate Bartlett. The Jervois Irrigation District family were recently named top dairy farmers for Central South Australia in the fifth annual Dairy Australia Australian Dairy Business of the Year awards. “We try to run a very simple and streamlined operation and most of our decisions come back to labour: for example, we recently purchased an air seeder which makes it faster to get over paddocks and a new rake, for the same reason,” Kate said. “When we feel that an investment will mean more time for Kym and I to do other jobs and increase our productivity while still being cost effective, we will make that purchase.” The Bartletts are among the top 12 dairy businesses in the country, achieving a return on capital of 9.3% and producing 1919kg milk solids/ha and an average of 25,555 litres of milk/ha/year from their herd of 220 pedigree Holstein cows. Kym has worked on his family’s dairy farm since leaving school. When the couple took over in 2003, the first project was to install a new dairy: a single operator, fifteen aside with automatic rapid exit. The farm is flood irrigated, produces its own hay and sources grain from a local farmer. The operation has one part-time staff member who milks three afternoons a week and most Sundays, freeing up Kym’s time to do other jobs around the farm, while Kate keeps a hand on the business side and stays involved with local industry groups, including chairing the Jervois Irrigators Trust and as a member of the Future of the Lower Murray Swamp Group. This year marks the second win for the family, who has entered the competition for four years and ranked in the top three dairy businesses three times. What makes the win even more compelling is the fact that up until twelve

ALL SIR

months ago, the Bartlett’s home region of the Lower Murray Irrigation District was battling some of the worst drought conditions on record – and had done so for over four years. Dairy farming in the grip of drought meant adapting quickly and scrutinising every business decision but the Bartletts considered their situation a lucky one. “We were very lucky going into the drought because we were in a secure financial situation so we could make business decisions without some of the stresses that others faced. “We were also lucky because Kym knows his land so thoroughly, having grown up here and worked the land with his father for so many years before taking over. “This was a huge benefit and something that you can’t buy, his instincts and the decisions we were able to make on the back of that knowledge were invaluable.” This inevitably meant carrying on business as “normally” as possible and without resorting to excessive spending on infrastructure. “We had to adapt to what the drought threw our way – when we couldn’t grow grass, we supplementary fed. But even with this regime, we kept to a simple, low-cost system: no labour, no feed wagon, no infrastructure and no feedlot.

Who:

Kym and Kate Bartlett Where:

Woods Point What:

SA Dairy Business of Year

tinues to impact how decisions are made on the Bartlett’s dairy. “We just can’t look too far into the future, especially with all the unknowns surrounding water; so we just work with what we have, while we have it, and try to learn from the past and keep positive about the future. “We tried not to buy infrastructure just for the drought but rather adapt as best we could to the drought and Drought-induced hard soil plan a future without and cracked laneways posed a drought. We purchased additional land when it threat to cattle, with lameness became available knowing becoming apparent. it would help in or out of drought.” Feed availability was “It was as close to a home-grown grass one of the main concerns during the system as we could make it with cows drought. One piece of infrastructure the Barfed bought-in hay in the paddocks and concentrate in the dairy. We continue tletts did buy during the drought, a to move the fence every day just like in pump for the edge of the river, was purchased so that an allocation could be normal times.” The drought also meant that short drawn to irrigate one or two paddocks term decision making became the norm from the usual twenty. Hay was bought in where it had never but they keep thinking forward to a long term future. Although the drought has been before. Up to 14 bales a day were passed, the changing environment con- being fed out during the peak of the

drought, compared to today where one or two bales are being fed out. The trialling and planting of dryland lucerne was a successful move to replace the losses in irrigated feed. Two years ago the lucerne was oversown across irrigation land and “really helped” the cows maintain milk production through the drought. The concern now, however, with a high river and normal water table is will it survive with wet feet. As the moisture profile of the soil dropped dramatically during the drought, large cracks began to form on the Bartlett’s farm land, some up to half a foot wide and up to a meter deep. The hard soil and cracked laneways also posed a threat to the cattle, with lameness becoming apparent after a while. “We re-rubbled the laneways earlier this year, but we were concerned about flood as the water was up to the top of the levee bank and after the stress of drought we were not sure the levee would hold, but we couldn’t go through another winter without doing it,” Kate said. Prior to the drought, the Bartletts had

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DAIRY NEWS AUSTRALIA // october 2011

animalhealth

Cows eating more grain, supplements AUSTRALIAN DAIRY cows are eating more grain/concentrate supplements despite better pasture conditions, according to a new Dairy Australia report. The average grain/concentrate feeding rate on Australian dairy farms in 2010/11 increased 2% on the previous year, from 1.58 to 1.66 tonnes/ cow/year according to the 2011 Dairy Feeding Update. This continues a long-term trend. Younger farmers fed their cows more grains/concentrates than those aged over 40. On average, larger herds were fed higher rates than smaller herds, although all herd sizes recorded slight increases. Slightly more than half (54%) of farmers nationally chose to graze their herds and feed more than 1 tonne grain/ concentrates in the dairy bail (feeding system 2 - see diagram below). This resulted in an average 6310 litres and 476kgMS/cow. While farmers using Partial Mixed, Hybrid and Total Mixed Ration feeding systems (feeding systems 3, 4 and 5 - see diagram below) represented only 18% of all farmers na-

tionally, they produced 26% of total annual milk production. The dairy industry’s total feed grain requirement was around 2.5m tonnes per year. Dr Steve Little of Grains2Milk said farmers continued to prefer to spot-buy their grain/concentrates as required. “However, more farmers with 300+cow herds used forward contracts – up to 26%, compared with 15% the previous period. Among extra-large herds (500+ cows), the proportion was 36%, up from 21% in 2009/10.” More farmers bought grain/ concentrates directly from a stockfeed mill and fodder directly from a farmer; fewer bought through a merchant or trader. Nationally, 65% of farmers implemented a transition feeding program pre-calving. However, only half of these used an approach which might provide cows with all the nutritional components of an integrated transition diet, and well over half did not feed the transition diet for long enough to gain the full cow health, fertility and milk production benefits. On-farm capital invest-

ment in feed systems was unchanged from 2009/10 at 10% of respondents, with the number intending to invest in the next 12 months also very similar to last year. The study, prepared by Dairy Australia’s Grains2Milk program, provides an

overview of current market conditions and a snapshot of on-farm dairy feeding management practices. It used information from Dairy Australia’s Dairy 2011 Situation & Outlook report and 2011 National Dairy Farmer Survey.

feed facts • 19% of farmers in Tasmania fed grazed pasture only, which was considerably higher than in all other regions (ranging from 1% to 7%). • Gippsland and Tasmanian farmers are the lowest users of partial mixed rations (PMRs) (5%). • More farmers in northern Victoria/Riverina, NSW and Queensland used a PMR or hybrid feeding system using a feedpad/mixer wagon (feeding systems 3 and 4) than elsewhere in Australia (31-33%). • Queensland farmers, especially in far north, were Australia’s lowest buyers of hay and silage (37-38%). • Investment in feed systems in 2010/11 nationally was highest in SA (22%). • Farmers in the Bega Valley were the most likely to purchase hay and silage (81%). And, at 78%, more Bega-district farmers than anywhere else fed cows a pre-calving transition diet.

Staggering discovery will prevent livestock deaths GROUND BREAKING research by Victorian scientists has provided the key to eliminating ryegrass staggers in livestock. Researchers at the Department of Primary Industries used new $2.5 million mass spectrometry equipment to unlock the secrets of endophytes, or fungi, found in many pasture grasses. The research means DPI scientists now know which endophytes can be safely added to pasture grass seeds to improve pasture productivity without

risking stock health. Ryegrass staggers is a serious problem in livestock grazing perennial ryegrass dominant pastures in summer and autumn, sometimes causing significant stock losses. The condition occurs when stock graze on pastures with grasses containing fungal endophytes which produce certain harmful chemicals known as alkaloids. However, the fungi also protect the plant and help to boost pasture productivity.

NEW

Project leader Professor German Spangenberg said seed companies were already inoculating pasture seed with fungi which were known to reduce the risk of staggers while also increasing pasture productivity. “What this latest research means is that we know which combinations of fungi carry zero risk of causing ryegrass staggers but can also help to boost pasture productivity,” Prof Spangenberg said. “In the foreseeable future we will be

able to provide seed companies with the information they need to inoculate seed with fungi that achieve productivity gains that are well matched with the grass varieties but carry no risk of causing staggers.” Prof Spangenberg said scientists and agronomists already knew that certain strains of the endophyte fungus Neotyphodium lolii were the main cause of ryegrass staggers. He said through the research, the scientists now know how to better com-

bine the best endophytes with elite varieties of grasses. The mass spectrometry platform established also underpins other research undertaken to help further boost pasture productivity, water use efficiency and to breed pastures better matched to ruminant livestock. “There is potential to breed pasture varieties with less lignins, which reduce digestibility, and higher carbohydrates, biomass and nutrient quality,” Prof Spangenberg said.

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DAIRY NEWS AUSTRALIA // october 2011

animal health

Routine inspection detects disease IN LAST month’s column, I wrote about the importance of keeping an open mind when looking at the symptoms of illness in the herd, and the important role that your veterinarian should play to ensure that animal health you are treating the right rob bonanno disease with the right medication. I suspect similar things are The reason for this available in other states. is that it is actually the Dairy farmers pay complex interaction millions of dollars in between the cow, her industry levies and taxes. environment and the bugs on the farm which must be I strongly believe that you are entitled to demand a diagnosed and treated. reasonable surveillance I often wonder why we visit some herds frequently, network, especially as recognition grows of the diagnosing all manner of strong links between problems and working up animal and human health plans to try and treat and prevent them, yet down the with particular respect to emerging diseases. road is another farm we Recently, using this may only visit once every funding pool, one of my blue moon to pull out a colleagues visited a herd rotten calf. with anaemic, weak fresh Has this other farmer cows. cracked the code, and do they genuinely have no other problems, or Not making a diagnosis is the actual problem a lack almost always costs of looking? more money than I suspect it is actually investigating a problem. the latter because in my conversations It would have been with the local knackery reasonable for him to workers they tell tales of diagnose phosphorous how they are run off their deficiency, and continue to feet. his next call, but because I know that most farm budgets are pretty tight and of the SDI funding, he cutting back on calls to the collected samples and a diagnosis of Theileriosis vet for cows seen as a “lost was made. cause” may seem like a Theileriosis is a blood good place to make savings. borne parasite which has However, not making a been causing problems diagnosis is almost always for some time now in costing more money than Queensland and NSW but investigating a problem. it had not been diagnosed These “involuntary in the Goulburn Valley. culls”, as we Subsequent discussion euphemistically refer to on the email list of the them, represent a valuable resource to either diagnose Australian Cattle Vets (where vets from all over herd level problems which Australia discuss their cause sudden or lingering cases) has led to Theileria deaths, or even just to being diagnosed in monitor trace mineral Gippsland also. levels. Theileria is a parasite When I graduated, I was that has the potential lucky enough to be able to cause great losses to to submit samples to the dairy farmers as there regional vet lab network, is no product registered at no cost to the farmer. for treatment in most Sadly, over the years state Australian states. The governments have cut dairy industry must use back on vet lab services its resources to facilitate to save money, and the vibrant regional laboratory the registration of the treatment for Theileria, network was sacrificed and should also lobby hard at the alter of economic for further funding of rationalisation. Recently here in Victoria disease surveillance and investigation. we have had access to However, ultimately some funding to assist in it is time dairy farmers investigating significant diseases or unusual events. themselves recognise the

importance of making a diagnosis. Whether it is calf diseases, mastitis, lameness or poor production, the solution is never just a simple shot of some drug. There are always management factors that can and should be addressed to try to prevent the problem occurring again. When a sick or dead cow leaves the farm without a diagnosis or follow up, the opportunity to make

the changes required to prevent it happening again goes with her. Your dairy veterinarian needs to be getting out onto your farm regularly in order to make that diagnosis. He or she can work with you, if requested, to prevent and not just treat diseases in your herd. Rob Bonanno is president of the Australian Cattle Veterinarians Association and a director the Shepparton Veterinary Clinic.

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DAIRY NEWS AUSTRALIA // october 2011

animal health

Better calf care “The workshops are designed to help farmers AUSTRALIAN DAIRY farmers are continuing to raise the bar in their care of calves through hands- and calf rearers remain abreast of the latest deon work with calf rearing experts. Industry body velopments in calf rearing and raise awareness of Dairy Australia is rolling out workshops in dairy- recent changes in animal welfare standards and regulations,” McNeil said. ing regions as part of the Healthy “The quality of calf rearing is Calves Program. It has a strong “It has long been improving all the time, as farmfocus on the first week of life known newborn ers understand the value of rearwhen the calf is most vulnerable. ing well grown, healthy herd reDairy Australia Healthy Calves calves need good and the importance project leader Jamie McNeil said quality colostrum” placements of selling strong, fit and residuethe workshops arose from recent free calves.” farmer surveys of calf rearing The workshops, presented by leading dairy vets, practices which found farmers were keen to learn more about best practices and calf management also provide an opportunity for farmers to hear from each other about their calf rearing systems research.

Australian farmers are raising the bar in calf care with the help of a brix refractometer (right).

and what works for them. Interest in the Healthy Calves workshops held so far in Gippsland, Tasmania and South Australia has been excellent. Participants said the workshops “reinforced best practices” and provided information and practices which could be “easily implemented and make a big difference to calf health”. Colostrum management is one of the key topics covered in the one day Healthy Calves workshops and as part of this subject, farmers who attend are learning to use a simple tool called a Brix refractometer, a device used in viticulture to measure the sugar content of grapes, but dairy farmers are now using it to rapidly assess the quality of colostrums, he says. “It has long been known newborn calves need good quality colostrum (the first milk produced by a cow after calving) to give them the best start in life. “ The workshop content is based on the practical experience of Australian dairy farmers, animal scientists and vets. Topics covered also include pre-calving care, calf housing, nutrition, disease management and preparation for sale.

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“The impacts on cow fertility, health and welfare last well beyond the hot months.” So how does heat affect milk production? Milk production drops 10-25% or more in high heat stress and 40% in extreme circumstances, according to Dairy Australia. Milk composition is affected by high-to-severe heat stress: milk protein percentage decreases by 0.2-0.4% and milk fat percentage is more variable day-to-day, and may be severely depressed if ruminal acidosis occurs. Milk quality is also affected. Sediment may increase if cows’ teats are allowed to be contaminated with mud and dung. Risk of udder infection increases, which, if occurs, results in increased somatic cell counts. It also increases risk to cow health. Risk of mastitis and laminitis, and ruminal acidosis and ketosis, also increase.

IN UDDER WORDS...

Incorrect grain feeders can affect herd health WHEN WAS the last time you calibrated your grain feeders in the dairy? One of the often unforeseen problems with feeding grains to dairy cows is not so much the variation in energy and protein between each type and variety but rather the variation in actual weight to volume between each load delivered to the silo. Mark Freeman of the Tasmanian Institute of Agricultural Research (TIAR) Dairy Centre says grain is usually bought by weight (for example, 30 tonne of grain is delivered). “It is also usually fed by weight, where the cows receive 14kg dry matter (DM) of pasture per cow per day, for example, and we want them to

have intakes of 18kg DM/cow/day, so 4kg DM of grain is fed in the dairy to supplement the diet. “However, grain varies in size and density – not just between types of grain, like wheat and oats, but also between batches of the same type of grain due to variety, climatic conditions and soil fertility. This means that the same weight of grain that differs in size and/or density will occupy a different area.” Freeman said this could mean a 20 tonne silo might hold 20 tonne of wheat but only 19 tonne of oats because of the different size of the grain. It could even mean the same silo could hold 20 tonne of one type of wheat but 22 tonne of a denser variety.

A 20 tonne silo can hold 20 tonne of wheat but only 19 tonne of oats because of the different size of the grain.

“This is important because when you look at your grain delivery system in the dairy, it generally also works on a volume rather than a weight basis. A set volume of grain is stored in a container and released when a cord or button is pressed or an augur will run for a set time dispensing a certain volume of grain.” To address this difference in weight per volume, grain density and weight is measured as kilograms per hectolitre. Freeman said measurements of grain samples during last season has shown there can be differences of up to 40% in hectolitre weights between different batches of grain. “In practical terms this means that if you are not regularly calibrating the grain feeders, they could be delivering 40% more or less than what you have set them for. You may have set the grain feeders to deliver 3kg of grain per milking but they could be delivering anywhere from 1.8kg or 4.2 kg if they haven’t been calibrated to the different densities of the grains. “This can have implications on milk yield, with a drop in production as cows are being fed less than target, and animal health with cows being fed excess developing clinical or sub-clinical acidosis. “It is therefore a good idea to regularly check the quantity of grain that is actually being delivered through each feeder by weighing the grain and then adjusting the system to deliver the target amount.”

Select bulls for mastitis resistance SELECTING DAIRY bulls with mastitis resistance can help fine-tune mastitis management in the long term. Dairy Australia’s Countdown project leader John Penry said that although most mastitis control is achieved through management practices and the environment, genetics does have a small influence on mastitis resistance.

“Genetic variation for cell count exists and some bulls have been found to produce daughters which are more resistant to mastitis than others,” Dr Penry said. While the heritability of mastitis resistance is relatively low at 10%, the benefits are permanent and accrue with each generation. This means an estimated 10% of the variation in the Australian dairy cow popu-

lation is due to genetics and the other 90% is due to the management environment of the cow. “For little or no cost you can make a long term difference to the level of mastitis in your herd by selecting bulls from the mastitis resistance list in the Good Bulls Guide,” Penry said. Australian Breeding Values for mastitis resistance – cell count ABVs – are avail-

able for AI bulls, based on their daughters’ cell counts. Improving mastitis resistance involves selecting bulls with a Cell Count ABV which is more than 100— the higher the Cell Count ABV, the greater the mastitis resistance. The difference between the best bull (Cell Count ABV of 171) and the worst bull (Cell Count ABV of 20) is estimated to be $100 net

profit per cow per year. Most bulls have a Cell Count ABV between 78 and 122. Cell Count ABVs are incorporated in the Australian Profit Ranking because mastitis lowers farm profitability. “If mastitis is part of your breeding plan then look at a bull’s Cell Count ABV, or use the mastitis resistance list in the Good Bulls Guide,” Penry said.

Prevention key with mastitis Sue Edmonds A hefty dose of mastitis in an organic dairy herd can be very difficult to treat. So research and advice from Massey University trials presented at a recent Waikato, New Zealand, organic farmer and supporter group was welcome. Mastitis prevention is better than cure, especially in an organic herd, says Alan Thatcher of Massey University. Thatcher, involved in a five year trial comparing two small farms – one organic, one conventional – says because teat skin has no oil glands, it is prone to drying out. That makes it susceptible to damage, providing homes for bacteria which can invade the milk duct where they breed and multiply. Streptococcus uberis and Staphyloccus aureus, two mastitis-causing bacteria, are normal

residents in many cows’ gut and faeces. Consequently, keeping the race close to the shed clean will help reduce transfer of bacteria into the shed. Thatcher says ensure the camber on both sides is a slope of 1:12 to allow rain to wash it clean and drain it. Infection from pasture is less of a risk on all but the shortest rounds. “In pasture the bugs don’t live longer than two weeks, so with a longer rotation pastures are ‘clean’ by the next round.” Stress, be it from inadequate feed, bullying, or weather such as persistent rain, can markedly reduce a cow’s immune response. Staph aureus is mostly found on cow skin, and can be passed from cow to cow. Bullying of heifers when introduced to an adult herd can be stressful and allow bugs to be transferred. When it comes to coping with Strep uberis, teat spraying is very important. Even when cups are rinsed or dunked in disinfectant between

cows, bacteria have been proven able to be carried across to the next nine cows. Not all of these would develop mastitis, Thatcher says, but the threat is there, because any flaw or nick in the liners will retain bacteria. He recommends changing liners every 2500 milkings (every cow milked = one milking) or twice a year. Irregular pulsation leading to backjetting of milk can also cause bugs to be reintroduced to the udder. Inspecting teats, particularly on young cows, could show up machine inefficiency. Constant vigilance is necessary, identifying and keeping infected cows separate, and milking them last. A long dried-off period can help reduce susceptibility. He recommends post-milking stripping of 50-60ml of any infected quarter, using a clean glove each time. Bugs can’t spread from quarter to quarter internally, so drying off one infected teat can help.

Dealing with Mastitis during lactation The start of spring is great for pastures – but can play havoc with mastitis. Wet muddy conditions increase dirt on the teats and damage teat skin, encouraging the entry of bacteria through the end of the teat. Coopers® Animal Health Technical Services Advisor Dr Damian O’Brien said that the challenge is now on to control increasing mastitis levels. “Mastitis costs dairy producers a lot of money and time, but by increasing the focus on mastitis management, producers can minimise the level of infection and the cost to their operation,” Dr O’Brien said. “When using lactating cow intramammary antibiotics it is important to consider the milk withholding periods. The longer cows are out of the vat the greater the overall cost of the mastitis event.” “For instance, some mastitis treatments keep cows out of the vat for up to 8 milkings longer than others which can cost approximately $48 in lost milking income. So not only is the broad spectrum of mastitis control vital for good management, farmers need to consider the total time out of the vat to truly realise the impact of lactating cow intramammary mastitis options on overall cost to the business.” Dr O’Brien said that key control priorities in muddy conditions include: • Keeping teats in good condition with disinfectant and emollient • Regular milking equipment checks and maintenance to ensure correct vacuum pressures and pulses • Washing and drying dirty teats prior to putting cups on • Monitoring for clinical mastitis, and treating affected cows • Managing the dairy environment Dr O’Brien said producers should consult with their veterinarian for long term herd mastitis monitoring and control measures. “Your vet can advise you on lactating cow intramammary antibiotics that have both a broad spectrum of activity, and short milk withholding periods, to return your farm to full production as quickly as possible.” For more information on dealing with mastitis call Coopers on 1800 885 576 or talk to your local vet. ® Registered Trademark

DAIRY NEWS AUSTRALIA // october 2011

machinery&products No mucking about with manure spreader Gippsland farmer

working clothes chris dingle litre auto-fill model, and Delbridge reckons it was a very good decision. “It’s been the most trouble-free machine on the farm, and after 12 years you can’t say that about most farm equipment. A few parts replacements, and that’s it. We leave it outside because it is fully galvanised.” The tank on the Muck Runner fills in about three minutes from the effluent pond, and then they spread the manure onto paddocks using the tractor’s PTO economy setting of 750 rpm. Delbridge says it shoots out of the rear of the tanker Cam Delbridge and son Tyson with his Pichon Muck Runner manure spreader. like a peacock tail, about 12 metres wide. Kuhn Ag & Arable Frm Combi - Half Page_Layout 1 02/03/2011 17:05 Page 1 so they have some cows on spreading procedures and from the pasture growth – would use it every 2 to 3 One 10,500 litre load agistment the other side of otherwise you wouldn’t use are satisfied with it all. weeks, and operate it with covers about one hectare Yarram. The main Fish Creek either a John Deere 6830 or it, would you? at a reasonable speed and COMBILINER Earlier this year they had property covers about “The Muck Runner has 6630 but, as Delbridge says, he estimates a 20 minute 200mm rainfall in one day 160 hectares and they paid for itself many times turnaround to the furthest “you could pull it easily and Delbridge says they’ve have a number of other over in fertiliser savings. with less horsepower.” paddocks on the farm. had to fix the “You can miss that “We spread it over the They usually do 10 tracks three times particular paddock in the paddocks by following the to 15 loads at a time. The tank on the Muck now. fertiliser rotation, which cows. In summer you can “Occasionally it may be up This year they is every six weeks in the go onto any paddock you to 30 loads.” Runner fills in about have made about growing season. And in this like after the cows come In a normal year they three minutes from the 3000 rolls of hay case, that’s been the last 18 out of it. for their own beef months!” “You vary the thickness effluent pond. Who: and dairy cattle, During the dry years, by the speed of the tractor. Cam Delbridge and to sell, plus pit silage blocks for dry cows and some paddocks had no In the summertime, if for running a few bullocks. for the dairy cows. They fertiliser on them for two there’s no rain you need Where: Fish Creek or three years. Now they all The Delbridges are keen on grow turnips for summer to be a bit sensible about feed and buy in all their trading in beef cattle. when you let the cows back get some level of blend. What: grain. Like many properties in Delbridge said the in, but usually it’s about Muck Runner They feed 7kg per cow Gippsland it has been an EPA has been on-farm to two weeks later. Disc coulter innovation per day in the shed and are extraordinarily wet year, check out their manure“We get a good response SEEDFLEX

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Cam Delbridge, Fish Creek, says that when he bought his Pichon Muck Runner manure spreader 12 years ago it was the first in the district and since then plenty of farmers in the area have looked at it and bought one for themselves. He says the unit has paid for itself many times over in fertiliser savings. Delbridge and wife Sheryl milk 400 cows, mainly Holsteins, “with some reds thrown in” on a 50 unit rotary on what was originally a run-down beef block when he moved there from Korumburra with his parents. “We changed it to a dairy farm and built a 20 unit swing-over, then 15 years ago we installed the current rotary shed.” They have three children; Angus is eight, Tyson, 5, and Chelsea is just 18 months. Delbridge was in Tasmania helping out with the Young Farmers organisation at the Agfest Field days when he met Tom Palfridge, a dairy farmer from Mt Gambier, who markets the Muck Runners in Australia. Palfridge pursued Delbridge to look seriously at the French-made Muck Runner for a long time before he made the decision to buy. They purchased a 10,500

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currently getting about 30 litres per day with 3.4% protein and 3.6% butterfat. “I’m happy with that, considering the place is a quagmire but having said that, we’ve never been under 4% fat before,” Delbridge said. At this stage they are happy to stay with around the current number of cows. Working Clothes focuses on the performance of a new machine in the paddock each month. Send suggestions to Chris Dingle on 0417 735 001 or email chris@springbankfarm. com.au

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DAIRY NEWS AUSTRALIA // october 2011

machinery&products

New JD loaders fit all models NEW HEAVY-DUTY loaders from John Deere equally suit many sizes of the company’s new and older model tractors. The new H Series loaders, which replace the previous loader models, have more cast-steel connecting points and better visibility, and they have integrated components that make installation and removal easier. The H Series loaders, compatible with many John Deere tractor models, have different levelling options, nonself levelling (NSL) or mechanical selflevelling (MSL), depending on customer needs and legal/safety requirements. More cast-steel components in high-

stress, high-load areas of the loaders helps them handle big jobs with ease and extend working life, a JD spokesman says. “All major boom pin connection points are cast-steel for better pin alignment and reduced load stress which is an improvement over traditional bushing-type joints. “We’ve also designed the H Series with a lower torque tube and concealed oil lines within the loader boom to give it a cleaner look, improve over-the-hood visibility for the operator and to reduce potential for damage to oil lines during use.” In addition, John Deere has added in-

Case IH offers free prime-lift loaders With the agricultural industry striving to meet the 2012 national safety standards set by Safe Work Australia, Case IH is throwing farmers a lifeline by offering a free PRIME-LIFT loader with every JX or JXU tractor purchased prior to October 31. Engineered specifically for use with Case IH tractors, the PRIME-LIFT loader dramatically enhances user safety, taking the guesswork out of loader operation. “The agricultural industry is one of four priority industries Safe Work Australia is focusing on under its 2012 strategy to reduce workplace injuries,” Case IH Marketing Manager Kerry McCauley said. “Of the four priority industries, agriculture has seen an 11% decrease in incident rates since the strategy commenced in 2002. “This is certainly something to be proud of, but we know the agricultural industry can build on this further. As one of the leading equipment manufacturers, farm safety is a key focus for Case IH and the Case IH is offering a free PRIME-LIFT loader with every JX or JXU tractor purchased prior to October 31.

PRIME-LIFT loader is testament to this with its range of optimal safety features.” The PRIME-LIFT’s safety features include a loader self-leveling system which dramatically enhances visibility. Meanwhile, the precise mechanical level lift function eliminates negative angle creation throughout the lift cycle which reduces the chance of the tractor rolling over. Farmers who take advantage of this deal are eligible to take delivery of the adaptable and dependable JX or JXU with a low 5.75% interest rate and no repayments for the first 12 months. Built with loader work in mind, the JXU tractor is available in four models ranging from 86 to 113 Hp and a choice of 12 x 12 or 24 x 24 Power Shuttle transmission. The down to earth JX tractor is also available in four models ranging from 59 to 89 Hp. Performance and value for money is guaranteed with the JX’s 20 x 12 Synchro Shuttle transmission. For those looking for a heavy duty small tractor, the JX Straddle comes in three models ranging from 56 to 76 Hp.

tegrated parking stands and pins into the loader which, combined with a single-point hydraulic connection system, allows the loader to be quickly removed or reinstalled with virtually no oil loss. To give customers access to a wide variety of John Deere loader attachments, the company uses a common global carrier that standardises equipment compatibility worldwide. “These are the most rugged, durable and versatile loaders on the market today,” says JD. “They are engineered to fit a wide variety of John Deere tractors quickly and easily and provide years of trouble-free operation.” www.johndeere.com.au

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DAIRY NEWS AUSTRALIA // october 2011

machinery&products

Rain sparks machinery inquiries Elmore Field Days kicked off as we went to press with reports of solid enquiry from the dairy sector. Tim Lawrence from PFG says that he is looking forward to an interesting season, pointing out that enquiries are far more positive than at the Henty Field Days, possibly because of the rain in between. “The waiting is over and our sales programs are coming together on new Vicon balers,” Lawrence said.

new products chris dingle There are also demonstrations arranged around the region of the interesting Simba line of tillage equipment, which

appears to be very suitable for dairy operations. On the Lely stand, general manager Clive Edwards said that there is more and more interest in robotic milking with the brand new A4 system on display. This particular unit has been sold and will be commissioned in Gippsland in November. The dealership responsible for the installation is Traf Tractors, and dealer principal Murray Tuck said

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that he is looking forward to an exciting time ahead. They have an intense training session on the A4 arranged for the first two weeks of November with four people coming from New Zealand, four from Bega and two from Traf Tractors. Traf Tractors have appointed Daniel Upston from Drouin to focus on the robotic milking side and Murray reckons that Daniel “is a good all-rounder on dairy.”

Kubota has added power and deluxe features to its Basic L series.

Lely was also demonstrating their new Welger 445 Master baler, plus Clive Edwards said there is strong interest in the new Welger Tornado baler/ wrapper combination. “Labour is always an issue for farmers and this variable chamber combination offers savings in that area, along with more options for both silage and hay-making.”

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Alan Kirsten at Agriview reports that this part of the year usually sees a lot of machinery deliveries, but it’s a little early as we go to press to gauge the situation for this quarter, although the indicators are solid. “We have one of the best outlooks on machinery sales for a long time”, Kirsten said. “There is plenty of enquiry on all areas of equipment. Any dampening in demand is not due to the agricultural sector, but more about the world financial situation and other factors affecting the confidence to spend.” He says that 2012 is shaping up to be a terrific year for the agricultural machinery industry.

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Kubota has added power and deluxe features to its Basic L series with the release of new 32 and 38 horsepower L3200 and L3800 tractors (pictured). Both models are available with either gear drive or three range hydrostatic transmission and a 38 litre fuel tank. Kubota’s new LA524 quick attach/detach front end loader and BH77 backhoe are performance matched to the L Series tractors. The LA524 level lift front end loader features a curved

boom design and boasts exceptional lifting power and bucket breakout force. The BH77 backhoe also offers a curved boom providing easy operation and visibility paired with a digging depth of 2350mm. An optional mechanical thumb further adds to their versatility. The BH77 backhoe is also quick attach/detach allowing the tractors to quickly convert back to a conventional tractor with three point linkage. Once the three point linkage is fitted a wide range of implements can then be fitted.

Progress on manure system

We reported in May that Lely in Europe had joined forces with Green Energy Technologies on the development of a sustainable operational system to make optimal use of minerals on the farm. The system is intended to process manure in a few days and means that less manure will need to be removed from the farm. Lely says that the project is now taking a major step forward. Within the joint venture, GET and Lely will develop the system into a fully-fledged product, after which it will be sold and maintained under the Lely brand and through the Lely distribution channels. During the coming months, the first AgriMoDEM model will be thoroughly tested and further developed to prepare the product for commercial installations. They are convinced that the refining system has the potential to become one of the major solutions to current manure issues, not just for reducing emissions but also to allow farmers to become autonomous when it comes to their own energy production. Contact Chris on 0417 735 001 or email chris@ springbankfarm.com.au

DAIRY NEWS AUSTRALIA // october 2011

machinery & products

Krone increases efficiency in time for hay season

makes the baler run much Krone has upgraded quieter compared to the round balers for extra Vario Pack baler. productivity this coming The Fortima has an auto hay season. Krone’s V1500 and V1800 lube system for its chains, and greasing is made easy Fortima variable chamber round balers were released with accessible grease banks located on the baler. earlier this year, and while A new electronics system their new modern design is appealing, the German designed balers are turning more The baler has less heads due to several wear and tear improvements to the inside of the while increasing machine. its efficiency A 2.15m wide considerably. camless pickup has been added with 5 tine rows, which has has been installed providthe Fortima baling faster ing intelligent diagnostics than its predecessor the of key functions and preKrone Vario Pack. cise control of the baler. Krone Australia Product “The new monitor design Manager Lars Pasedag said for the tractor cabin has that the Fortima uses 60% fewer parts than your typi- some nice new features, it cal cam design pickup seen attaches magnetically and is very easy to operate.” in other balers. The Fortima V1500 baler “It’s a superior design as makes bales from 90cm the baler has less wear and in diameter up to 1.5m in tear while increasing its diameter, while the V1800 efficiency considerably,” can make bales up to 1.8m Pasedag said. in diameter. “The chain and slat bale The balers are available chamber system has been with an optional 17 knife upgraded to intermesh cutting system which can with hay, straw and silage chop material to 64mm in during baling to produce a length. denser bale”. Both balers are availThe system is known able with an optional for its reliable work in all baling conditions, whether tandem axle system which it is wet silage or dry baling is popular in wet and hilly conditions where stability conditions. is very important. Bigger guide wheels The tandem axle also instead of sprockets reduce allows for smoother transnoise of the chain and slat porting between paddocks elevator and result in less which is popular with hay chain wear, as the chain contractors. links do not change direcTel. 1800 334 653 tion as quickly. This also

Fences stand up to floodwaters The use of longer and stronger steel fence posts at closer-thannormal spacings of four metres, has given Gympie grazing family the Mulhollands a fencing solution that withstood the ultimate test - a flood submerging the low-lying paddocks to six metres above ground level. Andy Mulholland’s family property Widgee Crossing has a 3km double frontage to the Mary River and Andy says this new fencing is the first on the place to have emerged undamaged from such a big flood. “In the past we’ve found traditional Y-shaped star pickets get bent over and even some of the timber fence posts get pulled out in the floods so we decided to go with Waratah GalStar Extreme posts when we replaced the fencing on the cultivation country last year,” he said.

“We used the hot dipped galvanized posts 150mm longer than the traditional Y shaped steel pickets we utilized in the past. When strung with four strands of Waratah 1.8mm high-tensile Longlife barbed wire, they literally stood up to the flood. “When the water receded all we had to do was take the debris off the fence instead of rebuilding or repairing it like we’ve had to do in the past – the fence didn’t move at all.” The property has been in the Mulholland family since the early 1870s and Mulholland hopes his switch in fence design will see a welcome end to the Widgee Crossing tradition of mending fences after each flood. “Fencing is an expensive piece of infrastructure and if you’re losing sections to flood every five or

Flooding on the Mulholland family’s Gympie property, Widgee Crossing, from the Mary River.

six years, replacing it becomes a big regular capital expenditure and time cost. It’s now hopefully one we won’t have to make.” “The black imported steel pickets we have used in the past were 165cm long and we drove them in the ground about 45cm. The silver

GalStar Extreme posts were 180cm long and we drove these in the ground about 60cm. By increasing the depth the post was driven by one third, the post’s resistance to overturning was significantly increased,” Andy said. Tel. 13 1080

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DAIRY NEWS AUSTRALIA // october 2011

motoring Honda refreshes Accord The 2011 Honda Accord range has been refreshed, delivering more elegance, sophistication, additional features and greater value to customers. Honda Australia marketing manager Stephen Collins said the Accord represents excellent value for money. “Its spacious interior combines with superior comfort and handling with the perfect combination of power and fuel economy.” Since its introduction to Australia in 1977, the Accord nameplate has become a favourite with buyers and the motoring media alike. The Accord was the first Japanese car to win the coveted Wheels Car of the Year award in 1977 and is Honda’s most decorated car globally. The eighth-generation Accord won Drive Car of the Year in 2008 as well as Drive’s Large Car award the same year. The Accord range offers buyers a choice of engines; a powerful 202 kW V6 with Variable Cylinder Management (VCM) that allows the engine to operate on either six, four or three cylinders for maximum fuel and emission efficiency; and a 133 kW 2.4 litre four-cylinder engine that sips 8.7 litres/100kms (combined), an improvement on the previous figure, which was 8.8l/100kms.

Peugeot releases new compact SUV

The Accord’s exterior has been updated across the range, with the previous black grille replaced with two chrome bars, along with a revised bumper design. At the rear, a chrome highlight strip across the boot-lid adds a touch of class. Inside, the Accord has improved technology features including a USB port to allow connection of personal

music devices and A-pillar mounted Bluetooth. The Accord also has a new foldaway key design (jack-knife). The Luxury variants are now equipped with satellite navigation, front parking sensors (V6L only) reversing camera, a premium audio system with subwoofer, intelligent dual air-conditioning and new five twin-spoke 17 inch alloy wheels.

The new Peugeot 4008 will be released in Australia next year, with the company saying it is the ideal compact SUV for Australians. Marketing manager Richard Grant says the SUV is economical, stylish and easy to drive in the cities; tough, reliable and exceptionally flexible in the country. “Australians have very specific and wide-ranging demands for these vehicles and there are a couple of 4008 models under development that are spot-on for us,” Grant said. “Now it’s down to equipping these models suitably and negotiating the best possible prices for what is

arguably the most competitive car market in the world.” He said the 4008 would be exceptional value for money.

The new Peugeot 4008 will be on sale next year. Available items will include many typical Peugeot touches, such as a panoramic glass roof, Bluetooth/ USB connectivity and LED daytime running lights. “The 4008 - in both two-wheel-drive and four-

wheel-drive - will complement the existing 3008 and 4007 perfectly in the Peugeot model range, and all three will be on sale sideby-side,” Grant said. “The compact SUV segment is exciting and growing and the 4008 will considerably broaden our appeal across the market. “It will be our compact SUV while 3008 is our luxury compact offering. For its part the recently repositioned 4007 will appeal to buyers who need something a bit bigger, especially if they need to tow.” Peugeot Automobiles Australia expects the 4008 to go on sale locally in the second quarter of next year.

Don’t just seize the day.

Transform your workday with the 6R Series. Change the way you work with the new John Deere 6R Series – our most versatile tractors yet. Models up to 154 kW of engine power (210 hp*), with a full 114 L/min hydraulic ﬂow and up to 9,550 kg of rear hitch capacity, give you the muscle to handle big planters and deep tillage equipment. Need to move some materials? The all-new H360 and H380 Loaders were built speciﬁcally with these tractors in mind, giving you greater lift height and available single-point electrical and hydraulic connection. And when the day’s done, you can get home faster with transport speeds of up to 50 km/h. Don’t just seize the day, transform it. The all-new 6R Series Tractors with 125-154 kW of engine power (170-210 hp*). Get to know the all-new 6R Series Tractors at our website or see your local John Deere dealer today. Nothing Runs Like A Deere.™

* Rated engine hp (ISO) per 97/68/EC.

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DAIRY NEWS AUSTRALIA // october 2011

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