Macalister demo dairy scrutinised

Macalister demo dairy scrutinised

Dairy
Dairyfarmer Hans van Wees: "With an entity like this, all procedures need to be written down. With the high staff turnover, the first thing that should be developed is a written plan of where the irrigation is and how to use it."

Dairyfarmer Hans van Wees: "With an entity like this, all procedures need to be written down. With the high staff turnover, the first thing that should be developed is a written plan of where the irrigation is and how to use it."

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THE Macalister dairy farm (MDF) is an ideal model for co-operative, corporate or multi-farm management, but needs an overhaul.

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THE Macalister dairy farm (MDF) is an ideal model for co-operative, corporate or multi-farm management, but needs an overhaul.

That was the view expressed by farm consultant and MDF manager Matt Harms at a recent field day at Maffra.

Mr Harms said MDF had a chequered past, with some good and some poor managers and strategic directions.

MDF is co-operatively owned by the community, has a board of management and community advisory committee and employs managers and staff.

It has become part of the Gippsdairy industry's Focus Farms program to help guide its development.

But its unique status as a co-operative-owned dairy farm enables it to be scrutinised as a corporate model in an environment in which that type of agricultural venture is expanding in Victoria.

MDF has 270 spring-calving milkers, with a budgeted component of $1.04 per kilogram of milk solids (MS) for paid labour based on total annual production of 6845 litres/cow, or 1.51kgMS/cow and about 400kgMS/day total.

February's production target was 1,215,027 litres of milk; the herd achieved 1,265,464 litres.

Fat content was +4.4 per cent variance between target and actual; protein/kg was +5.3pc variance.

Mr Harms said wages and labour retention were a significant challenge in business and discussed a range of ways to gain labour efficiency beyond increasing business size.

"This is a 100pc corporate entity so everyone who works here is paid a wage, so the biggest challenge is management of labour," he said.

"Paid labour is a big component of this farm.

"Retention of staff is seen as a significant measure of success in dairy but young people are used to moving quickly between jobs and it's drummed into them by society that employment is transient.

"So, 12-18 months should be considered positive for labour retention these days - and I think every dairy farm should consider that likely."

He discussed the 'corporate dilemma': farmgate milk price $6.09/kgMS; labour full-time equivalents/hour $3.79/kgMS; 100pc paid labour $1.05/kgMS; depreciation $0.07/kgMS; asset return on investment at 6pc is $1.19/kgMS.

"So $6.09/kgMS is not a return on asset because milk price is below $6.09/kgMS as likely as not," Mr Harms said.

"What do we squeeze to get the budget in surplus?

"To get it down to $3.30 or increase production?

"Most corporations need about $6/kgMS milk price to break even."

Mr Harms said a major problem the farm was facing was past under-expenditure on capitalisation, which meant equipment was breaking down or becoming obsolete for its purpose.

Therefore capitalisation would be an additional draw on earnings but was essential to set the farm up for the future.

"What are the options when milk price is below $6.09?" Mr Harms said.

One of the options taken up this season was changing pasture quality to take 12 megajoules of energy out of the cows' diet, resulting in a two-litre drop in production.

This also affected the budgeted bottom line.

Mr Harms said pasture was the major production issue on the irrigated farm, which has a 500 megalitre water licence.

"Pasture quality is another issue," he said.

"We need a growth rate of 44kg/day to ensure grass cover.

"That doesn't take into account weather variables.

"When you factor in grass cost you have to include cost of nitrogen, urea et cetera.

"Grass has a value, because when we don't have grass we need to pay for an alternate.

"So we need to ask 'What is the cost of grass?' then add the cost of water, power for irrigation, diesel for pasture topping, weed spraying - all of which have a labour cost as well.

"If we assume $140/tonne of dry matter consumed, this equates to $1.47/litre."

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