Gearing up for the new season

Western Victorian dairy farmers gear up for new season with focus on profit

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BUILDING EQUITY: Issac, Ben, Hope, Charlie, Ruby and Anna Kenna on their western Victorian farm in 2017. They are gradually building equity in the farm.

BUILDING EQUITY: Issac, Ben, Hope, Charlie, Ruby and Anna Kenna on their western Victorian farm in 2017. They are gradually building equity in the farm.

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Western Victorian dairy farmers Ben and Anna Kenna are looking to take advantage of this season's milk price with a strong business approach powered by good analysis and cost control.

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Western Victorian dairy farmers Ben and Anna Kenna are looking to take advantage of this season's milk price with a strong business approach powered by good analysis and cost control.

The former Focus Farmers have owned their current dairy operation for the past six years and milk 630 cows, a majority Friesian herd, on 257 hectares at a higher than average stocking rate for the region at 2.5 cows per hectare.

The couple bought their farm at market rate from Mrs Kenna's parents after share farming the property for a number of years. Their farm near Terang has well established infrastructure and pastures to manage their autumn calving herd.

The 2018/19 season

With a focus on efficient feeding and monitoring the numbers in the business through the Xero accounting package and Dairy Australia's DairyBase, the couple made a profit in a challenging 2018/19 season.

The way the operation is structured set up the Kennas well during a time where the milk price was about $6 a kilogram milk solids, yet high bought-in feed costs were affecting all dairy regions.

Low overheads in the business are a feature of the operation. A relatively new rotary dairy and feedpad means low maintenance costs. The couple keep the labour bill at $140,000 per annum and employ two staff.

Calving is set up to take advantage of drier autumn conditions. Calving starts on April 1 and ends on July 1. This also means they can match lactating cows with spring pasture growth and maximise homegrown feed.

The Kennas use concentrates in the form of pellets to supplement the diet of the herd through winter and in recent years they have continued to push concentrates in the bail into spring.

This not only helps from a milk production point of view but also helps conserve and make silage.

Last year 600 tonnes of silage was harvested off the milking areas. The Kennas know this as they are charged by contractors by the dry tonne.

"You want to know what you've paid for, but you also want to know how much you've got in your stack," Mr Kenna said.

However, a key to the success of the season was the approach to buying in a range of feed.

"As we got into spring it was looking a bit of a worry up north," he said.

"Grain was getting dearer, hay was getting dearer. All the talk was concerning. I made a lot of calls. It took a bit of time and patience and there was stress in not committing too early."

After some negotiating, Mr Kenna managed to get 500 tonnes of medium quality hay (9 megajoules of metabolisable energy per kg of dry matter) for $200/tonne/DM (market rate was $300-$400/tonne) which was fed to milkers, dry cows and calves.

There is a lot of negativity around the dairy industry but we want to show people that you can be successful and we are happy to talk about our journey. - Anna Kenna, dairy farmer, Terang, Vic

He also bought 300 tonnes of high-quality maize silage at $290 a tonne.

In addition, pellets were used as normal and bought at an average price of $460/tonne, which was $80-$100 more per tonne than a normal season.

Overall, they achieved 8.8 tonnes DM/ha with home-grown feed accounting for more than 50 per cent of the total.

As a result, the operation produced 366,000kg/MS which enabled debt reduction, all bills to be paid and a profit from the 2018/19 season.

Running the numbers and EOFY

During the season, Mrs Kenna uses Xero to assess the figures from month-to-month to review how much money they have left over at month's end. The Kennas' goal is to have to have enough cash-flow to pay the monthly bills and they like to see what they have left over.

When it comes to the end of the year, Mrs Kenna prints out a Profit and Loss statement with the yearly totals and that data is then entered into DairyBase including things like hay tonnage and fertiliser costs.

After entering the information from their milk statement into DairyBase, they then have a good analysis of their own yearly performance, in comparison to past years, as well as comparing to other farms in their region.

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A key report in DairyBase they like to check to track how they are going is the Wealth Report. This allows them to see if there has been a change in their overall wealth position, but also their asset growth and equity position.

"As we started from a low equity position of 20pc, we really like to have more security going forward," Mrs Kenna said.

The couple have now built their equity over time and are now at 54pc.

Consultants in the past have helped Mrs Kenna enter data into DairyBase but she is now comfortable to do it herself.

This season's focus

The Kennas see few changes in their business in 2019/20 and are hoping for favourable seasonal conditions to take advantage of the positive outlook on milk price, and to continue to improve their position and gain an operating surplus.

They are happy to showcase their progress and show some of their practices to other dairy farmers.

"There is a lot of negativity around the dairy industry but we want to show people that you can be successful and we are happy to talk about our journey," Mrs Kenna said.

This story first appeared on Australian Dairyfarmer

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