Improving On Farm Productivity

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Improving On Farm Productivity
DAIRYING A GREAT FUTURE
Max Barbe Jelbart South Gippsland 1050 Cows 750
Heifers Diversified Investments
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Set the scene for on farm productivity Consider
our operating environment What we can
control Beyond our control Markets Resources O
n Farm Management
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Current Scene State of change

• Mid 90s imported 10 total energy
• Today Importing 50
• Climate variation 10 less grown utilised
• Risk profile shifted dramatically industry
  built on dry matter per hectare
• Not monitoring marginal rate of return on inputs
• No seperation of profit growth

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• Mid 90s capital growth was taboo when
  discussing returns
• Today part of the equation but few tools
• Big question mark on profitability of large
  dairies both in Australia and New Zealand when
  capital considered.

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Markets ongoing strong demand at good prices

• World wide shortage of milk product
• 200 emails 4 negative responses
• Overseas companies looking to vertically
  integrate with farms to secure supplies
• A strength lower profits

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Import Demand vs Production
Import demand growing at a faster rate than
production from exporting regions
Includes EU, US, NZ Australia Argentina and
Brazil
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Biofuel a threat and an opportunity?

• Take grain away from livestock industries
• GM of lignocellulose in stubble will help ease
  pressure on grain in medium term for biofuel
• Consequences
• Lower milk prodn from more forage based industry
• Milk shortages
• Higher milk prices gt buyer resistance
• Substitution of alternatives e.g. soy

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Domestic Markets

• Purchasing power of duopoly supermarkets
• Pressure on prices for higher standards
• Commoditising products
• Egg prices up, supermarket profit protected
• Co-Ops essential for base milk price
• MG driving Australian milk price
• Do not repeat UK history letting co-ops fail

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Environment growing pressure

• Farmers are greenies at heart
• Public demand high standards with little
  recompense
• Responsibility to be good land stewards
• Hard to be green when you are in the red
• Drought exacerbated by declining trade terms
• Higher stocking rates
• 1982 drought 1 cow/Ha producing 230 kgs MS//Ha
• 2007 3 cows/Ha 1680
• 1000mm rainfall farms out of water
• Risk management feed and water storage very
  important

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Resources great opportunity in places

• Dairy land to east and west of Melb. Best
  environment
• Good climate, grain, fodder, infrustructure
• Urban sprawl within 2 hours of City pricing
  farmers out
• Govt policy blocking dam construction impeding
  viable farming and
  restricting previously encouraged
  decentralised towns and industry

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On Farm Productivity great potential

• Fundamentals need to be right to invest
• 345 300 Tonne for grain hay unsustainable
• Sydney futures exchange may mitigate risk
• Is the family farm disappearing NO
• Smart young farmers achieve double digit returns
  with 250-350 cows
• Will outperform large dairies like ours detail
• Labour efficiency improving /kg milk solids

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Variable costs a myth?

• Mostly fixed
• Land, cows, cow maintainence, replacements, vet,
  facilities, labour etc all fixed
• Extra feed and delivery of it variable
• Number of cows milked not on milk cheque!
• Understand the business drivers!

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The Future a stream of innovation

• Technology 1 man rotary dairy milking 1000
  cows
• At 280 cows per hour
• Electronic cow ID with individual daily milk
  records
• Auto teat spraying and drafting
• Much to learn from cropping to increase
  efficiency
• Computerised tractors, sprayers, GPS, fertiliser
  spreaders, green seeker technology

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• Minimum tillage
• Low endophyte late heading high ME grasses
• Double cropping to lift dry matter yields from 7
  gt 20Tonnes/ha in suitable soils
• Cross breeding with Holstein, Jersey, Swedish
  Red, Montbellier for hybrid vigour
• Limited freestall barns in central grain area

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Strong Future

• Capital create viable equity pships business
  of farming the land and owning the land
• What constitutes a sustainable business balancing
  home grown and imported feeds??
• Lack of high skilled dairy business managers
• Strong Co-Ops supported to ensure good farmer
  returns

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• The cost of production often directly reflects
  the price paid for the milk
• Prof. David Leaver, Cirencester.
• We need to ensure that we have efficient
  production systems in that the highest production
  is not always the most profitable

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Improving On Farm Productivity
DAIRYING A GREAT FUTURE
Max Barbe Jelbart South Gippsland 1050 Cows 750
Heifers Diversified Investments