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Wednesday, November 7, 2012

The Bare Bones, Scraping The Bottom Of The Barrel, Budget, 50 Cow Starter Farm

This post will seem crazy to the farmer who will someday inherit Mum & Dads farm or the farm owner or even the sharemilker milking 500 cows.

This post is to get people thinking about alternative ways in which they can get into dairy farming.

I want to talk about what I call the "bare bones, scraping the bottom of the barrel, budget, 50 cow starter farm". As the name states it's an attempt to milk cows with the lowest possible set up costs, and its a way for young people with no money to start building a herd.

Just like a standard dairy farm, you will need; 50 cows, a cowshed & some land. The way we acquire these three things will be slightly unconventional.

It's important to note that a sensible person would just go contract milking. So if you're not sensible or you can't get a contract milking position, then the "bare bones" system may work for you.

There are many reasons why this system won't work but as Geoff Ross said "Every Bastard Always Says No". To run this system the dairy company that you supply will need to amend their risk management programmes, which some seem happy to do.

The Cowshed
You need to be able to harvest the milk, and as the video below shows that a mobile cowshed does not need to be expensive and can be very basic. It also shows that tractors can be very small or is that a ride on lawnmower?




The cowshed in the video isn't the fastest way to milk cows. I would consider a single side herringbone or even a walk-through design rather than the design they have used. But either way this is a very simple structure that will allow you to get milk out of 50 cows and into a vat, which is all we are trying to do. You probably only want to do it once a day though.

Tanker Track
To supply a dairy company you need to have somewhere for the milk tanker to collect your milk. This usually consists of a purpose made gravel road made to the dairy companies specifications, which runs up to a farmers cowshed. The tanker parks onto a concrete pad where the farmers main collection vat is located.

You can build your own tanker track and put a concrete pad down, but that will cost money and if you are leasing land the land owner will probably not want a big tanker track on his property at the end of the lease.

Collection Vat
Your main vat does not need to be on the same bit of ground that you milk your cows on. It can be located in a number of areas. You could put your vat on the neighbouring dairy farmers tanker track (if you ask nicely), or on the sheep farmers track next to his wool shed or anywhere that a tanker can easily drive up to and collect your milk. Where the tanker collects your milk will depend on peoples individual situations. 

These collection areas are almost always made of concrete. But the MPI (Ministry of Primary Industries) food safety specifications say that these areas need to be made of an "impervious" material. MPI don't want a situation where waste milk and wash water are pooling or running into the surrounding area. There are a number of ways these requirements can be met with out using concrete. Having said that it might just be cheaper and easier just to build a concrete pad next to the track that you use as a tanker track and just remove the concrete at the end of your lease.

Your collection vat and vat wash facilities can be housed in a small shipping container and all waste water/milk runs into a plastic water tank and a cheap K-line style sprinkler system will enable you to spread the waste water. This type of set up will pass the regulations and allow you to move it when/if you move to a different block of land.

Cows
The cows will be your main cost and at the time of writing a fully recorded cow is worth about $1800-$2,000. So 50 cows will cost you $90,000-$100,000. 

But you don't need to spend this much money on cows. 

Lame Cows
Because you will be milking the cows in the paddock the cows do not have to walk to and from the cowshed. That means you can buy cows which have sore feet. I'm not talking about cows that should be culled for welfare reasons, but on every farm I have worked on we have had a few cows which seem to live in the sick paddock, close to the cowshed. They seem to have recovered from their sore feet issues, but after a week with the main herd they end up back in the lame paddock again. You should be able to buy these cows for $1,000.

Older Cows
A local stock agent told me that he has some clients who have larger herds (1,000-2000 cows). He said they have a practice of selling their older cows before they break down on the long walks which seem to go with large farms. These cows will do 400kgms/year but you must be careful they don't have a high somatic cell count. These cows can be bought for $1,100/cow. These cows will be living the life of riley, being milked once a day and not walking anywhere.

Empty Cows
In the autumn when the grass growth slows, farmers start to get rid of the stock they do not want to feed through the expensive winter months. Cows that have failed to get into calf in the late spring- early summer are often sent to the works for $500-$700/cow. You can buy these empty cows and milk them through the winter. If you milk these cows with the mobile system, where the cows lay in the paddock for 23.8 hours of the day waiting for you to park the cowshed next to them. You should have 50 fat, happy cows who are only too keen to conceive.
In the spring you simply put 2 bulls in with them and leave them there for a few months. The worst case scenario is that some of these cows don't get in calf. If some are still not in calf, then simply send them to the works and receive $500 for them. You will have received $1,700 for their milk over the past year (320kgms/cow@$5.50) so your total income from this cow will be $2,200. The farmers I know who have done this report having 20% that do not get in calf. 

Lease Cows
Leasing cows is also a good option as you don't have to stump up with the cash or borrow any money to buy your herd. Lease cows usually cost 10% of the purchase price of a cow. So in today's figures with cows worth $2,000 the yearly lease for a cow is about $200. You get to keep all the calves.

Here are three ways to buy a cheap herd of cows for half price. I would find a handful of farms that have a large number of cows, who have an absentee owner and a high turn over of staff (ie Crafer farms). This should not be hard to do, especially if you live in the South Island. These farms will have a high number of good cows that have had a hard life and will be lame from long walks or have not got into calf due to a combination of factors. If you can get first option on these cows before they go to the works etc you can have a consistent supply of half price replacement cows, which you can turn into great producing cows by inserting them into your mobile "living the life of riley" milking system.

Land
Your cows need to graze somewhere, you can buy land (too expensive) or lease land (good option).

If you lease land you pay market rates at a per Ha basis. Canterbury irrigated land is about $700-$1,000/ha, unirrigated land is about $300-$500/ha. Its difficult to find a lease block of land for 50 cows. You will need about 16-25 ha depending on if its irrigated or not. A small irrigated block of land for lease is very difficult to find. Other parts of NZ where irrigation is not required will have a much easier time.

I live in Rangiora, the surrounding farmland has been carved up into 4 Ha lifestyle blocks, which are purchased by townies with a dream of the country lifestyle. Many soon find out that their 700 square metre section in Christchurch was easier to care for than their 4 Hectares. Often these life-stylers end up spending money to have these blocks maintained.

Lifestyle blocks are an under utilized source of land that can be used to milk cows on. Because the cows will be milked with a mobile cowshed, you can move the herd from block to block. Depending on the type and amount of feed on each block it will take 50 cows 6-12 days to chew through a 3 ha block of land. Obviously you want the blocks of land to be quite close together.
You may not need to pay any lease on these blocks, if you agree to maintain it and look after it for the owners. You could also agree to supply them with milk and to keep their freezer filled with meat.

Show Me The Money

It's difficult to budget a system that is so experimental. But production of 330kgms/cow for a South Island herd milked once a day is realistic. Once a day milking generally shows a reduction in farm working expenses of 25%. 


If the farmer supplied a corporate dairy company they would not need to buy shares. This would reduce the set up costs by $74,580. If the cows were leased rather than purchased, then that would knock a further $50,000 off the set-up costs, which would leave you with a total setup bill of about $55,000. Which is quite good when you consider that the budget shows a profit of $32,000!

This system is all about just doing the basics, so there is no artificial insemination, or imported feed. Its just grass and milk.

This exercise is a bit mickey mouse, but it shows that there is the potential to make a profit from a small herd of 50 cows. I'd encourage young people with very little capital, to think how they could set up a small herd that would fit their circumstances.

A young couple could set-up a similar system. One partner could continue working in a job while the other milked the cows in the morning and did the farm work.

Or, you could just go contract milking!

2 comments:

  1. Hi Glen,
    Very interesting article. There is something to be said for being the master of your own destiny, i.e. self employed. If you are going to work hard it best be for yourself. One would learn and grow so much more as a person. I especially like your ideas around getting a cheap herd. From my experience so long as the genetic factor is not too strong these sore foot cows etc will flourish under the no stress once a day no walking, fully feed all grass system especially with a little mineral supplementation.
    Cheers
    Matt

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    Replies
    1. I'm setting up my own small scale dairy. I'll blog as I go. Outlining how I am building my low cost system. Stay tuned.

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