Thursday, June 27, 2013

Mike Barton-Beef Farming Under a N Cap. This Video Will Scare The Crap Out Of Dairy Farmers

Mike Barton gave this talk to the Beef & Lamb NZ Farmer Roadshow in June 2013. 

It is a real eye opener & Mike explains in detail what farmers in the lake Taupo catchment have had to change in order to meet the Nitrogen cap put in place by their regional authorities.

Thanks to Beef & Lamb New Zealand for making it publicly available.

A quick summary

Mike has had to cap his nitrogen leaching & production to 2004 levels.

He can't change his beef farm to dairy for example, therefore he has also given up any real capital gain on his land.

He has to farm for cash flow not capital gain.

  • 20% of catchment area is in Pastoral farming, 69% is in forest.
  • Possible many other regions of NZ will be the opposite! (69% pastoral & 20% forest)

  • Farming responsible for 93% of manageable Nitrogen
  • 6 farms were modelled for the environment court-Insolvent in 5-9 years
  • Production is capped at 2004 levels
  • Since then costs have increased by 48%
  • Mike assesses his productivity in profit/kg of Nitrogen leached. That is the only way he can increase his profitability.

Mike stated, New Zealand farmers can not continue to sell our product for less than it costs to produce.

New Zealand farmers have not been taking into account the environmental cost of our production. 

New Zealand farmers need to stop being commodity sellers, they need to stop worrying about production and start to concentrate on selling high value products, and more importantly retaining as much of the value as possible.

We need to find low N dairy systems

The reason I am working hard to investigate dairy farming systems that leach very low amounts of Nitrogen is because the day will soon be here when farmers of all descriptions will have to account for the nitrogen leaching out of their farming systems.

I get the feeling it will not matter which flavour of government is in power, the trend is clear.

The Horizons One Plan is the latest instalment and it is only a matter of time before similar plans hit the rest of the country.

I'm planning now, for a profitable farming future. Where my cows will have to leach much less Nitrogen.

Sunday, June 9, 2013

Dairy Farmers Spend 66% Less Than The Average NZ Business On Wages


G’Day, Glen Herud here again.

I’m going to carry on talking about dairy farm staff. I’ve got some statistics for you. 

Wage to Revenue Ratio

  • NZ Average                             21%
  • Dairy Farm (Owner/operator)     7%

Statistics New Zealand have released some data, and they’ve said that the average New Zealand business with a turnover, greater than $700,000 per year spends 21% of their turnover on wages. The dairy industry, on the other hand, spends 7% of turnover on wages. 

If these 2 businesses had $1 million turnover, these guys would be spending $210,000 a year on wages, and the dairy farm is spending $70,000 on wages. 

This backs up what I’ve been saying, is that the dairy industry is under-investing in staff.

I Think a 750 Cow Dairy Farm Needs To Add 2 Extra Staff

If we take our 750 cow dairy farm, which I’ve been using as an example, now we have 3 staff on there, plus the boss, so there’s 4 people on the farm. 

I reckon we actually need 5 staff plus the boss. I think we need to add an extra 2 people onto this farm. That’s not going to be cheap, that’s going to be an extra $70,000 per year on wages. If you look at that from a percentage of turnover, if they add $70,000 to their wage bill, they’re still only spending around 10% to 11% of their turnover on wages, which is about half of what the New Zealand average is. I think that’s still quite acceptable.

How Would I Staff a 750 Cow Dairy Farm

How would I setup this dairy farm so that it could attract and retain good people? This is how I would do it:

I would start with a Monday-to-Friday work week. I’d get rid of these rosters that you have, like 6 days on 2 days off, or 9 days on 3 days off; whatever like that. I’d have a work week from Monday-to-Friday. 

You’d need around 2 people to milk in the morning. That would start at 4:00 a.m. They’d have their breakfast at 8:00 a.m, after milking, they’d go through and have lunch at 1:00 p.m., and that’s the end. They’re done for the day, they’ve done 8 hours. You start early, you finish early. 

You get another 3 staff, and they’d start at 7:00 a.m. Get up, have breakfast, go to work, 7:00 a.m. Have lunch at 1:00 p.m. or maybe 12:00 p.m., and then they finish up after milking at 5:00 p.m. They’re working around a 9-hour day. That’s how I would do it.

Basically, we’ve got 3 people on the farm from 7:00 right through to 5:00. Between the hours of 9:00 a.m, through to 1:00 p.m., you’ve got 5 people on the farm. You can get a heck of a lot of work done. There’s no excuse for not having everything perfect on your farm. 

Of course, you’ve still got the boss, who’s also floating around, out here. You’ve also got to bear in mind that if you’ve got 5 staff, you’ve got to give them 4 weeks annual leave every year, so that’s around 20 weeks. For around half of the year, one of these staff members is going to be on holiday. I still think that’s quite an acceptable staffing ratio on a farm that size.

What about the weekends?

I reckon you only need 2 people to milk. Because you’ve got 2 people milking, all you want to do on the weekends, I believe, is just milk. 

On the Friday afternoon, everyone should be setting up the farm so there’s nothing else to do on the weekends but milk. The effluent irrigators moved, the brakes are moved, I’d even feed out silage on Friday. I’d feed out Saturday and Sunday’s silage on the Friday, and deal with all lame cows, all those things get done on the Friday.

On Saturday and Sunday, the 2 guys who are milking, all they’re doing is milking. Go home after breakfast; wait around under afternoon milking & milk.

Only Work Every 3rd Weekend

You’ve got 6 staff, because essentially, you’ve got 5 staff plus the 1 boss; that means you only work every third weekend. Essentially, you work Monday-to-Friday, a 40-hour week, roughly, have 2 weekends off in a row, then you work the third weekend, and then you have 2 weekends off in a row. Those are the sort of conditions that are going to be appealing and attractive to all workers. 

I think if we offer those terms and conditions, we’d be able to pick the best people and be attracting and retaining great people into the dairy industry, as opposed to scraping the bottom of the barrel, which we seem to be doing at the moment.

That sounds all wonderful though, but there’s a big but: How are you going to pay for an extra $70,000 a year? There will be farmers out there with 750 cows in Canterbury saying, “There isn’t $70,000 sitting on the bottom of my budget.” 

That’s what I’ll talk about next time.