The Reasoning Behind My Micro Dairy Business

In the next 2 months, I'll begin milking a small herd of 15 cows. I'll sell the milk direct to the public. I'll milk my herd on leased lifestyle blocks, using my mobile cowshed.

In my last blog post I outlined 5 points that I wanted to achieve with my new business.

• Create a truly environmentally sustainable dairy business
• Create farming opportunities for young people that also provided a great lifestyle
• Keep control of the value chain
• Offer real unaltered whole milk to the public
• Concentrate on building a brand rather than owning land

It's taken a few years of thinking about the issues and I wanted to briefly outline how I have come to settle on my current system.

Question Everything

I started off by questioning every aspect of traditional dairy farming.

I asked:
Why do we do what we currently do? 
Why do we need irrigated land? 
Why do we use ryegrass & clover pastures? 
Why do we milk twice a day? 
Why do we need a big concrete cowshed? 
Do we really need laneways? 
Why are their less small herds around now?

I investigated dairy farm cost structures and profitability.

I asked why do farmers supply dairy companies like Fonterra or Synlait? 
How do people progress in the dairy industry? 
How much money do dairy farmers make?

I questioned what we know about the environmental aspect of farming.

How exactly are water ways affected by farming?
How do nitrates work? 
Where do the nitrates come from? 
Why do we deal with effluent the way we do now? 
What is Phosphate & how does effect our effect the environment?

Environmental System

I started with a blank sheet of paper. The first priority was to design an environmentally sound dairy system. I’d worry about how to make it profitable later.

The research tells us that nitrates are the greatest pollutant caused by dairy farming in New Zealand. Turns out that the cows urine patch is the biggest contributor to nitrate leaching by a long shot. I learnt that the wetter the soil is, the more leaching occurred. Large amounts of nitrate are leached over the winter months. I discovered that plant root systems are the greatest absorbers of nitrates.

I thought, if we forget everything we know about farming and just designed a system that would leach no nitrate.

What would that farm look like?

We’d want to reduce the amount of urine on our paddocks, which means we want a lower stocking rate. We don’t want our cows on wet soils. So wintering cows on crops on a small area of land (as is the usual practice) is not going to work for us. We also want to use un-irrigated land because it leaches much less nitrate. We want plants/crops with deep roots to absorb the nitrate, which means ryegrass & clover pastures probably won’t work for us.

All these points put together basically mean, we would leach very little nitrogen. But more land is needed & that land will produce less because it’s not irrigated. Our wintering & feed costs will be a lot higher too.

It’s pretty clear that this farming system would not work financially, if we supplied Fonterra or another dairy company, we simply would not be profitable.

Make the farm fit around my desired lifestyle 

With the environmental aspects sorted, the second priority was how could we design a dairy farming system that I wanted to work in and that suited the lifestyle I wanted to lead. I assumed that if I could achieve this goal, then it would also be attractive to the best of today’s young people.

There are lots of brilliant young farmers out there, but we need more. Many great people are choosing other occupations and agriculture has to compete for good people.

So again I questioned every aspect of the daily duties on the farm.

Why do we start milking so early in the morning? 
Why do we milk twice a day? 
What activities take the most time?

Milking the cows took the most time and you can easily spend over an hour herding cows to the cowshed each milking.

So milking once a day milking is an attractive option. The research shows that most cows milked once a day were producing 19% less milk, but had less animal health & feed costs. Trading 19% less milk for about 40% less work still feels like a winning situation to me.

But the main attraction to once a day milking, is that dropping the afternoon milking gives you much more options for giving staff (& me) more time off. It allows much greater flexibility on when the jobs get done.

While milking once a day may help with a better lifestyle, the other half of the solution to attracting young people to farming is financial opportunities. This system had to be achievable and in reach of young (& cash poor) people.

Basically it needs to be cheap to set up.

Attainable to young people

I concluded that it needs to be small scale system. It's easier to find the money to buy 20 cows than 200 cows. Also when you have a small herd the amount of equipment needed is greatly reduced.

Land is by far the biggest expense when setting up a farm. The land required for a small 20 cow operation would cost at least $1,000,000. Which is hardly in reach of your average young person.

My solution is to lease land. But you are hardly going to build a small cowshed on land you don’t own. This is where the mobile system becomes important. If I could build a fully contained cowshed that is totally mobile, then milking off leased land becomes an option.

My research into dairy farming financials showed that interest paid on land was one of the biggest expenses on a farm. By leasing land rather than buying it, I could save a lot of money. Which could offset the extra costs & lower production caused by our no nitrate leaching measures.

As I thought about this more, the mobile system looked like it could save a lot of time on farm as well. For instance, I would not have to spend time herding the cows to the cowshed as I’ll milk the cows in the paddock. No concrete yard to clean, which saves time & water. No need for a conventional effluent system, which is one less cost. No need for lane ways or permanent fencing either.

At this point I had a rough idea of how I could farm dairy cows and leach very little nitrate. I worked out that a mobile cowshed could be achieved & the mobile system made it possible to set up a small scale herd on leased land for a relatively low amount of money.

Who will buy the milk?

Now it was time to ask the question, who will buy my milk & how can we make it financially viable?

From my research, it was clear that there are a number of people who would love to buy a sustainable or eco brand of milk. This is a brand that can promise its farming practises do not adversely affect the environment. 

The public are aware of the environmental impacts that dairy farming has on our water ways & a good number of people say they would support a brand that stood for more eco dairy farming practices.

There is also a growing number of people who are concerned about what is happening to our food in these modern times. The whole food movement is growing.

There are clearly people would buy my milk if they had the opportunity.

Could I make it pay though? 

The following thoughts were going through my head; 

All the trends are for farms to get bigger and have greater scale & I’m proposing going smaller!

On farm costs have been increasing which is putting pressure on farm profitability. I’m proposing even higher costs combined with production drops in order to meet my self imposed environmental & lifestyle standards.

A trip to the supermarket showed that 1 litre of Organic milk was retailing for $3.40, 1 litre of Anchor or Meadow fresh blue top sells for $2.45.

If I could receive $2.50/ litre for my milk, then I could make it work financially. I worked out that if I could keep the money that the farmer & the processor get, then I could break even. 

But breaking even is not a very sustainable goal. I would also need to retain the 30-40% margin the the retailer receives in order to make the business viable.

So, I would need to be the farmer, the processor, the delivery man & the retailer in order to be profitable.

In conclusion:

I've just described, very simply the thought process that occurred over a couple of years that has brought me to where I am now.

I hope that I have found a way for us to milk cows sustainably that is attractive & within reach of young people & profitable too.

We’ll see if it works. Stay tuned.

Why Bother With A Mobile Milking System?

Well, I've finally got my act together and started building my mobile cowshed.

The question I get asked a lot is, why? 

There are plenty of opportunities to go dairy farming. I could go lower order sharemilking or contract milking. Those two options don’t require a huge amount of money & I've got the experience to do a good job of it. 

But there are certain aspects of the dairy industry that don’t fit with me. I'm not saying that these aspects are wrong. But for me, I want something different.

So I've spent the last few years thinking about how I could create the perfect farming business that suited my family and my beliefs.

So I’d like to explain what my 5 issues are. Once people understand the 5 issues it becomes a bit clearer as to why I'm building a milk business based on a mobile cowshed.


Real milk
When I left the farm & moved to town, I was surprised by how different the supermarket milk was compared to the milk I got from the vat every morning, while living on the farm. Any dairy farmer will tell you that the milk we buy in the super markets is quite different from the milk that comes straight from the cow.

Virtually all milk brands in New Zealand put their milk through a number of processes. The result is milk that isn't really like the real thing.

There has been a lot of demand from the public for raw milk. It’s common to hear people rave about how great raw milk tastes etc. 

But the difference in the milk is not because it's raw, but because its real milk that has not being heavily processed.

It’s crazy that New Zealand produces so much milk, but it’s so hard for kiwis to buy real milk.

So I’ll give people the opportunity to buy milk straight from the cow. I’m going to simply milk our cows, gently pasteurise the milk and then deliver it to the public. 


Brand is better than land
You can generalise by saying the farming business model in New Zealand is to, borrow heaps of money & buy a farm. 

You then need to farm it like crazy to pay the interest bill. Farmers then make a small return of about 4% of asset per year. But that doesn’t matter because the land always seems to increase in value, and the capital gain that is made on the land is tax free.

This is actually very similar to what urban New Zealanders do too, except they do it with their home. 

The goal of many driven young farmers is to own their own farm. 

I take a different view; I believe owning a brand is just as good or even better than owning land. 

If we look at some well-known companies we find that the value of the tangible assets, like land, plant & equipment is only a fraction of the total value of the company. The intangible assets or the goodwill of these companies are worth more than the actual assets that you can touch.

The “McDonalds” brand accounts for 70% of the total value of the company. This is despite the fact McDonalds owns some of the best commercial real estate in the world. 

The Coca cola brand is said to account for 51% of the company’s value. This is despite the fact that the company owns many other drink businesses too.

So I'm not really interested in owning the land that our cows graze. There is a limit to the amount of production a piece of land can produce, but there is no limit to how far you can grow a brand.

I feel that New Zealand agribusiness doesn't concentrate on building the consumer brands enough. We are very good at producing commodities. But the consumer brands are where the action is, in my opinion anyway.

My focus is on the building a consumer brand.


Sustainable farming
Rightly or wrongly, farmers are copping a fair bit of criticism about the environmental impact of modern intensive farming systems, especially dairy farmers.

I've decided that environmental sustainability is imperative, both on farm and off farm. 

These days, just about every farmer will say that caring for the environment is very important. It seems that “environmental sustainability” is a relative term used by everybody regardless of their farming practices.

I've looked at the science around water quality & nutrient leaching. It appears that the science is quite clear. We know what factors cause environmental damage. 

Unfortunately it can be quite difficult for a traditional dairy farm to change their practices to meet the science & stay profitable at the same time.

We've designed our farming system so that it is adaptable & fits around what the science tells us about nutrient leaching & effluent run-off.

The farming system we employ, has to be pure. That means our goal is zero nutrient leaching, zero waste & eventually carbon neutral.

Now, that’s a ballsy claim to make! 

To be clear, I'm not saying we will achieve those goals from the start, but that is our goal. 

We’re prepared to get radical & funky with the way we farm to ensure we get there. 


Value chain control
If we look around the world we see farmers who have lost control of their product.

Many dairy farmers in the UK have found themselves at the mercy of the milk processors & the major supermarkets. 

The supermarkets have all the power and they use their power to drive down the price that the farmers receive.

Our friends in the Australian dairy industry have found themselves bearing the brunt of the supermarkets using milk as a loss leader. Again the farmers find that they have little power.

Recently in New Zealand we have seen many suppliers complain about the business practices of our supermarkets, which happen to be owned by the same Australian supermarkets, which (quite by coincidence) are being run by the same bunch of Poms who used to run the UK supermarkets. 

So, I want nothing to do with supermarkets. (Actually, I don't think the supermarkets would want anything to do with me either.) 

It’s easy to say “we’re going to take control of our product”. It’s quite another thing to actually do it. 

The easy thing to do is to sell our milk via a retailer. They have the customers and it’s easy to get the volume that I require to be profitable. But in the long term, I would find myself dependent on the retailers for my distribution.

I'm going to spend a little more time and effort now & get set up to sell our milk direct to the customer.

But in order to produce a truly sustainable product with a small scale herd, I need to know that I'm not going to get screwed down by a retailer.


Opportunity & Lifestyle
This section comes out of the “I want my cake & I want to eat it too” department.

I want a great lifestyle where I can spend quality time with my kids & wife. I don’t want to be tied to the cows and I don’t want to be running around in a frantic rush, trying to get all the jobs done in the day. 

I also want to earn a good living and to top it all off, I don’t have much money to spend setting up this business. 

So it has to be cheap to set up.

Some will say I'm an unrealistic dreamer to think i can have all those things together. Well maybe I am, but I'm going to give it a crack.

If this works, there is no reason why young eco conscious, entrepreneurial men & woman from around New Zealand, can’t set up their own milk business.

When I was 25 I found an investor, who helped me go into business for my self.  There’s so many good young people out there who don’t think farming is an option for them. I want to get young people into agriculture. Many young people give dairy farming a go but decide to leave the industry & do something else (like myself). I want to see if we can create opportunities for young people to start their own farming businesses that provide the lifestyle we all want.


So those are this issues that have been on my mind for the past few years.

In my next post I'll explain how the mobile milking business will work and why it addresses these 5 points.

Fonterra & The Botulism Scare. What Actually Happened

Keith Woodford's blog is great. He doesn't post often but when he does its good.

His latest post is on the Fonterra botulism scare. Keith outlines the turn of events.

Here are the main points.

It all started back in May 2012 when some plastic came loose in a whey concentrate dryer at the Hautapu plant near Hamilton. The risk was that this plastic had got smashed up and possibly melted within the dryer, and then mixed with the whey.

The only way to find out for sure was to hydrate the whey powder (which is soluble) and then filter out any solids.  For reasons not clear, Fonterra chose to do this using equipment that had not been used recently.  Unfortunately the equipment had not been properly cleaned.

Once hydrated and then re-dried, the product passed the mandatory bacterial tests, but did have a level somewhat higher than typical. 

By this stage there should have been two orange flags but the Fonterra system recognised neither.  The first was that once the product had been reprocessed, then it should have been drafted away from human use and used for stock feed. The second orange flag was when the re-processed whey powder gave elevated but technically acceptable bacterial counts. Once again, this should have been enough to restrict its use to stock feed.

The next flag came in March 2013, when an Australian division of Fonterra re-tested some of the powder before using it as an ingredient. 

This time they found bacterial counts had further elevated. In all likelihood these levels were still below technically acceptable levels, but the fact that levels had risen in the powder would have been indicative of anaerobic bacteria being present. 

Fonterra saw this as an orange flag but it should have been a red flag. All products processed from the Hautapu plant using the same production system should have been immediately removed from the supply chain and placed under bond. Instead, Fonterra decided only to do further tests. 

Hindsight is wonderful. If in doubt leave it out.

Discriminating between sporogenes and botulinum is difficult. There is no quick laboratory test. Instead, it is necessary to culture the organisms and then feed them to mice. If the mice die then it is botulinum; if they don’t die it is sporogenes.

In this case, it would seem that some mice may have died but not enough to be sure. 

So AgResearch reported that it looked likely that there was botulinum present but they were still not sure. 

At this stage Fonterra did see a red flag. The Government was notified and there was a product recall.

If only Fonterra had seen the warning flags earlier on, then all of the damage could have been avoided. The products should have been removed from the supply chain before there was any risk of them getting anywhere near any consumers. If that had been done, then no public recall of products would have been needed.

Things got worse when Fonterra's representative went onto live TV and said that they had actually found the botulism toxin in infant formula! We now know that the actual harmful toxin was not present.

One of the interesting issues going forward will be whether legal action is now undertaken, and if so, as to who sues who.

Their unhappiness is not that Fonterra delivered them a product containing Clostridium botulinum. Indeed Fonterra did not deliver such a product. Their unhappiness will be that Fonterra so bungled the management of the scare that their infant formula market in China has been seriously damaged.

I was speaking with a food safety consultant recently. He has a client who manufactures and sells blackberry powder to the asian market.

His product has been stopped from entering into some asian countries. 

He was notified by his customer via an email in broken english explaining that they won't purchase anymore product because botulism was in New Zealand products.

This issue does not just affect dairy products.

I suppose this highlights the dangers of the food business. Reputations can be ruined so quickly. 

As a consumer, I often wonder how food can cost so much. Consumer may only think about the cost of land, inputs, wages, harvesting & delivery costs.

But the cost of testing food, storage costs while food awaits results and of course product that is discarded if test results are not conclusive, are all major costs that food companies must face and build into the price.

New Zealand has had such a good reputation as providing safe food, thats because its so easy to stuff up. Other countries have stuffed up.

Hopefully all businesses in New Zealand can learn from this. 

I get sick of hearing small business people complaining about the amount of regulation that they must pass in order to provide food to the public. Sure, it may be hard and tiresome, but the costs of getting it wrong are too great for our little country. 

Food safety is our competitive advantage, so we must protect it. 

On Farm Productivity Is Good, But The Big Money Is Made From Off Farm Productivity

Theres a lot of talk about productivity in New Zealand these days.

But are we focusing on the right areas?

The government has set a target of doubling the primary sectors export earnings from $32 Billion to $64 Billion by 2025.

Nobody doubts that this is a difficult ask.

New Zealands primary sector has a strong record of productivity gains.
The sheep industry alone has increase productivity (expressed as meat sold /ewe) by 80% over the last 25 years.

Thats 2.5% productivity gain every year. Any business analyst will agree that that is impressive.

But are sheep farmers any better off?

Despite 20 years of productivity gains sheep farmers recently experienced their lowest level of profitability, according to Beef & Lamb NZ data.

New Zealand farmers are very good at on farm production productivity, such as milk solids/ha or meat/ha or tons of grain/ha.

But its the off farm productivity that needs some serious work and that is where the big gains are available.

Rod Oram is a business journalist and he gave a very good example recently.

Fonterra has a total asset value of $4 billion.

One Fonterra plant manufactures infant formula for Pfizer, the pharmaceutical company.

Pfizer's infant formula business has an 8% share of the Chinese market.

Recently Pfizer sold that business to Nestle for $12 billion! Thats three times the size of Fonterra's entire business!

So, Fonterra supplies the milk, manufactures the milk into infant formula and packages the formula into tins.

Pfizer puts its branding on the tins and wholesales the formula to retailers. That part of the value chain, the branding and the wholesaling is worth $12 billion. 

Fonterra or New Zealand farmers receive a small portion of the value of the final product.

You could say, if Fonterra owned that formula brand which has an 8% market share and took the formula right through to the retailer. Then Fonterra would be worth its current $4 billion + $12 b to be worth $16 billion dollars!

I think you could say that the payout to farmers would also be three times its current rate. 

How does a $21/kgms payout sound?

We could put it another way, if Fonterra was just that one factory and all it did was produce infant formula for 8% of the Chinese market under its own brand. It would be worth three times what all of Fonterra is today.

New Zealand is very good at producing quality product, but not very good at keeping paid for it.

The graph below is from a Corileus report that they have made public. As you can see Fonterra is one of the largest dairy companies in the world from a volume perspective. Pfizer is way down the bottom by size. But Pfizer's dairy business makes a hell of a lot more money than Fonterra does from its products.

The graph below shows the profitability of the different dairy companies.

Fonterra is making a 4% return on Asset, while Nestle, Kraft, Danone which have their own retail brand products are making 14%-15%.

The nutritional dairy businesses which deal with infant formula etc are returning well over the 25% right up to 65% return on assets for BMS Nutritionals! 

These graphs are exciting, they show that Fonterra has plenty of room to increase profitability.

Fonterra have been saying that their "strategy refresh" will focus on increasing the value they receive for their products.

Last year Fonterra announced that they are launching their own branded infant formula into Asia. Which is a good start.

What will Fonterra look like in 10 years? Imagine if Fonterra is successful in growing the portion of its business that is branded. 

The increase in profitability is potentially huge. 

Some of the thoughts that are going through my head are:

• How will a more profitable Fonterra affect land use change? If dairy returns are much greater than sheep/beef while Fonterra operates at the commodity level. How can other land uses compete with a payout of over $15/kgms?

• Will the payout actually increase in line with profitability? You assume it would.

• What will Fonterra shares be worth? Assuming greater profitability increases the dividend paid.

• What will happen to land prices?

• What environmental impacts will this have on New Zealand?

What ever your views of Fonterra or the dairy industry are, you can't deny that the future is bright for New Zealand dairy farmers and the flow on will benefit the whole NZ economy.

But the same challenges still exist for the industry such as public perception, environmental impact and staffing issues.

To Change Perceptions Farmers Need To Connect

It's a perception Issue

I often hear people in the agricultural sector say things like "We need to remove the emotion from the issue" or "It's a perception problem".

We will never remove emotion from decisions, because everybody forms judgments based on their emotions, past experience and prejudices.

People make snap judgements

Malcolm Gladwell wrote a book called "Blink". In his book he outlines research that shows people make judgements on a person, product, brand based on very small amounts of information.

He says that once a judgement has been made, a person is unlikely to change their mind.

The only way to change a persons opinion is to connect with them

In the video below I discuss 2 examples. One is of Village Milk and the other is Fonterra & their new light proof milk bottle.

Farmers need to put themselves out there, people what to know about farmers and their businesses. 

So, I'm encouraging farmers to start blogging, make videos or sign up to some form of social media.

Get your stories out there, show people what you do.

Because the perception of farmers or farming is not going to change unless farmers connect with the public.

Reduce Nitrate Leaching With The Mobile Milking System

Unconventional ways to reduce nitrate leaching

Part 1 
A few weeks ago I explained how agroforestry is a farming system that is able to reduce nitrate leaching.

Part 2
Today I will talk about how a dairy farming system based around a mobile cowshed is able to reduce the level of nitrate leaching.

A traditional cowshed is in a fixed location. The cows have to be within walking distance of the cowshed because they need to get milked twice a day.

The main cause of nitrate leaching on dairy farms in the cows urine patch.

For this reason, the cows are always grazed on the same block of land surrounding the cowshed.

What this means is the cows are rotating around the same block of land every 15-30 days, urinating  on the same paddocks month after month, year after year. 

By making the cowshed mobile, we also make the herd mobile and that allows the cows to move to other blocks of land throughout the year.

Essentially spreading the urine/nitrogen over a larger area and therefore reducing the concentration of urine on each single block of land.

It's a totally different farming system, but could be one method farmers use to reduce their nitrate leaching levels.

How A 750 Cow Dairy Farm, Could Make $125,000 More By Employing 2 Extra Staff

The Small Things Make A Difference

Ive been using a 750 cow farm (Canterbury average) as an example. I have been saying that this farm should have 5 employees + the boss, instead of the usual 3 employees + the boss.

2 extra staff @ $35,000 each = $70,000/year extra wages

But if this farmer could:

• Increase fertility by 7% = extra $32,000
• Decrease SCC in just 5% of cows = $30,000
• Increase pasture quality by 10% for just 31 days = $63,000

Thats adds up to an extra $125,000

Subtract the $70,000 in additional wages = $55,000 better off.

By employing 2 extra staff, could this farmer:

• Train staff better
• Retain staff for longer
• Reduce hours worked by each employee
• Have less stressed staff
• Have more engaged staff
• Attract better quality employees

By attracting better people who are more engaged, better trained and generally less fatigued. Farmers are able to make lots of small improvements across the whole business.

The figures used here are examples of average performance being increased slightly. The productivity gain will be much greater foe farmers performing at below average.

6 Week In Calf Rate

• Average NZ 6 week in calf rate 65%
• 7% increase = an extra $115/ha profit
• $115/ha * 277ha = $32,000
• 7% increase in 6wk in calf rate @750 cows = extra 52 cows in calf
• Thats just an extra 1.2 cows/day in calf for 42 day period

"It's really easy to miss one cow on heat or miss a retained membrane after calving etc when staff are tired or rushed or not aware of all the things that contribute to a successful mating"

Mastitis

• 5% of cows contribute to 50% of Somatic Cell Count
• 5% of 750 cows = 37 cows
• Drop BSCC from 212,000 to 150,000 = to $31/cow
• $31*750 cows = $23,000
• Drop BSCC from 300,000 to 150,000 = extra .15/kgms
• 750 cows (@400kgms/cow) *.15 = $45,000 extra income

"Depending on what your cell count is and what the payout is, there's around $20,000 to $40,000 sitting there if you could just work on 5% of your herd"

Pasture Quality

• 10% increase in pasture quality = extra 0.4kgms/cow/day
• 750 cows * 0.4 = extra 300kgms/day
• Assume farmer can achieve 10% increase for just 31 days
• 300 kgms/day*31 days= 9,300 kgms *$7/kgms = $63,000 extra income

"You don't have to spend any extra money to get that; you're using the pasture you've already got, but we're just assuming you can do it a little bit better for one month of the year"

Disclaimer:

These figures are just hypothetical and based on assumptions. Before I get jumped on by people claiming I should have used $6/kgms rather than $7/kgms or that fertility figures should be $100/ha rather than $115/ha etc.

I'm just using some data that is easily found to illustrate a point that small gains added up make a big difference. 

Likewise, small losses add up to make a difference too. 

When I read figures showing:

• The average length of service on a dairy farm is less one year
• Staff turnover increases to 40% every September 
• Anecdotal evidence shows 1/3 of dairy staff leave the industry every year

 I'm sure many farms are missing out on profit.

Transcription

You know, this is the last time I'm going to talk about dairy farm staff, but I just want to make one last point and it's that the small things make a difference, they all add up. And, you know, I've been saying a 750 cow farm really needs an extra two staff, so that's an extra $70,000 a year. So, that's a lot of money, but I think if we just concentrated on three KPI's, or parts of a dairy farm, and if we assume that a farmer was at an average level of performance and they could make a slight increase on each one of those three areas, that they not only could cover their extra $70,000, but they would make an additional $50,000 as well.

                  So, the first thing I want to talk about fertility and the average six week in-calf rate in New Zealand is 65%. So, Lincoln University did some work and they increased the six week in-calf rate by 7%. And they said that was worth an extra $115 per hectare in operating profit. So, if we times that $115 per hectare by 277 hectares, which is what your 750 cow farm is. Then that's an extra $32,000 in profit. And that 7% increase is worked out to be 52 cows. You just need to get an extra 52 cows in calf over that six-week period, which is 42 days. So, that's 1.2 cows in calf and I'm saying if you had those two extra staff, would you be able to train your staff better and would you be able to do that?

                  So, the second thing is mastitis. Now, Livestock Improvement Corporation tell us that 5% f your herd attribute to 50% of your bulk somatic cell count. So, that works out to be 37 cows. And, they tell us if you drop your, or if you have an average cell count of 212,000 and you drop it to 150,000, that works out to be worth an extra $31 per cow. So, times that by 750 cows and that's $23,000. DairyNZ have some slightly different figures and they tell us if you could drop your cell count from 300,000 to 150,000, that's worth an extra 15 cents per kg of milk solids. So, on a 750 cow farm, that works out to be around an extra $45,000. So, depending on what your cell count is and what the payout is, now, there's around $20,000 to $40,000 sitting there if you could just work on 5% of your herd.

                  So pasture quality is the third thing. DairyNZ tell us that if you could get a 10% increase in pasture quality, that correlates to an extra 0.4 kgs of milk solids per cow per day in production. So, times it by 750 cows and that's an extra 300 kgs dry matter, sorry, 300 kgs in milk solids per day. And, let's just assume that you can get that 10% increase for just one month of the year, so 30 days. So, that works out to be an extra 9,000 kgs of milk solids. Times that by $7 payout and you're looking at an extra $63,000. And, you know, you don't have to spend any extra money to get that; you're using the pasture you've already got, but we're just assuming you can do it a little bit better for one month of the year.

                  So, let's add all this up. If you take a 10% increase in pasture quality for just one month of the year, that's worth $63,000. Concentrate on 5% of your herd and drop your cell count down to 150,000, that's worth $30,000 a year. If you can increase your fertility by 7% , that's $32,000 a year. Add that all up and that's $125,000 in additional profit or income. Minus your $70,000 for your two extra staff members, and you're still ahead by $55,000 a year.

So, I'm saying, with those extra two staff, would you be able to have a staff that are more engaged? Would you be able to train them better? Would they, would you be able to retain them? Would you be able to attract even better people to your farm? Because all you need to do, is make, you know, a little adjustment over those three areas, and you make your money back. What if you did over five or six parameters on your dairy farm? So, I think it's a false economy to understaff our farm

Agroforestry Systems Can Reduce Nitrate Leaching By 50%

Following on from Mike Barton's presentation to Beef + Lamb NZ, about farming under a nitrate cap. I thought I'd look at some less conventional ways farmers can reduce nitrate leaching.

Today I want to discuss Stephen Briggs Nuffield report into Agroforestry.

The report shows how an agroforestry system can dramatically reduce the amount of nitrate leached from a farming system.

It's a pretty radical change, but maybe the pasture based dairy farm of the future will include 100 trees/ha as well as cows.

Transcription:

Glen Herud here again and I'm blogging from my van today because I'm struggling to find time to blog. I still want to blog, but the only time I have to myself is when I'm stuck in Christchurch rush-hour traffic for 30 minutes every morning. 

So, I know I'm a bit weird.

I posted a video of Mike Barton last week about how he farms under a nitrogen cap. Heres the link to the full video on the Beef + Lamb NZ website. I recommend you watch it. 

But this is what he had to say:

"We leach 93% of the manageable nitrogen that's going into the lake. We wanted it to be all the batches and the septic tanks and the town and whatever else you could hope for. It wasn't. It was us."

You know, I think it's just a matter of time before all farmers will have to farm under a nitrogen cap. And whether that's right or wrong, I don't know. I just sense that the movement is towards that. 

When you look at the changes on the Horizons District Council, what's happened in Taupo. Canterbury is talking about it. Southland is talking about it. You know, I just get the sense in 10 to 15 years time, that's where we'll be.

And I don't think farmers are really thinking radical enough about how we could change our farming systems. I'm sure farmers understand how big the effect will be on their farming businesses. They understand that. But I think we need to really think about how we're going to farm under that, rather than spend all our energy on fighting it. Because I think it will happen, as Mike Barton said.

Now, one radical system, I'm going to cover a few radical ways that we could farm cows over the next couple of weeks. 

Agroforestry

And I want to talk about agroforestry. The reason is that agroforestry has been shown to reduce nitrate leaching by up to 50% over a monoculture system. Now, Stephen Briggs is a Nuffield scholar from the U.K. and he released a report on agroforestry last year. And I'll put a link to it, it's really good.

But, what you do is you really combine trees with agriculture. So, they could be nut trees, fruit trees, timber trees and they could be cropping. Could be dairy, whatever. And what you do is you plant them in lines, you have about 100 trees per hectare. And you farm within the alleyways.

Now, the reason it reduces nitrate so much is that the tree roots will grow down deeper. And they go in underneath the alley crop and they join up in the middle. That creates a kind of a safety net. So, any nitrate that drops out the bottom of the agricultural system gets absorbed by those trees. Therefore, you have a much lower rate of nitrate leaching.

So, there's a lot of other advantages. For instance, shelter. Also, agroforestry systems have shown to have 30% reduction of evapotranspiration rates. So that means that you're losing less water out to the atmosphere. Which is probably pretty good for Canterbury farmers that particularly, when you think about our howling nor'westers in the summer. But it's not all plain sailing. Shading is an issue and Stephen talks about how to overcome shading and the research done on that.

I know Lincoln has done some research into agroforestry and they showed that, after 15 years, their pine trees have totally shaded out their alley crop. So, we don't want that to happen. There needs to be a bit more research done into it. But, you know, it's a radical way of doing things. I mean, imagine if your average dairy farm sort of looks like this and imagine just planting that full of trees. Planting thousands of trees in your most productive land. That's a pretty radical thing to do.

Now, these are the sort of things I think we need to start thinking about if we're going to have a dramatic effect on our rate of nitrate leaching. And of course, many people, many farmers, don't think we need to. 

But as Mike Barton says in his presentation, 'If farmers don't come up with the solutions, some bureaucrat in Wellington probably will.' And it's much better that farmers come up with solutions than someone else. 

So, I'm just going to throw out some real wacky, way-out sort of things that maybe we need to consider to reduce our environmental impact.