No more cows but double the returns

Euan and Sarah McKnight.

Euan and Sarah McKnight.

No more cows but double the returns

Keeping it simple is the guiding philosophy for Reporoa farmers Euan and Sarah McKnight. They told Steve Searle that it has led to a sustainable and profitable operation.

When Euan and Sarah McKnight bought more land to extend their Reporoa dairy farm by half as much again, they could have added another 100 cows.

Instead of 280 cows on 80ha they could have decided to milk a herd of 360 cows on 117ha if they had maintained their stocking rate of 3.1 cows/ha – slightly ahead of today’s Waikato average of 2.94 cows/ha.

But Euan and Sarah, who had already started wintering off half the herd for six weeks for easier winter management, decided against carrying more cows after adding 20ha two years after buying the farm.

Two years later they added another 20ha and again resisted the idea of increasing the herd.

“We wanted to drive per cow production, keep costs low and try to maximise our use of home-grown grass,” Euan says.

Wary of being exposed to the risk of higher feed costs during the summer, a season becoming more difficult to manage, Euan and Sarah opted for a more self-contained farm system. So they were very interested in joining the Tomorrow’s Farms Today (TFT) study group of 25 Central Plateau farms three years ago to collectively look at each farm’s economic resilience and environmental performance.

Discussion about stocking rates caught Euan’s attention, as did the numbers showing that farms with a stocking rate closely matched to home-grown feed were proving less costly to run, more profitable, less exposed to risk, and having less impact on the environment.

‘I’ve still got a British system of scoring cows; not to grow them like big fat elephants but to have good healthy cows and feed them well.’

“The financials and our environmental score show we are going in the right direction; that it’s actually easier farming and as a business we are making money.”

In a summary of the recently ended three-year study, the McKnight farm’s return on capital for 2013-14 was 9.3%, double the average return for Central Plateau dairy farms, and their return on equity was more than 16%.

“I don’t know of a magic formula,” Euan says.

But he listed a few key aspects to about 30 farmers who recently attended a field day on his farm, starting with an emphasis on cow health that begins with four blood tests for each cow during the year in consultation with a vet so they can avert potential health problems.

The cows get B12 and selenium injections and the rising two-year-olds, lighter, and older cows are given feeding priority all winter at home while the bulk of the herd are grazed off for six weeks.

“Attention to detail and prioritising cow health would be our main focus,” Euan says.

“I’ve still got a British system of scoring cows; not to grow them like big fat elephants but to have good healthy cows and feed them well.”

The TFT study found the McKnight cows’ production averaged 473kg milksolids (MS)/cow for the 2013-14 season, which works out to be 95% of total cow bodyweight compared with 79% in the preceding drought season and 90% and 83% in the two previous seasons when there were up to 35 more cows in the herd.

Pasture production and utilisation is another focus and the TFT figures for the McKnight farm show the herd had eaten more home-grown feed this past season – 4.3 tonnes per cow compared with 3.26t/cow in the drought year, 4.3t/cow during the preceding bumper growth year, and 3.78t/cow in the 2010-11 season.

To maintain pasture quality 10% of the farm is renewed each year, starting with paddocks where kale was grown for extra summer feed.

“On average we harvest over 10t of grass/ha, so at 2.4 cows/ha we are feeding over 80% of their diet as grass, which is our cheapest supply of feed.”

The remaining 20% of the cows’ diet is supplement that includes palm kernel fed in paddock troughs during pre-mating and calving or as a buffer when grass cover is short.

Costs are another key area and while machinery on the farm is minimal – a tractor, silage wagon, and quad bike – the 34-aside dairy is equipped with automatic cup removers so that the milking of 8½ rows of cows is a one-person operation completed in an hour with only the wash-down left to do.

“The contractors do all the cultivation, harvesting, and effluent spreading because we find it’s easier and their bigger machinery does the job more efficiently and we save on the capital and running costs.”

Farm expenditure is “on a needs-must basis” and the kiss (keep it simple) rule is run over any proposal for change.

“When it’s a simple system it’s easy to replicate year to year if it’s working well.”

To keep costs down and be able to divert savings into the replanting of their Psa-stricken kiwifruit orchard, Euan and Sarah have run the farm with only seasonal labour from early August to late March for the past few seasons. But from June 1 this year they employed a full-time farm assistant whose experience can be continued from season to season.

The TFT results show the McKnight farm’s overall production cost jumped in 2013-14 by about $1 to $4.23/kg MS but this included about 60c/kg MS of deferred drought costs for the previous season that had ended up costing $4.96/kg MS.

“In an average year we would have been down to about $3.55/kg MS, which would be a truer reflection of costs,” Euan says.

In the seasons before the drought the figures had been $3.18 and $3.71/kg MS.

He likes the idea of having a farm system that can “move up a gear or drop back a bit with no financial disruption” and not being so exposed to any price jumps for bought-in feed.

A field day hand-out showed the increasing operating profit for the McKnight farm as cow numbers reduced – $4811/ha from 275 cows in 2013-14 and then the drought slump to $1226/ha from 295 cows, which was preceded by $3880 from 310 cows and $4402 from 297 cows in 2010-11.

“For ourselves the assessment of our farm was both enlightening and an encouragement,” Euan says.

“It was enlightening from the point that there is such a wide variation in leaching and profitability across all the farms (in the study) and we found it encouraging because it shows we are actually running a good business.

“We are very pleased we are not up there (with 360 cows). It appears a lower stocking rate works out to be a better system for us and of course we are 10 years older since we bought this farm so easier winters have fitted in with keeping it simple.”

The environmental performance of the farm is improving with a nitrogen loss of 24kg N/ha for the past year compared with 31kg N/ha/year three years ago. This is near the average (31.4kg N/ha) for the TFT group and lower than the average for Central Plateau (39kg N/ha) and Waikato (36kg N/ha) farms. 

Keys to success:
More profit from fewer cows
Focus on healthy cows
Feed demand matched to grass growth
Cows producing 95% of bodyweight in milk.

Getting a good score
An Environmental Scorecard was part of the development of environmental information for farms in the Tomorrow’s Farms Today (TFT) study.

The farms’ data output from Overseer, software that calculates nutrient use and movement within a farm system, and a physical farm audit were entered into the scorecard and from this was derived an environmental risk score from 1-5 for each farm. The parameters included in the upper Waikato River catchment included:

• Nutrient efficiency onfarm

• Nutrient loss risk

• Waterways, waterway fencing, riparian planting, wetlands and protection, tree/bush stands and protection, points of connectivity to waterways

• Effluent system and malfunction alerts

• Soil protection, winter cropping process, buffer zones, managing pugging

• Water saving initiatives, general farm water management, and leakage alerts

• Energy use and efficiencies, and renewable energy technology used on farm

• Silage wrap /plastics /hazardous waste disposal.

The points for each of criteria were totalled and then correlated to give a graded score for overall risk.

In the three-year TFT study the lowest risk farms scored consistently less than 2.3 out of 5.

The scorecard design, criteria, and risk ratings can be modified for different catchments to encourage farmers to focus on key measures for their area rather than focusing solely on nitrogen and phosphate loss.

The Overseer software underwent five modifications during the course of the TFT study, resulting in scorecard alterations, and changes to a regional code of practice for effluent management were also taken into account.

Key points

Location: Reporoa
Owners: Euan and Sarah McKnight
Cows: 275 Friesian
Stocking rate: 2.4 cows/ha
Bodyweight/ha: 1206kg
Milking efficiency: 95% of bodyweight
Production: 473kg milksolids (MS)/cow
Home-grown feed: 4.3 tonnes/cow
Nitrogen loss: 24kg N/ha/year.

This article originally appeared in Agri HQ, on 4 August 2014.