ANDREW SWALLOW
Lincoln University’s high profile demonstration dairy farm has lost its pole position on profitability.


The realisation, which isn’t a one-off and has emerged over the past two seasons, is prompting a major rethink about the role of the 660-cow, 159ha unit.


“There are two main schools of thought,” FarmWise consultant and LUDF management team member George Reveley told Dairy News following a recent focus day.


“The first is we stay with what we are doing as a reference point for relatively low input grass-based systems. The second is we enter the competition using grain, when grain is the right price.”


A third option is to reduce emphasis on production and focus on environmental issues, he adds.


“The board has been discussing for a number of months where the farm does go now having achieved best practice and very profitable production from pasture.”


Dairybase data shows other farms in the area pulling ahead on profitability by using more nitrogen and adding supplements such as grain and palm kernel expeller (PKE), while maintaining similar top notch pasture management practices as Lincoln.


In 2008-09, a $5.10kgMS milk price year, one of the farms achieved nearly $3000/ha operating profit compared to LUDF’s $1750/ha, a result which left it mid-table in the 20 farms’ accounts analysed.


A key factor for those achieving superior profitability appears to have been the relatively cheap supplements available, sometimes well under the 5% of payout price benchmark, says Reveley.
“In the past six months grain has been available at $230/t for most of these guys.”


What’s more, with its high metabolisable energy content of 12.5-13MJME/kg, the returns stack up even if the price creeps above that 5% guide, he acknowledges.


“It’s a guide and you need to make the price equate to pasture at 11MJ of ME. It means grain can be [priced] a bit higher than that 5% benchmark.”


The question going forward is what will be the relationship of grain to milk price, and will that justify the investment to retrofit Lincoln’s rotary shed with feeders.


In the past when that calculation has been done the conclusion has been it wouldn’t pay, particularly as the herd would need increasing to 750-800 cows and splitting into two, necessitating extra staff.


“It would change a whole lot of things.”
However, with hindsight profit might have been boosted by as much as $1000/ha in the past two seasons, he notes.


“An extra $1000/ha for two years would actually have paid for the investment in that infrastructure and probably the extra cows as well.”


While such questions are being revisited by the board, the budget for 2010-11 includes a couple of significant tweaks to try drive profit forward, given the $6.90-7.10/kgMS forecast.
Nitrogen fertiliser will be raised from 225kg/ha to 300kg/ha on non-effluent areas to overcome a recurring mid-summer feed pinch and offset what is suspected to be increasing damage from clover root weevil.


“We’ve probably been missing out on at least 1000kg of drymatter per hectare.”
Secondly an extra 3-400kg of silage supplement per cow will be fed.


Grazing management principles– seven clicks on the platemeter residuals and 2800 to 3000kgDM/ha covers pre-grazing – remain set in tablets of stone.


“If we’re using a mower we expect it to be making silage.”