Thursday, December 7, 2023

More profit with lower impact

Neal Wallace
The low milk price in 2013 was not the ideal time for a multimillion dollar dairy conversion let alone one writing its own blueprint. But, as Neal Wallace reports, North Otago’s John and Ruby Foley had a vision and a goal and they were determined to see it through.
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There was no single dairy farm blueprint for John and Ruby Foley to follow. 

They had just a wish list underpinned by a philosophy that the value of the business had to be set by the enterprise not the cost of land.

In the back of the minds of the North Otago dairy farmers was the increased difficulty for young people to enter the industry because of the cost of land.

Having previously invested in two traditional dairy farms they wanted a business that did not require vast areas of land but an enterprise generating enough income to fund the purchase.

Their solution was to develop Gleniffer, a farm near Tokorahi as a hybrid dairy farm focused on efficiency throughout the supply chain.

It uses two Herd Homes to support pasture grazing backed by extensive monitoring of the feed eaten, feed bought-in, waste and the volume and quality of milk produced each day.

“The value of Gleniffer is in the enterprise, not the land,” John Foley said.

Through their company Glenmoa Farms the Foleys milk 420 cows averaging 750kg MS a cow at an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of $4.60 a kg MS a cow.

Last season they produced 315,000kg MS off 180ha at a stocking rate of 2.3 cows a productive hectare. The farm was split between 117ha used for feed production and the remaining 53ha for cow grazing.

“To get the production that we have achieved we would need a 227ha traditional pasture system, operating under average-efficient conditions and milking 820 cows,” he said.

The key was a relentless focus on efficient milk production by controlling costs, monitoring inputs, ensuring cows were efficiently converting feed and maximising milk produced.

“We’ve dropped our cost curve,” he said.

Four staff, including John and Ruby, were employed, at a staffing rate of one person to about 100 cows or 75,000kg of MS produced, compared to the NZ average of one to 140 cows or 54,000kg of MS produced.

They run 133 cows per 100,000kg MS compared to the NZ average of 260 cows per 100,000kg MS.

Supplements harvested off Gleniffer – grass silage, fodder beet and cereal crops – provide 75% of their needs.

The weight of all supplements used were recorded on a weigh bridge so the Foleys knew exactly what was used.

Bought-in feed included high protein products and some concentrates but the exact recipes were secret, their intellectual property.

“It’s where we make our money,” he said.

The skills they learned when cropping proved useful, especially monitoring, mixing and buying grain and feed and reinforcing the importance of timing and tasks such as annual soil testing of paddocks.

At 5pm each day Oceania Dairy texts him a milk quality report on that day’s consignment.

Subtle changes can then be made to the feed mix to ensure the milk qualifies for premiums paid for meeting specific composition targets.

Their milk price, including a winter premium and milk composition premium, is $7.74/kg MS and so exact is their farm system, in a perfect week production varies only 3kg MS a day.

“Every day the cost of the feed we feed to our cows is put into a computer and at the end of the day we know our milk volume and our margins.”

When they established Glenmoa Farms in 2013 it was a green field site, which Foley said was vital to get the optimum layout of infrastructure.

Cow efficiency is a central plank to the Foleys’ hybrid dairy unit.

Foley was raised on Glenmoa, a neighbouring mixed-cropping farm, and apart from 10 years working and living in Gisborne, has spent his working career in North Otago.

On returning, he bought Glenmoa, expanded the area and focused on cropping. At one stage he was harvesting 10,000 tonnes of grain a year.

Two of the farms were sold and in 2009 an investment was made in a corporate dairy farm.

Four years later they converted the 190ha Glenmoa property to dairying and employed a sharemilker who milked 650 cows.

But they were not happy with the traditional dairy model, questioning who would buy the farm if they came to sell it.

“Ruby and I thought about farming, continuing to do cropping and dairying but how to do it better, to create an enterprise rather than large-scale farming.”

They sold Glenmoa and created the hybrid venture on Gleniffer, with work starting after crop harvesting in 2013 and ready in time for the 2014 dairy season.

Foley said the hybrid system sounds more complicated than it is and any farmer could adopt it provided they stay focused on the drivers, that it is an enterprise and requires careful monitoring of inputs and cow efficiency.

Importantly, Gleniffer is profitable but is also less demanding on the land and environment.

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