Friday, July 1, 2022

Watching the pennies pays off

Don and Wilma Schimanski told Sheryl Brown that operating a high-input system can be very profitable and also environmentally responsible. The keys to unlocking the substantial operating profit margin on Don and Wilma Schimanski’s high-input Otorohanga dairy farm can be found in figures detailing fertiliser application, cow costs and production return on supplements. Wilma wanted to find out whether there was a good profit being made from the farm because she believes it’s about whether you are making money and gaining something. So they have entered the Dairy Business of the Year competition three times, this time coming out as the supreme winner after taking out the title in the high-input category in 2011.

Their farm’s operating profit margin is strides ahead of fellow Waikato dairy farmers. At 52.2% the operating profit margin is significantly better than the average of 39.5% for the Waikato region.

The cost of production on the farm sits at $3.50/kg milksolids (MS), compared with $4.52 for the average Waikato dairy farm. The figures used for last year’s competition are from the 2010/11 season. 

High input, low cost

The Schimanskis are currently milking 730 cows on 185ha just north of Otorohanga. In 2011/12, the cows averaged 2027kg MS/ha – almost double the Waikato average, which is down to the high input system. Despite the supplement cost of $875/cow compared with the $625/cow average, the overall cow cost is $476, well below the regional average of $584/cow.

They changed to a high input system when they built a new 54-bail Westfalia rotary in 2007 with an in-dairy feeding system. Don said the farm was medium input before that, but moving up a notch has allowed him to get better feed utilisation out of the supplements he is buying and challenge feed the cows.

The cows get 1.5-2 tonnes (t) of supplement/year, an average of 4.5-4.8kg/cow/day. Challenge feeding is carried out by taking each cow’s average production for the previous five days and assessing her feed requirement for that day. It ensures the cows that are best turning that feed into milk get the best feed.

According to Don, building the in-dairy feeding system was a way for the couple to get more profit on what we had without buying more land.

“I felt a grass system is a really difficult system to run, because you are totally reliant on weather,” he said. “With this you end up with more flexibility.”

He has a vigilant approach to watching feed prices and ensures there is plenty of feed on-farm in case there is a feed pinch. He usually has a couple of hundred tonnes of maize silage at home in case grain prices spike.

“I am really selective on how I buy my feeds, particularly if it is a low payout year. You’ve got to watch the prices.”

Intelact farm consultant Bill Rys said the Schimanskis contract most of the bought-in feed, which includes palm kernel, grain and molasses. The average cost of feed is $423/t dry matter (DM) for forage and $441/t DM for concentrate. This includes a wastage factor, interest and repairs and maintenance of the capital equipment used to feed it to the cows.

The couple’s philosophy is to fully feed the cows, keeping them healthy and paying particular attention to grass management using the three-leaf emergence concept to determine grazing rotation speed. Once the pasture allocation/cow is determined, the forage supplement feed is manipulated to get the desired animal feed intake and residuals in the paddock. There is a strict policy about looking after pasture and standing cows off in the wet weather to avoid pugging.

Fertiliser costs

The other farm philosophy is to look after staff – three full-time employees, including the farm manager who has been there 10 years. Don said the new dairy has also done wonders for farm labour efficiency. Since competition, Don and Wilma have invested heavily in extending their effluent irrigation area to 140ha, which is almost the majority of the farm. They’ve fenced off most of the farm waterways and planted out over half of the buffer areas, planning to complete the project over the next few years.

Along with the use of LessN, the effluent irrigation has allowed them to decrease the rate of nitrogen (N) fertiliser they use, again contributing to keeping costs down. They use between 100-150 units/ha of LessN and liquid urea. The LessN is used behind the cows from calving through until Christmas, and at times in autumn.

“With the LessN I noticed the cows clean out the paddocks better and we’ve had good response in the growth,” Don said.

The farm is now leaching about 40kg N/ha which is a good result according to Rys.

“The average farm is leaching about 35kg N/ha, but doing half the productivity, so the amount of leaching to productivity is quite exceptional.

“We will be looking at methods to reduce this further to a target 25kg N/ha, hopefully maintaining productivity.”

Another farm philosophy is to only use fertiliser as required, so the total fertiliser cost (including N) is consequently low, at $308/ha compared with Waikato’s average cost of $518.

The farm has high Olsen P levels, but the soils are tested every two years to see what is required.

Another area of significant saving on the farm is in the repairs and maintenance column. Don, a former bulldozer contractor before he and Wilma went farming in their 40s, with the help of his staff, is able to do a lot of the work on the vehicles and machinery.

“Don won’t pay anyone if he can fix it himself,” said Wilma.

But he is a fan of having their books analysed undertaken by Red Sky a few years ago and repeated annually. Don said the $400 investment to ensure they’re on track, making a profit and showing where improvements can be made is well worth it.

“It makes you look at things and think about what you are doing,” he said. “Some things don’t change significantly and some things only need tweaking. I think there are most likely other farmers doing just as well but they haven’t had their books analysed and so they don’t know.

“This (winning) doesn’t mean we are the best in New Zealand, it just means we are the best out of those farmers who entered.”

Owners: Don and Wilma Schimanski
Area: 185ha
Herd: 730 crossbreds, breeding worth (BW) 96/44 , production worth (PW) 110/44
Production: 475kg milksolids (MS)/cow; 2027kg MS/ha  
Stocking rate: 4.28 cows/ha
Operating profit margin: 52.2%

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