Competitive Position of the Tasmanian Dairy Industry Farmers Key to Success

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Competitive Position of the Tasmanian Dairy
Industry -Farmers Key to Success-
David Beca Red Sky Agricultural Pty Ltd
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Agenda

• Background to data
• How Tassie compares
• Profit drivers in pasture-based dairying
• Opportunities for Tassie Dairy
• Finalists from Tassie
• Cleaning up at the awards
• How do the winners do it

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Database Content

• Comparisons provided across Aus NZ
• Strong data integrity
• Similar bias across all data groups
• There have been no statistics completed on
  individual data sets
• Some of presentation based on queries of the
  Australia-wide Red Sky database
• 286 sets of data for 2005/06
• Data across 5 states
• Wide range of farm systems
• Processed by Red Sky or rural professionals

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Return on Assets
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Profit per Hectare
AU based on AU1.00 NZ1.12
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Milk Price
AU based on AU1.00 NZ1.12
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Cost of Production (c/l)
AU based on AU1.00 NZ1.12
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Cost of Production (/kgMS)
AU based on AU1.00 NZ1.12
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Pasture Harvest - Dryland
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Pasture Harvest - Irrigated
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Tassies Scorecard

• Strengths
• Pasture harvest ( stocking rate)
• Labour efficiency
• Core per cow costs
• Competitive
• Milk per hectare
• Forage cost (low use)
• Core per hectare costs
• Less Competitive
• Milk per cow
• Concentrate Cost (due to locality)

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Hypothesis No.1

• Milk production per cow is a primary driver of
  profitability in pasture-based dairying
• Given cows need a set amount of energy for
  maintenanceif we can feed them better then more
  energy will go into milk production which must be
  more efficient
• Tasmanians New Zealanders have been chastised
  over their low level of milk production per cow
  for many yearswell

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ROA vs Litres per Cow
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ROA vs Milksolids per Cow
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COP per kgMS vs Litres per Cow
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COP per Litre vs Litres per Cow
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Labour Efficiency vs Litres per Cow
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Core per Cow Cost vs Litres per Cow
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Conclusion

• Given cows need a set amount of energy for
  maintenanceif we can feed them better then more
  energy will go into milk production which must be
  more efficient
• There is not a positive correlation between milk
  production per cow and profit
• So more milk per cow in itself will just as
  likely lose money as make money
• To make more money from more milk per cow, the
  critical components to master are pasture
  harvest, labour efficiency and core per cow costs

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Hypothesis No.2

• With the high cost of land and/or water it will
  be important to generate more revenue from
  thisso more supplementation and use of high
  yielding crops
• Would irrigation water be better utilised on much
  higher yielding crops than ryegrass?
• Substantial lifts in stocking rate along with
  higher yields per cow have the potential to
  produce dramatically more milk per hectare
• One impact is that pasture decreases as a
  percentage of diet

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ROA vs Pasture in Diet
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COP per kgMS vs Pasture in Diet
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Pasture Harvest vs Pasture in Diet
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Core per Cow Cost vs Pasture in Diet
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Conclusion

• With the high cost of land and/or water it will
  be important to generate more revenue from
  thisso more supplementation and use of high
  yielding crops
• There is not a positive correlation between
  increasing supplement use and profit
• So increasing supplement use in itself will just
  as likely lose money as make money
• To make more money from higher supplement use,
  the critical components to master are pasture
  harvest and core per cow costs

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Hypothesis No.3

• Stocking rate is a primary driver of
  profitability in pasture-based dairying
• Given milk per cow does not appear to be a
  primary driver then stocking rate had better
  beor are we not in the business of producing
  milk?
• And if stocking rate is a primary driver then is
  there a right stocking rate or is it just that
  higher is better

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ROA vs Stocking Rate
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COP per kgMS vs Stocking Rate
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Pasture Harvest vs Stocking Rate
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Conclusion

• Given milk per cow does not appear to be a
  primary driver then stocking rate had better
  beor are we not in the business of producing
  milk?
• Stocking rate does positively correlate with
  profitability
• The link to pasture harvest appears critical
• Potentially a sweet spot that optimises profit
  depending on productive capacity of land

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Hypothesis No.4

• Pasture is the primary driver of pasture-based
  dairying profitability
• Is more pasture simply better for business?
• Where does it rate compared to alternative feeds
  and farming systems?

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ROA vs Pasture Harvest
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COP per kgMS vs Pasture Harvest
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Labour Efficiency vs Pasture Harvest
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Summary

• Pasture IS the primary driver of profitability
• IF increases in milk production per hectare
  result in more profit then stocking rate is
  likely to be the primary driver
• To make more money from more milk and
  supplements, the critical components to master
  are pasture harvest, labour efficiency and core
  per cow costs
• Maintaining a low cost of production is at the
  heart of our international competitiveness we
  lose this at our peril

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The Opportunity in Tassie

• To keep improving in the areas of strength
• To further increase performance in the areas of
• Pasture harvest
• Stocking rate (more milk per ha)
• Labour efficiency
• Core per cow costs
• Lower cost of production

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And the winners were

• Sharefarmer Wayne Angela Huisman
• Irrigated Paul Nadine Lambert
• Low Concentrate Paul Nadine Lambert
• Medium Concentrate Stephen Karen Fisher
• Tasmania Stephen Karen Fisher
• Supreme (dryland) Stephen Karen Fisher
• Trans-Tasman Stephen Karen Fisher

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Tassie Finalists
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So how do you do it

• Farming philosophy summarised in a few words
• How do you judge success
• Thoughts on the following
• Milk production
• Stocking rate
• Pasture production
• Feed purchasing
• Labour efficiency
• Cost control
• Where to from here

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Tasmania Dairy
www.redskyagri.com