With the recent lift in Fonterra's milk price forecasts to $5.25kg/MS (24 c/l), the mood and the financial situation across farms in New Zealand has most certainly improved. Since my arrival, this represents $1/kg/MS (4.5 c/l) lift in price forecast, with this being the difference between a profitable year or loss making year for many New Zealand dairy farmers.

The forecasted cost of production on this farm is $3.60/kg/MS (16.5 c/l) for the current season. This production cost is based on budgeted farm working expenses (FWE), which includes all farm expenses with the exception of drawings, interest, repayments and tax, divided by the total forecasted volume to be sold.

While costs have been shaved back over the last couple of seasons, mainly through reducing health and wintering costs, the focus has also been to dilute costs further through increasing output by allowing the herd to mature.

With milk price forecast now on an upward curve, the next challenge will be to maintain this cost structure while refraining from the temptation of purchasing unnecessary equipment and inputs that will only increase the cost of production on the farm – eating into potential profit.

Irrigation

This week out on the farm has seen the beginning of irrigation which will continue from now until the end of March. In recent weeks, the soils have dropped in moisture content to just above refill point (25% soil moisture), with water applications needed before growth begins to suffer. Although we have received showers of rain on a weekly basis, the drying wind and sun results in large amounts of moisture losses through evapotranspiration.

Irrigation, while hugely beneficial in terms of growing grass, comes at a cost to New Zealand farmers. The setting up of paddocks for irrigation, along with the installation of pivots, the maintenance, power requirements and water charges can amount to a significant cost on dairy farms.

Flood irrigation

Border dyke irrigation (flood irrigation) is still used on a third of this farm, but with water availability now also limited on farms, this method is becoming outdated as pivots (spray irrigation) are a much more efficient use of water. Within the next five years, it is hoped to remove the border dykes on this farm and install a second pivot – this will allow more grass to be grown mid-season and will result in a much more efficient use of water on the farm.

Water charges in the Canterbury region vary, ranging roughly from $80/ha to $800/ha (€52 to €520/ha) depending on what scheme a farm is on, with nearly all dairy farms using irrigation.

Calving complete

The final cow calved last Wednesday, 12 weeks to the day since calving began here at Fairfax. With 722 cows now in the milking herds in total, production is now sitting at 2.27kg/MS/day (26.7 litres; 3.87% protein, 4.63% fat).

SCC in the last few collections has crept up to the 80,000-85,000 mark, with three cows being identified with cases of clinical mastitis. Having withdrawn these today, we're hopeful that we've nipped this latest mastitis outbreak in the bud.

Although we've reduced bag nitrogen application rates, grass growth remains strong, with a latest growth rate measured at 90kg/DM/ha/day on farm. We are currently following cows with 13kg/N/ha (Urea) along with 33kg/K/ha in the form of muriate of potash.

Having sprayed off another 8ha for reseeding, the AFC is currently at 569kg/DM/ha, with a cover per cow of 161kg/DM. Yearling heifers went to the bull on Thursday with the cows’ breeding season due to begin seven days later on 27 October.

Read more from Michael Tobin here.