Just under a quarter of all milk produced in New Zealand is produced in the Waikato region. It is the traditional dairy heartland of New Zealand, so winning an award for dairy farming there is a big deal.

As ambassadors for dairy farming, you won’t get better than Bobby and Jade Millner. The 27-year-olds both grew up on dairy farms. Bobby has a degree in engineering and Jade is currently completing her final accountancy exams. They have an 18-month-old daughter, Addison, and are finishing their third year of share-milking on a 270-cow farm near Morrinsville.

The Millners own the cows, provide all the labour and, after splitting some of the costs, they get a 50% share of the milk cheque with the farm owner, Jim Barrett. This is an example of the kind of 50:50 share-milking agreements that are the foundation of New Zealand’s dairy industry.

Along the road to stock ownership, the couple managed a farm for a season and were lower order share-milkers for a season before taking two years out from farming. During this break, Bobby worked in construction and Jade went back to accountancy.

“We took a step back from farming which gave us the space to decide on our own future and what we wanted to do. In the end, we decided to go for it, investing all our savings and getting my parents to stand as guarantors on a loan to buy cows,” Jade says. Their ultimate goal is to be farm owners in 10 years’ time.

Finding a job was the next thing. They logged on to the Fonterra website, which advertises farm vacancies. Share-milking jobs are scarce, especially in the Waikato region, and in 2013 payout was high and dairy farming was on a roll so opportunities like the one with Jim were extra hard to come by.

So what did the farm owner Jim look for when he picked Bobby and Jade? “I want to work with people that are young, smart and ambitious. Ideally a couple less than 30 years old who are keen to progress. The last share-milker I had stayed for six years and left the farm with NZ$600,000 (€360,000) in equity and is now share-milking on a much bigger farm. I love seeing that happen.”

When I asked Bobby and Jade what they looked for in a farm owner, they said they wanted to work with someone they could communicate openly and easily with and was on the same wavelength with them about what system of farming is best. So for them, communication and system of farming is priority, not the number of hectares or units in the parlour or the state of the dwelling house.

The system

When I visited last November, the Millners were in the middle of the breeding season. They had just come through a cold and wet spring (similar to Ireland in 2016) and all the talk among farmers out there was the low milk price and the threat of El Niño. El Niño is the weather event that brings cold and dry weather to New Zealand. Farmers in the Waikato would be worst affected by this as they don’t have irrigation.

Bobby and Jade had budgeted to produce 100,000kg of milk solids (MS) from their 78ha farm with 270 Jersey and Jersey crossbred cows. This would be 1,282kg MS/ha and 370kg MS/cow, which they felt was ambitious given the forecasted weather pattern for the year.

On low-input grass-based farms such as that run by Bobby and Jade in the Waikato, the weather has a big influence on output. The focus is always on utilising what grass is on the farm, not on feeding the herd at all costs. In a drought scenario, or to build up grass for the autumn, they would prefer to dry off or cull a portion of the herd early rather than rely entirely on purchased feed to supplement grass.

While this reduces production, it keeps costs low and more profit is made. In the 2014/2015 season, Jade and Bobby’s farm working expenses were NZ$1.40/kg MS (5.8c/l) while their peers on Dairybase (Profit Monitor equivalent) were producing milk at NZ$2.29/kg MS (9.4c/l). Bobby and Jade’s operating profit was over three and a half times greater than their benchmarked peers at NZ$1.39/kg MS (5.8c/l).

“Perfect residuals are the key,” said Bobby, who does most of the grassland management and milking. “It’s a simple system – all we do is measure grass and milk cows.” When I visited, they were three weeks into breeding, had 87% served and the cows were cleaning out paddocks right to the base. The farm grew on average 15.5t/ha in the previous two seasons.

At the start of the year, their target was to produce milk at NZ$1.33/kg MS (5.5c/l). See Table 1 for the breakdown of the costs that they are responsible for. In November, the projected milk price from Fonterra was NZ$4.60/kg MS (19c/l). As the share-milkers get half of this, they were on track to retain NZ$1/kg MS (4.1c/l) or 5.4c/l as profit – that is before the payout dropped.

For share-milkers to expect to make a profit in the 2015/2016 season is almost unheard of. Their bank manager from ASB Bank, Willie White, was at the farm when I called and he said that the Millner’s were his only share-milking clients that weren’t looking for extra finance to fund current expenditure this season. At that time, most farmers were adding on about NZ$1/kg MS in extra debt to keep the farms running. And this was before Fonterra announced further price cuts.

“The reasons for this are probably more to do with what they did when milk prices were high. Instead of going off and buying a new tractor like others did, Bobby and Jade paid down debt and stuck to their low-input system. The reward for this discipline is profit now, when others are struggling.”

With the New Zealand milk producing year coming to a close, I rang Jade over the weekend to see how the season went. Total milk solids produced were 90,000kg. They had a long dry summer on their farm which meant that they couldn’t build up grass in autumn but they had a good early summer with excellent production up to Christmas – a key parameter.

As a result of low covers, the whole herd was dried off on 29 April and are now on a 50-day round length. Farm working expenses were on target at NZ$1.35/kg MS (5.6c/l), which is in the top 10% nationally.

Jade expects the payout including the dividend (which they get 50% of) to be around NZ$4.40/kg MS (18c/l) so profit will be NZ$0.85/kg MS (3.5c/l) or NZ$76,500 (€45,930), which is sufficient to pay back interest on loans and cover all drawings. About NZ$60,000 (€36,000) is budgeted for paying back debt next season at a NZ$5kgMS payout.

The couple have decided to stay on for another year with Jim but are actively looking for a larger farm to share-milk with 600 cows.

Comment

The visit to the Millners was one of the highlights of my trip to New Zealand. Here was a young couple with a clear goal – land ownership. They weren’t trying to reinvent the wheel to achieve this. How often do we hear about simple, low-cost systems being the best? Yet, in New Zealand and here in Ireland there are so many farmers letting others take money out of their pockets.

The other striking thing for me was the attitude of the farm owner Jim Barrett. He wants to see people succeed and is willing to help them achieve their goals. He is not only the Millner’s farm owner, but he is also their mentor. Not enough Irish farmers are mentors to young people. Every farmer should treat every person that comes on his or her farm as a potential share-milker or farm owner, regardless of their current position.

This involves treating everyone with dignity and respect, but also outlining the career opportunities that exist in dairy farming. The biggest threat facing the dairy industry is not milk prices – it is the scarcity of good, young, enthusiastic people coming into the industry. For this to happen structures, attitude and work practices on farms need to change.