Download NSW Dairy Farm Monitor Project

2015 NSW Dairy Farm
Monitor Project
Camden, 2nd Mar 2016
Kerry Kempton – Technical Specialist Dairy
Peter Havrlant – Development Officer Dairy
NSW DPI Dairy Business Outlook Discussion Groups – 2016
DISCLAIMER / WARNING
 This report should be used as indication of the dairy farms
in NSW for 2015 F/Y
 It is not an industry benchmarking tool
 Averages/statistics/trends are not statistically significant
 BEWARE AVERAGES!!!!
 Data should not be used by financial institutions for lending
assessment purposes
 Milk pricing information should not be used for contracting
purposes
NSW Dairy Farm Monitor Project
 4th year running in NSW
 37 farms analysed across NSW
 Now part of the national DFM Project &
database
 Based on Victorian program, funded by
Dairy Australia
Why do it?
 As a service to the NSW dairy industry
 To provide accurate reliable information about
NSW dairy farm performance
 To monitor changes and trends over time
 To provide the participating farmers with an
indepth analysis of their business
 To understand the issues and factors affecting
farms and families
Dairy Farm Monitor Project
Participant locations
Dairy Farm Monitor Project
divided by
assets managed
divided by
Return on asset
managed (%)
equity
Return on equity (%)
DFMP method
Cash vs Profit
Source methodology: Dairy Farm Monitor Project
7
Cash vs Profit continued
8
Dairy Farm Monitor Project
2014/15 season
 Milk price $7.46/kg MS, (54 c/l) up 3% from 2013/14
 Concentrate price $370/t as fed ($413/t DM)
 Above average rainfall
Results for 2014/15 for NSW
 See Infographics
 Results in more detail………..
Dairy Farm Monitor Project
Physical Results – State & regions avge
Physical results
State
North
South
Average Milk price received ($/kg MS)
$7.46
7.62
7.28
Herd size (No. cows in milk for at least 3
months)
338
259
430
Water used – rain plus irrigation (mm)
1130
1430
1076
Total usable area (hectares)
287
215
372
Milking area (hectares)
128
95
165
Milk sold (kg MS/cow)
506
477
540
Pasture grazed (t DM/ milking ha)
6.5
6.4
6.7
Pasture conserved (t DM/ milking ha)
1.8
1.8
1.8
$370
390
350
2.6
2.4
2.8
Concentrate Price ($/t as fed)
Purchased feed /cow (t DM/cow)
Financial Results - State (average)
2014/15
2013/14
Assets
$6.4M
$6.3M
Debt
$1.5M
$1.5M
Equity
76%
76%
EBIT
$264k
$170k
Net Farm Income
$160k
$56k
RoA
3.5%
2.6%
RoE
2.8%
1.3%
Financial Results - regions (average)
North
South
Assets
$4.8M
$8.4M
Debt
$0.9M
$1.9M
Equity
78%
73%
EBIT
$120k
$435k
Net Farm Income
$26k
$319k
RoA
1.9%
5.3%
RoE
0.4%
5.7%
Dairy Farm Monitor Project
Return on assets managed % - regions
14
12
8
6
4
2
Return on Assets (%)
North
South
> 12.5 %
10 - 12.5%
7.5 - 10%
5 - 7.5%
2.5 - 5%
0 - 2.5%
0
< 0%
Number of farms
10
Return on assets managed %
Dairy Farm Monitor Project
Earnings before interest and tax per Kg MS
$2.50
EBIT ($/kg MS)
$2.00
$1.50
$1.00
$1.91
$1.32
$0.50
$0.82
10 c/l
14 c/l
6 c/l
$0.00
Statewide
North NSW
South NSW
Farm income and
cost category
State-wide
kg MS
North
c/l
kg MS
South
c/l
kg MS
c/l
INCOME
Milk income (net)
$7.46
54.1
$7.62
54.7
$7.28
53.4
Total income
$8.44
61.3
$8.61
61.9
$8.25
60.5
$1.26
9.1
$1.43
10.2
$1.06
7.8
$2.29
16.4
$2.35
16.7
$2.22
16.1
$4.16
30.0
$4.48
32.0
$3.79
27.7
Employed labour
$0.85
6.1
$0.94
6.7
$0.75
5.4
Imputed labour
$0.89
6.4
$1.05
7.5
$0.70
5.1
Total overhead
costs
$2.96
21.4
$3.31
23.7
$2.55
18.6
COST OF
PRODUCTION
$7.12
51.5
$7.55
57.6
$6.11
48.1
EBIT
$1.32
10.0
$0.82
6.0
$1.91
14.0
VARIABLE COSTS
Home grown feed
cost
Purchased feed and
agistment
Total variable costs
OVERHEAD COSTS
Profit results
 There is a wide variation between farms in both
groups.
 The top 25% farms (based on Return on Assets)
are shown in the striped bars.
Dairy Farm Monitor Project
Earnings before interest and tax - North
$3.50
25
$3.00
20
$2.50
10
$1.00
5
$0.50
$0.00
0
-$0.50
-5
14/15 $/kg MS
14/15 Average $/kg MS
Top 25% * $/kg MS
14/15 cents/litre
13/14 Ave
NN0026
NN0025
NN0024
NN0023
NN0022
NN0021
NN0020
NN0019
NN0017
NN0016
NN0011
NN0010
NN0009
NN0008
NN0007
NN0006
NN0005
NN0004
-$1.50
NN0003
-$1.00
NN0002
EBIT ($/kg MS)
$1.50
-10
EBIT (cents/litre)
15
$2.00
Dairy Farm Monitor Project
Earnings before interest and tax - South
$4.50
35
$4.00
30
25
$2.50
20
$2.00
15
$1.50
10
$1.00
5
14/15 $/kg MS
14/15 Average $/kg MS
Top 25% * $/kg MS
14/15 cents/litre
13/14 Ave
SN0022
SN0021
SN0020
SN0019
SN0018
SN0017
SN0016
SN0014
SN0013
SN0012
SN0010
SN0009
SN0007
SN0006
SN0005
$0.00
SN0004
$0.50
SN0002
EBIT ($/kg MS)
$3.00
0
EBIT (cents/litre)
$3.50
Regional variation
 There is also a clear difference in profitability
between the North and South regions.
 These differences continue when broken further
within regions:
– North broken into Northern coastal (from Taree
north to Queensland border) and Hunter region
– South broken into coastal and highlands and
inland valleys
Key
No. farms
Group1
10
Group 2
10
North
20
Group 3
9
Group 4
8
South
17
State
37
State Top 25%
9
Location
North coastal from Taree to Qld border
North from Gloucester to Upper Hunter
20 farms total
South coastal Sydney to Bega
Southern inland
17 farms total
37 farms in total
Top 25% in the state based on ROA
Group1 Group 2 North
2014/15 Dairy Farm Monitor data
Break up by region
Main Financial Indicators
Milk income
All other income
Gross farm income
Variable costs
Overhead costs
VC + OH costs
Total cost of production (Adj for Inventory)
EBIT
ROA
ROE
Average
Group 3 Group 4
Average Average Average Average
Nth coast
Hunter
Units
$/kg MS
$/kg MS
$/kg MS
$/kg MS
$/kg MS
$/kg MS
$/kg MS
$/kg MS
%
%
7.77
1.07
8.85
4.73
3.47
8.20
7.95
0.65
1.3%
-0.8%
7.47
0.91
8.38
4.24
3.15
7.39
7.16
0.99
2.6%
1.6%
ha
ha
hd/ha
head
MS/ha
MS/cow
%
t DM / ha
t DM / ha
t DM / ha
t DM/hd
$/ t DM
%
Milkers/FTE
kg MS/FTE
$/kg MS
$/kg MS
185
86
1.4
230
607
438
61%
6.9
2.0
8.9
2.5
$378
39%
69
30277
$1.92
$3.95
245
105
1.2
289
605
515
57%
5.8
1.7
7.6
3.3
$395
43%
67
34102
$1.90
$3.61
South
Average
State
State
Average Top 25%
Sth coast
Inland
7.63
1.00
8.62
4.49
3.32
7.81
7.57
0.81
1.9%
0.3%
7.60
0.88
8.48
3.82
2.74
6.55
6.24
1.93
3.8%
3.8%
6.92
1.06
7.98
3.76
2.33
6.09
5.95
1.89
7.0%
7.9%
7.30
0.96
8.26
3.79
2.56
6.35
6.12
1.91
5.3%
5.6%
7.46
0.99
8.44
4.16
2.96
7.12
6.88
1.32
3.5
2.8
7.38
1.28
8.66
3.7
2.35
6.05
5.85
2.61
8.1
9.9
214
95
1.3
258
606
475
59%
6.4
1.9
8.3
2.9
386
41%
68
32098
$1.91
$3.79
282
143
1.3
365
641
513
56%
6.4
2.1
8.5
2.8
$417
44%
84
41,774
$1.96
$3.31
473
190
1.0
504
549
571
57%
7.0
1.5
8.4
2.8
$356
43%
89
49,206
$1.38
$3.24
367
164
1.1
427
600
539
57%
6.6
1.8
8.5
2.80
$390
43%
86
45,077
$1.70
$3.28
287
128
1.2
338
602
507
58
6.5
1.8
8.3
2.6
413
42%
77
38200
$1.81
$3.55
443
182
1.3
573
656
508
0.64
9.7
1.6
11.3
2.2
370
36%
101
49520
$1.43
$3.15
Main physical indicators
Total usable Area
Milking area
Milking cows per usable hectares
Milking cows
Milk solids sold (kg MS/ha)
Milk sold (kg MS /cow)
Home grown feed as % of ME consumed
Grazed pasture
Conserved feed
Total home grown feed consumed
Purchased feed per milker
Concentrate price
Percent of total energy imported
People productivity
People productivity
Grain & concentrates
Total feed costs
What’s driving the differences?
• Milk price
• Cost of production
• Profit
Why?
 NOT because of:
– Milk price
– Farm size
– Production per cow
– Farm system
– % imported feed
Why
 Differences lie in Cost of Production
 Both in Variable costs (main working expenses of
Herd, Shed and Feed costs
– Range $3.70 to $4.70 / kg MS
 And Overhead costs (labour, R&M, depreciation)
– Range $2.50 to $3.50 /kg MS
 That’s $2.00 /kg MS (15 c/l) difference between
group 1 and 4 in COP!
Conclusions….
 It does cost more to produce a kilo of milk solids in
the North than the South of the state.
– Grain price differential of $30 - $40 per tonne
– Lower quality pasture in summer
– Smaller farms with lower labour efficiency
 Opportunity – for all farmers to examine their cost
of production and review their management
system
 No one size fits all solution to higher profitability
The secret to success
Some of the top farms in DFMP
 3 farms each from North &South with high EBIT
Farm 1
North 10
Farm 2
North 11
Farm 3
North 17
Farm 4
South 21
Farm 5
South 22
Farm 6
South 05
Herd size
Usable area
250
361
350
180
880
607
1260
1030
800
443
250
218
Milking area
101
140
226
434
250
100
MS/cow
406
517
624
487
397
555
MS/kg lwt
0.74
1.3
0.67
0.97
0.74
0.87
Pasture cons
MA
13.5
10.7
5.9
9.8
9.2
10.2
Cows / FTE
99
68
105
131
163
79
MS / FTE
40344
35407
45082
63665
64667
43717
Milk price
7.89
7.46
7.52
5.90
7.80
7.70
Feed costs
3.07
2.58
3.47
3.47
2.62
3.06
COP
6.22
5.67
6.29
4.71
4.32
6.18
EBIT
3.00
2.58
1.97
2.19
3.74
2.56
Litres/cow
Features of top 25% farms (by EBIT)




COP $6.00 – 6.50 /KG MS (42-45 c/l)
60 – 65% feed consumed is home grown
> 70 cows / FTE, 40,000 kgs MS /FTE
Herd size above 250 cows
 Drive per cow efficiency MS/kg LWT
 Keep feed costs down by home grown feed and
simple diets
 Are good in most areas of management
Dairy Farm Monitor Project
Summary
 2014/15 was a profitable year for the NSW dairy
industry
• Average EBIT: $265k, up from $170k
• Average NFI: $160K, up from $56k
 Above average rainfall
 Higher milk prices
 High cattle prices
 Build up of feed inventory
Dairy Farm Monitor Project
A brief outlook for 2015/16
 Milk price: slightly lower than last year
 Grain prices same or lower – good grain
harvest in NSW
 Seasonal conditions
– a cracker so far for most coastal regions
– Drier inland, though variable
– Some flooding in January in Hunter and
south coast
 Cattle prices strong
 Milk production in NSW up on last year.
Farmer sentiment
Percent of Businesses
100%
80%
60%
40%
20%
0%
Increase
No Change
Decrease
Increase
Milk price
No Change
Milk production
North
South
Decrease
For more information:
www.dairyaustralia.com.au/dairyfarmmonitor
www.dpi.nsw.gov.au/agriculture/livestock/dairy-cattle
• Kerry Kempton, NSW DPI, Tocal
• 02 4939 8945
• [email protected]