Unique focus

By Dairy News

A unique equity partnership is being explored in West Gippsland, Victoria, through the focus farm concept. Five independent partners make up the three-way equity REDAN partnership — Noel and Anne Campbell, Evan Campbell and Dean and Rebecca Turner.

Collectively, the partnership leases the 185-hectare Yannathan dairy farm of Matt Coleman, on a four-year lease, with a following four-year option. About 25 farmers and service providers make up the focus farm support group and includes Matt Coleman and REDAN’s full-time employee, Misty Vlietman-Paris. As well as being an equity partner, Evan Campbell receives a wage as the full-time farm manager.

In the background is facilitator and consultant, Matt Harms.

The idea behind the partnership is for Evan, Dean and Rebecca to build herd and cash equity and become independent dairy farmers, while Noel and Anne reduce their equity stake during the same time period.

Adding further to the relationship is the long-term (20-plus years) arrangement between Noel and Anne and sharefarmers, Dean and Rebecca.

“The raison de’tre for the partnership is for everyone to achieve more working in a team than they could expect to do in isolation,” Matt said.

Equity growth in the partnership is through ownership of young cattle. Cow ownership determines the equity percentage, and therefore profitability, of the partners and this is reviewed annually.

“Effectively, the partnership is wound up annually and renewed every year,” Matt said.

A dividend is also paid to each partner annually. However, the dividend is the result of reconciliation after all costs are paid; some funds are retained annually to be working capital.

The 185 ha farm runs a mixed-breed single-calving herd on 174 ha — last season herd numbers peaked at 377. Calving begins in July and timing needs to be kept tight. The herd needs to grow quickly to 420 milkers and the partners expect that will happen this financial year, mostly through purchasing cows.

The herd is mixed breeds, mostly small to moderate-sized cows.

Initially, Noel and Anne owned 62.5 per cent of the herd, Dean and Rebecca 25.4 per cent and Evan owned 12.1 per cent. Cows are not pooled and remain in the individual ownership of the respective partners.

Evan keeps a spreadsheet that identifies each cow and her production — her value is determined by her production contribution and annual herd tests. Because the herd was initially all purchased, with the cows at varying prices, an averaging is applied to cow replacement cost.

“Good herd records are key to knowing the cow’s contribution each year and who owns her,” Evan said.

In year two, 2018–19, the ownership and therefore the profit and dividend split was Noel and Anne 58.2 per cent, Dean and Rebecca 27.2 per cent and Evan 14.6 per cent.

Consequently, in these early years, decision-making power is naturally driven by the partners’ equity if there is dispute.

Noel and Anne do not have young stock. They provide the machinery and consequent costs of machinery maintenance as an input without value.

Evan has 84 R1s and R2s; agistment is at commercial rates on the farm owned by Noel and Anne.

Dean and Rebecca have 122 R1s and R2s and these graze on a leased turnout block at their own cost.

All calf raising (to springer) and veterinary costs are applied back against the individual cow owner’s name.

There are three key pillars to farm business growth — stocking rate, calving rate and cow type. Profit can be maximised by reducing the amount of bought-in fodder and increasing herd fertility, and the amount of pasture grown and consumed.

It is Evan Campbell’s responsibility to maximise profit daily, by getting management outcomes “as right as possible” for 365 days of the year.

Production in September last year was 1.93 kgMS sold of 2.04 kgMS produced. This year in September, production was 2.05 kgMS sold.

The farm supplies Fonterra and opening price offered was $6.80/kg/Milk Solids.

The effective grazing area is 160ha, with a daily allocation of 5 ha per 24 hours.

Stocking rate is 2.24 cows/ha. Seventy-five per cent of the farm was resown in the first year, 60 per cent of the farm was resown this year.

“There were old pastures that needed re-seeding,” Evan said.

“Where we’ve sown in the past two years, we’re looking after those pastures where the grass has persisted.”

The dairy is a 30-bay swingover. As well as Evan as farm manager, at 1.3 EFT, and Misty as 1.0 EFT, there are two part-time milkers 0.7 EFT and a seasonal worker at calving time 0.3 EFT. There are four units of imputed labour from each of the remaining partners, equivalent to 0.4 EFT.

A fertiliser plan was developed following soil tests — the country is deep clay with a hard pan, has a history of dairy and potatoes and needs autumn rain, according to Matt Coleman. Spring pasture growth responds well to a good soil moisture profile.

A process of deep-ripping to 30 cm, liming and application of organic matter was followed this past year, with mixed results so far. Most of the organic matter came from the calf-raising sheds, the calving pad and chook shed litter.

The deep-ripped paddocks, at a cost of $100/ha, have shown variable growth. A power harrow was applied into some paddocks at the back of the farm; by early September, this area was showing no residuals from pasture sown in the autumn.

“We’re trying to determine what’s affecting pasture persistence and how to offset that; and what investment is worthwhile, given it’s a lease paddock,” Evan said.

Forage barley was sown, at a cost of $470/ha, into 10ha; by early September, it was growing at a rate of 3tDM/ha in some places, but was patchy where water still lay on the surface.

“We’re considering whether it will be grazed. It could be boosted with 250t/ha fertiliser and harvested as silage in October,” Noel said.

The rainfall pattern is generally reliable, but the 2019 autumn and winter were dry. Consequently, sacrifice paddocks were used to feed out silage during this period.

According to farm owner, Matt Coleman, the farm is traditionally very wet. Four inches of July rain had rescued a dry winter, which brought about decisions to stop milking the herd some weeks earlier than normal. With moisture driving pasture growth coming out of winter, Gibberellic acid was applied alongside weed spraying to boost growth, from 1600 kgDM/ha on June 22 to 2300 kgDM/ha in mid-September.

But the rain reduced the likelihood of gaining access by machinery to harvest silage until well into spring.

At the Redan farm in Yannathan

“Where the deep ripping occurred, those paddocks are still too wet to get on to; and will probably remain like that into October,” Noel said in early September.

The dry autumn and winter meant pasture growth was reduced and the entire store of harvested fodder was used to supplementary feed cows. Last season the farm harvested 600 tonnes dry matter silage as bales and two stacks; fed out by August this year at a rate of 1.7tDM/cow.

The partners said the silage strategy was to chase hard, producing 1.6–2tDM/ha. At risk was needing to purchase fodder to supplementary feed out in summer if insufficient silage is harvested; hot weather dries out the soil moisture and impedes pasture growth, limiting grazing options.

Of course, growing the herd to 420 in a short period will impact pasture growth and silage harvest. An additional 60tDM of silage will need to be harvested. One of the issues discussed at the focus farm open day was how much nitrogen would be applied to chase pasture growth and it was decided it would need to be ramped up to 1.6t/ha.

A herd of 420 cows in full milk will necessitate a stocking rate of 2.3 cows/ha.

The partnership has budgeted to spend $250 000 on pellets this financial year.

Other herd costs include the operating costs of retaining and raising heifers.