dairy news australia sept 2013

Strong fodder season will ease squeeze pages 6-7

Taming The LionDairy Farmers secures new milk dealPAGE 4

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september 2013 issue40 // www.dairynewsaustralia.com.au

neXT geneRaTionInvestigating all optionspages 10-11

CRossBReDsTiCK BoXesHigh fertility, productionpage 18

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news // 3

news ��3-13

opinion �� 14-15

agRiBusiness �� 16-17

managemenT �� 18-21

animaL heaLTh �� 22-27

aBVs �� 28-31

maChineRy &

pRoDuCTs �� 32-34

Damian Murphy has investigated how banks can help young farmers enter the industry. pg.10

Chris Lancey says his new Claas Arion 640 tractor and loader is perfect for dairy farms. pg.32

Michele Ryan and Frank Mickan give tips on producing the best quality feed possible this spring. pg.20

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Further calls for dairy free trade

Northern Victorian farmer Tim Kennedy is looking forward to the new season.See more on page 18.

ausTRaLian DaiRy leaders have called for free trade agreements to capitalise on the ever-increasing demand for dairy in Asia.

Australian Dairy Industry Coun-cil chairman Noel Campbell, Murray Goulburn managing director Gary Helou and Bega Cheese chairman Barry Irvin have all called for action.

Mr Campbell said trade barriers had to be removed if Australia was to expand further into international markets.

China overtook Japan as the greatest destination for Australian dairy exports last financial year and this is projected to grow further as the Chinese domestic supply decreases.

ADIC chairman Noel Campbell said Australia was an efficient pro-ducer and had adopted an open-market approach.

However, he said without free

trade agreements such as the one New Zealand has in place with China, Australian dairy would find it hard to expand further into inter-national markets.

“Dairy exports to our top 10 mar-kets are worth over $2 billion to the Australian economy, but in recent years our slice of the pie has been shrinking,” Mr Campbell said.

“We rank fourth in terms of world dairy trade with a 7% share, behind New Zealand, the USA and the EU.

“Most of our exports are to Asia partially due to our geographic position, but also we are excluded from other major markets by direct restrictions or export subsidy pro-grams.”

Mr Campbell said a new report commissioned by the ADIC and prepared by Dairy Australia showed there was a positive perception of

Australian dairy as being high qual-ity and safe, but the lack of free trade agreements was hindering the sec-tor’s chances of competing fairly in international markets.

“Demand for dairy is grow-ing in China, South-East Asia and the Middle East as their local milk supply cannot keep pace with con-sumer needs,” he said.

“These burgeoning markets are being targeted by dairy producers from across the world with the USA and the EU and rapidly moving into traditional Australian markets.

“Without free trade agreements like our competitors have, Austra-lian dairy is operating with one hand tied behind its back and our farmers are unable to fully realise the many export opportunities that are now available.

“This report further supports our calls that if Australia is to be able to

fairly compete on the world stage, then we must sign-up to free trade agreements with our key trading partners as a matter of urgency.”

Mr Helou has called for FTAs with China, Taiwan, Korea and Japan.

“What we need is equal access to those markets.

“You can’t be competing in a place like China with a 15% disad-vantage compared to massive com-petitors like Fonterra,” he said.

Bega Cheese executive chair-man Barry Irvin told the Australian Financial Review that FTAs were towards the top of his wish list.

“There’s no doubt that Austra-lian dairy can continue to grow, but the observation I would make is New Zealand has an entire govern-ment focused strongly on investing in farms and FTAs. We’re a long way behind,” Mr Irvin said.

DAi ry NEws AUsTrALiA september 2013

4 // news

afTeR a decade at the helm of the Dairy Farmers Milk Co-operative, Ian Zandstra is more convinced than ever about the value of cooperative representation.

Mr Zandstra has resigned as chair-man of the DFMC and won’t seek to be re-elected as a director at the AGM in November.

But that doesn’t mean he has lost any of his passion for the dairy industry or the need to represent farmers in commercial negotiations.

Mr Zandstra will now concentrate on his family’s two 404ha dairy farms at Nowra in NSW and Shepparton in Victo-ria. “Dairy farming is my great love, that is where my heart is, I have a great empathy for farmers, and that’s where we want to be,” he said.

“I never regret a minute of my time with the cooperative, I have been on co-op boards for 17 years, but I’m a dairy farmer first and foremost. We started with a small start and dairying has been good to us.”

Mr Zandstra was involved with Dairy Farmers Co-op before its restructure into DFMC in 2004 and has been the coopera-tive’s chairman since its inception.

“Representation and governance is challenging, especially in the change era of our cooperative processor Dairy Farm-ers restructuring, corporatising and selling to Lion. It is vital that farmers have some-one in there as their voice,” he said.

“Farmers are too dispersed and don’t have all the information to negotiate as individuals. They really need a coopera-tive on the ground so their point of view can be heard in commercial dealings from sellers to buyers.”

The DFMC has often battled at the negotiation table with Lion over its models of payment for farmers.

“We realise we can’t be uncommer-cial but you have to make a deal that is

fair for farmer suppliers; farmers have an economic position as well but corporates don’t like farmers in their decision-making kitchen,” he said.

“I kept going because there was always something more to do, the industry never settled down; there probably still is but we got through the Lion gold silver and black pricing episode so I thought the main things on the plate had now been addressed.

“I know more issues will come up but there had to come a day when I say enough is enough and go back to enjoying being a farmer.”

The DFMC has an agreement for mem-bers to supply Lion for the next six years. “After that I anticipate we will have to strike a new agreement and that’s where you need a cooperative to make sure the farmers’ voice is heard.”

Mr Zandstra admits the industry has been “through a lot of tough times” over the past decade. “Seasons, prices and cost increases lead to volatile margins,” he said.

“From our own farming perspective we believed we had to build critical mass and so we invested in building up our farms. My wife Cheryl and I have got confidence that we can make it. We like the business side of dairy and we choose to invest there, but there are always risks in farming and anything can happen.”

Deputy DFMC chairman John Macar-thur-Stanham will serve as interim chair-man until the AGM.

Mr MacArthur-Stanham said Mr Zand-stra’s decision to stand down was a sad day for DFMC.

“Ian’s leadership has been through an extremely challenging period for DFMC and the broader dairy industry. His wisdom and experience has been valuable for the board and management,” he said.

“He has had a great career and put in the hard yards for farmers.”

Mr MacArthur-Stanham also plans to retire at the November election.

Zandstra returns to green pasturesRiCK Bayne

Dairy Farmers reaches deal with LionRiCK Bayne

Lion anD the Dairy Farmers Milk Co-operative have agreed to terms for the current season after initial discussions led to mediation.

The Dairy Farmers Milk Co-oper-ative, representing 700 dairy farm-ers, described the initial Lion price offer as a “have and have not” model which would mean lower overall milk prices for most suppliers.

The Lion offer was a two-tiered system, with about 40% of suppli-ers offered five-year contracts with a three cents per litre contract con-sideration rate, with all milk at tier one value for the first year only, with no future guaranteed pricing.

This offer targeted farmers sup-plying more than 1.5m litres in NSW and 800,000 litres in south-east Queensland.

All others were offered a one-year contract with a view that these sup-pliers would no longer be supplying by the end of June 2014; this included tier two milk for those farmers for the spring months.

Currently contracted farmers were offered more severe terms if they did not change to new contracts.

However, new DFMC chairman, John MacArthur-Stanham, said Lion has reviewed its position following mediation.

“We have reached a satisfactory position to go forward,” he said.

“With Murray Goulburn in the market they could take a signifi-cant quantity of milk so Lion has to respond and adjust.”

Mr MacArthur-Stanham said DFMC understood that Lion’s posi-tion was not unreasonable in theory. “They are less inclined to pay for milk more remote from the city market and on a smaller scale because of the costs, but as a cooperative we try to treat all our members fairly and equi-tably.”

The cooperative has 1800 suppli-ers across the country and pricing is varied to reflect this. Mr MacArthur-Stanham would not enter into specif-ics due to the mediation process.

DFMC has 320 dairy farmer mem-bers in NSW who produce more than 360 million litres of milk annually.

It has welcomed new competi-tion for milk in NSW and hopes it will result in better prices for farmers.

Murray Goulburn is inviting dairy farmers in the NSW-Sydney market region to express interest in sup-

plying milk to the cooperative from October 1.

The DFMC has a contract which restricts it members to supplying milk to Lion.

Mr MacArthur-Stanham said having Murray Goulburn as a new supplier would be healthy for NSW dairy, even if it means the coopera-tive loses members.

“I am sure we will lose a few mem-bers if they can secure a higher price, but having another competitor for milk is a good thing for farmers,” Mr MacArthur-Stanham said.

“If there is upward pressure on price, that’s a good result for all farm-ers.”

The DFMC would continue to negotiate good returns for its mem-bers but understood if farmers went for a higher price with Murray Goul-burn, he said.

Former Dairy Farmers chairman Ian Zandstra.

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news // 5

fonTeRRa was hit by a ‘perfect storm’ of unrelated events and mistakes which lead to the recall of whey product potentially contam-inated with a lethal bacteria. This turned out to be a false alarm.

The mistakes included a missing piece of plastic which initially lead to the reprocess-ing of WPC80, the use of non-standard equipment for that reprocessing, and a one off delay in information sharing which lead to a delay in test-ing.

Computer systems in Aus-tralia had just been upgraded when the recall was launched and staff lack of experience with the system lead to delays in tracing the product.

“Global recalls are never related to one event,” says Mr Spierings. “This is the result of a number of separate and unrelated events occurring in

an in unforeseen sequence. When you compare it to other crisis this is always the case – there is always four or five events related to the crisis.”

However, as pinpointed in the operational review by group director of strat-egy, Maury Leyland, the issue was not escalated to the chief executive early enough. Mr Spierings was told at 11pm on August 1, 24 hours after the AgResearch results indicating a potentially lethal clostrid-ium botulinum and a month after that testing was commis-sioned.

Mr Spierings said he should have at least been told when the sample went to AgResearch to test for botuli-num in June, and possibly ear-lier than that when elevated readings indicated there could have been a problem.

“I am not saying that I have the wisdom but what you nor-mally do is sideline the prod-uct which is in the pipeline, you call your customers and

say park it for now. You do further testing and because it was such a rare example of botulinum in this part of the world you would have got the results from AgResearch and you would have got a second opinion.

“Because it is so rare it’s so unique in this part of the world, you would have asked the question ‘should we have a second opinion’. That’s the end of June, not the end of July.”

Fonterra has now created a new role of group director of food safety and quality report-ing directly to the chief execu-tive, strengthened the remit and scope of its Food Integ-rity Council, and launched an internal Food Safety and Quality Hotline for staff and contractors to escalate any concerns about potential food safety risks.

It has also completed quality audits at its sensitive nutritional plants, including Hautapu.

Fonterra bacteria scare a false alarmpam Tipa

muRRay gouLBuRn has sacked a further 72 employees across its processing facilities.

The move follows the major review in May last year when 12% of its workforce – or 301 positions – was removed. An additional 64 jobs were made redundant at its Rochester plant in March last year.

All job cuts have been made in the name of efficiency, according to the company.

The latest reduc-tion in roles is made up of 38 positions at Cobram; 15 at Leon-gatha; 8 at Kiewa; 4 at Edith Creek; 4 at Rochester; and 3 at Koroit. These changes will take effect within the next four weeks.

Keith Mentiplay, general manager operations, said all affected staff would receive their full enti-tlements and will receive additional support where needed.

“While these decisions are challenging, they are necessary to ensure MG remains competitive,” he said.

“It is in the best interests of our supplier/share-holders, employees, communities, customers and consumers that MG remains a strong business, able to compete globally and deliver higher farm-gate prices.

“We continue to employ more than 2000 people at MG, mainly in rural and regional Australia and contribute an estimated $6 billion to the Austra-

lian economy.”The latest retrenchments were revealed a week

after MG announced a step-up in the farmgate price for the 2013/14 season of 9 cents/kilogram butter-fat and 19 cents/kg protein, taking its “weighted-average” price to $5.86/kilogram milk solids (MS).

It has also increased its end of season fore-cast to a range of $5.95-$6.20/kgMS. External factors including fluc-tuating interna-tional commodity prices and cur-rency movements

may result in a final price that is higher or lower than this forecast, the company said.

Managing director, Gary Helou, said since increasing the opening price in late June, the international dairy market for key ingredients has remained strong while the outlook for the Austra-lian dollar has remained relatively weak compared to last year.

“These factors combined with our ongoing focus on delivering value through improved busi-ness efficiencies and innovation, has meant that we are able to pass additional benefits to our farmer supplier/shareholders,” he said.

The step-up follows the announcement in June to lift the opening base price by 13c/kgMS.

“We remain optimistic about market returns for the remainder of the year,” Mr Helou said.

MG cuts staff, lifts prices

Murray Goulburn has cut further staff from its Rochester plant.

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6 // news: foDDeR season

Frosted crops are hay boundgRain gRoweRs in northern NSW and southern Queensland may be forced to turn frosted crops into hay.

Ian Wickham, from Feed Cen-tral, said he was surprised more grain growers hadn’t turned to the hay option after freezing overnight conditions in late August left crops extensively frost damaged.

“Most are sitting on their hands waiting to see if gets really bad. Grain farmers tend to stick to what they know but they should look at hay as a back-up plan,” Mr Wickham said.

“The value will decrease the longer they leave it.”

Frost damage has been uncovered in wheat, barley, canola and chick pea crops.

Mr Wickham said there was a rea-sonable market for hay. “Because it has been so dry it sucked up the exist-ing hay for drought feeding so there is a market for it. We had one of the lowest volumes ever last year.”

He said that while growers could

make more money from hay than grain with the crop condition, they needed to make sure they did it properly and stored the hay for long-term sales.

“Some might want to sell hay as soon as it’s made, but you have to fit with what the dairy industry needs and store it properly.”

Mr Wickham said grain prices remained reasonably good but prices were expected to drop significantly at the new season harvest. “It’s too late then to make hay,” he added.

Dairy farmers in the region have been through a typically dry few months but could expect to have more growth after September storms.

Mr Wickham predicted increased volumes of vetch hay and pasture hay this season.

“There are pretty good growing con-ditions for hay so dairy farmers should have some good volumes coming up, if not high quality.”

He recommended dairy farmers “think further ahead” and lock in some interim supply.

“Most hay sheds are fairly empty on the east coast.”

RiCK Bayne

RuminanT nuTRiTionisT Tim Huggins, from Five Star Stock-feeds, says confidence in south-west Victorian farmers is growing about the spring season.

“With the sunny weather in the past week the grass has jumped out of the ground,” he said. “A bit more rain will keep that ticking along.”

Mr Huggins said growth rates of 30-40 kg DM on south-west Victorian farms in August were amazing for that time of year.

Farms in the region have also been

able to access more hay supplies to fill the breach before harvest.

“There is a lot of high quality vetch hay at reasonable prices from the Wimmera and Mallee,” Mr Hug-gins said.

“Overall the season is looking really promising at this stage.”

Dixie dairy farmer in south-west Victoria, Barbara Collins, said the grass was starting to grow but many farmers were still trying to catch up.

“It will make the light at the end of the tunnel a bit bigger, but the light is

just a pin prick at the moment,” she said.

“We probably won’t see a profit till February and then we’ll need two or three years of good prices to make things look really good again.”

The Collins farm just spent $8000 on a load of hay and expects to buy another similar sized load before having enough home-grown feed.

“We’re still rationing out feed and had to buy hay for the springers,” Mrs Collins said. “Our grass is coming but it’s not there yet.”

Growth rates excel in south west Vic

A farmwalk at Barry Philp’s Garvoc property in western Victoria late last month.

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news: foDDeR season // 7

woRLD ReCoRD grain crops and predictions of better than average hay yields and a solid fodder growing season will help the financial squeeze that crippled dairy farmers last year.

Record grain crops globally should lead to lower prices locally for new season crops while hay prices have eased in parts of Australia.

The potential for a better-than-average spring will help farmers replenish feed stocks with home grown fodder.

The demand for fodder across Victoria during winter has started to abate, although some farmers are still being forced to continue buying dwindling stocks of hay to see them through to harvest.

Farmers are being urged to be pro-active during spring and take advan-tage of the likely good conditions to increase their home-grown feed.

Dairy Australia says there is a gen-eral feeling that although some pad-

docks have patches of waterlogging, at this stage there is potential for better than average hay yields in the coming spring, with predictions of a solid fodder growing season.

Hay prices have been steady across most of Australia but have eased in south west Victoria. Grain prices have generally fallen slightly over the past month.

Australian Crop Forecasters gen-eral manager Ron Storey said over-all conditions and weather forecasts looked good though “the weather in the next month to six weeks will make or break us”.

Mr Storey said south-west Queensland and north-west NSW were in poor shape but the rest of the east coast was generally good and slightly ahead of this time last year.

“The Bureau of Meteorology is predicting average or slightly better chances of average rain; if their pre-dictions come true we should have a reasonable season,” he said.

Mr Storey said world record crops had pushed down prices interna-

tionally but the fall of the Australian dollar had offset that advantage for Aussie importers.

“Prices remained flat in August but the pressure is downward.”

Mr Storey said supply and demand was tight along the east coast and was likely to remain that way until har-vest.

“If you don’t have supplies lined up till around Melbourne Cup day, you need to start looking around.”

Old crop prices are expected to remain strong.

Queensland agricultural specialist Graeme Busby said high grain prices were providing no joy to farmers in a tight, dry market where milk prices also remain depressed.

“There is plenty of water in dams but the grass is fairly dry,” Mr Busby said. “A lot of the yields have been pretty ordinary.”

Victorian DEPI pasture and fodder conservation specialist Frank Mickan said Gippsland was sitting nicely for a positive spring.

“West Gippsland has had more

rain and a bit of pugging but at this stage the whole region is looking rea-sonably okay for spring.

“South-west Victoria is pretty much the same,” he added.

Mr Mickan said farmers should do whatever they can within finan-cial and practical means to grow and utilise as much home-grown feed as possible to try to minimise costs of production.

“Grass grown and converted straight to milk will optimise annual profit,” he said.

He said grazing management and nitrogen fertiliser should be used to boost the spring flush over as much area as possible.

Mr Mickan said farmers should aim for quality above quantity and make sure they get their timing and decision-making right to encourage more home-grown feed.

“Improving silage from 9.5 mega-joules of energy per kilogram of dry matter (MJ ME/kg DM) to 10.5 in a 350 tonne DM stack can be worth an extra $10,000.”

Grain surplus, strong spring will ease financial squeezeRiCK Bayne

Frank Mickan

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8 // news: BoaRD LeVeL

new ZeaLanD dairy farmers Trevor and Harriet Hamilton have imple-mented a governance structure seen all too rarely in the dairy industry.

The Hamiltons own or have interests in eight dairy farms across NZ and have set up a board which consists of them-selves, plus two independent directors, Massey academic Dr James Lockhart and accountant Greg Eden.

The Hamiltons’ farms produce 2.4 million kg milk solids (MS) a year. Each farm runs about 860 cows. They have an operations manager in the South Island who looks after the four farms there and Mr Hamilton has taken on the role of North Island operations manager as well as his owner responsibilities.

None of the Hamiltons’ five adult children is on the board but they may be appointed in the future.

The only other person present is the operations manager, Peter Aitken, but he does not have a vote.

“We have him in the boardroom the same as you would a chief executive. The aim is to give him a full understand-ing of what the board’s all about, where it’s going to, how we need to deliver on things and the general discussion of pol-icies and strategies.

“We’ll ask him to leave if and when we feel there is something we need to discuss in private.”

The board meets bi-monthly and it has set some clear strategies and pol-icies which drive the business. From these are set the key performance indi-cators (KPIs).

Communication is a top priority for the Hamilton operation. The operations manager meets with the farm managers on a regular basis and they in turn meet with staff. Reports are fed back to the board.

“I’d go to the South Island possibly once every six weeks and just deal with my operations manager, Peter Aitken and talk to him about any issues he may have.

“We ask managers to report every

10 days on pasture walks and provide monthly farm reports which come back to the board through the operations manager. So we don’t want to take our eye off the ball on any of the KPIs.”

This structured approach is critical to the success of their business, Ham-ilton said. Problems occur when junior staff don’t understand the farm policies and structures.

“We implement that very strongly and there isn’t a lot of room for devia-tion.”

Occasionally outside experts are called in to talk to all staff.

What surprises many people is that the Hamilton’s children are not on the board and in fact have to report the board.

“When we started going down this path of formal governance we called all the five siblings and said ‘This is what we’ve achieved in the last 30 years and the last 10 years and this is where we can take the company in the next 10 years. We asked them if they wanted to be part of it and we had 100% buy-in.”

Four of the Hamilton siblings work in the business and for them it’s a case of ‘earned opportunity’ but not an inheritance.

“We don’t believe in inheritance because it doesn’t bring about any learning. For example, my son and one of my sons-in-law have started at the bottom and worked up to where they manage some of the units, then we’ve opened up opportunity accordingly.

“The family members are now under no illusion that Harriet and I don’t make decisions, other than personal decisions, without the board.

“We have had instances of family differences and the independents on the board dealt with these on a busi-ness basis.

“That puts the line between what is business and what is family and that is the line we want to keep.”

The key to it all is governance and having people on the board who think differently from him: they add value.

“The exciting thing is where we can take it in the next ten years. People make the mistake of thinking it’s all about the money, but for me it’s all about the challenge.

“I think we can probably take it from a NZ$100 million business to a NZ$250 million-300 million business in the next 10 years.

“This is based on the fact that 12 years ago we had two farms doing a total of 300,000kgMS and are now doing 2.4 million kgMS.

“How many people can I grow? How many family members can I grow? It’s hugely exciting.”

Board has final say on operationspeTeR BuRKe

Trevor Hamilton

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news: BoaRD LeVeL // 9

Boards aid farm strategymoRe DaiRy farmers are turning to a board structure to govern their business.

The more formal approach to farm management is seen by many as a way to bring greater professionalism and scrutiny to the business operation.

Warrnambool-based consultant Mike Weise of Client Victoria said many farms were realising the benefits of taking a more professional approach.

“There definitely seems to be an increase in the number of farming companies, both family and corporate, establishing boards and then inviting an independent director to help them professionalise their multi-million dollar businesses,” Mr Weise said.

“The management decisions are still kept within the family but the board uses the independent director to advise on how improve the way the farm business governs, set strategy, achieve agreed decisions, plan for succession and follow legal and compliance regulations.”

Mr Weise recently attended an Australian Pacific Extension Network (APEN) conference in New Zealand on ‘Change: Chosen or Unchosen’ where the increase in the number of larger family farms creating boards was a hot topic of discussion (see story page 8.).

Mr Weise, who is a professional director with a diploma from the Australian Institute of Company Directors, and is vice-president of APEN as well as chairman of South West TAFE, said many farming families had not previously taken time to work strategically on their business.

“A lot of families don’t sit down and have a management team meeting and they don’t have a governance structure to assess how well the management team is delivering the business plan.

“With a formal series of meetings, some farms

do decision making on the run and don’t set aside enough time to plan as a team and then review how the plan is tracking.”

Mr Weise said structures being adopted by dairy farms were either a board or a board/management hybrid.

Farms looking to use an independent director often want someone who is experienced in governance, excellent at strategic thinking, has good business process and facilitation skills to help the board come to consensus, has some corporate legal risk management and compliance knowledge and is impartial, Mr Weise said. “Their reward is solely the fee they receive for their contribution at the board table.”

Mr Weise said farm businesses also expect an independent director to have a diploma in company directorship.

“It adds a discipline to the meeting schedule - if there is a paid director present meetings won’t get cancelled because of some operational calamity on the farm.”

Mr Weise said he believed the move to board structures was prompted by a growing understanding that all farms, dairy included, need to be more strategic in planning and take the time to review how the plan is being executed.

Woolsthorpe dairy farmers Roma and Glenn Britnell established a board structure two years ago as a part of confronting the succession challenge.

The board has an independent director, the two principles of the business, Mr and Mrs Britnell, and their three sons.

“We spent time developing the capacity of the board members who had not been exposed to such a concept by investing in education, including a personal development course with our sons,” Mrs Britnell said.

The Britnells use an independent director who is a local business man.

“Business discussions need to be business focused and family and

business need to be separated,” she said. “Professionalising the relationship by developing board meetings with agendas etc assists with this.”

Rural financial counsellor Vince Thorne said all farms need a business model

that involves forward planning. “Using a board format is one way of doing that. I like formal arrangements because you have something to fall back on if problems arise as they often do,” he said.

Mr Thorne said he had not noticed many clients moving to a board

structure “but maybe that is why they are my clients and need help”.

“A number of farms operate well as a trust and a few use companies but this is often a more expensive way of administration with little benefits in the scale of operation,” he added. Mike Weise

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10 // news: neXT geneRaTion

iT’s an ever-present issue – how to deal with the ageing farming popu-lation and make it possi-ble for young enthusiastic farmers to enter the sector.

Dairy farmer Damian Murphy, from Dumbalk North in Victoria, believes thanks to a Nuffield schol-arship, he may have found the solution.

“I’ve seen people come into the industry and they’ve just found it so hard to get finance for things that would allow them to grow their asset and progress in the indus-try - it is becoming a real hurdle, and almost exclu-sive.

“It was almost a case of you could only get a start and continue in agricul-ture if you had the family farm or the family con-nection to keep on going through and I’d like to see that change.”

Mr Murphy set off on his scholarship in 2012 to investigate what young farmer finance schemes exist around the world, particularly in places where land is more tightly held than in Australia

“That’s one of the key things we had to look at – if we don’t have that manoeuvrability, how do young people keep on coming through?

“They might start on a share and progress through onto a lease and maybe a marginal farm or something like that - in places like Ireland and France they don’t have that option, whereas in Australia we’re lucky we still have that option.”

Perhaps surprisingly Mr Murphy found in France that, unlike Austra-lia, a significant percent-age of farmers previously did not have a connec-tion to the farm - in other words they were start-up farmers.

“They do have a very different system to us, and yeah a lot of money flows in from the EU.

“When I sat down with the French young farmer group and asked them, the answer was 30% do not have that connection to the land and I think that’s a terrific stat.

“However it costs a lot of money and I think we can do it better than that.”

It was in North America however where Mr Mur-phy’s big find came, when he discovered a loan pro-gram from Farm Credit Canada called Transition Loans.

“How it works is when a young farmer buys a property, Farm Credit Canada will go as guaran-

tor for the money that’s outstanding to the existing owner of the farm.

“So over five years, Farm Credit Canada will guarantee that owner will get his money for that asset – so if it’s a $500,000 farm, they will get paid $100,000 each year from Farm Credit Canada.

“Now the advantage to me as a start-up farmer is I only pay principal and interest on the amount outstanding to the owner. So in the first year the owner gets $100,000 of his $500,000 and as the young farmer I’m only paying principle and interest on that $100,000.

“That helps a huge amount with cash flow and that’s what is really key to a young farmer, just pro-tecting that cash flow situ-ation,” he explained.

Loan scheme eases cash flow for young farmers

“I’ve seen people come into the industry and they’ve just found it so hard to get finance for things that would allow them to grow their asset and progress in the industry.”

Mr Murphy believes a bank should take on this transition program in Australia, but also sees merit in setting up a co-financing program where money from agri-culture is invested back into agriculture to assist young farmers with equity requirements.

“I mean get into agri-culture and progress through, so I’m talking stock, lease agreements, machinery – anything

that’s fairly manoeuvrable right through to land pur-chases. Wherever the young farmer wants to go I’d like to see them sup-ported and encouraged with finance if that’s how they see they want to go,” he said.

He said after travel-ling around the world on his Nuffield schol-arship, he holds grave concerns for the future of Australian agri-culture without a viable entry system for young people.

“I think what you’re going to find, and what I found through my research in the EU, is they’ve got such an old ag population that it’s really going to hinder them in

the next 10-15 years if it’s not hampering them now.

“We’re in the same situ-ation, something is going to have to happen with young farmers coming through in the next 10-15 years or we’re going to end up with a very old farmer

population.“We have to

find some way of manoeuvring that through encourag-ing young and beginning farm-ers into the industry to

progress through - because these older farmers have a huge amount of assets in agriculture and they’re going to have to get passed on in some way, some-how, at some stage and if the young farmers aren’t coming through and in a

position to buy that asset or progress through or manage that farm, the value of that asset will reduce and that’s not good for anyone,” he said.

The Geoffrey Gardiner Dairy Foundation sup-ported Damian’s scholar-ship.

Nuffield Australia is an organisation which provides opportuni-ties to Australian farm-ers between the ages of 28 and 40 to travel the globe investigating a research topic important to them and Australian agriculture.

Damien Murphy

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news: neXT geneRaTion // 11

Seeking best fit in northern NSW

a noRTheRn NSW dairy farmer has used a scholarship to investigate different farming models in a bid to open opportu-nities for his family and other dairy farmers who want to progress within the industry.

Paul Judge has worked on, and now partly manages, Sam and Fleur Tonge’s farm at Casino, NSW, for almost nine years but is keen to move into a sharefarming, leasing or management role.

Mr Judge said the northern NSW district does not have a strong his-tory of leasing or share farming.

“Traditionally, it has been handed down or sold off,” he said.

“I want to have a long future dairy farming. I see it as my career but the pathway isn’t clear or automatic. I’m going to have to create some of the opportunities for myself.”

He was awarded a Win-ston Sweeny Scholarship to investigate how to facil-itate these options.

He focused largely on Tasmania where arrange-ments for share-farming, leasing and managing cor-porate farms are more common than in his home region.

“There are amazing opportunities in the Tas-manian dairy industry at the moment,” he said.

“Factories are looking for more milk; the govern-ment is opening up more irrigation water to drive agriculture so there’s a trend to opening up new land for dairying.

“Landholders are rec-ognising the returns from dairying and when they are ready to move out of daily involvement in dairy-ing, they are consider-ing options such as hiring managers, leasing and share farming. Yet there’s a shortage of young dairy farmers willing to take up those opportunities.”

Mr Judge is unlikely to move to Tasmania, saying the farming systems are vastly different to farming in the subtropics, but he

did gain valuable insight into what makes a success-ful share farming, leasing or management arrange-ment.

“The message I got loud and clear was there’s no standard agreement,” he said. “The most impor-tant thing is to find the right match of people, owner and farmer, and to build the agreement to meet both parties’ needs.”

For now, Mr Judge plans to look for oppor-tunities closer to home and has taken the step of selling the idea to land-holders, preparing a pro-spectus for potential candidates to read.

“I think there are a lot of dairy farmers in our area who are ready to reduce their daily involve-ment in the farm opera-tions but see very limited options, such as convert-ing to beef,” he said. “They might not think of leasing, share farming or putting on a manager.”

Mr Judge said any agreement had to work for both parties.

“Getting an agreement that works for landowner and farmer involves a lot of discussion, and some of the issues can be uncom-fortable to face,” he said. “A consultant can guide you through that, help you understand the other’s perspective and draw on their experience to help you avoid common traps.

“For example, a prob-lem with leasing is people have scaled back so the farm is not running at its optimal capacity. Some may consider it a 2 million litre farm when it’s really a 1 million litre farm. Paying for potential and redevel-oping a business is OK but often who pays for this is a sticking point.

“In other cases, people want to exit the industry but they still have debt. The owner needs close to 100% equity to make a share farming or leasing agreement work.

“An agreement with a share farmer means the owner may have to push it harder and invest more, so there’s a risk there, and both parties need to realise that.”

Mr Judge and his wife,

Jo, will continue to invest in their herd until the right partnership can be estab-lished.

There are about 420 farms in the sub-tropi-cal district, from Kempsey

to northern Queensland. Mr Judge will continue to work until he finds one that works for both par-ties. He hopes other young farmers will follow in his footsteps.

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12 // woRLD news

Fonterra to ship 4500 cows to ChinaaBouT 4500 cows are being readied to ship to China as Fonterra prepares to commission two more dairy farms near Beijing.

Fonterra’s Peter Moore said shipments of cows to China will continue as they seek to develop more farms with the ultimate goal of producing a billion litres of milk there.

Three farms are now producing, col-lectively milking about

10,000 cows. “We’ve got farms four

and five under construc-tion and due to be com-missioned towards the end of this year…. That will require another 6500 cows, taking us up to milk-ing 15,000-16,000 cows depending on the time of the year. Obviously we’ve got our supporting stock as well.”

Sexed semen is used by Fonterra to grow heifers

numbers in China and Mr Moore says generally this has been successful. They are producing more heifers than they need at present but these animals will be used on future farms.

North American genet-ics are used to increase the volume of milk from the cows in China as that market is largely a ‘liquid milk’ market. Such cows can produce 8-10% more milk than the ordinary

New Zealand cow, but Mr Moore points out that the base genetics is still Hol-stein Friesian .

With the exception of the first pilot farm, the farms are in a hub in Herbei province which makes for easy manage-ment.

The big difference is the design: lessons from the pilot farm have been incor-porated into the design of subsequent farms

“Farms four and five are similar to farm three. We learned a lot from farm one and so farm two was quite different. Farm three has some minor differ-ences from farm two and we have sort-of landed on what we consider the ‘roll

The LaTesT REINZ figures show that for the three months ended July 2013 the median sales price per hectare for dairy farms was A$30,200 (47 properties sold), compared to A$25,650, for the three months ended June (66 properties sold), and A$19,700 (29 properties sold) for the three months ended July 2012.

The median dairy farm size for the three months ended July 2013 was 147ha with a range from 64ha in Waikato to 525ha in Hawke’s Bay. Median production per hectare across all dairy farms sold in July 2013 was 861kgMS, down from January 2013 which was 1047kgMS – the highest ever recorded by REINZ in a month.

On an annual basis, 2012 sales activity levels rose in 11 of the 14 regions measured by REINZ. Sales numbers were greatest in Canterbury which has led the trend to dairy conversions and where 239 sales were reported, up by nearly 30% on 2011.

While well up on the 126 sales recorded at the trough of the market in 2009, sales volumes are still significantly below the average of just over 340 per annum which prevailed in Canterbury between 2000 and 2008. The Waikato region experienced the second highest volume of sales in 2012, at 174, up from fourth place in 2011. The Waikato region’s climb in the rankings was due to a sharp increase in the sale of dairy farms, with transactions doubling from 28 in 2011 to 57 in 2012.

This growth in the dairy sector is being reflected by farmers and investors actively looking to buy existing dairy units, dairy support units and farms with potential for conversion. Southland, big in dairy conversions, was the third most-active market with 151 sales in 2012, followed by the Manawatu/Wanganui region with 137.

Cow numbers reached 4,634,226, over the 2012-11 period, an increase of nearly 21% since the 2005-06 season when the total stood at 3,832,145. Most growth in cow numbers has been in the South Island where conversions have resulted in herd numbers rising sharply.

The spike in conversion activity has reversed the trend of falling herd numbers brought about by farm amalgamation which had been a near constant theme for nearly 40 years.

fRanCis woLfgRam

Hike in farm sales figures

Fonterra is setting up two more farms near Beijing.

out’ design for the future,” says Mr Moore.

Each of the two new farms – four and five – will have about 3000 cows plus replacement heifers. Feed is being sourced from local farmers, helping build rela-tionships with the local community. The farms are also good for local employ-ment: at least 300 local people work them and only five ‘expats’.

As the two new farms near completion Mr Moore and his team are thinking about the next ones. “We

hope to develop those next year and we are still in the process of finalising where those will be and the agreements to lease land, which we haven’t done yet but we are well advanced in those discussions.”

Mr Moore says the suc-cess of the farms is in no small part due to the New Zealand genetics which have “suited us pretty well in China”. But with the farms’ rapid expansion it’s possible they may ship some cows from Australia to supplement their needs.

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woRLD news // 13

The uniTeD States dairy industry is turning its attention outside its own borders and could emerge as a significant competitor to Australia in international export markets, a visiting global dairy expert has cautioned.

Rabobank’s New York-based global dairy strategist Tim Hunt – recently in Australia presenting to local industry – says the United States, long focussed on its own domestic market, is reorienting towards the global market place, attracted by the allure of better returns across some product categories.

Until recent times, the entire US dairy industry had been dedicated to servicing its own lucrative and growing domestic market, with countries like Australia trying to gain access through bilateral trade agreements.

“Historically, the US dairy industry lived in a fortress,” Mr Hunt said.

“It had a very large, affluent domestic market, which grew strongly and had very high prices. It was protected from the international market by high tariff barriers and had government support.

“But US dairy market growth has slowed in recent years, while the commodity price boom has seen international prices rise above domestic US market prices, making export returns more alluring for US dairy players.”

This, in effect, was turning the US from ‘the hunted to the hunter’ as its dairy industry

sought to compete in the more attractive global marketplace, Mr Hunt said.

“The US dairy industry is becoming increasingly cost competitive in export markets due to a combination of its large-

scale farm operations, easing feed costs and a lower US dollar, while it is also beginning to align products to suit the global market,” he said.

Mr Hunt said US dairy exports had already begun to steadily grow as a result, with, for example, milk powder exports increasing from about 300,000 tonnes in 2007 to 500,000 tonnes in 2012, and cheese exports going from about 100,000 tonnes to more than 250,000 tonnes in the same period.

But Mr Hunt said it was not all smooth sailing for the US as they reoriented towards world markets, with a number of obstacles to overcome.

“With the entire US dairy industry having developed to service the domestic market, they are not aligned to the requirements of exporting dairy,” he said. “Essentially, they have the wrong plants and they make the wrong products

US change tack and sets sights on export markets

for global market exports. In addition, US regulation makes exporting hard for the industry.”

And there are also market access and customer relationship issues, Mr Hunt said. “The US dairy industry

doesn’t have good access to several important markets and they also have relatively weak relationships with offshore customers,” he said.

However, progress is being made towards the

US becoming a better exporter. “Plants are being tweaked to make export products and new plants are being built to service export markets,” Mr Hunt said.

“Market access is improving and

relationships with offshore customers are being strengthened.”

And with Australia largely having lost its cost of production advantage in world dairy markets, it will be increasingly likely to compete head-to-head

with the United States in coming years, Mr Hunt warned.

“Maintaining Australia’s edge in post-farmgate processing and marketing will be crucial to sustaining returns on farm,” he said.

Tim Hunt

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Dai ry News aUsTraLia september 2013

14 // opinion

eDiToRiaL

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Banks make a lot of money for their shareholders. Not many in Australia would call them good corporate citizens.

A strong bank sector is good for the economy, they say, normally after revealing multi-billion dollar profits. This is true, but it must work both ways. They need to help small business grow.

Murray Goulburn’s Robert Poole had most on his side when he said recently banks had to stop funding agriculture the same way they did 50 years ago.

A lot of the banks are still funding agriculture like they did in the 1950s and 60s, with 50% equity and mums and dads borrowing money, he told media at a recent agribusiness conference.

Mr Poole was taking the opportunity to promote Murray Goul-burn’s sale and lease-back scheme, MG Partnerships, where the co-op attracts equity funds to purchase farm land which is then leased back to suppliers.

But his point is still valid. Banks that reject young farmers with good business plans because of a lack of “necessary savings” or the amount required, does not bode well for the future of agriculture in this country.

There is a responsibility for banks to look more closely at the proposition. We’re not talking about giving money away, more so rating emerging businesses as a profitable long-term investment.

MG has now sold a dozen dairy farms to a European superan-nuation fund under MG Partnerships. This will help the next gen-eration of farmers the industry needs.

Farmers can bring projects to MG, such as buying the farm next door through equity rather than debt, and receive that initial boost. The super funds do well too, receiving returns of 5% per annum plus capital growth.

It’s a win-win situation – it just takes some thinking outside the box.

Young Victorian farmer Damian Murphy travelled to Canada to investigate farm finance and discovered a loan program from Farm Credit Canada called Transition Loans.

When a young farmer buys a property, Farm Credit Canada will act as guarantor for the money that’s outstanding to the existing owner of the farm.

This scheme not only gives a young farmer a leg-up into the industry but gives him a fighting chance to succeed by helping cash flow for the first five years.

It’s thinking outside the box and Mr Murphy believes a bank should take on this transition program in Australia.

There are thousands of young farmers that will use nous and energy to lead the next generation of farming. They just need sup-port from a bloated banking sector.

Banks must act as good corporate citizens

Dairy debateWe believe the term is ‘touche’�

When anti-dairy group, Dairy Debate, issued a challenge to industry representatives to participate in, you guessed it - a dairy de-bate, Corangamite mayor Chris O’Connor agreed�

If they would hold it in dairy country that is, more specifically, Terang�

You could imagine them spitting out their soy drink in shock and indignation at such a response�

“I want to invite them out to milk the cows at Demo Dairy, because my view is they wouldn’t know which end of a cow to go to,” the former dairy farmer said�

Dairy Debate declined, saying it would be easier for people to attend in Melbourne� We’re not sure how many will be attending – at last glance they hadn’t lined up any pro-dairy volunteers and only one for the negative side�

say it ain’t soYou have to feel sorry for Hughesy� No, not the well-known comedian, but his brother�

Dave Hughes - co-median, breakfast radio presenter and host of The Project – was challenged to give up drinking milk for a week on his radio show, prompting an online peti-tion to quit it entirely�

Residents of Hughes’s hometown of Warrnam-bool were outraged� Surely one of their favourite sons wouldn’t turn his back on the town’s most important industry�

Rest assured, Hughes said he was only giving up milk for a week, part of a radio regime of foregoing certain foods to provide radio fodder�

He told the Warrnam-bool Standard that not only did he have shares in Warrnambool Cheese and Butter Factory (WCBF), but that his brother, Mi-chael, worked there�

We can imagine the rib-bing Michael has copped since his more famous brother opened his mouth� Christmas is coming, Dave, you better buy him some-thing nice�

footy team of centuryThe late Colin Watson may have won a Brown-low medal in 1925 with St Kilda but he would receive greater accolades follow-ing his passing in 1970�

Watson, born in Al-lansford and starting his footy career with South Warrnambool, has since been inducted into the Australian Football and St Kilda Football Club halls of fame�

Now, he has also been named captain-coach of the Blokes Who Grew Up On Dairy Farms Team of the Century, announced at the Milk It 4 More Expo at Glenormiston last month�

Melbourne-based writer and broadcaster John Harms said the team is still up for debate�

“We are getting closer but this is still not the definitive team� Every place it is discussed there are more names added to the mix and new consider-ation to be made,” he said�

“It’s turned into quite a saga and very competi-tive�”

The team can be seen at www.footyalmanac.com.au

where have you been?Loved this from SA farmer Matt Seeliger, Glencoe West, on Twitter last week: “The dairy industry must have picked up! Consul-tants and salespeople are calling again� First time for over 12 months�”

And while on Twitter, some jokes from Picton farmer John Fairley:

From what animal do you get dragon milk? A cow with short legs�

What has one horn and gives milk? A milk van�

What did the love-sick bull say to the cow? ‘When I fall in love it will be for heifer’!

Goodnight, you’ve been great, thanks very much�

that farmers prefer to use.”This can be achieved in collabora-

tion with government, health services and local communities through a ‘com-munity health development approach’.

Such an approach uses ‘soft entry points’ – ie industry field days, commu-nity events and farmer education pro-grams – to promote the effective use of available services.

It also identifies within communi-ties, credible individuals who can act as ‘boundary crossers’, who have the trust of farmers, industry and health services alike, to assist local health services design appropriate health information and activities and recruit farmers to these activities.

The primary responsibility of SFOs is to provide a collective voice for their members on issues related to agribusi-ness and agri-politics. Yet, to secure the productivity, profitability and sustain-ability of the agribusiness sector, then it stands to reason that a healthy rural workforce is required to deliver this.

Apart from the NSW Farmers Asso-

ciation (who have been leaders in the field), there appear to be no other organisations taking a front seat to address the mental health and wellbe-ing of their members.

Key recommendations to come out of the 2013 RIRDC Staying Healthy Report for industry groups include:

■ Develop a plan for promoting health and wellbeing to farmers, including brokering health pro-grams run by external agencies.

■ Build the capacity of farmers to identify the services, facilities, information sources and social infrastructure they need and would choose to use to maintain health and wellbeing, at both an individual and rural community level (health

literacy). ■ Provide links on industry websites

to web-based health materials from credible health organisation sites, and encourage members to use the linked sites for health information.

■ Together with community groups, provide places and spaces for physi-cal exercise and, more importantly, social interaction. (They should be supported to fill a wide role in relation to health and wellbeing in small rural communities that have limited interactional infrastructure and services.)

■ Be alert to the effect of ‘difficult times’ such as drought, flood, eco-nomic pressures and industry reg-ulation on farmers and fishers and have a ‘toolbox’ of commu-nity appropriate solutions ready to implement.Let’s not waste any more time on

getting this right … far too many lives are being lost.• Alison Fairleigh is manager, rural and remote services, with Mental Illness Fel-lowship of Northern Queensland. She was named the 2013 RIRDC Queensland Rural Woman of the Year. Follow her on twitter at @AlisonFairleigh

The menTaL health and wellbeing of our farmers is one of the greatest challenges facing the future of Austra-lia’s primary industries and rural com-munities.

Because farmers prefer to partic-ipate in group activities arranged by organisations who they trust will under-stand their needs, it is critical for state farm-ing organisations and industry associations to work with health ser-vices and rural commu-nities.

This can best be achieved through a community health development approach, resulting in better out-comes for our farmers.

High levels of mental health disor-ders and suicide have been featured as significant health issues for male farm-ers across Australia.

Yet, few targeted interventions or preventative programs have been designed. Implicated in the high rates of suicide, male farmers show more stigmatised attitudes towards mental health care which strongly predict reti-cence to seek care. [Source: Australian Journal of Rural Health, February 2013]

As such, even where formal mental health services do exist, farmers are not using these services. Nor are they

accessing mental health telephone helplines, tele-health or online services.

Further compounding the prob-lem, our mental health service provid-ers largely operate out of major regional centres and do not have direct access to farmers.

It’s a Catch-22 situation: farmers won’t go to the services and our service provid-ers cannot get access to the farmers. So what do we do? How do we ‘get to’ farmers to help improve their mental health and wellbeing? Who does have access to farmers on a regular basis?

The answer lies with our state farming organisations (SFOs) and industry associations who have a critical role to play in the provision of extensive, informal mental health sup-port.

The 2013 Rural Industries Research and Development Corporation (RIRDC) Report: Staying Healthy - Behaviours and services used by farm-ers and fishers, found that “farmers will engage with health-related information, programs and services that come from, or are endorsed by, trusted and credible individuals and organisations. Industry associations are well placed to provide or facilitate the provision of services


opinion // 15

Farm groups must take lead in mental healthState farming organisations need to step up and address the mental health and wellbeing of their members.

oPiNioNALisoN fAirLEiGh

If you have been affected by anything you’ve read in this article, please call one of the following helplines:

• Lifeline: 13 11 14

• Suicide Call Back Service: 1300 659 467

• Kids Helpline: 1800 55 1800

• MensLine Australia: 1300 78 99 78

Field days should be used to promote mental health services to farmers.

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16 // agRiBusiness

Bega Cheese has increased its revenues in the last financial year by 8.3% to $1 billion and profit after tax by 24.6% to $25.4 million.

The company’s share price rose to an all-time high of $3.09 following the announcement.

Earnings per share grew 30.8% to 16.76 cents

per share while dividends grew 15% to 7.5 cents per share.

Management strength-ened the balance sheet, reducing net debt by around $20 million to $87 million. Management also held capital expenditure relatively flat while boost-ing production volumes from 203,765 tonnes to

210,052 tonnes.The results were

announced a month after Bega Cheese approved a capital investment plan to build a nutritional powder blending and packing facil-ity to support the growth of its infant formula busi-ness.

Bega Cheese’s wholly owned subsidiary Tatura

Milk Industries manufac-tures infant formula and child milk powders, partic-ularly to the customers in the Asian market.

The new blending and packaging facility will allow Tatura Milk to meet the projected growth of its existing customers and respond to the ongoing demand for retail ready

infant formula products sourced from Australia.

The facility will be commissioned in early 2014 and have an annual capacity to blend and package up to 15,000 tonnes of canned nutri-tional powders.

The footprint of the new facility will allow for future upgrades of addi-

Bega reaches $1b in revenue

tional packaging lines to increase capacity and format flexibility.

Bega Cheese has entered into a supply and services agreement with Melbourne-based nutri-tion company Omniblend Nourish who will access up to 25% of the initial capacity.

Omniblend Nourish co-operated with Bega Cheese in the design and selection of the equipment for the facility.

Bega Cheese chief executive Aidan Coleman said nutritional dairy products were a key to

Bega’s growth.“The growth in

demand for high quality infant formula products particularly from the Asian region is well documented with China alone consistently delivering double digit market growth,” Mr Coleman said.

“We are very confident that we will quickly build volume in our new facil-ity and the company was pleased to work closely with Omniblend Nour-ish in both the design of the facility and long term supply agreement.”

waRRnamBooL Cheese and Butter maintained sales in the last financial year but its profit fell by 50%.

Total revenue was $496.5 million, essentially unchanged from last year’s numbers, but after-tax net operating profit fell 50.7% to $7.5 million.

Chairman Frank Davis said the 2012-13 financial year had been “difficult and disappointing”.

Mr Davis attributed the lost profit to a persistently high Australian dollar and high raw milk cost relative to market conditions.

“However WCB has undertaken a number of strategic steps to maintain its long term revenue base and mitigate against ongoing deterioration in international commod-ity revenues,” Mr Davis said.

“A late surge in international powder prices and the depreciation of the Australian dollar was insufficient to wholly compensate for the depressed trading conditions and outcomes that prevailed for the majority of FY2013.”

WCB’s balance sheet remains strong and gearing at 31.8% is well within policy range, according to Mr Davis.

Working capital debt increased temporarily as WCB took advantage of the improved powder prices and lower exchange rates late in the year.

In the latter part of the year, Warrnambool’s situation improved slightly with an uptick in international powder prices and a depreciating Australian dollar (which helps exports).

Looking ahead, the company expects prices to prove more profitable for 2014. A weakening Aussie dollar has expanded margins, while Warrnambool continues to churn ahead with various business improvement projects.

The directors have declared a fully franked final divi-dend of 11 cents per ordinary share with a record date of September 9, 2013, and a payment date of September 27, 2013.

The Dividend Reinvestment Plan is applicable to the payment with elections to participate to be lodged by Sep-tember 9, 2013.

WCBF profit falls by half

Bega chairman Barry Irvin.

BOOKING DEADLINE: October 2 MATERIAL DEADLINE: October 8PUBLISHED: October 15CONTACT: CHRIS DINGLE T: 0417 735 001 E: [email protected]

TRACTORS AND MACHINERYNext month’s special report reviews the latest developments and news from the farm machinery sector; the hardware that makes the modern farm tick. We’ll focus on equipment that’s relevant to dairy farming – no big broadacre gear reviews, just gear that helps the dairy industry farm smarter. Watch out for it in the October issue of Dairy News Australia.

SPECIAL REPORT

NEXT ISSUE: OCTOBER 2013


agRiBusiness // 17

as wiDeLy reported, the combination of lower milk prices, higher input prices and adverse seasonal conditions meant that the total production volume for 2012/13 finished down 2.9% on the prior season. Lower total production meant that there was less milk available to man-ufacturers, but with healthy (albeit rel-atively low) growth in domestic dairy product consumption and produc-tion volume well outstripping domes-tic requirements, the broader industry still relies on growth in export markets to drive farmgate returns. We collate our figures on the prior season, as the data comes available, including estimates of how milk was utilised.

A first glance at the export figures might suggest that there was no truly significant year-on-year shift. This is not unexpected in the context of gen-erally stable, established product mixes and relationships in export markets. So, the 2012/13 figures reveal that export vol-umes were up, around 5% to 800,000 tonnes and export value was just margin-ally down (0.1%) to $2.756 billion. Higher cheese volumes and the higher Austra-lian dollar were primary drivers behind those movements in volume and value.

Overall the pattern depicting the value of Australian exports by destina-tion region in 2012/13 confirms the fact

that the dairy industry’s returns have for some time been linked to Asia. In recent years this has become more clearly pro-nounced: after all, close to 75% of the total value has gone to Asia over the last three years; and this was closer to 65% in the first half of the 2000s decade. Of course, the share going to Europe and the Americas has declined over the same period.

A second glance reminds us that the share of total value going to South East Asia and Japan has remained very stable over the last decade at around 30% and 20% respectively.

But a closer look confirms a more recent trend, namely, the growth in the share going to Other Asia (which includes over 10 Asian countries out-side Southeast Asia and Japan): this was between 15-18% for much of the 2000s, but has been 25-27% over the last three years. Digging down further into the fig-ures confirms that this growth in the value of exports going to Other Asia is,

perhaps unsurprisingly, largely reflect-ing the growth in exports to China. And this is where the 2012/13 figures provide evidence of a notable year-on-year shift.

That is, in 2012/13, although Japan remained the top export destination by value, Greater China (China, Hong Kong and Macau) overtook its neigh-bour to become the top export desti-nation by volume for Australian dairy exports. And this unprecedented devel-opment was due largely to the year-on-year growth specifically in China-bound exports of fluid milk and whole milk powder (WMP).

China’s continuing urbanisation and increasing household incomes are expected to keep driving increased dairy product consumption, which the OECD-FAO forecasts to grow 38% by 2022. On top of the positive longer term outlook for dairy demand, China is also facing serious challenges in growing dairy supply domestically. China’s domes-tic production for the first half of 2013 reflects this—with production report-edly already 5-10% down. Hence, the fundamentals favour China continuing to rely on imports; so developments in China may become even more relevant to the broader farmgate returns story in Australia.

Of course, despite widespread inter-

est in getting fresh fluid milk to China, exported fluid milk volumes mainly com-prise ultra heat-treated (UHT), extended shelf-life (ESL) and similar products that are making their way to the coun-try’s consumers. China-based research-ers BSNABC estimate that UHT milk accounts for 60% of the Chinese liquid milk market and with annual consump-tion of the product growing at around 10%, more Australian product should invariably find itself on the supermar-ket shelves in China to meet that surg-ing demand.

So, the 2012/13 figures provide some encouraging signs. Yet a bigger challenge still for Australian dairy exporters may be growing the value of China-bound exports - free trade agreement notwith-standing. Higher value-added products such as cheese, infant, WMP and other powders have also seen good year-on-year growth—and at least the data sug-gests that there are plenty of prospects for growth and improved returns there too. • Glen Fisher is industry analyst with Dairy Australia.

Chinese appetite for Australian dairy grows

GLobAL imPAcTGLEN fishEr

Dairy NewS aUSTraLia june, 2012

With season 2011/12 only a few weeks from ending, attention is now focused on 2012/13 milk prices as farm-ers consider strategies for the coming year. In some domestically-focused regions, renegotiated contracts incor-porating lower prices and reduced ‘tier one’ access are undermining farmer confidence and supply stability. For many farmers in export-oriented regions, a lower price outlook relative to the current season not only adds to the challenges of doing business, but seems to contradict the positive medium term outlook of Asia-driven dairy demand growth.

Dairy Australia’s indicative outlook for southern farm gate milk prices – published in the recent Dairy 2012: Sit-uation and Outlook report, is for an opening price range of $4.05-$4.40/kg MS and a full year average price range between $4.50 and $4.90/kg MS. The report considers the wider market pic-ture and summarises the many factors at play; the key theme of the current sit-uation being that of re-balancing in the dairy supply chain.

In regions of Australia focused on producing drinking milk, many farmers face a re-balancing market in the form of renegotiation of supply contracts and reduced access to ‘tier one’ supply.

Shifts in private label contracts and pro-cessor rationalisation have seen milk companies adjust their intake require-ments and pricing to meet the chang-ing demands of a highly pressured retail marketplace. Lower contract prices and a lack of alternative supply opportuni-ties present challenges in a market with limited manufacturing capacity. Despite these challenges, the underlying domes-tic market is stable, with steady per-cap-ita dairy consumption and a growing population providing a degree of cer-tainty beyond the current adjustments.

In the seasons following the 2008 financial crisis and subsequent com-modity price recovery, farmers in export-oriented regions have seen solid global supply growth (see chart) - with higher-cost competitors in the North-ern Hemisphere amongst those expand-ing output as their margins increased. This season, favourable weather con-ditions have further enhanced milk

flows. 2012 milk production in the US is up around 4% on 2011 for the year to April (leap year adjusted), whilst early data suggests EU-27 milk production finished the March 2012 quota year up 2.3% on the previous year. New Zealand production is widely expected to finish this season up 10% on last year - a huge market influence given 95% of NZ milk is exported. Argentina is also enjoy-ing solid production growth, but a sig-nificant supply gap in Brazil prevents much of this additional milk from leav-ing South America.

Despite wider economic uncer-tainty, demand has remained resilient as importing countries like China and

those in south-east Asia and the Middle East maintain consistently higher eco-nomic growth rates that support increased dairy consumption. How-ever, the surge in supply has outpaced demand growth in the market.

This situation has seen the scales tip in favour of buyers in dairy mar-kets, with commodity prices retreat-ing steadily over recent months. Butter prices are down some 30% from their 2011 peaks, whilst powder prices have lost more than 20%. Farm gate prices have subsequently been reduced in most exporting regions. The average basic farm gate price for milk in France for example, dropped 12% from 32 Euro

cents/litre in March (AUD 41c/L) to 28 Euro cents/litre (AUD 36c/L) in April. Profit margins are under pressure in the US, and in NZ Fonterra has announced the final payout for the 2011/12 season has been cut from NZ$6.75-$6.85/kg MS to NZ$6.45-$6.55/kg MS (AUD$4.96-$5.04).

Effectively, global dairy markets are rebalancing. Lower prices will both slow production growth and stimulate demand, and as this occurs we will ulti-mately see a price recovery. Key factors to watch on the global scene will be the rate at which milk production overseas slows in response to lower prices, the impact of the current financial worries on consumer confidence, the path of China’s economic growth, and the value of the Australian dollar.

Demand for exported dairy prod-ucts remains a positive and will con-tinue to grow with the middle class in large emerging markets such as China, with changes in diet and with increasing urbanisation - and also in conjunction with global population growth. Locally, the domestic market is supported by a growing population and stable per-capita consumption. Whilst the dairy market is currently a challenging place to be a seller, all signs indicate that bal-ance will ultimately return.

agribusiness // 17

austraLian FooD company Freedom Foods Group Ltd is to build a new milk processing plant to cash in on growing demand in Asia.

The plant, to be built in southeast Australia, will be the first Australian green-fields expansion in UHT in 10 years.

Freedom’s wholly owned subsidiary Pactum Australia will run the plant. Some of its products will be sold in Australia.

The company says given Asian consum-ers’ rising incomes and improving diets, demand there will grow for qual-ity dairy products from low-cost production bases such as Australia, whose milk is well regarded.

The new plant will allow Pactum to meet growing demand for UHT dairy milk, and add to capacity for value-added beverages at its Sydney factory. Pactum is expanding its capabili-ties at the Sydney plant

to provide portion pack (200-330ml) configura-tion for beverage prod-ucts.

The NSW location will provide access to the most sustainable and economic source of milk. Pactum has strong links to the Austra-lian dairy industry and will expand its arrangements with dairy farmers for supply of milk. The new plant will increase scope for Australian milk supply – value-added, sustainable and export focused.

Initially the plant will produce 250ml and 1L UHT packs from a process line capable of 100 mil-lion L. The processing and packaging plant will emit less carbon, use less water, and be more energy-effi-cient than equivalent UHT facilities in Austra-lia and SE Asia. Pactum expects site preparation to begin in October 2012 and start-up by mid-2013.

Pactum makes UHT products for private label and proprietary customers.

Freedom Foods planttargets Asia

Malaysia FTA benefits dairyaustraLian DairY, rice and wine exporters to Malaysia are the biggest winners in a free trade agreement (FTA) signed between the two coun-tries last month.

The deal, signed after seven years of negotia-tions, allows a liberalised licensing arrangement for Australian liquid milk exporters and allows access for higher value retail products.

It guarantees Aus-tralian wine exporters the best tariff treatment Malaysia gives any coun-try. It also allows open access arrangements from 2023 for Australian rice with all tariffs eliminated by 2026.

The National Farmers’ Federation says the trade deal will improve inter-national market access for Australian agricultural goods.

“After seven years of negotiation, the NFF is under no illusion of how challenging it has been to complete this FTA with Malaysia,” NFF vice presi-dent Duncan Fraser says.

The FTA will fill a number of gaps within the

ASEAN-Australia-New Zealand FTA (AANZFTA).

“Protectionist senti-ment over agricultural goods is rife and grow-ing across the globe, so in this context it is pleas-ing Australia has managed to forge an agreement with Malaysia that has dealt with some sensi-tive agricultural issues not effectively covered by AANZFTA,” says Fraser.

“While under the AANZFTA agreement most of Australian agri-culture’s key interests had tariffs bound at zero, dairy and rice are two sec-tors where incremental market access improve-ments have been negoti-ated under the Malaysian FTA.

“This trade deal was also particularly impor-tant for sectors such as dairy that have been facing a competitive dis-advantage in Malaysia compared with New Zea-land which already has a completed FTA with Malaysia in place.”

The FTA also sig-nals some administrative benefits for Austra-lian agricultural export-

ers through streamlining of rules-of-origin dec-laration processes and improved marketing arrangements for certain commodities.

The Malaysian market is worth about A$1 bil-lion in Australia agricul-tural exports – including being its fourth-largest sugar export market and fifth-largest wheat export market. With an annual economic growth at about 5%, Malaysia forms an impor-tant part of the ‘Asian Century’ story and the opportunity this presents for Australian agricultural producers, says Fraser.

Despite the comple-tion of this agreement, much remains to be done for Australia’s farmers to tap into the full potential of the Asian region and beyond.

He says the NFF will now throw its attention towards ensuring agricul-ture remains front and centre in completed FTAs with South Korea, Japan, China and Indonesia as immediate priorities.

“These are all markets with enormous growth opportunities and where significant barriers to trade in agriculture still exist, not only through tariffs that restrict trade

but also through technical or so called ‘behind the border’ restrictions.”

The FTA was signed on May 22 in Kuala Lumpur by Australia’s Trade and Competiveness Minis-ter Craig Emerson and his Malaysian counterpart Mustapa Mohamed.

Emerson says Australia will be as well-positioned in the Malaysian market as Malaysia’s closest trad-ing partners in ASEAN, and in some cases better. The FTA will guarantee tariff-free entry for 97.6% of current goods exports from Australia once it enters into force. This will rise to 99% by 2017.

incremental change in milk production (year-on-year)

Export demand remains strong

Sealing the deal: Malaysian trade minister Mustapha Mohamed with Australian counterpart Craig Emerson after signing the deal.

gLobaL impacTJohN DropperT

016-017.indd 17 6/06/12 1:41 PM

gea faRm Technologies has appointed New Zealand managing director Jamie Mikkelson to vice-president area Australasia.

He will head sales and operations in New Zealand and Australia, and remain MD in New Zealand.

GEA Farm Technologies is owned by the GEA Group, in 2012 earning A$8.2 billion globally.

Mr Mikkelson has worked at Milfos, Hamilton, for 20 years, where he helped grow the business from a start-up,

alongside its founder, the late Philip Locke.

Mr Mikkelson was a shareholder and the managing director of Milfos when Mr Locke died last year.

When GEA Farm Technologies bought Milfos in late 2012, Mr Mikkelson became managing director of its NZ operations.

He is now one of eight global VPs, responsible for sales and performance of 190 employees and 50 service partners.

Mr Mikkelson said the acquisition of Milfos by GEA completed the companies offering of a ‘total solutions provider’ for pastoral dairy farmers.

New Zealand is being positioned by GEA as a ‘world hub’ for pastoral farming. He said business is about people first and products second.

“My role is aligning people and the business to a common strategy and helping them deliver on that strategy.”

Kiwi oversees GEA Farm Technologies in AustraliaThe challenge of

managing Australia was not dissimilar to the challenges of managing the differences between farming in, for example, the North and South Islands.

“While New Zealand and Australia are similar,

they are also very different – I don’t expect to take a NZ approach in Australia and likewise what works in Tasmania will not necessarily work in New South Wales.

“It’s about understanding in real detail the drivers,

challenges and where we can add value.”

Ownership by GEA Group allows for products made in New Zealand, such as FIL and Milfos, to be marketed elsewhere in the world.

In New Zealand GEA Farm Technologies

owns and markets milking machine and farm management equipment from Milfos and WestfaliaSurge, dairy hygiene and animal health supplies from FIL, effluent handling equipment from Houle and barn equipment supplies from Norbco.

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bred.He simply chooses

from the highest ranked bulls from the catalogue each year to add to the herd.

“We are constantly seeing improvement in the cattle,” he said.

LIC also appeals to Mr Kennedy as he operates a grass-based system, like most of New Zealand, where LIC has its breeding program.

“We only feed half a ton of grain per cow during winter and we find the LIC cows do better, particularly in tough times. We’ve bought cattle in that aren’t NZ genetics and they stand out like a sore thumb.”

The grass-based pro-duction system is under-pinned by an extensive irrigation system. The farm contains 15km of channels and there are two automated pumps in the Murray River to maintain them at a constant level.

650ha of the farm is irrigated, with each linear irrigator covering 80ha. They have 220ha of annual pasture and 120ha of cereal crops, enough for their own needs, and share crop a further 350ha of canola and wheat.

“Since the drought, we realised we needed to be self-sufficient. We can pro-duce cereal for $80-$90/t, which is a third of the cur-rent price.”

Every paddock is the same size and shape (6.6 hectares) and the 60-head rotary dairy is located exactly in the middle of the farm, which makes for easy management, according to Mr Kennedy.

The extensive system

of laneways and chan-nels makes it easy to grow the exact amount of pas-ture required and to move the herd quickly when the desired amount has been eaten.

“We put 70 to 80kg of urea on the day before every grazing. We also divide paddocks with strip fences if necessary.

“We alter rotation length to growth rate. Pas-ture is measured every 10 days with a rising plate meter and we allocate pas-ture as needed and adjust the rotation length to max-imise our growth.”

They have switched to a 100% annual pasture base now they are entirely autumn calving and graze each paddock down to 1400-1500kg dry matter before moving the herd on.

They can fine tune this because of their irrigation system, utilising lateral irrigators to maintain the correct level of moisture, and optimising pasture growth with a constant trickle of nitrogen.

The cows are run at the stocking rate of 3.2cows/ha, producing 1300kg milk solids/ha. It is all autumn

calving from March 10 for 10 weeks. They stop feed-ing grain in mid-August and resume when cows are due to calve again.

Mrs Kennedy is respon-sible for calf raising. They raise and keep as many as they can to continue build-ing numbers. They see 20-30 calves a day during this 10-week period as easy compared to the 60-70 they had to deal with when running 1700 cows.

Mr Kennedy attributes LIC genetics to his empty cow rate of 10-12% after the 10-week joining period. Those that don’t get back in calf are sold.

Their calving system also enables them to capi-talise on the premium milk price in the winter months (it was more than 60c a litre in July) when cow supply is peaking.

Mr Kennedy aims to fine-tune the opera-tion further by investing in moisture monitoring equipment. “We do weekly pasture measurements and annual soil tests but if we could nail the exact amount of moisture in the soil, rather than guess work, we could grow more

pasture.“That’s the next step in

the progression. We have been looking at moisture monitoring systems over the last 12 months and they have come a long way from where they were 10 years ago.

“They are at a stage now when it would be ben-eficial and cost effective to do it.

“There are permanent moisture probes now that can talk to your phone all the time and that takes the guess work out of it.”

Despite the size of the operation, Mr Ken-nedy said their mantra is a simple and sustainable system.

Their 10-week calv-ing enables them to take February off, when cows are run on dryland. There is no irrigation from late December through to the end of February.

“We are very systems based and train our staff to follow systems,” Mr Ken-nedy said.

“We run 200 cows per man because of the system, where the Austra-lian average is 90 cows/man.”


18 // managemenT

Crossbreds tick every boxsTanDing among his herd of crossbred cows, it seems funny to hear Tim Kennedy say: “I wouldn’t touch the cross-bred semen when I heard about it 10 years ago.”

Curiosity saw him “dabble in it” and he soon came to the conclusion they were the best cows he was breeding.

“I thought, we better get some more.”

Tim and his wife Leah now milk 750 crossbred cows on the north-ern Victorian prop-

erty at Torrumbarry they sharefarm with New Zea-land farmers James and Donna Wilkins.

They came to the 1300 hectare farm 10 years ago, managing it for five years. They then purchased the herd and machinery and moved to a sharefarming arrangement, trading as Avonleigh Heights. They employ all staff as part of the arrangement.

When they first came to the property 10 years ago, they were milk-ing up to 1700 cows but the northern Victorian drought saw this drasti-

cally reduced to 300 by 2007/08. They

have slowly built num-

bers since.The

Wilkins converted the former dryland sheep and cropping property to dairying 20 years ago.

Having trou-ble sourcing

crossbred cows,

they

purchased mainly Frie-sians, some crossbred and some Jerseys. They then used a mix of Friesian, Jersey and some crossbred semen to create a cross-bred herd.

“The herd was tend-ing too much towards the Jersey side and getting too small and we wanted more of a crossbred, so we moved to LIC crossbred semen,” Mr Kennedy said.

The LIC crossbred bulls are all Jersey-Friesian cross but contain varying amount of either.

“Apart from the hybrid vigour, we find they require less maintenance, have less lameness, are easier to get back in calf and have less mastitis issues,” Mr Kennedy said. They also produce more milk solids than a pure-

sTephen CooKe

who: Tim and Leah KennedywhErE: Torrumbarry whAT: Crossbred herd

Lateral irrigators irrigate 350ha of the farm.

Northern Victorian farmer Tim Kennedy in his crossbred herd.

Tim Kennedy

It’s More Than a Handful1pm Thursday 26th September 2013

Special FeaturesWednesday 25th & Thursday 26th September 2013

Be sure to visit our major sponsor, Devondale/Murray Goulburn and the team from MG Trading stores at their hospitality area.

Ladies Pavilion - This pavilion promises to have something of interest for all the ladies.

Kids Activity Pavilion - Plenty of fun for all the kids can be found in the Sanders Pavilion.

South Gippsland Dairy ExpoWednesday 25th & Thursday 26th September 20139am to 3.30pm at Korumburra Showgrounds Cnr South Gippsland Hwy & Charles St Korumburra

Gate Charge:$10/person Under 16s Free

Come along and see our Feed Companies and Milk Companies go ‘head to head’ in a hand milking competition. Sponsored by Burra Foods.

Visit our Major Sponsor

Gold Sponsors

Matt Harms - On Farm Consulting Pty Ltd 11am Thursday 26th September 2013

Service Provider Session4pm Wednesday 25th September 2013

Visit our Sponsors and Exhibitors

This networking session will be extra special this year with some wine and cheese to taste! Dairy farmers are welcome to attend. Sponsored by Dairy Australia & GippsDairy.

Better Milk Price More Profi t – or is it?Are we just chasing a pot of gold at the end of the rainbow?

Panel Members: Trent Crawford (Binginwarri), Toby Leppin (Bena), Paul and Louise Sherar (Loch), Hans van Wees (Tinamba) andRussell Mann (Rabobank).

Topic: With a shocker of a year behind us, and better prospects ahead for 2013/14, the panel members representing small, medium, large and sharefarm dairy businesses tell us how they fared in 12/13 and what their strategies are for this season. Are they chasing a pot of gold at the end of the rainbow, or are they chasing genuine profi ts with a proven track record?Sponsored by the South Gippsland Shire Council and Rabobank.

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managemenT // 19

Tracking genetic changes over time

Garry Haddon and fiance Tiffany Jones.

wiTh a herd of about 1200 dairy cows Elaine Haddon has a lot of data. She recently discov-ered the Genetic Prog-ress Report is a useful tool to guide sire selection decisions and for track-ing changes in the herd’s genetic merit over the years.

Elaine, and her hus-band Neville, dairy at Sabina River near Bussel-ton in Western Australia with their son Garry and his fiance Tiffany Jones. They received a report on their herd when attend-ing a recent workshop run by ADHIS with support from DAFWA and West-ern Dairy.

Mrs Haddon looks after the farm records and says a challenge with a large herd is finding a way to use data to make better deci-sions.

“Between milk record-ing and our on farm PC system we have a lot of herd data but it’s not always easy to make sense of it. It can be hard to see the woods for the trees,” Mrs Haddon said.

When it comes to genetics, Mrs Haddon has found the Genetic Prog-ress Report presents the herd’s data in a way that she can track changes over time and compare the herd to industry stan-dards.

Mrs Haddon said selec-tion decisions in the past had placed high priority on profit and type.

“Our first report con-firmed that we have made very good progress with type, and it highlighted some strengths in the herd that we hadn’t noticed, such as longevity and fer-tility. But we were disap-pointed in our genetic progress for Australian Profit Ranking,” she said.

While the herd has made steady gains in APR over the past 10 years, it is tracking just below the national average.

Some of that may be due to missing data: the Haddons purchased a sig-nificant number of cows

in recent years and some of these are missing their sire and dam informa-tion. Animals with miss-ing sire information won’t get an ABV and therefore won’t be recorded in the report. Also, the Haddon’s have previously waited until heifers calved before entering them into the milk recording system.

“I’m keen to start entering that data when they are calves because it will make our Genetic Progress Report more useful to see trends among the youngest animals in our herd.”

Once the data is more complete and up to date, Mrs Haddon will closely examine the herd’s genetic progress for profit, masti-tis and protein. These are the traits she has identi-fied on the current report that could be improved.

“We are a commercial operation but I’ve always placed a high priority on type because it affects profitability. Sometimes our cows walk up to 3km a day so we look at feet and legs and also udders when selecting sires to use over the herd. And of course we also look at their APR,” she said.

“Our report confirms that our selection deci-sions have achieved signif-icant gains in type. But it also highlighted the traits that we will concentrate on more in the future – protein percent and mas-titis.

“That’s the beauty about the report – because it’s based on our own herd so it’s a good tool for guid-ing decision making.”

Mrs Haddon has already started getting more data into the milk recording system so that it will be incorporated into future the Genetic Prog-ress Reports.

“I’ll be reviewing future reports with great inter-est. As well as guiding our selecting decisions we’ll be able to see – over time - the effect of those deci-sions on the herd’s genetic merit.”

who: Haddon family whErE: Busselton whAT: Genetic improvement

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20 // managemenT

faRmeRs aCRoss south west Victoria need to get their timing and decision-making right to encourage the growth of more home-grown feed

this year to take advantage of predicted favourable spring conditions.

DEPI fodder conser-vation specialist Frank Mickan and Warrnam-

bool’s DEPI Dairy Services team member Michele Ryan stressed the impor-tance of being proactive and developing a feed plan for the season to ensure

cows are productive.Mr Mickan said while

farmers should “go like hell now” they should consider going for qual-ity over quantity as many

things can occur over har-vest with the result that medium to lower quality quantity of fodder is pro-duced without targeting this.

Quality silage focus will be rewarded in the vat

“You should grow and utilise as much home-grown feed as possible to try to minimise costs of production,” he said.

Mr Mickan added improvements in silage quality would pay off for farmers in the additional value of milk produced. Improving silage from 9.5 megajoules of energy per kilogram of dry matter (MJ ME/kg DM) to 10.5 in a 350 tonne DM stack can be worth an extra $10,000.

“Yield will be lower and cost per unit of DM will be increased but so are the costs of harvest such as twine/netwrap, plastic, chopping/baling, cartage in/out of the storage site. Also much more silage of lower quality is needed to be consumed per unit of production,” he said.

“Grass grown and con-verted straight to milk is the most efficient way to optimise annual profit.

“You can cut a lot of bulk but lose out on qual-ity and putting con-served crops into storage increases costs substan-tially.”

Mr Mickan said that it was important to feed the milkers as well as possi-ble and have enough high quality pasture and/or fodder for heifers.

He advised farmers to use grazing management and nitrogen fertiliser to boost spring growth.

“You should keep graz-ing tight for fodder con-servation and longer feed supply into summer,” Mickan said.

“You’ve got to make every hectare count and should walk all paddocks to prioritise your pad-docks.

“Your home block is most important but also try to make your out-block work for you.

“Improving the pasture species and/or improv-ing soil fertility for longer term lease blocks, could be a big bang for the scarce buck. If there are vigorous ryegrass and clover plants surrounding the poop and piddle patches, then pas-tures should respond to fertiliser.

“If not, then pasture species need to be sown.”

Ms Ryan said farm-ers shouldn’t create a false surplus. “Don’t take the feed away from the cows and don’t lock up too much of your land for silage,” she said.

Grazing should happen just prior or at canopy clo-sure.

Ms Ryan recommended farmers use a mix of crops across their farm.

“If you are using nitro-gen for extra growth, you should hit paddocks you know you can get on. You want to make sure every kick is a goal. You should take the time to do soil tests on representative areas of the farm which will tell you what nutrients to focus on and work out your best winners.”

More than 150 farm-ers and service providers attended a series of ‘Fill-ing the Shed’ field days hosted by WestVic Dairy’s Profitable Farming Sys-tems project and the Department of Environ-ment and Primary Indus-tries at Macarthur, Garvoc, Toolong and Colac from August 29 to September 3.

Profitable Farming Systems project manager Tim Huggins said the field days were designed to trig-ger farmers to think about their planning for spring.

The field days were funded by Dairy Austra-lia and the Department of Environment and Primary Industries.

Michelle Ryan and Frank Mickan.

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managemenT // 21

RusseLL anD Maxine Napper believe trees make a better dairy farm.

Reducing salinity, keeping cows warm and cool, encouraging pasture growth and making it a better place to live and work is a decent short-list of reasons.

The Nappers run 200 cows on 70ha in the Macalister Irrigation District in Sale, Gippsland.

“I like trees and I could see the reac-tion of the dairy cows,” Russell said.

“On a stinking hot day in a paddock without trees they’ll all crowd around the trough – the dominant cows will get in, whereas the heifers won’t get anywhere near it.

“Whereas when you have trees, the dominant cows might take all the shade but at least then the younger ones get access to water.”

Both Russell and Maxine, who are very mindful of animal welfare on their farm, believe trees are the single most important factor in maintaining a happy herd.

“On a very hot or very cold day I can say that the cows are clearly happier in a paddock with trees in it,” Mr Napper said.

Having contented cows, however, hasn’t meant a drop in production but instead has seen cows better able to cope

with extremes of temperatures, while pastures thrive in the shelter afforded by planned plantings.

“You see a cow on a hot day stand-ing there panting and you wonder how much energy she is using trying to stay cool,” Mr Napper said.

“But if she’s feeling comfortable she will go out and have a bit of a graze then come back.”

In a tough industry, looking out for the bottom line is vital if farmers want to keep their heads above water.

But Mr Napper maintains that giving land over to trees has seen pasture – and potential profitability – grow signifi-cantly.

Since the start of his planting pro-gram, he said there has been a three-fold increase in dry-matter consumed per hectare.

Put simply, better care of the land has resulted in a better outcome in milk production.

“We produce 1.5 million litres of milk off 60ha - that’s about as productive as anywhere.”

It was in the early 1990s when a rou-tine inspection of a bore revealed the water table had risen to dangerously high levels.

Mr Napper had seen it all before and knew that if nothing was done, some of the best farming land in Australia would soon become barren.

“I can remember in 1961 the paddock over the road from my school turned black after we had a wet winter,” he said.

“Back in the 1950s irrigation was extended to Nambrok for soldier settle-ment and within three years the water table rose 20 feet.

“The bottom end of Nambrok just turned black.”

It was indiscriminate land clearing combined with irrigation on farms that was causing salinity.

Mr Napper believed that it was the re-introduction of trees that would allow the land to heal itself.

“There was a problem here and the question, was what we are going to do about it?” he said.

“We knew that one of the things that would help was getting some native veg-etation back.”

Hearing about a salinity trial program called Joint Action Salt Action, the Nap-pers began the first of many tree plant-ings that have transformed their farm into a shining example of what can be achieved through planned farm man-agement.

After patchy early results, Russell helped form the Clydebank Landcare Group and started to get the right plants for his property.

“We did some first direct seeding

trials in the area. And that was quite suc-cessful in ‘91/ ‘92,” he said.

With the growing trees thirstily suck-ing up water, the water-table started to recede. The addition of a groundwater pump (one of several in the area) has seen vast areas of formerly unproductive land returned to verdant dairy pasture.

The pumps were funded with gov-ernment assistance and are maintained through a levy on irrigation water.

Mr Napper has not only worked to improve his own land, but has been an active member of various committees and boards like the Wellington Salin-ity Community Group and is currently a Southern Rural Water committee member.

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22 // animal health

the installation of a revolutionary milk puri-fication system has been instrumental in overcom-ing calf health problems for a large dairy near Mt Gambier in South Aus-tralia.

James and Robyn Mann run Donovan’s Dairy, at Wye, milking 2200 cows at peak time on a 116 unit rotary platform.

“Some time ago we could not get on top of

salmonella issues,” said Mr Mann. “Every time we vaccinated, we got another strain. It was a massive drug cost, so we made the decision to go with the UV Pure purifier system. It was the logi-cal next step – we weren’t getting anywhere with vaccines.”

The WestfaliaSurge UV Pure ultraviolet calf milk purifier is a modu-lar unit built around stain-less steel UV turbulators. The UV lamp is inserted into a quartz tube allowing the light to penetrate the

milk as it passes over the tube and into a separate calf milk vat. A hot water circuit allows cold milk to be brought up to feeding temperature. The flexible system is scalable depend-ing on the size of the par-ticular dairy operation.

Waste milk from masti-tis cows is often discarded, but if treated properly to lower bacterial or patho-gen levels, it can replace milk sources that calf-rear-

ers would otherwise need to purchase. The ultravio-let light in the Westfalia-Surge UV Pure system penetrates bacterial cells in the milk, destroying their DNA bonds, killing the bacteria and eliminat-ing their ability to repro-duce and grow.

It kills the bacte-ria without affecting the nutrient value of the milk, and the immune fac-tors and proteins remain unchanged. Vitamins A, B6, B12 and C remain intact and there is even an increase in Vitamin D, which does not occur with traditional heat pasteuri-sation. The milk is never heated above feeding tem-perature, helping to pre-serve the milk’s beneficial immunoglobulins.

Donovan’s Dairy installed the Westfalia-Surge UV Pure system a year ago and it has seen two calvings, totalling 1050 calves with just 15 losses in that time.

who: James and Robyn Mann where: Wye, via Mt Gambier whaT: Milk purification

Donovan’s dairy sees light

Barb Habner has been doing the calf manage-ment job at the farm for 10 years and says since they have been using the new system, they have minimal sick calves.

“Now, if any calf gets sick, it’s one course of antibiotics and they’re fixed.”

All the mastitis milk goes into the 1000 litre tank and Mrs Habner tops it up with fresh milk for the required amount. “We just purify what we need for the calves that day, and tip out what’s left.”

The WestfaliaSurge UV Pure is fully-automated

and easy to use with min-imal training required for operators. It will start automatically at pre-set times and calculates the required process time for the amount of milk, reduc-ing time and energy. It incorporates a fully auto-matic ‘clean-in-place’ wash process after every batch with the correct wash solutions to ensure proper cleaning.

“You just select how many litres are in the tank, press go and it does the process and shuts off when it’s finished,” explained Mrs Habner. “When we have colos-

trum milk in, we show it as twice the actual volume.”

The colostrum milk is purified and fed separately at the calving pad. They clear the pad three times a day during calving time, when they have 40 cows calving down per day at peak time.

“From the purifier the milk goes into a cool-ing tank to maintain it at 14°C if we need to store it otherwise it comes out at 20°C – or whatever we set it at – and straight to the calves,” Mrs Habner said.

“It is easy to use, giving us healthy calves where it was previously hard work. It has become almost a pleasure to rear calves. This is so much better than mixing up powder. Life is a lot easier and the UV Pure works in well with the daily routine.”

All the calves get four litres per day and are weaned off at 110kg. While they are in the calf shed, they get ad lib grain and hay and access to water.

Mr Mann said the UV Pure system is almost maintenance free.

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Calf manager Barb Habner with the WestfaliaSurge ultraviolet calf milk purifier.

Calf manager Barb Habner and James Mann inspect this year’s calves.

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24 // animal health

a pilot study con-ducted in New Zealand as part of a review on lepto-spirosis disease incidence revealed 30% of appar-ently vaccinated herds sampled tested positive to the disease.

Concern over mixed messages behind vaccina-tions prompted the New Zealand Veterinary Associ-ation (NZVA) to initiate a

review by Massey Univer-sity Epicentre on leptospi-rosis disease incidence.

This work reported on the possibility of increased risk of leptospirosis infec-tions in herds where calves had not been vaccinated until six months of age.

A small pilot study by Massey showed 30% of apparently vaccinated herds sampled tested posi-

tive for leptospirosis, and 13% of cows in these herds could have been shedding the bacteria.

The risk of having a herd with one or more cows shedding leptospiro-sis bacteria appeared to be associated with the age at which calves were vacci-nated for the first time.

Dr Roger Marchant, a veterinary advisor to the

NZVA, said the ‘window of infection risk’ was there when vaccinations were not done until six months of age.

“An animal may well be infected with leptospiro-sis prior to that, and even if it does get vaccinated, that will not eliminate the infection.”

From the Massey review the Leptosure ‘best

practice’ advice now is earlier vaccination than previously recommended, but not too early: for the average mob age of dairy calves the first vaccination needs to be about seven weeks of age on a farm with a high leptospirosis risk.

For a typical dairy farm that equates to 10 weeks after the seasonal start

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of calving as the earliest time, with a second shot administered 4-6 weeks after the first.

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Farmers should vacci-nate for leptospirosis to protect not only their herd

but themselves and their staff.

The disease in humans is a moderate to severe ill-ness with ‘flu-like’ symp-toms, which can later develop into more serious conditions including men-ingitis.

The leptospirosis bac-terium is spread through urine and bodily fluids, and can survive in stag-nant water for several weeks.

Infected cattle may present with fever, abor-tions or the birth of weak or stillborn calves.

Vets say good hygiene and use of personal pro-tective equipment is important when working around cattle, in stagnant water or in areas affected by flooding.

Dr Roger Marchant

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26 // animal health

Reduced fibre can lead to acidosisWith rising prices of fibre sources, such as hay, it may be tempting to reduce the fibre content of the diet. However, doing so may lead to losses in milk pro-duction through acidosis.

If you have limited fibre available, it will be important to plan the rate of feeding to ensure you still have enough to feed a balanced diet in late winter/early spring.

Effective fibre is important in main-taining rumen health as it promotes the cud-chewing, saliva production and rumen contractions that assist with maintaining a healthy rumen environ-ment.

Cow’s saliva is important as it contains naturally occurring buffers, including bicarbonate, that neutral-ise acids produced during digestion to assist with the maintenance of a suit-able rumen pH.

Without sufficient fibre in the diet, saliva production is not sufficient to maintain a stable rumen pH and the rumen becomes more acidic.

Some feeds require more chewing and result in more saliva production than others, which is related to the amount of fibre they contain.

Fibre is the structural carbohydrate component of the plant that allows the plant to stand up. It is located within the cell wall and is made up of three main

components: hemicellulose, cellulose and lignin.

These components within a feed are estimated, via chemical testing, as Neutral Detergent Fibre (NDF). Cows require a diet containing 30-40% NDF within their daily dry matter intake.

Of this, 75% needs to have a fibre length greater than 1.5 centimetres.

The amount of acid production that needs to be neutralised varies with diet. If cows consume sufficient amounts of highly digest-ible feeds, such as grain and actively growing pastures, rumen pH drops.

This results in reduced populations of fibre-utilis-ing bacteria and increased proliferation of acid-producing bacte-ria. This leads to increased production of acid and therefore a reduced rumen pH.

The rumen’s natural buffering capacity cannot keep up with the pro-duction of acids and the pH continues to decline. This may lead to acidosis.

Cows with rumen pH between 5.2 – 5.6 have sub-clinical acidosis. These cows may not appear to be sick, although feed intake and milk produc-tion will be reduced. Animals with a rumen pH below 5.2 will be suffering from acidosis.

These animals will be noticeably sick with reduced milk production, reduced appetite and scouring. This may result in downer cow syndrome and ulti-mately death.

There are some things you can do to check if you are feeding enough fibre. These include:

Is there any grain or concentrate left in the bails?

If bails have over 10% of feed left behind the accuracy should be checked. To do this, check the accuracy of 10-20 individual feeders. If they are dispens-ing the right amount consider reducing how much you feed.

If one bail has over 50% left some cows have substantially reduced appe-tites. Check for cud chewing and manure consistency.Is there sufficient effective fibre in the diet?

The cows need 30-40% of their diet

to be NDF and of that, 75% to be effec-tive fibre. Some feeds, for example palm kernel extract (PKE), have a high NDF percentage but a low effective fibre con-tent resulting from a small particle size.

Alternative fibre sources may be used to extend hay stores, but they cannot be used as the sole source of

fibre.What is the vat telling us?

The fibre and energy content of the diet contrib-ute to milk fat percentage. A reduced fat test may indicate acidosis, especially if the fat test falls below the protein

test.What is happening in the paddock?

Observe the behaviour of cows after they have eaten. This is likely to be two hours after milking.Are the cows chewing their cud?

At least half of sitting cows should be chewing their cud. If there are less than 50% of the sitting herd chewing their cud, this indicates insufficient fibre in the diet and it should be increased.Are there lame cows?

Laminitis can be a sign of acidosis. Your vet will be required to identify if the lameness is a result of laminitis.

Is the manure consistency correct?If manure has a porridge-like consis-

tency, forming a soft pile 40-50 millime-tres high, and making a plopping sound when it hits a concrete floor, then the diet has enough fibre. Manure that is of a watery consistency and light in colour indicates insufficient fibre in the diet. A loose dark manure is more likely to be due to the amount of pasture in the diet and is still safe if other indicators are OK.

In summary, insufficient fibre in the diet can lead to acidosis. Cows with acidosis have reduced feed intake, decreased milk production and scours. There are also other indicators that can be observed in the dairy and paddock that can signal acidosis.

It is important to maintain adequate fibre levels in the diet and ensure that 75% of that fibre is effective in order to minimise the risk of acidosis.

Plan your hay and silage feeding so that you don’t run out in late winter, as hay is expensive and difficult to source at present.• This article was prepared by the Department of Environment and Pri-mary Industries and first published in the August Mountain Milkline.

Without sufficient fibre in the diet, saliva production is not sufficient to maintain a stable rumen pH and the rumen becomes more acidic.

Removing fibre sources, such as hay, from your herd’s diet could lead to losses in milk production through acidosis.

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animal health // 27

BJD vaccine could be derailedlast month, Dairy News Australia ran a series of articles about my recent trip to Nepal as part of the EU-FMD training pro-gram. It was an incredi-ble experience to travel to another country and get a glimpse into the chal-lenges faced by farmers in a totally different system to what I had previously experienced.

I left Nepal with a couple of really strong messages (and a nasty dose of gastro). The key reasons, in my opinion, why diseases like FMD are endemic (ie widespread) in Nepal are that there is poor infrastructure, indus-try development, access to ongoing education and a generally poor under-standing of biosecurity practices to keep diseases out of the herd, and con-tain the spread within and between herds.

Here in Australia, we have access to a sound industry development body (Dairy Australia), generally good gover-nance, reasonable infra-structure, almost endless opportunities for educa-tion and self education and reasonable access to services like veterinarians and advisors.

However, on virtu-ally every dairy farm that I visit, there are opportuni-ties to improve the man-agement of diseases to prevent the introduction, the impact or the spread of bugs on or between farms.

About the most common disease that people ask me for advice about how to keep it out of their herd, or how to pre-vent it from spreading, is Bovine Johnes Disease (BJD)

Johnes Disease is an insidious disease that can spread throughout a herd causing losses due to chronic scouring and poor performance, loss of cull value, and a reduction on the value of the herd.

There are areas of the Australian Dairy Industry where there is a very low or no incidence of BJD, and others where it causes significant economic losses. For this reason, it has been very hard to get an industry wide consen-sus of opinion on the best way to deal with JD. In some herds, it only repre-sents a potential economic risk because of the possi-

bility of movement restric-tions and loss of value, on others they have sig-nificant production and livestock losses from the disease.

There is a lot of con-cern regarding testing for BJD as the blood test is not sensitive enough in the south of Australia, and not specific enough in the north. The fecal cul-ture tests take weeks or months to get results and again are not especially sensitive at detecting the result. The BJD Market Assurance Program has been around for many years as a tool of manag-ing risk by testing herds or representative samples of the herd to reduce the likelihood of the introduc-tion of BJD when purchas-ing cattle, but even that is not 100% guaranteed.

Here in Victoria, we have had a Test and Con-trol program (TCP) which has been testing and cull-ing positive animals in herds for a number of years. The TCP is cur-rently under review, and its future is uncertain.

In most of the South-ern Dairy industry, BJD is now considered as a man-agement disease, with no specific movement restric-tions applied to infected herds, just the obligation to declare your infected status if selling replace-ment stock. One would think that as we move towards management of any disease that the development of an effec-tive vaccine would be the number one priority to prevent the spread or the expression of clinical dis-ease.

For a number of years, a vaccine has been being tested at a number of sites in Victoria, and the results look pretty promising, yet at the moment, the vac-cine is not proposed to be included or recognised in any of the official BJD management programs.

The trials conducted in East Gippsland have shown a significant impact on clinical cases, and the shedding of the bacte-ria in cattle vaccinated up to two years old, but the best results occur when young calves of around 3-4 weeks are vaccinated. The real benefits of this vac-cine will be a reduction in the long term contamina-tion of pasture, and reduc-

tion in economic losses on infected farms.

However, the animal health council and the AVPMA (who register vaccines and veterinary

products) feel that the vaccinated animals should be excluded from export markets that require BJD Blood test-ing like China despite there being evidence that calves vac-cinated under 10 weeks of age do not actually test positive on the blood test at a greater rate than unvaccinated calves in the same group. This is because they pro-

duce immunity when vac-cinated very young by the cell mediated NOT the

antibody pathway.What might this mean

to the dairy industry in Australia? We are likely to NEVER get access to the vaccine for BJD, despite

it working well because the company that makes it may decide not to try to

market a vaccine that has label con-ditions that make it hard to sell to farm-ers. This could be a case where our reg-ulation and infra-structure could

derail a valuable disease management option.

As a group, dairy farm-ers, their veterinarians and advisors need to get the message across to key

stakeholders in Dairy Aus-tralia and other industry representative groups that the BJD vaccine needs to be registered and distrib-uted to farms that want to manage this impor-tant management disease, especially if the Test and Control program is shut down as a result of the review.• Rob Bonanno is a partner in the Shepparton Veteri-nary Clinic and a past presi-dent of the Australian Cattle Veterinarians Association.

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28 // aBVs

terang dairy farmers and Hol-stein breeders Bryan and Joanne Dick-son are on top of the world with their herd being ranked as the best in Aus-tralia.

It is the first time a south-west Vic-torian breeder has topped the Aus-tralian Profit Rankings for at least a decade.

The feat is even more remarkable as the Dickson’s Emu Banks stud herd of 728 is more than double the average size.

The Dicksons have also bred two heifers in the top 20 rankings.

The number one ranking has been revealed in the August release of Aus-tralian Breeding Values (ABVs) by the Australian Dairy Herd Improvement Scheme (ADHIS).

The Australian Profit Ranking (APR) is the main breeding index available for Australian dairy sires and is based on a series of nine production and non-pro-duction traits.

Mr Dickson said the selection of highly ranked APR bulls and strict cull-

ing of lesser performing cows had led to the national success.

“It’s all in the genetics. Breeding with good bulls is the top of my list,” he said.

ABVs express a sire’s genetic poten-tial for a single trait such as milk protein content or milking speed. A breeding index reflects a sire’s genetic poten-tial for a combination of several traits, making it easier for dairy farmers to compare the suitability of different sires for their herd.

The APR, the main breeding index available for Australian dairy sires, is a single index that reflects nine traits that influence net farm profitability, including production (milk, fat and pro-tein yields) and non-production traits. Non-production traits include survival (longevity), fertility, mastitis resistance, liveweight, temperament and milking speed.

The contribution of each trait towards the final APR value is ‘weighted’ according to its relative contribution to profitability.

Michelle Axford from ADHIS said the Dicksons’ top ranking was an even bigger feat when the herd size was con-sidered.

“Bryan and Jo’s result is special because they have such a large herd of more than 700. Most near the top are much closer to the average size of 250 cows,” she said.

Ms Axford said that to achieve the number ranking proved the Dicksons are “very careful breeders”.

“They use genomic technology well and are very careful in their bull choices, and how they mate and how they decide which cows should be bred and which ones culled.”

The Dicksons have been moving up the rankings over the past few years and were listed as number two for the Hol-stein breed in April this year.

The herd has an APR of 113 and an ASI of 92, the second best in Australia. It has a protein ABV 16kg above aver-age, the best in Australia, 470 L milk, and 14kg fat.

Mr Dickson said the use of genom-ics had helped in the herd develop-ment. “More than 30% are genomically tested, with more testing being under-taken each year,” he said.

“A key part of our success is that we herd test and we don’t milk lower per-forming cows,” he said. “We cull the low

performers even if they look good. It’s hard but that’s how we got to this level.”

Genomic bulls dominate the top bulls in the latest list of ABVs. Ms Axford said that more than half the Holstein bulls in the latest Good Bulls Guide were young genomic bulls.

“Genomic – or DNA – testing is having a major impact on dairy artifi-cial breeding in the two years since the technology was introduced in Austra-lia,” she said.

The Dickson farm is continuing to maintain good production with almost 9000 litres per cow and 630-640 kg/MS.

Mr Dickson said he had aimed for a top 10 ranking but once he achieved that he set his sights on the top. “Once we got in the top few I started thinking about reaching number one. It’s nice to get there.”

Emu Banks sells about 50-60 bulls each year to Genetics Australia and other A.I. companies, by exporting to China and to the local market. Ninety per cent of the bulls sold have been genomically tested.

“Having the number one ranking is certainly a great boost for us,” Mr Dick-son added.

who: Bryan and Joanne Dickson where: Terang whaT: Top APR herd

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Dicksons claim number 1 title

Bryan Dickson’s breeding success was more remarkable considering the large herd size of 728.

Bryan Dickson with this year’s calves.

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aBVs // 29

Good genes mean more milk, regardless of the feeding system, according to the results from Feed-ing the Genes, a study com-missioned by the ADHIS with Dairy Australia fund-ing.

Dr Pauline Bright-ling, who led the study, said results dispelled the myth that the benefits of cows with higher genetic merit, or Australian Profit Rankings (APRs), were not realised in herds using a low bail or total mixed ration (TMR) feeding system.

The results also dispel the common view that high genetic merit cows don’t last in the herd. “In all feeding systems the

daughters of higher APR sires produce more milk.

And, not only do they produce more milk, they are just as likely – if not more likely – to last in the herd as daughters of lower APR sires,” Dr Brightling said.

“These findings support the use of high ranked APR sires listed in the Good Bulls Guide for all dairy herds, regardless of breed or feeding system,” she said.

The study drew upon data from 505 commer-cial Australian dairy herds, using a range of feed-ing systems. Holstein and Jersey cows were analysed separately. The results showed there

Better genetics rewarded across all feeding systems

is an interaction between genetic merit and feeding system.

“The benefits of greater genetic merit do vary between feeding systems. While there is a benefit in all feeding systems, the response from selecting high APR sires is greatest in herds with Holstein cows

using more intensive feed-ing systems (hybrid and total mixed ration).”

The results for Jerseys also showed an interaction between genetic merit and feeding system. “Jersey daughters of high APR sires produce more milk volume, fat and pro-tein. These results apply

to low bail, moderate-high bail and partial mixed ration feeding systems. We didn’t have enough data to get valid results for Jersey herds using hybrid or TMR feeding systems,” Dr Brightling said.

The study also looked at the relationship between the APR and the price of

semen for bulls listed in the Good Bulls Guide. The semen of the Holstein top 50 APR bulls does not necessarily cost more than that of other bulls.

“Semen price is not a barrier to using high APR bulls. The catalogue price for straws from the top 50 APR bulls in April 2013

ranged from $14 to $90 and averaged $27.17,” she said.

Regardless of feed-ing system, herd manag-ers should select high APR sires whose Australian Breeding Values are aligned with the breeding objec-tives for their herd. These bulls are listed in the Good Bulls Guide.

genomic Bulls dominate the top bulls in the latest list of Australian Breeding Values (ABVs) released by the Australian Dairy Herd Improvement Scheme (ADHIS).

Michelle Axford from ADHIS said that more than half the Holstein bulls in the latest Good Bulls Guide (which lists the top dairy bulls) were young genomic bulls.

“Genomic – or DNA – testing is having a major impact on dairy artificial breeding in the two years since the technology was introduced in Australia,” she said.

“Three years ago, there were no genomic bulls. Two years ago, less than 25% of the Holstein bulls in the Guide were young genomic bulls. That represents a rapid uptake of the technology.”

Mrs Axford said the rapid uptake was because genomic testing could be done when an animal was any age, so breeding values could be estimated for young cows and bulls, long before performance data was avail-able (or daughter performance data in the case of bulls).

“This means bulls can be used with confidence from a much younger age, and that will contribute to a faster rate of genetic gain in Australia’s dairy herds.”

The Good Bulls Guide includes 22 proven bulls that have returned to service having previously been avail-able on the market as young genomic bulls.

“The farmers who used these bulls as young genomic bulls will now be joining their heifers. That’s a full two years earlier than before this technology was available,” she said.

Genomic testing is also useful for older animals, even proven bulls with daughter performance data. Bulls proven overseas without any Australian daugh-ters have more reliable breeding values with the addi-tion of genomics.

The reliability of Australian proven bulls also improves, particularly for harder to measure traits like fertility.

“Seventy one per cent of the Holstein bulls listed in the guide have been genotyped, which illustrates how valuable the information is to the artificial breeding industry.”

Genomic bulls making impact

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30 // aBVs

Australian Breeding Values August 2013HOLSTEIN TOP 10 Profit – Australian proven

PrOfIT PrOducTION SurvIvALcONfOrmATION

TrAITSWOrkAbILITy

dAugHTEr fErTILITy

rank bull Id bull Namegenomics included

Australian Proven or

Intl

APr$

APrrel

ASIASIrel

No. dtrs

No. Herds

Survival relOver Type

mam Syst

Type rel

milk Spd

Temp Like reldtr fert

rel Source

1 Canbee Country road roumare Canbee g a 355 72 304 78 44 21 105 59 107 105 70 104 103 104 69 aLt

2 roumare roumare g a 314 95 250 98 396 87 107 89 106 106 96 103 102 102 94 98 95 CrV

3 roufeCtor bundaLong roufeCtor g a 292 77 247 83 70 31 107 64 111 108 77 106 104 104 78 94 63 aLt

4 shoLtz st. CLair shoLtz-twin a 285 73 193 80 49 27 105 58 105 103 72 101 104 104 65 102 57 abs

5 29ho12470 indijks babyLon g a 283 81 202 87 75 35 103 68 100 100 75 101 102 102 77 103 72 abs

6 useage kaarmona CaLeb g a 280 84 199 90 100 45 108 71 102 109 78 102 100 104 80 100 77 gaC

7 westgate gaLLrae joCko 3438 g a 274 82 182 88 93 46 110 67 110 108 78 104 103 103 84 97 70 gaC

8 29ho12772 baLLyCairn oman peLLo g a 271 80 172 85 51 24 106 69 97 95 80 100 102 103 77 107 65 abs

9 deanCox manna farm deanCox g a 268 82 204 87 87 41 105 67 108 104 77 101 102 103 82 100 69 gaC

10 reaLm eCLipse roumare reaLm g a 264 74 269 81 58 29 104 59 98 102 70 103 103 101 72 92 61 gaC

JErSEy TOP 10 Profit - Australian proven

1 sandbLast noweLL sandbLast g a 320 82 246 88 96 28 100 68 108 112 77 101 104 106 84 106 70 agr

2 tbone riChies jaCe tbone a364 a 278 83 212 88 73 27 107 72 119 115 83 104 105 106 78 100 78 agr

3 eLton Cairnbrae jaCes eLton g a 272 93 219 98 1098 199 105 79 110 107 90 104 106 105 95 98 87 abs

4 tengen moroka tengen g a 261 69 221 77 35 15 103 54 101 103 64 102 102 104 69 gaC

5 LarfaLot Lightwood LuCratiVe g a 242 94 189 98 1045 216 106 81 111 105 92 100 103 103 97 97 86 gaC

6 VanahLem pannoo abe VanahLem g a 229 76 162 83 51 27 107 62 125 118 72 102 106 106 72 99 65 aLt

7 gainfuL kaarmona gaLeao g a 201 82 167 88 84 46 105 67 114 112 72 100 103 102 84 93 72 gaC

8 taiLboard noweLL tarsan g a 198 97 157 99 1263 241 102 92 106 103 89 100 102 101 97 99 95 gaC

9 VaVoom roCkLeigh park VaLerian VaVoom g a 195 73 200 81 58 22 102 56 101 99 65 102 103 105 72 98 57 abs

10 deLian LoxLeigh deLian g a 187 75 180 82 68 38 104 57 115 109 66 102 100 102 78 97 59 gaC

rEd brEEdS TOP 10 Profit - Australian proven

1 randersdaVid r daVid a 235 81 99 88 67 16 Vik

2 VrsoLero2851 Vr soLero a 217 69 194 79 28 10 100 42 Vik

3 petersLund petersLund 1213 a 195 96 101 98 751 107 108 91 94 94 85 102 99 101 94 104 95 Vik

4 arbbonjoVi bosgowan bon joVi a 187 84 133 91 128 62 105 66 111 105 71 101 102 202 82 104 71 gaC

5 arbpotsie grazin potsie a 185 83 138 91 121 51 103 62 97 93 65 98 100 100 83 106 69 gaC

6 arbbobdown Loden bob a 166 92 170 98 873 176 104 73 110 104 79 97 100 100 97 97 83 gaC

7 arbLippman bosgowan Lippman a 160 80 125 90 122 40 103 55 108 109 51 101 99 99 84 100 66 gaC

8 andersta 1967 andersta 1967 a 150 88 92 94 194 31 105 73 101 98 98 88 102 84 Vik

9 arbfrosty meriben park jaCk frost a 143 76 98 85 84 35 102 58 104 106 62 101 103 102 79 100 51 gaC

10 arbLex beauLands Lorry a 140 82 101 90 111 53 106 61 118 109 59 100 102 103 83 102 71 gaC

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aBVs // 31

With 600-700 cows in herd recording, John Lillico has plenty of data. He recently discovered the Genetic Progress Report makes that data work for him as a management tool.

Drawing upon his herd recording data, the Genetic Progress Report shows the impact of Mr Lillico’s breeding decisions and tracks his herd’s genetic improvement over time.

Mr Lillico, and his wife Vicki, dairy near Smithton in north-west Tasmania, with help from two to three employees. About three quarters of the herd calves in spring, with the rest calving in autumn.

Production averages at 9000-9500 L/cow/year from a predominantly pasture-based feeding system. Cows receive about 2 1/2 tonnes of concentrates in the dairy each year.

Although Mr Lillico has always taken a strong interest in breeding and genetics, it has been in the context of operating a commercial dairy business.

The herd’s Genetic Progress Report shows it ranks in the top 10% for Australian Profit Ranking and well above the national average for type, longevity, fat and protein.

The results confirmed that Mr Lillico’s breeding strategy over the years has worked. He selects bulls based on high APR and type.

“We have always believed in the science

behind the APR system. We’ve always selected from the top bulls for APR while paying close attention to their ABVs for type. And our report confirms our experience: that following the APR for selection delivers us the most profitable bulls,” he said.

Mr Lillico uses a combination of bulls bred in Australia and overseas.

“When we are looking at bulls from overseas, I’ll use their ABV(i) if they are available. We find them more reliable than the breeding values from their country of origin.”

The Lillicos have traditionally used progeny test straws over a small portion of the herd but in the past 12 months have transitioned across to using genomically tested young bulls instead.

“We are looking forward to seeing the full proofs from these bulls when their daughters come into production,” he said.

Mr Lillico’s main interest in the report was

the traits it highlighted for improvement.

“My initial reaction to the report was that it highlighted the traits we need to keep focussing on, particularly mastitis and daughter fertility. It also showed how mating decisions from year to year can quite dramatically affect the herd’s overall genetic trends and therefore profitability. It certainly puts a new perspective on the data from our herd,” he said.

Mr Lillico said he was both surprised and disappointed by the herd’s graphs for mastitis resistance and fertility, although both sat at about national average.

“Daughter fertility has become a big focus for us because we don’t want to cross breed. I think genomics will help us identify young bulls that rate well for both profitability and daughter fertility. I will certainly be taking a keen interest in our future reports to see if we are making progress with fertility.”

Like many herds, Hindlee’s graph for genetic progress for mastitis resistance fluctuates from year to year.

“The mastitis graph made us step back and look at what might have contributed to the curve going up and down. I think it may be due to using some promising young bulls that didn’t have a lot of daughter data and a couple of them fared

Data helps fine tune herd

quite badly for mastitis resistance. That dates back to the pre-genomics years and I’m hoping genomics

will help us avoid those sort of mistakes in the future,” he said.

John is keen to see the

herd’s Genetic Progress Report each year. “It’s a good tool to keep us focussed on profitability

plus I will be keen to watch the herd’s genetic trends for fertility and mastitis in the coming years.”

John and Vicki Lillico at their Smithton dairy property.

who: John and Vicki Lillico where: Smithton whaT: Genetic Progress Report

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the case ih lB4 Series large square balers are more efficient than previous models, boosting productivity on-farm.

Geoff Rendell, Case IH product manager for Hay and Harvest, said the new design has increased capacity by as much as 20%.

“We are very excited to bring a new level of baling technology and performance to Australian producers,” said Mr Rendell.

“We know the impor-tance of maximising short baling windows - the LB4 series gearbox runs at an astonishing 48 strokes per minute to put crop through the machine

quicker and more effi-ciently.

“The high-speed baling means producers can get more done in a day with-out compromising the quality of the bale.”

Inside, the LB4 Series baler features a new, high inertia flywheel that is 19% larger than previ-ous model, resulting in improved performance.

The new, high-capac-ity pickup features a roller windguard, feed-assist roller and faster RPMs to maximise crop flow into the baler.

“The LB4 large square baler has been put to the test, baling more than 200,000 bales, and it has excelled across a variety

of crops and conditions,” said Mr Rendell.

“The baler’s sleek new look and curved design also improves its function-ality, allowing it to shed debris more easily.”

The LB4 has also been redesigned for better wear and longer life, includ-ing the all-new, heavy duty frame on the pickup and reel.

Two feet narrower than previous models, the new design provides better visibility around the baler and makes transport easier.

LB4 large square balers also come equipped with steering sensors that inter-face with the intuitive AFS Pro 700 display to more

efficiently help producers build the perfect hay bale.

A GPS logger is avail-able for recording bale moisture, and together with a bale weighing system, offers complete bale documenting.

With GPS data logging and computer mapping software, all data relating to the baling process can be viewed at any time and can be exported onto a USB drive.

The LB4 is available in a choice of single axle or steerable tandem axle, in standard configuration or rotor chopper.

“The new design ele-ments create a product that is not only more effi-cient and reliable but also

easier to use and main-tain,” said Mr Rendell.

“We are very excited

about the performance of this baler - I’d encourage you to visit your local Case

IH dealer to ensure you get the most out of your next bale.”

on a very wet morning in central Gippsland a couple of weeks ago, we caught up with Chris and Leanne Lancey at Nyora, not far from Poowong.

Together with Chris’ parents, Graeme and Trish, they milk 1000 Hol-steins on a 12-year-old 70 unit rotary with automatic cluster removers, milk meters and reten-tion bars on their main 400ha farm, and a fur-ther 300 on a separate property with a 24-stall swing-over herringbone shed.

“Cups go on at 5am and 3pm, throughput on the rotary is between 400 and 450 cows per hour,” Mr Lancey told us.

In February of this year they bought a new Claas Arion 640 trac-tor fitted with a Stoll front end loader through Claas Harvest Centre in War-ragul (formerly Trac Mac) run by Allan and Paula Slater.

The 155 hp four wheel drive trac-tor has 50kmh transmission, which Mr

Lancey reckons is very useful.

The engine is a 6.8 litre six cylinder 24-valve tur-bocharged intercooled diesel which meets Stage 3B emissions standards. The radiator has been

boosted by 35% from pre-vious models to handle the greater demands of the system.

The ‘Claas Infor-mation System’ allows adjustment of key trac-tor functions such as transmission and engine settings.

Like most new trac-tors these days the Arion 640 comes stan-dard with a cab and air-

conditioning.It has done 400 hours and Mc Lancey

said that although it is a pretty basic tractor it is the ideal unit for hay feed-ing, and outstanding for tillage and hay-making.

“It has manual remotes and we find it an easy tractor to oper-ate and excellent for hired labour.”

The week before we visited, they had also taken delivery of a sec-ond-hand Claas Arion 540 with 135 hp, also fitted with a Stoll front

end loader.“It’s only done 10 hours so far, but

it’s doing everything that we expected. We’ll use it for feeding out and carting silage. Which tractor we use for that depends on the load and how far it has to move it.”

Mr Lancey is effusive about the sup-port from the Claas Harvest Centre and said one of the main reasons that they have chosen Claas is because of the level of service they receive.

“Personal service is paramount and Allan and Paula Slater give that because they have a personal interest in the dealership.

“Plus LandPower back up is phe-nomenal. The back-up service is 24/7!”

They make all their own pit silage and this season plan to cut 400ha of their own, plus 400ha for neighbours.

Chris and Leanne also lease a 2000ha property near Henty in NSW for their own feed, growing triticale, wheat and lupins. That property pro-vides grazing for 450 heifers.

Other machinery on the Nyora property includes a Claas Jaguar 890 precision chopper which dumps the silage into a couple of silage wagons converted into trailers and three tip trailers.

Two Claas 3900 contour mowers look after the hay and silage cutting – “we mow one day and chop the next.”

A Lely rake, John Deere 467 round baler and Massey-Ferguson MF187

large square baler make up the haymak-ing equipment.

“We take the Massey up to NSW to bale straw there and bring it back here, mainly for the calving shed,” Mr Lancey said.

They have four Fendt tractors, including one that is used both at home and up north. At Nyora a three-point linkage Landaco fertiliser spreader is used for following cows.

They employ nine full-time staff and the Lanceys say they all get on well

together. “Our staff perform above expecta-

tions and we have no worries about ros-tering. Without them the job would be impossible.”

Mr Lancey admitted the dairy job has been “pretty ordinary recently” and generally supply of milk in the industry will be an issue. But he loves dairying.

“Right at the moment we are com-fortable with the feed around the place, as long as the rain doesn’t hang around for too long.”


32 // machinery & products

Arion ideal for dairy jobs

workiNg cLoTheschris DiNgLe

who: Chris and Leanne Lancey where: Nyora, via Poowong whaT: Claas Arion 640 tractor

Case IH balers lift capacity by 20%

Chris Lancey and family milk 1000 Holsteins at Nyora.

Chris Lancey with the Claas Arion 640 tractor purchased in February.

JohnDeere.com.au/zero

Right now, get 0% p.a.* fi nancing on all new John Deere Balers and Mower-Conditioners in stock at your participating dealer.

Choose from our hard-working lineup of hay equipment like the 9 Series Premium Balers. Designed with a MegaWide Plus™ pickup and heavy-duty 80H Diamond chains, these balers are built to bale quality hay and quality profi ts. Plus, they’re backed with an unmatched 2-year, 12,000-bale warranty†.

Hurry, this deal ends 31 October 2013. Learn more at your John Deere dealer today or visit us online.

*Conditions apply. Finance available through John Deere Financial Limited to approved commercial applicants only. Offer is based on 30% deposit, GST back and 36 month term. Fees and charges apply. If not amended or withdrawn earlier, the promotion expires on 31/10/2013. Other terms and rates are available. Offer available on new balers and MoCos in stock at participating dealers. †Two-year or 12,000-bale warranty, whichever occurs fi rst, covers wear parts on 469 and 569 Premium Round Balers. Warranty excludes drive chains. Contact your dealer for full information.

Beauty. Brains. Brawn.


34 // machinery & products

Silage in the mornings, hay after lunch

Kuhn VBP2160

taranaki, nZ contractor Lloyd Gernhoefer’s new Kuhn VBP 2160 variable chamber BalePack is saving him time and labour with its simple

bale-and-wrap operation, the machine supplier reports.

Gernhoefer bought the VBP 2160 last year, making 11,000 bales of silage and 3000 bales of hay last

season. He has run Lloyd Gern-

hoefer Contracting from home at Eltham for 18 years. His services include hay and silage bales, pit silage, hedge cutting,

effluent ponds, fertiliser spreading, trailer work, direct drilling and culti-vation.

Gernhoefer hadn’t had a Kuhn baler before buying the BalePack but he has

The BalePack combines two technologies in one machine.

owned Kuhn power har-rows and a plough.

He looked at the Bale-Pack after realising he wanted something a bit different to replace his standard baler. “I was looking for something dif-ferent from everyone else. I wanted to see what else was available.

“It makes a nice bale and it has handled the con-ditions we have to deal with. Some of my country is pretty hard work, and we’ve got a lot of swamp land around here. I had a demonstration model here the summer before I bought it and we put it on some rough country and it handled it well.

“I liked the ease of working on the com-puter with the BalePack. That was the big thing: the monitor is easy to work… a big advantage at the start.”

He bought the BalePack and did most of his silage with it last season. “It’s really good. I haven’t been driving it myself but my guy who operates it finds it good.”

The BalePack combines two technologies in one machine. This baler/wrap-per combination combines the OptiCut integral rotor and unites it with an inno-

vative wrapper system.The machine can make

top-quality bales in all crop conditions and it operates effectively on steep slopes, the supplier says.

Fast and reliable bale transfer combined with a high-speed, twin-satel-lite wrapping unit enable

output up to 55 bales per hour.

Gernhoefer opted for Kuhn’s IntelliWrap 3D wrapping system, which distributes the total film quantity uniformly and efficiently across the entire surface of the bale. “The 3D system is really good, and you hardly get any rips in the wrap when you’re loading and unload-ing trucks,” says Gern-hoefer.

The design embod-ies fewer moving parts, unmatched crop flow, and outstanding performance and dependability, says the supplier.

Gernhoefer says the VBP 2160 allows him to have one less guy out on the job, making his baling operation more efficient.

The variable cham-ber also allows him to go from silage in the morn-ing straight into hay in the afternoon.

“It makes a nice bale and it has handled the conditions we have to deal with. Some of my country is pretty hard work.”

Display Centre Now Open(Monday to Friday, Saturday by appointment)30 Moloney Drive, Wodonga, Victoria, 3689Freecall 1800 880 802 or phone Derek on 0410 604 804

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^Finance Available from 3.0% applicable on a 36 months/nil structure term, monthly payments in advance. Estab fees and statutory charges (where applicable) are not included in rate quoted. The above pricing is not an offer of finance and all applications are subject to the lenders approval. The above pricing is correct at time of printing and subject to lenders rates.

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We also supply complete feed mills designed for the small or large dairy farmer so why not start milling your own grain today and benefit from the savings

Need a new pencil or centreless auger we stock a large range of grain augering equipment at great prices

Like Father Like Son

ZINGER

ASI kgP P% Milk kgF F% Rel% Cell Count

Overall Type

301 42 0.23 1129 66 0.26 66 103 106

APR319/58%

JETFINN*


Overall Type

202 36 0.03 1304 37 -0.27 76 106 107

APR242/69%

DELSANTO*


Overall Type

224 17 0.43 -226 60 1.01 90 126 110

APR243/83%

PICOLA


Overall Type

209 22 0.27 307 53 0.57 67 137 104

APR281/58%

ZINGER AND JETFINN> ZINGER is a high Production sire who excels

for Milk Solids for both Protein and Fat. He also offers an Outcross Pedigree making him very easy to use. He is now the number one genomic sire.

> JETFINN continues to be amongst the most popular Genomic Sires.

DELSANTO AND PICOLA > PICOLA is a DELSANTO son from one of

Australia’s best cow families the ‘Perfectors’, along with a high APR he also excels.

> DELSANTO is the King of components.

Genomics - you can use the next generation at the same time as their sires

*Sexed Semen available

ZINGER JETFINNDELSANTO PICOLA

Freecall 1800 039 047 www.genaust.com.au 20130366

Demand Australian Proven Bulls in your Breeding Program

ABV

dairy news australia sept 2013

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