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					Issue 34                                                                                                    November 2008




         INSIDE THIS ISSUE: n Conference Briefings n Equity Partnerships n TDDF Updates


  Confidence Boosting Conference
  The 2008 Tasmanian Dairy Conference organised by
  the DairyTas Board featured a number of key speakers
  who addressed some of the important opportunities
  and challenges that dairy farmers are facing nationally
  and locally. This edition focuses on some of those
  presentations that highlighted opportunities for dairy
  farmers in Tasmania.

  Opportunities
                                                                                         Conference Catch-up
  Tasmania’s Potential for Growth
  Frank Drum, a National Australia Bank (NAB)                       beyond current levels and Bradley questioned why
  agribusiness economist, presented a number of facts               there was no government-backed water initiatives to
  and figures about the global dairy outlook and how it             encourage further growth.
  might impact on the Australian industry. NAB expects
  global economic growth to slow but to be sustained. The           John Watson, the Chairman of Van Diemens’s Land
  impacts of the recent meltdown will need to be watched            Company (VDL), highlighted the investment opportunity
  closely.                                                          that New Zealand’s New Plymouth Council has seen in
                                                                    the dairy industry in Tasmania. VDL remains committed
  Competition from competitors especially New Zealand               to realising profit from milk production coupled with
  will remain in place but production increases from                improvements in the quality of the livestock and
  developing countries are likely to be constrained in              improved animal and welfare practices. John also
  the short term. Within the Australian dairy industry              raised the issue of the benefit of increasing irrigation
  continued demand from developing countries, in                    potential in the area. The opportunities for irrigation
  particular India and China, will be a good stimulus for           development in the north west region were greater than
  growth. Local issues such as the prolonged drought and            trying to drought-proof low rainfall areas.
  government policy around climate and emissions will
  have an influence on local production. Tasmania enjoys            Water Galore
  the lowest production costs in Australia but higher grain         One of the opportunities facing the Tasmanian dairy in-
  and fertiliser prices take some of the shine off. Generally       dustry is the enormous benefit that could be reaped from
  though the outlook is looking good for the Tasmanian              efforts underway to harness more water for irrigation.
  industry
                                                                    The Tasmanian Irrigation Development Board (TIDB)
  Investing in the Tasmanian Dairy Industry                         was formed in March 2008 to bring private sector
  All the speakers were very positive about the future of           experience to the development of private sector schemes
  the Tasmanian industry. Bradley Watson of Little Lion             in Tasmania. John Lord, TIDB Chairman, highlighted the
  Holdings explained why he is investing in the industry            key objectives of the board.
  and particularly in Circular Head. The local area
  experiences favourable weather and has a developed                The aim is to make the most of Tasmania’s water advan-
  industry and support base. Although land prices have              tage. Tasmania has 11.8% of Australia’s total annual
  increased there is still opportunity to see competitive           run-off and this from less than one per cent of the total
  returns on investment. There is still room for growth                                                 Continued on p. 2
                                                                
                                       Monitored Farms
                                       Three farms are monitored and information is provided for the benefit of readers.
                                       For further information please contact a dairy adviser on 1300 368 550.

                                                          Langleys                     TDDF                ERDS
                                      Units
                                                          Montagu                    Woolnorth             Elliott
 Date                                                     17/10/08                   20/10/08            20/10/08
 Total farm milking area      ha                             253                       368                  99
  Irrigated area                                                                                            36
 Cows in milk                 number                         653                       780                  280
 Cow condition                score                             4.2                     4.1
 Daily production             kg MS/cow                         1.8                    1.45                 1.7
                              kg MS/ha                       4.67                      3.09                 4.9
 Intake                      kg DM/cow/day
  Pasture                                                     11                        15                 12.8
  Hay/Silage                                                   0                         0                   0
  Concentrates                                                5.8                        0                  2.1
  TOTAL                                                      16.8                       15                 14.9
 Nitrogen                     kg N/ha                           0                        0                  46
 Pasture growth rate          kg DM/ha/day                      83                      58                  94
 Average pasture cover        kg DM/ha                      3336     (incl silage)     2257                2753
 Target pasture cover         kg DM/ha                       2000
 Rotation length              days                              20                      20                  34
 Pre grazing cover            kg DM/ha                       2800                      2600                2699
 Post grazing residual        kg DM/ha                       1600                      1500                1585
 Silage area                  ha                                88                     120                  22
 Silage made                  kg DM                             0                        0                   0

Continued from p. 1
land area. There are eleven priority projects identified        states. The overall impact that an integrated program
in the north, north-east and south of the State that look       would achieve is to have farmers confidently managing
to supply an extra 300 000 ML per year to underpin a            their feedbase resource to optimise profit and developing
doubling of agricultural production by 2015. Monies will        a capacity to adjust their systems to changing
come from public and private water users to provide for         circumstances and opportunities.
capital works and from users for operating costs.

Research Streamlines for Maximum Benefit
Dave Henry, Dairy Australia’s Feedbase Manager,
informed delegates about the merging and streamlining
of feedbase research across the nation. Feedbase is a
key driver of production and profitability. Having an
integrated feedbase approach will see national priorities
focussing on:
     • Growing more feed
     • Utilising feed better
     • Improving conversion efficiency of feed to
         product
     • Preparing for the future

Tasmania will not only have an important contribution
to make to the national feedbase through local research
and extension but will benefit from work done in other                                  The Sharp End!

                                                            
Equity Partnership Opportunities - Expressions of Interest
Mark Fergusson, TIAR Dairy Centre
An equity partnership seminar organised by DairyTas,              The seminar heard from participants of several successful
ANZ and Elders Real Estate in Devonport in September              equity partnerships already operating in Tasmania. John
heard from several speakers about the benefits these              Hewitt, Elders Real Estate, provided information about
entities can have for the dairy industry. The strong              the benefits from a farm owner’s perspective and Wayne
industry interest in the topic was evident from the               Huisman, Togari, spoke about the benefits for farm
attendance of over fifty people.                                  operators and share farmers.

The high capital cost of up to $10 million to establish a         In New Zealand a significant proportion of the new
new large scale dairy enterprise is beyond the means              large scale dairy conversion farms in the South Island
of many dairy farm families and operators. Equity                 are equity partnerships. The total number of New
partnerships can be used to develop these large farms.            Zealand equity partnerships has grown steadily to total
As a result some dairy farmers are seeking outside equity         close to 350 by 2008.
to fund new dairy farms and dairy expansions.
                                                                  DairyTas advise that as a result of the seminar a number
Equity partnerships provide several advantages:                   of dairy farmers expressed interest in further exploring the
                                                                  opportunities for them to take on equity partners. Further
• Young farm managers can own part of the business
                                                                  seminars are also planned for the non-traditional dairy
  and get experience operating a large dairy business.
                                                                  regions of Tasmania. Information about the properties of
• Existing dairy farmers can expand their farms through           farmers that expressed interest in equity partnerships will
  equity input.                                                   be shared with equity investors when DairyTas visits New
                                                                  Zealand later this year. Presentations on the opportunities
• Owners of properties converting to dairy farms can
                                                                  in Tasmania will be provided at the New Zealand sessions
  release capital through an equity investment while
                                                                  which are being supported by the Tasmanian Department
  having the farm developed to produce a better
                                                                  of Economic Development.
  cashflow and more valuable asset.
• Farmer investors can invest in an industry they                 Farmers and investors who would like more
  understand and potentially reduce their risk by                 information about participating in an equity
  investing in a different dairy region.                          partnership should contact Mark Smith, DairyTas,
                                                                  ph 03 6432 2233, email: dairytas@eburnie.com.au


October Thirst for Tassie’s Pastures – A Case of Déjà Vu
Rob La Grange, TIAR Dairy Centre

Spring has imposed some constraints on pasture
growth. The persistent cooler weather has seen growth
rates lag behind last year and whilst some areas have
experienced reasonable rainfall activity many areas
have received less than normal rains through early
spring. The current dry spell has seen soil moisture levels
dropping below what is needed to support growth and
pastures are starting to come under stress.

Experience from our focus farms showed that by not
                                                                                          Irrigating pastures
starting irrigation up early enough in anticipation of rain
to come, there was a significant loss of potential pasture
growth. It is important to get water on early to avoid
pastures going into moisture deficit stress.
                                                                    What’s On?
A soil moisture tension of 35 kPa or greater, means that            Nov – early Dec 2008
pasture plants are suffering from lack of water and will            Farm Walk at Elliott R & D Station
have a significant reduction in growth. The challenge               Friday 7 November & Friday 5 December, 11am-12.30pm
when irrigating is to start early enough so that the last           (Contact Lesley Irvine, TIAR, 1300 368 550)
run in the schedule puts water on before that pasture
                                                                    Pasture Field Days
suffers from moisture deficit stress. Knowing where your
                                                                    Just to let you know that we are planning a series of field
soils are with respect to available water and what your
                                                                    days focusing on pastures. Venues & Dates are:
schedule is will allow you to make an informed decision             1st December – Smithton Hockey Club
around when to start up.                                            2nd December – Scottsdale RSL Club
                                                                    3rd December – Bridgewater Civic Centre
Happy watering and may the rains come soon to spare                 4th December – Deloraine Community Complex
you one more job.
                                                                    Times: 10:00 am to 2:30 pm with lunch provided

                                                              
Call for Dairy Benchmarking Entries
The TIAR Dairy Centre is seeking participants to provide information for benchmarking their farm performance for the
2007-08 season.
This can be done through entering the Impact ANZ Dairy Business of the Year Award or as a separate exercise for
farmers who do not wish to take part in the Award. In both cases, dairy farmers receive valuable information on the
financial and technical performance of their dairy business.
Finalists for the Award are chosen on a points system for return on assets and operating profit per hectare. Judges will
visit the finalists in early 2009 and decide the winner using a points system for financial performance and environmental
sustainability, as well as management of pastures, stock and people.
Finalists for the Tasmanian Award go into the national Dairy Business of the Year Awards. Last year, the winners of
the national Dairy Business of the Year were Stephen and Karen Fisher of Togari with a 9.7% return on assets.
Entry forms and assistance to complete them are available from TIAR dairy advisers, phone 1300 368 550. Completed
forms need to be submitted by the end of December or the first few weeks of January at the latest.
The main awards and prizes are:
 Winner:                     $3500 Impact fertiliser plus $1000 cash
 Runners-up:                 $750 each for three runners-up
 Most Improved:              $1500
 Equity growth:              $1500
 Share dairy farmer:         $1500
 New entrants:               $500 random draw among those not entered last year

For more information contact Mark Fergusson, TIAR Dairy Centre, phone 1300 368 550.




                                           2008 Dairy Business Award field day

What a Great Conference
The comments listed below are typical of the benefits            imagination“, “I feel re-energised about what I do every
given by people attending the Tasmanian Dairy                    day and re-committed to my profession”, “I can almost
Conference “Growth of the Tasmanian Dairy Industry               always apply something I have heard.”
– Challenges and Opportunities” that was held in early           If you didn’t attend the conference, plan on doing so
October.                                                         next year and take up other opportunities to self-educate.
“To get insight into the issues of the day”, “Connecting         If you step up the self-education curve, you will come up
with new people and re-connecting with people I                  with more answers than you can use!
haven’t seen in a while”, “New information that will
help me improve”, “Sparking ideas for applying other’s
experiences and expertise”, “I’m never going to get a
better education in a shorter amount of time”, “ Staying
                                                                                   Did you know?
                                                                  The quality of seeding ryegrass will drop by about 5%
on the cutting edge of an industry which still fascinates         at the 3-leaf stage. Pasture that has gone to head can
me every day, and so I can mingle and network with the            contain 40% less energy than leafy pasture. Minimising
most influential”, “You look around the room and realise          this drop in pasture quality by grazing at 2 – 2.5 leaves
these are the people that are helping our industry move           before the stem matures to any great degree is one of the
forward, “Experiencing the delivery of new concepts               keys to spring production and holding the peak.
and inspirational presentations in person truly sparks the
                                                             
                                               Tasmanian Dairy
                                              Demonstration Farm
                                                             ‘The Gums’, Woolnorth
                                                                www.tddf.com.au

       ‘Demonstrating sustainable profitability through best management practice’

Farm Business Performance 2007/08
Chris Haynes, (FMG Member / TIAR Dairy Adviser)
It is the time of year where most businesses are eagerly                         If the right numbers of animals are not there to eat the
waiting for or are looking over their figures to see if                          grass when it is grows, then production will be lost and
they have made any money over the last financial year.                           income will be reduced. There is a fine line between the
Last season saw milk price increase as well as inputs                            right and wrong stocking rate, especially around system
such as fertiliser, concentrates and fuel, resulting in the                      sustainability, but the demonstration farm last season did
overall cost of production1 increasing. Does this mean                           not have enough animals converting grass to milk during
Tasmanian dairy businesses have made good money?                                 the peak season that ultimately affected farm productivity
The level of business efficiency will depend on how well                         (see table below).
the farm did in keeping a good margin, i.e. capturing
the high milk price while keeping the cost of production                                                     Target            Actual
down. In general, the cost of production and milk price                           MS Production             231,150           181,300
have not risen at the same rate meaning most businesses
                                                                                  MS/cow                       281               221
would have had good margins for the past season. The
demonstration farm did not meet budgeted targets in                               MS/ha                        628               492
most of the key performance indicators, mainly because                            Condition Score               5                4.6
they were stretch targets but still enjoyed good business                         Peak Production              1.3              1.32
efficiency (see table below).                                                     Lactation Days               280               240
 Cost of production is the overall cost of a litre of kgMS before interest
(1

and tax)                                                                          Pasture Utilisation          8.8               7.4

                                 Target                   Actual                 Table 2: 2007/08 Physical Performance
     ROA*                         7.5%                      6.1%
                                                                                 Where do our costs blow out?
     EBIT**                      $0.44m                   $0.37m
                                                                                 The system thrives on cheap conversion of grass to milk,
     Income                      $1.38m                   $1.23m                 which is not rocket science. Once grass starts becoming
     Expenses                    $0.94m                    $0.86                 more expensive through conservation costs, use of
*ROA is return on Assets    **EBIT is Earnings Before Interest and Tax           nitrogen to boost growth etc, margins can be significantly
                                                                                 reduced. While the need to conserve fodder is inevitable,
Table 1: 2007/08 Financial Performance                                           using nitrogen to boost silage is not cost effective with
                                                                                 urea costing $1100 a tonne. All replacement heifers
Did the business make the most of the elevated                                   will apportion some of the grass to growth but when
milk price?                                                                      they are smaller than they should be, they will utilise a
The overall financial objective of the demonstration                             greater proportion of feed for growth at the expense of
farm is to be in the top 10 per cent of dairy businesses                         production. The FMG have estimated that 10% of the
across the State. This has to be met in conjunction with                         grass grown last season went to animal growth where on
the project objective of demonstrating sustainable dairy                         a typical farm this would be closer to 1%. In dollar terms
business practices. The demonstration farm did not make                          this equated to $80,000 loss in milk income. Another
the most out of the elevated milk price because of a                             cost that does not come through the benchmarking is the
number of limitations affecting business efficiency. Animal                      overall cost to the business of high cow wastage. These
condition and wastage, and heifer liveweight in early                            numbers are well above industry- average, and affect the
lactation were the major limitations. It is expected that the                    value of the asset, not to mention the production losses.
farm will not be in the top 10 per cent of industry when
benchmarking statistics are released.                                            All farm benchmarking data is available on the TDDF
Why didn’t the farm make as much hay while                                       website www.tddf.com.au.
the sun shone?
This low input production system is exactly what it                              The TDDF Farm Management Group will
sounds. Keeping costs in this production system low                              be reviewing the farms 2007/08 financial
will mean higher returns at the end. There are three key                         performance at the monthly farm walk and BBQ
fundamentals that drive profitability in this system:                            on Monday November 10 starting at 10:30am.
• Keeping inputs and costs low;                                                  Make sure you come along as it will be a good
• Converting grass directly to milk during the period in                         day! Lunch will be provided. Contact Chris
   which it is growing the most; and                                             Haynes on 0408 548 091 for further details.
• Stocking rate
                                                                             
   U  p date
             f   rom       DairyTas Board
         DairyTas is the Regional Development Board for Dairy Australia in Tasmania. The Board
         funds and coordinates research and development activities for the dairy industry in
         Tasmania to improve the industry’s productivity and sustainability.
         For more information contact DairyTas Executive Officer Mark Smith, phone 6432 2233,
         email dairytas@eburnie.com.au or view the website at www.dairytas.com.au.


    2008 Dairy Conference                                         Dairy Australia Survey around
    Close to 200 delegates attended the 2008 Tasmanian            Improving Service Delivery
    Dairy Conference organised by DairyTas in Burnie              During the latter part of 2008 Dairy Australia are
    in early October. The conference theme was around             conducting a survey of selected dairy farmers across
    growth and development for the industry but it also           Australia to get feedback on on-farm challenges
    illustrated a number of challenges that we have in            and the sorts of assistance farmers are looking for.
    front of us.                                                  This information will assist with future research,
                                                                  development and extension activities. This is part of the
    The conference was a great success with a very well           Dairy Australia Confidence to Grow Program.
    credentialed range of local, national and international
    speakers that gave the audience great value. The              Equity Partnerships in Dairy
    conference reflected the buoyancy about the dairy             DairyTas is coordinating efforts to drive the use of
    industry at present and the optimism for its future in        equity partnerships in the Tasmanian industry. Seminars
    Tasmania. Copies of the conference presentations are          were held in Launceston and Devonport and in mid
    available on the DairyTas website at www.dairytas.            November, with the support of the State Government,
    com.au                                                        we will be conducting seminars in New Zealand to
                                                                  attract investment interest. That will involve taking
    Dairy Women’s Scholarship                                     examples of Tasmanian opportunities for investment.
    DairyTas and DPIW are once again making available
    $1,000 for the 2009 Dairy Women’s scholarship. The            Cows Create Careers Program
    scholarship is open to women in the dairy industry            Thirteen high schools are underway with the 2008
    that are interested in developing new skills and              program exposing nearly 200 students to the dairy
    information to help grow or improve the sustainability        industry including the hands on activity of raising
    of the business. More details are available from              three calves for three weeks. The program finishes
    DairyTas and applications close in mid December               in November and there will be a presentation in
    2008.                                                         Wynyard on 21 November. The project has attracted
                                                                  unprecedented interest from schools and we will look
    Duck River Nutrients Project                                  to growing it further next year.
    DairyTas’ new nutrient management dairy project in
    the Duck catchment is now underway. We are still
    looking for interested dairy farms to participate to
    get soil nutrient maps undertaken, look at nutrient
    budgeting and participate in farmer groups to improve
    nutrient use on their farm and in the area. Contact
    Mark Smith at DairyTas if you are interested.

    DairyTas Annual General Meeting
    DairyTas Board’s AGM is on in Scottsdale on
    Wednesday 12 November at the RSL from 11 to 1pm
    with lunch included. All dairy farmers and industry
    service providers are welcome to attend. The main
    presentation will be from Dorset EDG on the Northeast
    Irrigation Project. Three new board members will also
                                                                           DairyTas Moo-iarty Cow produced by the
    be appointed at that time.                                                     Moriarty Primary School

The Pasture PLU$ News is provided free to all Tasmanian dairy farmers as part of the Dairy Australia funded Pasture PLU$ Program.
For more information, please contact a TIAR Dairy Centre adviser on 1300 368 550 (cost of a local call).
Disclaimer: This publication has been prepared for the general information of dairy farmers in Tasmania. TIAR and the University
of Tasmania do not accept any liability for damage caused by, or economic loss arising from reliance upon information or material
contained in this publication.

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