Dairy: best practice in action?
Working with farmers for a profitable,
sustainable, competitive industry
Dr Mark Paine
Strategy & Investment (People & Business)
Overview of the story
• Situation and challenges to the dairy sector
• A strategic response
• Three stories
Who are the typical farm owners?
Dairy farmers
Meat & Wool farmers
• Av age 48+ yrs
• Av age 55+ yrs
• Av 385 milking cows
• Av 4000 stock units
• Total Assets $4.0 mill
• Total Assets $4.2 mill
• Av 2.5 people (FTE)
• Av 1.5 people (FTE)
involved per property
involved per property
Smaller milk suppliers are significant
Mum & Dad
DairyNZ, 2011
Transition
Corporate
Milksolids
production
6%
28%
7%
11%
9%
Production trends
1990 2000 2010
North
Island
South
Island
93% 77% 61%
4%
18%
7%
23% 39%
17%
The outlook and balance of risk ahead for New
Zealand’s dairy industry are more positive than at any
time in the past 50 years … (Dairy Exporter Aug 2007)
… next minute!!!
.. and volatile economic returnsRoC: 2.6
6.9
1.6
4.5
6.5
Increasing debt burdens
•
•
•
•
•
In the past 5 years debt has increased at a rate of $2/kgms per year.
In 1990 the average debt was $4.65/kgms in 2000 it was $8.05/kgms now $21/kgms.
Credit availability was a strong determinate of the appreciation in land values and on farm
debt.
Farmers got a ticket on the Capital Gain train.
Bank Investment into Rural assets increased as desire to absorb higher risk was driven by
competition for market share and an appetite for increased revenue.
Source: DairyNZ Economics Group
WHY PEOPLE LEAVE THE INDUSTRY
(Caring Dairying, 2008)
Growth Challenge
Contribution - volume
Footprint
Footprint
Value
$
1990
2010
2020
The response: An industry strategy
Competitive
milk supply
Genuine partnership
between industry and
government
Increase farm
profitability
Skilled people in
industry
Industry
reputation
By plotting averaged Operating Profit and adjusting for asset value (using the equation calculated on the previous slide), the remaining variation in
profit can be attributed to “people” factors. Interestingly the standard deviation of this quantity (which we will call Farm People Impact - FPI) is
only slightly less than unadjusted average Operating Profit (standard deviation of $980 per ha vs. $1,014 per ha). This provides empirical support for
the hypothesis that Farm People Impact is the dominant cause of variation in farm profits. FPI of $980 becomes the target for our modelling.
Farm People Impact
Mean:
Appx. $0
per ha
Standard deviation:
$980 per ha
13
Information age farming
Creating Demand
Organising Supply
Pulling it all together
InCalf
SmartSAMM
Healthy hoof
Stock Sense
Animal Welfare
SMASH
Dairy Women’s Nw
Herd
Dairy Ind Awards
NZYF
$500/ha
Spring Survival
My farm
Feed
PasturePlus
Whole business/
Feed budget/ wedge
20hrs/wk
Farm
my
farm
Pasture renewal/ persistence
Assess family
Progression + career path
+0.5 BCS
HR+ Compliance
People
PeopleSmart
AgR
MilkSmart
AgITO
Massey/
DairyBase
Business
Financial control
Lincoln
Mark&Measure

Sustainable platform to enhance the
delivery and uptake of:
◦ research, teaching and professional
development
Regional, National
and International
outcomes

Supply
Research
NZIPIM
Massey
Rural Profs
industry
Farm mgt
Fed F.
NZYF
Demand
Tertiary
Post grads
Centre
for Farm
Bus Mgt
Graduates
Lincoln
Prof Dev
modules
Dev of tools
AgITO
Diploma
Supply
Three stories:
The story of an education program
The story of two farmers
The story of a group
1st story: an education
program
Farm Information
Guyton (2011)
Central Plateau
typical
Herd Size
565
380
Effective Ha
215
140
SR
2.62
2.8
MS/Cow
350
330
MS/Ha
919
920
Pasture Harvest
9.8
10.1
 System 3 Farm
 Cows Diet = 82% pasture + 18% supplement
 Most of supplement is grass silage made at runoff
Guyton’
s
Guyton’s: 11.9% ROA + 28kg/N Leached
Central Plateau Average: 5.5% ROA + 39kg/N
Leached
2nd story: a farm partnership
Hayden & Alecia Lawrence
Hayden & Alecia Lawrence
3rd story: a group:
DairyPush
DairyPush:
Doing the basics
right every time
To sum up:
The Perspective of Employers
Prof. Paul Dalziel
Market Opportunities
Profits
Capital Investment
Productive Workers
The Perspective of Employees
Employment Opportunities
Skills
Individual Abilities
Education Investment
The Synthesis
Employers
Employees
Conclusions
1. Capability underpins economic
development
2. Networks create demand
3. Balancing formal and informal
learning effective for supply
4. Talent is retained through
progression
5. Workforce planning to manage
volatility
QPL (20%)
Farms and herds
average size
Tend to be older farmers with farms structured
as family partnerships
75% are owners vs. 65% avg.
17% are sharemilkers vs. 27% avg.
The oldest
farmer segment
52
Avg QPL
. size
Farm
Overrepresented in
South
Waikato
(ha)
AVG
Herd
Size
95% of herds represented
(outliers have been removed)
yr
s
vs. avg.
48
Risk
Averse
Loners
Avg QPL
.
Farming
tenure
© Synovate 2011
19%
23%
Avg QPL
.
Farm business
structure: family
partnership
QPL Base Size = 209
QPL
avg.
herd
size
x 418
39
QPLs are slightly less likely than the average
farmer to have attended any training or infosharing events & tend to rate events they
attend by local vets or DairyNZ the best
Q19 And within the last few years, which of these... have [you] personally attended, or have provided tools or materials that you have
used?
Q20 Next can you please rate how useful you think the extension, training or education provided by each of these providers is?
Useful but
few use
Used &
found useful
Not
useful &
few use
© Synovate 2011
QPL Base Size = 209
Used but
not found
useful
40
Uptake of smartphone applications
Uptake of smartphone apps
Have you downloaded any apps for your smartphone? What apps have you downloaded?
Smartphone owners, n=126; Smartphone owners who have downloaded any apps, n=60.
Types of apps downloaded