Making money in dairy

Making money in dairy


Dairy
Belinda and Trent Crawford are still smilling, after making a small profit and increasing their equity this year on their dairy farm in Gippsland.

Belinda and Trent Crawford are still smilling, after making a small profit and increasing their equity this year on their dairy farm in Gippsland.

Aa

WHILE it's been a testing year for those in the milking sector, one young Gippsland couple have proved it's still more than possible to make a profit.

Aa

WHILE it's been a testing year for those in the milking sector, one young Gippsland couple have proved it's still more than possible to make a profit.

They say the key is to make sure every cent is accountable, while understanding bigger is not always better.

At Binginwarri in South Gippsland, a crowd of more than 85 people gathered on Trent and Belinda Crawford's small 70 (effective) hectare farm for a field day aimed at young people wanting to enter the dairy industry.

Several newspaper articles about the current dairy 'crisis' were stuck to the wall and some people commented out loud about how they were sick and tired of the "negative" dialogue surrounding the industry.

Most of those present were young (between 20 to 40-years-old) and enthusiastic, refusing to be discouraged to recent unrest and hoping to find some answers about how to start their dairying career.

Farm consultant Matt Harms, who helped to facilitate the day (run by GippsDairy), told the crowd despite the current "negative" talk, it was still achievable to make a start in the sector.

"The trick is to be creative - and instead of finding ways not to the enter the industry - actually find ways to enter the industry," he said.

In particular, he said the Crawfords were a valuable example of a young couple who had paved out a career path and were still turning a profit. So what is their secret?

To sum it up, the couple (whose business is a Dairy Australia focus farm) only spend money if it will make a direct difference to their margin.

"We did not get given this farm, so we have to make it pay for itself," Mr Crawford said.

The couple's story began in 2009, when they were share-farming in Gippsland. An opportunity arose when Mrs Crawford's mother offered them a 10-year leasing arrangement for her turnout block. They decided to fund the revamp of the property to get it back into "milking order" - which cost them $53,000 to upgrade the old dairy, as well as build a new bridge and track on the property.

The catch? All the milking gear was second-hand.

Mr Harms said this was where the Crawfords were able to make the situation work for them.

"I was able to source parts of the dairy from local farms, a $5000 vacuum pump and $5000 vat," Mr Crawford said.

He did the concreting and welding himself, as well as connect the milking machines. The couple also opted not to buy new machinery or tractors for the operation.

"I've got a ute that I got for $6000 and it still does the job," he said. "And I've got an $8000 tractor that I used for the first three years without a front-end loader."

Mr Crawford has since invested in a 50hp tractor with a front-end loader that cost $7000.

"I just can't see the point in spending $80,000 on something that is sitting there most of the time," he said.

His consultant, Mr Harms, said the couple were resolute in the view that you don't need to spend money on high-depreciating, "debt-laden", machinery in order to run a good operation.

Their debt consists of $250,000 on land purchased next door, and $50,000 on their house. There is no machinery debt, overdraft or factory finance.

"When you look at it, these two are heathens of the dairy industry," Mr Harms said. "They are breaking all the rules and challenging some common perceptions, yet they are making it work."

Mr Harms said the industry liked to see "cows that looked good, grazing paddocks with news grass, being tended to with flashy tractors".

"But does it have to be this way?" he asked the crowd.

The Crawfords also decided against outlaying huge amounts of money on building up their herd.

"We had a bit of help from a neighbour who sold us 40 cows very cheaply," he said.

"He said to me I am going to sell them as choppers, and I'll give them to you at chopper price. They've cost me nothing and they are still going."

The balance of their herd is made up of crossbreds and heifers that had been parked from northern Victoria during the drought.

"I was reluctant, but I could not afford to buy anything else," he said.

But their decision to purchase "unproven" cows has paid off.

"I am not saying don't use AI, because AI is how I want to improve herd from now on, but you are better off to milk sub-standard cows than to milk nothing at all," he said.

Today, the couple milk 144 head that are churning out 542 kilograms of milk solids per cow, or 4.8 per cent fat and 3.48pc protein.

The couple plan to remain at that number and continue to make their farm profitable.

They say being small allows them to have a lifestyle and spend time with their two children.

Mr Harms backs their decision. He says bigger is not always better, but rather being efficient is the most crucial aim.

"Many in the dairy industry (for whatever reason) are hell bent on getting bigger to survive, not do a more efficient job to survive. Trent and Belinda will remain at 144 cows, give or take a few, and do everything in their power to make that number profitable," he said.

The couple are confident they will have an even better herd in five years' time.

"The day that I think I can't produce any more milk or grow any more grass - that is going to be a sad day. I always want to get better, not necessarily bigger," Mr Crawford said.

Growing grass is important in the operation, and they also seasonally calve and shut-down for a month - so lifestyle is high on their agenda.

"Others in the industry might think they are crazy," Mr Harms said. "But farming and personal time are not mutually exclusive."

So how does the Crawfords' farm look on paper? A revised budget, which takes into account extra fodder required because of the dry season and another step-up, should produce an operating surplus of $125,273 or $876/cow (income less herd costs, shed costs, feed costs, overheads and paid labour).

With an expected closing price of $4.55/kg MS, cash surplus (after lease, servicing of debt, personals, and before off-farm income) is anticipated to be $26,000.

Mr Harms said considering it was a tough year, this was a good result - but the important thing was their equity (66.15pc) and net worth was still increasing ($58,000 over the past season).

"This demonstrates if you produce milk in the way these guys do it, and you are lean and mean, then yes - you can make money," he said.

Do young people still want a dairy career?

WITH the negative dialogue surrounding the dairy industry at the moment, many young people might be left wondering whether there is a future in the sector. However at a recent field day held on Trent and Belinda Crawford's Binginwarri property, about 85 young farmers were reassured that money can still be made from milking cows.

Traralgon's Patrick Ferguson told Stock & Land he attended the day, because he was hoping to get some ideas about how to make a start in the industry. He has been working in the offshore oil and gas industry for two years to earn some money, but admitted it wasn't something he wanted to do for the rest of his life.

"The money has allowed me to build up calf numbers and rear them on my parents' property," he said, adding he had 280 heifers already.

"Today has reassured me that if you turn the screws on - that you can start a business from scratch. It's nice to see someone doing a good job in dairy, without their head in the clouds - getting a job done in a conservative way."

He was daunted by the fact the cheapest dairy farm started at $800,000, but said leasing was a good option.

Brett Smith, 23 - who works as a farmhand on a Yarram dairy operation - said the Crawfords' low-input operation was a good way to go.

He is also building up his own calf numbers and is hoping to take up a share-farming arrangement in the next two to three years.

"There is a lot of uncertainty in the industry right now, but days like this really show me that I can still make money if I go about it the right way," he said.

Aa

From the front page

Sponsored by