Schimanski Dairy Business of the Year 2012

September 2012

The benefits of entering a dairy business competition

Otorohanga farmers Don and Wilma Schimanski are the winners of the Dairy Business of the Year Supreme Award for 2012. The national competition looks at all aspects of a dairy farm owner’s business, in particular farm profitability. Entrants in the Dairy Business of the Year Supreme Award for 2012 were scored out of 70 for their financial performance, 15 for environmental care and 15 for human resources.

The competition is organised by Intelact director Chris Pyke. The judges were independent – Professor Keith Woodford of Lincoln University and Emeritus Professor Colin Holmes of Massey University.

Don and Wilma Schimanski have been dairying together for 23 years, and built up their business by putting three farms together. They now milk 748 cows on 184ha. Previously Don was a bulldozing contractor.

Don (now 64) said he put their figures up for the competition to see how they rated, and he wants to encourage others to have their figures analysed by Red Sky so they can compare with other farmers in a similar situation.” A lot of dairy farmers don’t compare their figures with others. What is the use of farming and being the worst farmer around when you want to be up with the people who are doing the job well.”

It’s only in the last three years they have entered the competition; a move which coincided with them getting farm figures benchmarked by Red Sky.

“But I feel there are a lot of people who could easily be doing better than me”, says Don.

The Schimanskis have very good per cow performance and very good per ha performance. For the 2011/12 year, the cows produced 474kgMS/cow, which was 19% up on the Waikato top 10 performance and they produced 2027kgMS/ha.

They have a high stocking rate of 4.28cows/ha, which is 15% above the Waikato top 10 stocking rate.

They have a 52% operating profit margin, with costs of 48%. This was described as an exceptional result for a business which has a high level of feeding out. The cost of production was $3.50/kg for that financial year.

“We use a lot of brought in feed; the cheapest we can find. We go through a fair bit of maize grain, barley, maize silage and palm kernel.” They might use 2t of brought in feed per cow.

Their philosophy is to fully feed the cows, keeping them healthy and well. They pay particular attention to grazing at the three leaf stage. “As soon as a grass plant produces four leaves, the first one is dying, so you have to eat the plant at the 2.5-3 leaf stage to get a new shoot growing as quickly as possible.”

They also protect their pastures to minimize damage from pugging and mud in the wet by standing the cows off when it rains. “We protect our pastures at all costs. The more protected my pastures the more grass we grow.”

Their soil types are average for the Waikato – about 40% of the farm is peat, 40% Puniu silt loam which can be damaged easily, 10% Mairoa ash and 10% clay.

They have also used liquid urea with “less N” for the past three years.

Good management means keeping a finger on the pulse all the time, Don says. “You can’t really stop criticizing yourself.”

Their environmental work includes planting up drains, and for the last three years they have been able to spray effluent back on 160ha of their farm, using a travelling irrigator.

Staff need a special mention. Iain Macdonald is their farm manager who has been working for the Schimanskis for the past 10 years. Mark Darlington was here for three years.

“My philosophy is to look after them. We have a stable workforce; I have been lucky there. Before them I had turned over staff quite a bit. I think the fact that I employed someone I get on with makes a big difference. You go out of your way to make things right for them too.

We have a five year old Westfalia dairy shed which is fully computerized. All the cows wear collars. When they come into the shed if a cow is on heat she is drafted off for AB. The decision to move to a Westfalia shed, which we built in the middle of the farm has paid off.

“Westfalia has been very good to me with their support on the technology and maintenance; they have been a big help to us.”

Bill Rys is their Intelact Consultant. He says “I do bimonthly visits, and we prepare an annual plan using the Udder farm monitoring programme, and then monitor it during the year. The focus is on pasture harvest, and utilizing as much pasture as possible.”

The figures show the Schimanskis have higher than average pasture harvested at 13.7tDM/ha compared to the Waikato average of 12.2tDM/ha.

Because the farm has a high stocking rate, they have to be very careful about pasture damage from pugging. If any pastures are opening up they are pretty quick to undersow them to ensure full production.

“We also use the three leaf principle for grazing, which is used to determine rotation speed. That helps with maximizing pasture harvest.

We also make sure everything is in a growing state, and minimize the time the pastures are in a slow growth phase.

We use Red Sky financial analysis to benchmark and monitor areas of high costs, looking at driving these costs down.

The strength of the business is that they have low cost production on a high input farm. Their cost of production around $3.50/kg compares with a Waikato top 10 of $3.62 and an average of $4.37, a NZ top 10 of $3.41 and a NZ average of $4.21.”

About 60% of the feed the cows eat is pasture; 40% is brought in feed. This compares with the more usual 80/20 ratio.

Another factor is that although they run a high input system, which normally has a lower profit margin, their profit margin at 52% compares to the NZ average of 43-44%.