A case study:

In the current season we dairy farmers are expecting a milksolid payout reduction in the order of 45% and our district has surplus of pasture available.

My accountant (and/or bank manager) is advising me reduce my feed costs to meet my revised budget. I think I can buy grazing at a lower cost per head per week than what the New Zealand Grazing Company cost estimate is. What should I do?

The dairy farmer found a new grazier priced at $9 per head per week instead of $12 for the 52 weeks and saved $12,480 for the year.

However, he lost;

  • $42,480 in production

  • $8,000 in extra heifers not in-calf

  • $9,200 to replace those extra heifers not in-calf

  • Also extra breeding costs, more anoestrus heifers

  • Lost days in milk as 3 year olds – slippage

THEREFORE;

  • The actual cost of going to a cheaper grazier was a nett loss of more than $47,200

  • $9 vs $12 per week grazing actually takes more days in milk for “cheaper” grazing group to start making a profit.

  • Overall performance of this group was still affected negatively 3 years later.

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