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Analysis key in profit driven system

Analysis key in profit driven system
Zach Mounsey and Laura Campbell on the Otorohanga farm where they sharemilk 285 jersey cows on 105 hectares.

An economist and accountant respectively, both Zach Mounsey and Laura Campbell are strict on their budgets to make a profit rather than pursuing production.

After growing up on a dairy farm in Otorohanga, Zach recognised the opportunity in agriculture very early, both on and off farm.

He graduated from the University of Waikato with a Bachelor of Management Studies majoring in Finance and Strategic Management, as well as also completing a New Zealand Diploma in Business, adding financial and business disciplines to his farming knowledge.

After graduating he held previous roles in public trading and finance at Fonterra in the office of the chief financial officer. He subsequently made the move to DairyNZ as an economist and followed that with an inaugural corporate support role to the chief executive before joining Happy Valley Milk, Otorohanga.

He describes Laura, who has a background in accounting and analysis, including as a former Fonterra accountant, as “someone who shared my passion for agriculture with a clear understanding of the discipline and work ethic it would take to progress through the sector and achieve our ambitious goals.”

She currently works as an agri-business banker at Rabobank. The couple also 50:50 sharemilk on a dairy farm near Otorohanga milking 285 jersey cows on 105 effective hectares, producing about 100,000kgMS on a long-term 16 hour and once a day system, with a manager handling the day-to-day workload.

This production achieves over 90% of the cows’ liveweight in milk solids, but these figures don’t explain the real story of the farm’s profitability.

“That in itself without relevant context doesn’t mean much; we outperform the national average of approximately 80% with far less time spent in the shed,” Zach says.

His experience in analysing countless farm financials has shown that, when balanced appropriately with costs, moderating instead of maximising production can often equate to higher profitability.

The couple’s own farm working expenses, including the cost of the manager are $1.96; when Zach worked on the farm himself it was $1.26.

“Last season we were one of the most profitable Waikato sharemilkers in DairyNZ’s benchmarking system, Dairybase.”

Despite their qualifications and work experience, running a profitable dairy farm is not rocket science and much of the resources needed are available to anyone through the likes of DairyNZ, Zach says.

“We follow much of the research coming out of DairyNZ and use it to challenge our own system and implement where possible to drive our business forward.”

One of the greatest indirect costs in a dairy business is the empty rate in a herd, he says. The five-year average empty rate in their own herd is just 5%, while rates of 15% or higher are commonly reported.

In a 300 cow herd this would represent a $27,000 loss, not including the ongoing cost of carrying through additional replacements.

Laura attributes the low empty rate to the strategy of balancing production along with an input minus output system mentality which aims to improve cow condition, mitigate stress, reduce walking distances and eliminate lameness.

Zach and Laura’s primarily jersey herd received the full benefit from the changes in how breeding worth is calculated this year with the differential spread between jersey and friesian

. The new fat price calculation has injected an additional 6c/kgMS into the farm and is set to go higher, along with a future A2 premium, a trait their jerseys carry more so than other breeds.

The couple are now in a process of transition, having bought another jersey herd for next season to sharemilk a new property, also in Otorohanga within 20 minutes of where they currently are.

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