Moving into a lower payout environment along with increased environmental regulations has forced the dairy industry and Dairy Holdings to reset its priorities, says Dairy Holdings CEO Colin Glass.
“It is about having a business model that is sustainable in this new world we are operating in. Over the last 15 years people have been investing in dairy farms for capital gains. Now the focus needs to be on farm operating performance while not increasing intensity so we are operating sustainability,” he says.
It is the path that Dairy Holdings has been moving along for some time – being the most profitable with the lowest environmental footprint.
Colin says that by keeping costs under control and in-house as much as possible as well as stocking at a level so cows can eat what is grown with no or limited bought in feed.
By maintaining control of many aspects of the business in-house has placed Dairy Holdings in a good position with regards to challenges around bio security such as the mycoplasma bovis outbreak as, for example, stock don’t move outside Dairy Holdings’ properties.
Dairy Holdings Limited is a New Zealand registered company owned by three families. The company owns 59 dairy farms throughout the South Island, which milk around 50,000 cows.
In addition Dairy Holdings also owns or leases 19 grazing blocks where it rears and grows 9000 head of dairy heifer replacements each year and winters all the cows.
Colin says that by being mainly self-contained Dairy Holdings can maintain control over its cost structure, which has enabled it to successfully ride the significant volatility of the industry. With regards to operating more sustainably Dairy Holdings has sought to take greater control of its wider nutrient footprint.
In 2012 the company embarked on a five-year development plan, largel focused around irrigation investment. The roto rainer and border dyke systems were replaced with more efficient centre pivot irrigation.
Dairy Holdings has purchased and installed about 100 centre pivots over the past five years. Colin says that Dairy Holdings has worked closely with Environment Canterbury to record improvements and nutrient loads.
Nutrient budgets are completed for all farms and audited against farm environment plans, which are reported to Environment Canterbury either directly or by irrigation schemes. Everything used on-farm, such as fertilizer, bought in feed and stock numbers, is closely monitored and managed.
Almost all production is from grass grown on the farms and Dairy Holdings buys in little feed. While the average for the industry is to use just under 600kg per cow of palm kernel, Dairy Holdings only buys in around 50kg. He says a pasture only model allows Dairy Holdings to operate at lower levels of intensity.
Colin stresses that the journey that Dairy Holdings has undertaken has been no different from that which other dairy farms are embarking on – the big difference is they are doing it at scale.
He says that this means systems have to be really resilient so they can be rolled out over multiple farms. The advantage that Dairy Holdings has as a larger operation is that investments can be made to achieve these goals.
He says that Dairy Holdings doesn’t have aspirations to grow significantly larger at this stage. The focus is more on sustainable growth, carefully considered to deliver value to shareholders and to take the business forward sustainably into the future.
Most Dairy Holding’s farms are operated by share milkers and contract milkers and Col in says that the success of Dairy Holdings is dependent on the success of its people.
“They must be able to achieve their personal objectives and be key members of their communities. It’s a real focus for Dairy Holdings that people can build their businesses through us and progress on the industry. In fact three Dairy Holdings share milkers bought their own farms at the end of last year.”
He says the changing dairy environment will alter the career pathway for those already in or entering into the industry.
“While we have seen managers, contract milkers and share milkers progress through to farm ownership, the milk price correction has made people reassess what success looks like for them. We’ve seen some leave the industry and others review
He believes that Dairy Holdings has a business model, which has proved farming can combine being profitable, productive and sustainable as well as providing a pathway for the next generation to get ahead:
“You’ve got to knuckle down and have the drive to get there but we are proving it is possible for people to really get ahead. But we also know that Dairy Holdings can only do well if the rest of the New Zealand dairy industry is doing well. We all need to get ahead together and present a positive environment to attract and retain successful high achievers.”
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