We have been managing for quite a few years now and are wanting to go contract milking - what do we need to do for this? what would we be expected to pay for? are we better to start with a small herd and then go larger? how much $ do we need to get started?
I am a French PhD candidate in Geography, and I would appreciate some help...
I conduct a research project looking at the transformations of dairy farming in New Zealand over the last 30 years. The rise of contract milking has been an important part of this, and I would like to know how the price paid to contract milkers fluctuated over the years.
So if you were contract milking during past seasons, could you please take 5 minutes to answer this short survey
That would be very helpful for me.
Please note that this is completely anonymous. If you want to get a copy of my work once finished (end of 2017), please e-mail me at email@example.com. I thank you very much for your help.
NB : Sorry for my englsih, it is not my native language.
@RuaFarm Having a business plan and a budget is a good start. Knowing whether you will need an overdraft facility and how much you will need/when it will be paid will be important if you need financing to cover your first few months until good milk payments start coming in. You will have a range of farming related things to pay for: generally shed power, can be rubberware, any farm bike or farm vehicle expenses in relation to your own vehicles, wages if you have to employ staff, relief milking. Allow for other non direct related expenses insurance (including public liability), ACC, Accounting as well. Scale of job depends on your level of experience, what responsibility you want to take on and what is likely to be your net profit. Do your homework as bigger doesn't always mean more profitable. As far as gear goes generally farmbike or equivalent is the main capital outlay (job dependent though). Good luck! Paul
@Tony-McKeage any tips for those wanting to go contract milking from a banking point of view? What they should be preparing etc?
@RuaFarm We went contract milking 3 seasons ago. We had a business plan (which I created via primary ito paper) which we took to anz bank manager and then were approved for start up package. We did have enough from a house sale to put towards gear but were lucky that we were on a small herd and gear was minimal. My husband is a ex-builder so he worked through the dry seasons to tie us over. The $ you need to get started will depend on the size of the herd etc. Some farm owners pay contract milkers a retainer through the year so that would decrease amount you would need to borrow or have on o/d.
I would recommend putting yourself out there that you are after a contract milking position or/and approaching your current farm owner to see if that option is available where you are.
Fed farmers contracts are great to use, but ensure that every part is filled out and that you get a independent party to look over the contract and contract price also.
Awesome advice above @Goldie82! Just a thought too, but if you are competent operators then you could look at Lower-order SM rather than CM, it is more risk (which, given the volatility in payout isn't necessarily a good thing) BUT there is more potential to make financial gains if payout/production goes up. Similar setup costs apply (e.g. you may need bikes, calf rearing equipment etc). Again, good budgeting and good advice would be key. And like CM, a higher % doesn't necessarily mean more profit - it's all about what drops out the bottom.
Should also say that we also get paid $50 per heifer calf reared.
To get started you will need enough $$ to buy machinery/equipment required and to live off and pay staff wages until first milk cheque comes in. You probably wont get a significant milk payment until September but have costs from 1st June
We went contract milking 4 years ago. Budgeting is really important - rates vary from 80c to $1.50/kg depending on many things such as area, farm size, production, responsibilities, what cm must pay for etc. A higher rate doesnt necessarily mean higher profit. We used the Lincoln farm budget manual, dairy nz economic surveys and talked to other farmers and consultants to try and get accurate estimates of costs. On our contract here we supply a tracter, feed wagon, motorbikes, calf trailer and calf rearing equipment. We employ/pay staff and pay for cowshed electricity, shed expenses - detergents, filter socks etc (but not teat spray as its animal health), fuel and R&M on our vehicles/equipment. Theres also insurance costs and ACC and other costs such as protective clothing, training fees, accountant and accounting software. If you do an accurate budget for each job then you can see if you're happy with the profit that falls out the bottom. The cashflow course that dairynz run is good and IRD run free workshops on employer and tax obligations. As for size - bigger farm usually more opportunity to make more money but need to manage more staff. Choice depends on what you feel you're ready for/want. I love being self employed and running our own business as a cm. Good luck and remember relationships are more important than anything else ☺