A focus on a low-cost, grass-based system is producing above-average profits for a Mid Canterbury dairy farming operation run by Greg and Rachel Roadley.
About 400 farmers and industry people visited one of their properties, Batley Farm at Pendarves, last week to learn the keys to their success in an event organised by the NZ Pasture Summit.
Roadley Farms milks 2000 cows on three Mid Canterbury dairy farms.
In total, the couple milk 3100 cows in Mid Canterbury and North Otago across five dairies and associated support blocks, some of which are via equity partnerships.
They are also involved in other dairy operations elsewhere in New Zealand and the United States.
“Our aim in farming is to operate an efficient, repeatable and sustainable pasture-based dairy business that focuses on generating free cash and delivering a total compounding return on equity of at least 15 per cent,” they said.
“Whilst we both thoroughly love farming and the lifestyle that it allows, our view is that we are farming as a business and the assets that we control need to deliver a competitive return.”
Pasture Summit treasurer Colin Glass said Roadley Farms was “unashamedly profitable”, with an Ebit (earnings before interest and tax) of $5110 a hectare, nearly $2000 higher than the average Canterbury dairy farm.
Operating expenses were under $4 a kilogram of milksolids at $3.74 a kg/MS compared with the Canterbury average of $5.07.
“That has enabled this business to grow and prosper, even when times are tough.
“They have made changes to their business at a time when others thought they were doing all right.”
The Roadleys were not just ahead of the pack in terms of profitability, but also their environmental footprint.
“I challenge you to compare your own numbers with the Roadleys.
In terms of nitrogen loss and greenhouse gas emissions, they are also at lower levels for Canterbury.
“So, what you are seeing is not just a successful and profitable business, but one that is able to withstand the challenges that dairying will face in the next few years,” said Glass, the chief executive of Ashburton-based Dairy Holdings.
Glass said there was a massive reset happening within the dairy industry.
Pasture Summit, which held conferences in Ashburton and Hamilton last year, aimed to share ideas and developments on achieving profitable dairy farming, focusing on pasture systems.
Greg Roadley said New Zealand’s competitive advantage was its low-cost dairy production based on perennial ryegrass.
Batley Farm’s cows eat an all-grass diet during the milking season, after bought-in supplementary feed was gradually eliminated over several years.
Grass surpluses are harvested for emergency winter feed and to fill shortfalls.
Cows on Batley Farm eat 2.5 tonnes of dry matter/ha more than the Canterbury average, consuming 17.1 tonnes/ha compared with an average 14.5 tonnes/ha.
Every cost was also questioned, with Roadley Farms’ spending on repairs and maintenance $241/ha, less than half the Canterbury average of $512/ha.
“We want to double the return on every dollar we spend, so that sets a high threshold for any expenditure,” said Roadley, the son of Fonterra’s first chairman John Roadley.
ANZ South Island general manager of corporate agri banking Mark Grenside said the payout reset of a few years ago had led everyone to think differently about their business.
Farmers were also having to tackle changes in off-shore capital, water quality and climate change limits.
“Everyone is reliant on the dairy industry being successful.”
Grenside said that considering the Roadleys’ off-farm interests it was no surprise their farm business was so successful.
In his down time Greg Roadley is an extreme runner, journeying huge distances across barren and inhospitable landscapes around the world.
Last year he completed a 250km Atacama Crossing desert race in Chile across salt flats, huge sand dunes, canyons and river crossings.
The Atacama desert is the driest place on the planet and follows Roadley’s previous extreme races in the Arctic circle and Sahara desert.
Rabobank Ashburton agribusiness manager George Lumsden said the dairy sector was an important contributor to the economy and Rabobank was committed to supporting the industry in the long term.
“The sector currently makes up around 60 per cent of our portfolio and we have a clear ambition to further grow our portfolio by taking on new business with leading operators in this sector, irrespective of where the Reserve Bank’s review of capital levels end up,” Lumsden said.
– By Heather Chalmers