Northland farmers Mike and Karen Smales breed beef bulls over their dairy herd and buy in their replacements. They told Sheryl Brown how they make dairy farming on tough country profitable.
A measure of success in any dairy operation is farming the land in a way to ensure its profitability.
Dairy farmers Mike and Karen Smales milk 480 cows at Maungaturoto, Northland where a lot of the farm is steep, often inaccessible by tractor, it grows a lot of kikuyu and is hit most years by drought.
The herd averages less than 800kg milksolids (MS) a hectare, which is respectable when taking into account those challenges.
“For our sort of country that’s pretty good – it’s not flash country. By pushing it further then you’d have to put a lot input in and that’s not really profitable or sustainable,” Mike says.
“The bottom line is utilising our country, you can’t run it as a straight-forward dairy farm. How we are doing it is how we feel we can get the best out of the land without abusing it.”
Mike and Karen run a mixed dairy and beef operation, breeding beef bulls across their entire herd and rearing the calves to sell as two-year olds.
They use both Angus and Hereford bulls across the dairy herd. Mike admits crossbred cows adapt better on the hills than straight Friesians and says by using good beef bulls you get a good calf.
“Crossbreds adapt a lot better, they fossick.”
Breeding the beef calves from a crossbred herd can sometimes result in calves that throw more dairy, but they are still worth more to rear than putting them on the bobby truck for $20.
“We rear everything, When the Jersey steers come up to two-year olds and we sell them, there is not a lot of difference. Most of them grade, we can usually buy a good dairy cow for what we get for them.”
They buy all their dairy replacements as in-milk mixed-age cows which means they don’t have to try to calve down and milk heifers on the hill country, which can be pretty tough on young heifers, Mike says.
When buying cows he doesn’t worry too much about cow records.
“I back my judgement. We’ve never tried to be a top-producing herd, because we never will be on this country.”
‘The winter cows do better than the spring cows. You can supplement a cow through a bad winter, but you can try and supplement a cow through a hot, dry summer but she might not eat.’
They have been split-calving for six seasons, milking 250 cows through winter and calving the rest of the herd in spring.
The winter milking premium is a good incentive, but it suits their Northland climate and their property, Mike says.
“The winter cows do better than the spring cows. You can supplement a cow through a bad winter, but you can try and supplement a cow through a hot, dry summer but she might not eat.”
Although winter milking suits the cows better, Mike wants to keep a mob of spring-calving cows so they can control the surplus grass in spring.
Controlling the kikuyu grass is key on their property. The kikuyu needs to be managed let the ryegrass and clover come through – which is where the beef cattle come into their own, he says.
The beef cattle and dry cows typically follow behind the milkers to eat down the pasture.
“You’ve got to keep on top of the kikuyu otherwise it takes off and rye and clover don’t get a chance.”
They undersow the milking platform regularly with annual species which can grow through the kikuyu.
They shut up the top hills in April and May to have enough grass to winter the spring-calving cows.
“On this sort of country we set-stock in the winter. The minute you go near cows they make mud.
“Wintering cows out back, you could never take supplement out to them.”
Dairy-beef supplement income
The dairy-beef offspring have always been a healthy supplement income for Mike and Karen.
Selling Angus and Hereford calves from their crossbred dairy herd over the last 43 years has helped pay to clear the land and grow their business.
“We’ve always done dairy-beef. It used to be a dirty word, but we called it our development fund,” Mike says.
“The first 10 years there weren’t a lot of farmers doing it. People used to put their dairy-beef calves on the bobby truck.”
But the dairy-beef market has continued to grow and get stronger. There is a historic beef schedule at the moment which sets the scene for it to continue, Mike says.
The key for Mike and Karen during their lives has been to stay in a position where their business can adapt to market demand. They have tried to ensure their business has enough flexibility to be able to sell or hold stock where necessary.
Farmers can get burnt by trying to chase the dairy-beef market, Karen says.
“Farmers are always a season behind the eight ball getting into it.”
When the rush comes on and prices go down they are usually in a better position because they haven’t given up anything else in their business to chase the market.
“We drop back too, but we’ve always done it and never changed our farming policy to swing with the ups.”
They typically rear all the calves and finish them through to two-year-olds. However, they will sell stock depending on market prices or feed supply on the farm.
They sold 80 R1 calves in February to account for the drought that was hitting Northland earlier in the year.
They’d had no rain since start of December and the schedule was buoyant in the Waikato and King Country at the time so they made the decision to get some stock off the property.
The weaner steers averaged $750 and the heifers averaged $630 for an average weight of 207kg.
“All your decisions in farming are weather-driven,” Karen says.
“We try and be proactive rather than reactive – you’ve got to go by your gut and your experience.
“There is no good saying we should have done this, or should have done that. You make a decision and go with it.”
When it comes to selecting bulls, the Angus and Hereford mix works well, Mike says.
“As far as fattening is concerned I’m swinging more to Angus. They seem to fatten quicker, where the Herefords start growing and keep growing.”
There is such a strong premium for black white-face calves at the sales, however, which is good enough reason to keep breeding both at the moment, Mike says.
Easy calving and lameness are two of the more important breeding values Mike looks for.
He runs bull mobs of six during mating, revolving the bulls out of the cows every three days.
“If you breed for ease of calving and manage your cows well you eliminate most calving problems,” Mike says.
The hills can be a challenge, but they are also a big help to keep the cows active and fit for calving down the beef breeds, Karen says.
The farm can get quite wet and hooves can get soft so the stock need to be able to stand up to the conditions. Any lame dairy cows are pulled out and treated immediately.
Once a cow is treated for lameness and mastitis, if she comes back with a recurring problem, she goes, Mike says.
“If a cow has a problem, no matter what she’s producing, she’s out.
“If they’re not sound we don’t milk them. To me that’s a way of getting to a healthier herd. People have to be happy milking cows and that means not having slow milkers, or cows with health problems. Those are the things that can frustrate staff.”
Rather than sending them to the works, if a cow is not milking well, Mike will often pull her out of the herd and put a calf on her – putting her to use until the market is right to sell her.
In terms of animal health their main routine is injecting calves and cows with an annual dose for trace minerals.
“I believe in cobalt, selenium and copper. This country is deficient in it. We operate on a preventative rather than reactionary approach.”
They also leave Crystalyx drycow mineral blocks around the farm for the milking cows all year long. The cows constantly have access to them and they prevent most issues, including milk fever, Mike says.
Clearing the scrub
The couple both grew up on sheep and beef properties in Northland. Mike worked on Karen’s family farm for eight years before they were able to go out on their own.
They purchased their first 280 hectares at Maungaturoto in 1968 for $7000, with a $1000 deposit.
They ran beef cows and had an annual roundup, having to go nearly to Waipu to find all the cows and calves.
In 1974 the neighbouring dairy unit came on to the market. They bought it with 85% borrowing from the Marginal Lands Board and the balance from inherited money. Karen and Mike had never milked cows before and on August 8 they moved in with 108 cows calving.
It was a very wet winter and on the first night they got into bed, looked up at the ceiling which was painted the colour of calf shit, and said “what the hell have we let ourselves into?”
Money was very tight so the couple used old milk liners as insulators and teatree poles for posts.
“We learnt that if you didn’t have money you couldn’t spend it.”
In 1979 the next door runoff came on the market. It was about this time interest in pine trees was growing strongly so they were able to sell off the steepest country of their original block to purchase the runoff – again mainly scrub and gorse and very low fertility.
They couldn’t afford to buy a herd of beef breeding cows so decided to breed beef bulls over their dairy herd.
“Mike always wanted to be beef farming. We couldn’t afford to buy the beef cows – we had no money – so the best thing was to rear the calves,” Karen says.
They found the dairy-beef calves worked well for their budget, giving them additional income to keep developing the land into pasture and building the infrastructure.
The recent environmental move back to fencing off and replanting a lot of gullies and marginal land has gone a bit against the grain of what the couple have always done.
“My challenge in life has been to develop land. It’s been a way of life,” Mike says.
“As young farmers we were lucky to have the opportunities we had. We had good support from government to put everything into grass.”
They have fenced off the milking platform, done riparian planting in some of their gullies, and donated 50ha into a QE II Trust.
One of the real positives has been the asset of the updated effluent system. They now irrigate on 40ha of the milking platform, which has significantly lifted the soil fertility, Mike says.
“I call it liquid gold, that’s been a really good investment.”
Compliance costs and increasing regulations are a challenge for farmers, particularly with how children grow up on farms, Karen says.
“We’ve had a good family life. The kids were both heavily involved in the farm growing up, but with the new rules and regulations it’s not quite as simple as it was.
“Farming used to be a way of life, but now it’s million dollar businesses.”
As such the business decisions have to be with the head not the heart.
They constantly look at their income against expenditure to see how they are tracking every month, rather than doing an annual budget.
There is a lot of work in doing a budget, and it could go out the window the next week, Karen says.
“I have a rough idea of what’s coming in and what has to go out. If we are lean on the income side I will go talk to Mike about where we are and what we can sell.”
Mike has a passion for trading stock, so enjoys the opportunity to buy and sell dairy and beef cattle to take the opportunities in the market.
Mike is the stock manager and also manages two drystock blocks for other farmers. He has a general farm manger helping to oversee the properties and a couple of farm assistants.
This year Mike and Karen employed a contract milker for the milking platform as a way of pedalling back some of the daily responsibility.
“I’m trying to get it operating without us,” Mike says.
“As long as the farm is going forward we are happy. Now we’ve got the dairy ticking over, I want to concentrate more on the beef – maybe buy some beef cows to put on the hills for another supply of calves.”
Mike does a lot of hunting and trekking and has ridden in every hunt in NZ. He would like to spend more time riding.
“I go hunting twice a week when I can. I have been known to go four times a week.”
Karen teaches learn to swim classes and likes to travel frequently. They are both keen to get off-farm more and spend time with their children Richard and Vicky and their five grandchildren.
“The kids are keen for us to keep the farm, so I’ve told them they can take on the mortgage too so we can do what we enjoy,” Karen says.
Owners: Mike and Karen Smales
Location: Maungaturoto, Northland
Average rainfall: 60 inches
Milking platform: 186ha
Milking platform stocking rate: 2.4 cows/ha
Cows: 480 crossbreds
Record production: 144,000kg milksolids 2013-14
Supplements; 20ha maize grown onfarm, 120t palm kernel bought
Farm dairy: 30-aside herringbone
Effluent irrigation: 40ha
Stock onfarm autumn 2017
251 R1 steers
238 R1 heifers
113 R2 steers
278 R2 heifers
480 crossbred dairy cows