A well-established dairy business in South Gippsland, Victoria, has recently undergone rapid generational and operational change but it is management as usual.
Jelbart Dairy was established by the late Max and Barbe, in 1981, with 110 hectares and 127 cows. The couple took over from the shareholder on the property. In 1985, the herringbone dairy was expanded from a nine-swingover to 20-a-side double up, and they were milking 230 cows.
By 1992, Jelbart Dairy had expanded to 165ha, milking 400 cows in a 60-unit rotary, with a 25,000-litre vat. Through the next 10 years, the herd grew to 1000 cows and the milking platform expanded to 360ha.
At the same time, the family was expanding, with George, Will and Tim growing up on the farm and encouraged by their parents to look beyond it for a career.
Two farms were operating in tangent, the original one at Leongatha South and the other at Caldermeade, milking 400 cows in a 40-unit rotary, where a café was part of the business.
Max Jelbart carved a reputation as a dairy advocate, on the boards of Murray Goulburn-Devondale and Australian Dairy Farmers, on the United Dairyfarmers of Victoria council and active in the local branch, a director of Ellinbank Research Farm and Marcus Oldham College and a Nuffield Scholar. His advocacy earned him an OAM.
In 2013, the family began succession planning, with the intent of Max and Barbe stepping back from farming. Farm manager, Mike Kilkenny, was employed, working closely with Max Jelbart.
Barbe Jelbart died in 2014, followed two years later by Max Jelbart.
In 2015, with the family anticipating change but the succession plans incomplete, youngest son, Tim, stepped into the role of general manager, a little earlier than anticipated. The family business continued as usual until succession planning was completed in early 2016, just before Max’s death.
It has restructured to a co-ownership. The three sons, George, Will and Tim, are co-owners under a testamentary trust and the business is managed by a board of directors and advisers, comprising the three owners, farm consultant John Mulvaney, of OMJ Agricultural Consulting, and Michael Dowling, a family friend with a background in business, financial literacy and agriculture.
Quarterly meetings are held to discuss strategy and direction.
“Our wives are included in all quarterly meetings and are cc’d into all meeting correspondence. We welcome their contributions,” Tim said.
“Having external advisers on the board has made us more objective about our farm decisions and ensured transparency in our communications between the board and management.”
An initial business analysis led to devolving the Caldermeade farm and cafeé to free up business equity.
“It was part of the discussions around the succession plan,” Tim said. “The Caldermeade farm was a good farm but an asset that was geographically distant from the main property at Leongatha South.
“It was also a distraction and none of us were interested or had a background in running a hospitality business.
“We assess the value and cost recovery of each major decision or direction for the business.
“Our vision of Jelbart Dairy is a business that’s sustainable, in that it can survive variable conditions, is profitable, efficient and provides a sense of enjoyment for everyone involved with the farm. We also want to be an active part of the community and the dairy industry and ensure good family relationships.”
Change is a regular agenda item at board meetings.
“We have regular discussions about everyone’s aims and involvement and interest in the farm,” Tim said.
“We all acknowledge the current structure needs to be adaptable and flexible to the changing needs of individuals and families.”
Changing from a partnership to a corporate governance structure, the farm’s focus is on producing grass, milk and supporting up to 30,000 hours of labour annually. What has changed is operational management.
“The thing that really changed was attention to detail and formal reporting,” Tim said.
“When Dad was alive, he was very much the keystone of the business. Everything went through him. He had a pretty good structure and staff retention. We needed to implement a chain of command for staff, reporting to Mike Kilkenny.
“I focus more on macro management.”
That includes analysing spreadsheets, budgeting and being responsible for cash flow. A significant portion of the business production is based on the farm producing its annual fodder and silage needs.
“We rely on grass as much as possible and we aim to have at least one pit of silage left in reserve each year,” Tim said.
“We have the land, manpower and equipment to produce good quality hay and silage, so we focus on that to decrease our exposure to variable markets.
“We buy in 2000 tonnes of grain and 700-1000 kilograms of other concentrates, mostly canola, whole cottonseed and bread, which we forward contract where we can.”
In 2016, feed needs included locking in a two-year contract for grain.
“It was an educated decision at the time and I’ve had moments where I worried about locking in the cost, but in the long term it’s proved a good plan,” Tim said. “It’s about mitigating risk to the business and that’s an area where we need to focus.”
The reporting structure clearly delineates responsibilities among staff and directors.
The need to support the workforce is recognised with regular staff meetings and a barbecue; and rosters that recognise and value employees.
“We do this to keep staff informed about conditions, the business direction and forward plans,” Tim said.
“We try to keep people to five days on/two days off, including a weekday.”
This includes Tim, who is paid a competitive wage as part of his employment.
Along with staff management, farm manager, Mike Kilkenny, sets the daily feed rations, aligning with reports on the pasture conditions and paddock rotations. This information is provided by farm workers and decisions made in consultation with the assistant farm manager, Will Ryan. Will’s role includes herd health management.
“Will is in charge of animal health. This involves monitoring cow health post-calving and during lactation, hoof trimming and lameness prevention and monitoring nutrition with Mike,” Tim said.”We contact the vet for complex and clinical cases; everything else we deal with.
“The focus is to make us multi-dimensional. It means we can all take a break and have back-up when people take leave or other absence.”
The 13-14 full-time equivalent labour units include a full-time mechanic. Fencing repairs are done on farm but new fences are erected by contractors. Chemical spraying is also contracted.
Investing in the herd
The 1000-head split-calving closed herd of predominantly Holsteins is milked off 360ha of perennial ryegrass pasture, of a total 870ha of owned and leased land. The remaining 510ha of country is used to graze 1000 Holstein calves and heifers, for fodder production and a recent diversification into Wagyu-cross calves raised for the beef market to minimise the number of bobby calves sold in the market.
There are some Aussie Red and Montbeliarde cross cattle, along with a few Jerseys, in the herd, that are being slowly bred out.
“We didn’t think we were getting the benefits from the Aussie Red and Montbeliarde, compared to the Holstein. We decided Holsteins were a better fit for our production and livestock sales’ targets,” Tim said.
“We focus on an average weight of 650kg per cow and co-ordinate our pasture rotation and ration feeding on that as a maintenance weight.
“And it gives us better marketing options.”
The business raises cows for the dairy, for export and for the chopper market.
All cows and heifers are artificially inseminated with pure Holstein semen. “The only mop up is our own-bred Holstein bulls; we have about four or five each year in the heifer program,” Tim said.
“There’s a few specific cow families we’re targeting as well as high genetic merit (BPI) cows as well.”
He is also analysing the potential for selling semen from those cow families to Genetics Australia (GA). Jelbart Dairy has been a long-term client of GA.
“We’ve been buying semen from GA for about 27 years and more recently a lot of sexed semen for the heifers,” Tim said.
“We value the key relationship we have with GA’s Gerard Brislin, who knows the herd well and understands our business. It’s about the service and understanding what genetic improvements we need to make for our herd, which GA does well.”
In spring 2016, the Jelbart Dairy board of management made a three-to-five-year commitment to invest in genomics and evaluate the outcomes.
“I had concerns about testing the whole herd at the same time, a cost of about $50,000,” Tim said. “So we decided to start with the 2016 spring heifer calves and test heifers each subsequent year.”
In February last year, the first heifers underwent genomic testing ù 70 per cent of the spring 2016 drop, based on parent averages.
“Genomic testing helps us make informed decisions about which heifers to keep and which to sell,” Tim said. “It also has the advantage of verifying parentage.”
He sees this as an opportunity to improve their herd breeding records, currently based on paddock observations at calving.
To date, other than the ImProving Herds project results, Tim has not evaluated the cost-benefit analysis, given the business is in the early days of testing. But he sees some potential advantages, given their several approaches to breeding and selling cattle.
“It’s probably too early to tell if the Balanced Performance Index (BPI) is 100 per cent accurate but we’re certainly using it to sort out our young heifers; and will continue to monitor the heifers as they come into milk,” Tim said.
“With the heifers tested in 2016 coming into the herd in spring 2018, I’ll be looking at how their performance tracks against their genomic predictions.
“However, I already use BPI rankings to identify potential sale heifers and cows.”
BPI reflects the economic drivers of net profitability for the range of dairyfarming systems in Australia, measuring traits of production, survival, type, mammary, milking speed, temperament, cell count, fertility and feed efficiency.
Based on BPI, the top 25 per cent of the Jelbart Dairy herd produced an extra 1656 litres/cow of milk, 66 kilograms/cow of protein and 67kg/cow of fat, compared with the cows in the lowest producing 25 per cent of the herd.
“These top 25pc of cows had a gross margin ù income over feed ù of $585/cow a year more than the lowest producing 25pc of the herd,” Tim said.
“They also lasted 11 months longer in the herd.”
He said these cows were mostly in calf in the first AI round, had few health issues and tended to stay in the herd longer.
There are several marketing options the business works towards.
About 500 heifers are born each year, with 250-300 selected as herd replacements. “Our decisions depend on the season and livestock marketing options,” Tim said.
“Generally, livestock sales account for 15-20 per cent of our total income, while milk production is 80-85pc.
“Value-adding to livestock sales is a key part of increasing our overall farm income and fully utilising the land resource we have available.”
Export heifers are sold at nine-months-of-age, depending on if there is an export order and if these cattle fit within the parameters of the market.
Some heifers in-calf to sexed semen are also sold at 16 months, and heifers and cows at the point of calving and fresh cows in milk are sold to provide room for heifers coming into the herd.
Steers are a new market. Steer calves are kept if the season allows enough country to graze them. Currently there is a small mob of steers ranging up to nine-months-old.
A new variant is a relationship with BeefCorp, that sees Wagyu semen used in the tail-end of the cow herd.
“We currently have 90 Wagyu calves in the shed, from second and third AIs. They are contracted to go at 200kg,” Tim said.
“Our decisions about what we’ll sell and where vary depending on what prices are on offer, current and forecast seasonal conditions and where we make the best profit margin. This helps to diversify our livestock income.”
The next diversification is a planned inaugural heifer sale in 2019. First- and second-calving heifers will be selected for the sale.
“We want to share our genetics within the industry. We’re still working out the logistics, but by that time most of the heifers will be DNA tested so we’ll be able to provide their genomic history as well,” Tim said.
“We’ve got some culls on the list that are milking 45 litres/day. Even our bottom end of the herd is still a good producer.”
By: JEANETTE SEVERS
Source: The Australian Dairy Farmer