Jersey Advantage Update – June 2022

It is a great time to be a Jersey Farmer in NZ. The 8% milksolids advantage for Jerseys over HF is very significant at a $9-10/kg MS price. 25% of that advantage is eroded by lower meat returns and another 25% is lost with additional per cow costs at a higher stocking rate to have the same kgs LWT/ha. This leaves a net +4% advantage for Jerseys. 4% does not sound a huge breed advantage margin, but once cost of production and bank interest is paid, 4% margin translates into roughly +15-20% profit margin.

Increasingly, cow fertility is a greater concern amongst NZ farmers. Since the abolition of inductions in NZ, and increasing feeding levels in NZ, national non pregnancy rate is now 15-16% in spring calving herds. All evidence, from multi sources, demonstrates Jerseys have a 4-5% pregnancy rate advantage over HF. Ease of calving, less mastitis, fewer collapsed udders all add to the Jersey Advantage, and the only real negative with Jerseys is that they take more looking after in the first 3-6 months of life.

The Manuka operation in Chile across 59 large scale herds, has a consistent ownership and farm management system across all farms. The herd breed mix is heading towards a weighted average J12F4 animal, with a few high merit J16 herds for breeding service bulls. Currently the breed mix across 59 herds ranges from F10J6 through to J16. The pastoral system is identical to NZ and Manuka has been using NZ genetics for 15 years. There was some suggestion that maybe the J12F4 mix should head back towards J8F8. The observation of herd performance by MS% across all of the herds for lameness, pregnancy rates, and most importantly cash margin was so strong in favour of the Jersey and JX animals that it became a very short discussion. The correlation between high MS% and lameness, fertility and profitability was very high.

Jersey Advantage Acknowledgements

1. Michelle Good retired as JA General Manager at the end of 2021. Michelle did a great job; and we were sorry to lose her from the role. But we will still have her to help with promotional work.
2. Louise Berry has capably looked after the administration role of JA while we have been seeking a replacement for Michelle.
3. Six parties; the Bailey, Bocock, Colebrook, Dobson and Gibson families, and Southland real estate firm Country and Co each generously donated $50,000 to the Jerseyland Farm Project. In addition, the five families all took a 10% share in Jerseyland Farms Project.
4. Other families including the Atkins, Cutforth and Ingram families have donated or advanced material funds to JA. And of note, old Argentinian friend of NZ Jerseydom, Jock Campbell donated NZ$50,000 to the JA Jerseyland farms cause.
5. The goodwill and cooperation of JerseyNZ with regard to Jerseyland Farms allowed this project to eventuate. Jerseyland Farms, and a future business plan has the ability to change the future income streams for both JA and JNZ.
6. Thanks to the Jerseyland Farms Board and shareholders for sanctioning distributions from year one of the farm project. JA received $50,000 as its share of distributions. With JA’s charitable trust status, all of this sum can go to running JA activities for the betterment and advancement of Jerseys.
7. And a thank you in advance for any other Jersey people who wish to support the JA financial cause. This could be by way of donations, or next time updating your Family Wills, Jersey Advantage may be a very worthwhile cause to support for those who have devoted a good part of their life to farming and promoting Jerseys.

Jersey Advantage Responsibilities

• Milk Payments
  The issues on the table here are Fonterra volume charge and component pricing. Currently Synlait and Tatua have volume charges at 4c/L and above reflecting the full cost of handling volume up to the point of milk standardisation. This covers both operational and capex volume related costs. Fonterra in its wisdom, is only reflecting the cost of running vats and tankers and has no allowance for replacing them. This is neither right nor equitable. The other matters which will come up for another round of discussion will be component pricing regarding Lactose (Jerseys
  produce less volume attached lactose), casein protein value vs whey protein (Jerseys have higher Casein: Whey protein ratios hence the Jersey advantage in cheese production) and the Fat value in Food Service. Food Service is predominantly fat based products and are some of the most profitable parts of the Fonterra profits beyond the Milk Price Model, and escape the VCR component net applied to the milk price. Jersey Advantage has had some good support from Zach Ward in these matters. Zach is very knowledgeable in this field. He farms Jersey cross type herds and from the archives, Zach’s grandfather, Norman Ward, won the Champion cow at the Waikato show in the late 960s when higher profile studs usually dominated the show ring

• BW and PW matters
  This is an area that James Courtman leads and he sits of the NZAEL Farmer Advisory Panel. The key areas of focus here will be the upcoming LWT economic value review. The LWT EV is a blend of cow maintenance, cow replacements, cow salvage value and calf values. One of the discussion points to be tabled is whether the LWT EV is split into two being maintenance and replacement costs (a negative value) and meat values from culls and calves (a positive value). Future discussion points within BW will likely consider methane and nitrate emissions. It is not unreasonable to think that Jerseys should do well with something like a 12% carbon footprint advantage over HF on a MS basis (8% on milksolids yield + 2% on lower required replacement rate + 2% on milk collection and drying of higher concentration milk)

• Environmental matters
  Michelle Good and Roger Ellison, on behalf of JNZ working with JA, have spent plenty of time in this area. It is an on-going matter which is evolving over time. Because of Jersey carbon and nitrate efficiency, this is not an area of concern unless there was some limitation placed on stocking rate per cow rather than stocking rate of Kgs LWT/ha. Anyone with knowledge of the matter will concede stocking rate in Kgs LWT/ha is the appropriate measure. But it is essential JA has a seat at the discussion table to ensure that any stocking rate considerations are factually accurate (LWT/ha) rather than headline numbers (cows/ha). Roger has good knowledge on these matters.

• Bobby calf issue
  We all know the issue and pressure to reduce bobby calves. The headline points on bobby calves are the headwinds for some farmers in terms of increasing Jersey semen use. The irony here is that the cost of the bobby conundrum has to date fallen with HF farmers. The talk of reducing bobbies
  has flooded the market with beef calves. Good HF bull calves or whiteface calves have through oversupply dropped in price by approximately $100 per head. All this has achieved is that $100 per calf has gone from the pocket of a dairy farmer to a beef farmer. Ben Watson leads the charge for JA on this matter. For those less informed on the bobby matter, the reality is that if NZ has a finite amount of stockfeed, and NZ has a carbon reduction target, if the 2 million bobby calves were reared and taken through to 18-24 months of age, then the NZ Dairy Industry would need to shrink to 65-70% of its current size. Completely unrealistic and simply swapping $9/kg MS product for $3/kg LWT meat product with the same feed conversion efficiency. Nonetheless, Jerseydom needs to take the reduction of bobby calves seriously. There are options to decrease the total number of bobby calves. This will be an ongoing matter where common sense pragmatism needs to be applied rather than headline unrealistic outcomes.

Mark Townshend (on behalf of the Trustees of JA, John Bailey, Rodney Dobson, Glenys Ellison (JNZ), Richard Gibson and Evan Smeath (JNZ)