Tag Archives: dairy

Solar at the dairy: how to crunch the numbers

SolarDairy

I’d love to install a solar system here on the farm but since we use most of our energy in the dark or at sunset, it’s a real challenge make it affordable. I’m really grateful to dairy energy expert Gabriel Hakim of AgVet Energy in Warragul for writing this guest post on how to crunch the numbers!

Energy Audit with Gab

Gabriel Hakim and Wayne check out the dairy during an energy audit back in 2012

With the backdrop of the recent closure of Hazelwood, and continued uncertainties over supply and prices more and more dairy farmers are asking “Can solar work for me?”.

The way electricity is consumed on most conventional dairies – early morning, late afternoon, and overnight – means it is a challenge to maximise the direct benefits of solar.  In southern Australia, most of the electricity generated by photovoltaic panels (PV) occurs between milkings, during the middle of the day.

How this electricity is used has huge implications for the economics of PV.  The three broad options are:

  1. sell all unused generated electricity into the grid;
  2. store unused generated electricity and use it later; and
  3. change the timing of electricity-using tasks so they make use of the electricity as it is generated.

The reality of course, is to deploy a combination of these options. This post explores option 1 for installing solar on an existing dairy with:

  • Twice-a-day milking. 6:00 – 9:30 am and 3:30 – 6:00 pm (includes milk cooling time)
  • 450 milkers calving all year round
  • 40-50 units
  • Conventional cooling (glycol chiller, with final direct expansion cooling in vat)
  • Conventional cleaning (warm pre-rinse, hot wash, hot final rinse) – ~1,600 l hot water/day
  • Average daily electricity consumption 450 kWh (large user)
  • Electricity charges are 22.6cents/kWh and 10.1 cents/kWh (ex GST and after discounts have been applied) for peak and off-peak respectively. Annual spend on electricity is $22,206.71 (ex GST).

How big should the PV system be? 

The optimum size depends on several things such as; the load profile, how much of your consumption you aim to off-set, the available roof space (or ground space), and how much you’re willing to invest.

For this case, let’s choose a 50 kW quality brand PV system. The going price for this roof-mounted system on a tilt frame is $59,545 (ex. GST) net of RECs.  And, from July 1, 2017 the feed-in tariff rate increased to 11.3 cents/kWh.

Whilst the calculations for the economic analysis might be straightforward, the real challenge is making realistic assumptions about power usage.

Unfortunately, many solar systems salespeople don’t have a good appreciation of dairying and I have seen too many instances where the intended outcomes are never realised because of poor or incorrect assumptions.

For the example dairy, the maximum proportion of PV generated electricity that can be consumed directly is 48% because the bulk of the electricity generated is typically between 11:00 am and 3:00 pm, when very little or no equipment is operating.  To increase the proportion of direct consumption would require shifting tasks to this timeslot – option 3, to be discussed in another post.

The PV system

PV system Size 50 kW PV capital cost $59,545
Average annual electricity generation  72,560 kWh Simple payback period 5.8 years

GabrielSolar1Table

Even with 48% of the generated electricity being directly consumed – and 52% being exported – the annual savings are substantial, $10,613 in year 1. The simple payback period for this investment is 5.8 years. Higher tariffs or future price increases would make the payback shorter.

The “take-home” lesson here is that the more you can consume directly the better the financials stack up.

If the PV system was bigger, say 80 kW, you might be able to capture a little more for direct use during the winter months but you will be simply exporting more to the grid. It is still financially attractive but requires more investment (~$95,300) and payback time is extended by about six months.

Financing solar
The financial indicators above assume farmers have the money to fund this investment stashed under the pillow (we all wish it was).

Fortunately, over the last three years or so the financing market has become far more amenable to funding energy related equipment. The number of institutions that offer products targeting this space seems to grow every month.

The Sustainable Melbourne Fund (http://sustainablemelbournefund.com.au/), for example, has broadened its focus to regional areas and is very interested in getting involved in the agricultural sector. They were really impressed by the environmental credentials of the Green Cleaning System I designed a few years back.

A cashflow-neutral investment
Financing an investment such as this can be very attractive as the savings in the electricity bills can be used to service the repayments. By negotiating a low (interest) rate and reasonable term length (5-7 years), these types of projects can become cashflow positive from the very first bill.

If we were to finance the above 45 kW PV system over a 7-year term, the fixed monthly repayments would be $846 equating to $10,152 per year. If we manage to achieve 40% or more direct consumption of the PV generated electricity, then this project would be “cashflow neutral” or even slightly positive from the outset. After seven years, the saving can be banked.

So, “Should I go solar?” is worth thoughtful consideration. The option presented here is the least financially attractive of the three options but still has merit. Ensure that any assumptions made are directly relevant to your situation. Do your homework and don’t hesitate to seek advice.

Thank you, Gabriel, and Milk Maid Marian looks forward to the next installment of solar smarts.

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Filed under Farm, Machinery and equipment

Time to wisen up on water

When it comes to survival here on the farm, the three things with the potential to make or break are:

  1. Our health
  2. Mother Nature
  3. The milk price

I only truly understood the health thing and the worst possible price scenario last year but Mother Nature has been playing me like a marionette since the day I took the reins. Just take a look at this mess:

Pasture growth rate (tDM/day)

Pasture growth rate (kgDM/day)

If it looks too technical, don’t worry, it’s just a graph showing how fast the grass can grow by mapping its production over the last 14 years.

As you can see, from May to August the growth rate is consistently low, irrespective of what falls from the sky. I guess the days are just too short to grow a lot.

Come September, the grass begins to take off. After that, it’s anyone’s guess what will happen but that’s when – if there’s enough soil moisture – we harvest the grass we need to feed the cows over summer and winter.

Make or break hinges on reliable water during 12 critical weeks of the year from October to December.

So, while this is the time we need it to rain the most, it’s also the time where the whole thing can shut down. Like it did in 2015.

pfs2015

Right when we should have been turning waves of excess grass into silage, we began feeding the cows to make up for bare pasture. It was a financial and emotional disaster. I found myself suffering panic attacks as I stood in the browning paddocks.

The models show that, in an average year, we can grow 13,432 kilograms of feed per hectare, while in a good year like 2011, we can grow 19,068. In 2015, we could manage just 6,279kg/ha. That’s less than half the average or a mere third of a good year’s growth.

On a 200-hectare farm, that’s a loss of 1430 tonnes of feed valued at, let’s say, $280 per tonne to replace. It adds up to a $400,000 feed deficit. Enough to send me scurrying off to the bank for a new mortgage.

pfstdm

Desperation is the mother of innovation
Thanks to the unquenchable thirst of the resources sector and some rather curious water policies, we are locked out of tapping into the vast aquifer under the farm.

Nonetheless, we do have some water in a farm dam and the dairy effluent ponds. Last summer, we installed a small irrigation system to get that precious water onto the paddocks.

It’s enough to properly water a fraction of the farm during those 12 weeks, so we’re keen to maximise its value, watering only the most water efficient crops.

What we’re learning fast is that, unlike rye grass, which shuts down in the heat, millet luuuurves a heatwave, so long as it has enough moisture. Our experience has been supported by new Australian research, which shows that millet is almost three times more water efficient than rye grass.

There are other benefits, too. Unlike brassicas, which invite repeated attacks by every bug under the sun from mites to moths, millet is pretty much indestructible. And, unlike sorghum, which can be toxic if fed too early, it’s safe for everything from calves to milkers.

Contrary to the traditional wisdom that you can’t milk off millet, you can, so long as you graze it when it’s short. Just like any grass, it gets too fibrous when it’s long and loses quality. Because it can grow visibly in 24 hours under the right conditions, that means you need to graze it often. Not a bad problem to have in my book!

Expect to see more millet planted here to make the best use of every drop of water we can offer, especially as climate change makes the seasons less and less reliable. Now, if only we could get access to that aquifer…

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The big opportunity for MG, the last big co-op

cowcockiesbook

To many dairy farmers, Murray Goulburn is much more than a milk processor. It’s their co-op. I know, it was my co-op too. For the record, our farm had always been a dairy co-op member for generations, even before MG was formed, until just before the partial float.

But sometimes, that zeal can backfire. It’s counterproductive to say farmers can leave the co-op without penalty and then openly consider placing special conditions on returnees. Zealots also look foolish, or callous, publicly arguing black is white in an attempt to airbrush the hurt caused to so many since April. Nor is it okay for them to harass anyone – as I was this weekend in private messages – who simply points out inconvenient facts. Aggression is not the path towards conversion.

As MG director-elect Craig Dwyer pointed out on Twitter this morning, the fish rots from the head.

craigdtweet

And this is where Murray Goulburn is at a crossroads. Until the April trading halt, it had been travelling at what the then MD Gary Helou loved to call “break-neck speed” towards its vision of becoming a “first choice dairy foods company”. The co-operative ethos had faded into the background.

Over the last few years, MG’s culture has moved away from that of a real co-op towards a company. “Each for all and all for each” once graced the cover of MG’s annual report but in its submission to the Senate inquiry published just days ago, MG revealed there were many more “special deals” than many had suspected (see below).

specialdeals

Excerpt from MG Senate Inquiry into the Dairy Industry submission (p. 10)

The zealots often lament the treatment of MG by the media and commentators like me. The reality is that this scrutiny offers the co-op a massive opportunity. Everyone is listening and the story MG could tell is compelling. It is the last big Australian dairy co-op (with apologies to Queensland’s Norco) and many – even those who have fled MG – still cherish the co-operative spirit. We just need to know that MG does, too.

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Filed under Farm, Murray Goulburn

Why the system is broken

The interaction between processors and farmers is bizarre to outsiders. The way it works is this:

Out of a handful of processors in the district, you ask one to collect your milk, although, if you’re unlucky and live somewhere a little remote, you might not actually have a choice at all. We’ll call this processor “your” processor for convenience.

Whichever processor you choose, they tell you what they will pay for your milk on July 1 – sometimes after July 1. This “opening price” is meant to be the lowest anticipated price, the one you can budget on. The only other time the price has fallen below the opening price in the last couple of decades was during the global financial crisis and even then we had a couple of months’ notice.

The price generally goes up along the way from there, though, unless you are one of the very few farmers who gets a fixed price, nothing is actually guaranteed after that.

It all depends on the exchange rate, global commodity prices, the performance of the biggest processor in the market and the success of “your” processor’s particular product mix.

What’s the performance of the biggest processor in the market and the success of your processor’s particular product mix got to do with the amount farmers are paid, you ask? Everything.

And it’s a system that used to work brilliantly. Once upon a time – not too long ago for those sporting the odd grey hair – there were not one but two major dairy co-operatives in the southern states: Bonlac and Murray Goulburn.

Every cent of profit the two co-operatives earned was returned to their farmer-shareholders and, because their whole reason for being was to maximise profits for their farmers, they effectively set a base for the farm-gate milk price.

Neither co-op could get too lazy or arrogant because there was strong competition from the other. Then, disaster struck, as reported by The Age:

“Crucially, Bonlac is processing only 1.6 billion litres of milk. Over the past 10 years, its share of Victorian milk production has declined from about 40 per cent in 1992 to 16 per cent in 2002.”

“Bonlac’s milk plants are running at only 75 per cent of manufacturing capacity. Particularly underused are the factories at Darnum in West Gippsland and Stanhope in northern Victoria.

“Debt, the result of an ambitious expansion into value-adding branded products in the 1990s, is still crippling the company, despite asset sales creating paper profits in the last couple of years, and the repayment of $185 million of debt.”

Now, in the midst of an ambitious expansion into value-adding branded products on the back of a partial listing, MG is in turmoil. Its MD and CFO have resigned and the milk price has collapsed, triggering ASIC and ACCC investigations, at least one class action and a share price meltdown.

Bonlac is long gone and, in the eyes of many farmers, MG has lost the title of reliable pacemaker. The system is broken.

It’s no longer acceptable for dairy leaders to tell farmers to concentrate on their farm businesses and blindly follow their calls for growth. It’s time we actively forged a new era for Australian dairying.

 

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Filed under Farm, Fonterra, milk price, Murray Goulburn

When Old Macdonald retires, who should own the farm?

milk-carton-thumbnail

Him (distracted by his new iPhone 6): A litre of milk, please.
Me: That’s $1.20, thanks.
Him: $1.20? No way, I can’t afford that. We go through four litres of milk a week. I’ll get it at $1.00 down the road.
Me: But $1.00 isn’t enough!
Him (wanders off, still looking at the iPhone)

Me (in 10 years): I’m tired of trying to make ends meet. I’m retiring.
Him (looks up from new iPhone 60): You’re selling the farm?
Me: Yep. Got a good price from a guy who says he can see the farm’s potential. I’m finally able to retire.
Him: But where will I get my milk from?
Me: The new owner, I guess.
Him: But he might sell it to someone else!
Me: Just get it from down the road then, like usual.
Him: But what if they decide to retire as well and sell it to this bloke?
Me: Relax. Not everyone’s going to sell to the same bloke.
Him (waving arms, stamping feet): But what if they do? It’s not fair. You are not to sell to him. This is MY milk. I demand food SE-CU-RI-TY!!!
Me: Maybe you could just offer him $1.20 for it?

Banning foreign ownership of Australian farms sounds nice in theory but it’s just not fair. Not to the farmers who want a fair price for their land and not to international investors who appreciate the true value of our farms.

There are two main arguments against foreign ownership of farms: ethical practices and food security.

Ethical practices are important and Australia has stringent rules governing almost every aspect of farm operations. In 2014, I wrote about my concerns regarding an overseas firm publicly railing against those laws but, even so, am dismayed to see Milk Maid Marian used as a rationale for preventing any foreign ownership. Farming well, no matter who by, should be supported. Farming badly, no matter who by, deserves concern.

Food security, on the other hand, is a privilege, not a right. Australians – among the globe’s wealthiest people – are in a great position to compete for our share of the world’s abundance of food. And there is no place for a peasant underclass here in Australia.

It’s dazzlingly hypocritical to gleefully buy cheap, high quality electronics from poor nations on one hand but refuse to allow them to buy affordable, high quality food from us in return. If Aussies really want food security, they need to start putting their money where their mouths are.

 

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Filed under Farm, supermarket war and $1 milk

Milking in a snake pit

In the midst of a wild storm that pelted the farm with hailstones the size of Maltesers, Wayne texted me a photo from the dairy. That was unusual. I only ever get texts from the dairy when there’s been a disaster.

The first of 14 rows

The first of 14 rows

It all looked okay on my phone’s tiny screen, so I literally shrugged my shoulders, put it down to a fit of boyish exuberance over the hail and turned my attention back to making dinner and the four-year-old yanking at my shirt.

It all became clearer when Wayne arrived home at half past eight.

W: Did you get my text?
M: Yeah, what a hail storm!

W: (Rolling of eyes) So, you didn’t look at it.
M: Yeah, we saw the hail up here too, the kids wanted to go out there and eat it!

W: (zooming into a section of the picture on his phone) Have a closer look…
M: Oh.

CopperheadMovingCloseLoRes

M: When did that happen?
W: (Look of pride) First row.

M: First row?! What did you do?
W: I had my face close to a cow, putting on the cups, when I felt something fall on the top of my boot. I just kicked it off without really thinking about it, expecting it to be a piece of rubber or something that had come loose. But when it didn’t feel stiff enough, I looked down and saw it f*@#&ing wriggle away.

For a minute, I just stood there frozen, then grabbed a bit of poly pipe and tried to whack it but the pipe got snagged in the gear above the pit. I hosed it up the other end of the pit and let it eat frogs. Every time it came too close, I hosed it again.

M: But how did you get rid of it?
W: I didn’t. It’ll probably find its own way out or Clarkie’ll find it in the morning. I’ve written a note on the whiteboard.

While Wayne was brought up in the city, Clarkie is a genuine bushman. I’ve seen him pick up a huntsman spider like it was a hamster and the man really can command a lasso and crack a stockwhip off the back of a horse. Wayne’s theory was Clarkie’d think nothing of milking cows in a snake pit.

M: (Incredulous) And what if he doesn’t read the whiteboard? And what if the thing winds itself around the stainless steel and gets him in the goolies? And what if he can’t see it at 6am and spends the whole milking semi-petrified wondering where it is? Clarkie’s good but, come on, Wayne!
W: Well, I’ll ring him now and let him know.

Obviously, Wayne and I have different OHS management styles.

While Wayne was phoning Clarkie (who apparently just laughed, whether that was hysterically or not, I can’t say), I was phoning a snake catcher.

About an hour and 20 minutes’ drive away, Jeff from VenomWise was the closest snake catcher I could find. The man was amazing. I told him I thought we had a copperhead in the dairy and that it had to be gone before 6am. It was already 9pm and all he said was: “I’ll leave right now but could you do me a favour and have someone keep an eye on him so I know where to find him?”

Since my mother was here for a rare one-night’s visit, Wayne insisted he would go on snake duty. So, taking a packet of cheezels, he pulled up a seat in the silent, empty milking platform to watch over his reptilian dairy hand.

This was the next text:

CopperheadCoilLoRes

I made a morale-boosting call.

M: Is he good company?
W: (Animated) Did you see where he is? I couldn’t see him when I came in, so I went down into the pit to have a look and thought he’d gone until I came back up to the steps. I’ve just walked over the bloody thing!
M: (Belly laugh) Just stay on the platform, eat your Cheezels and stay away from the fridge, for God’s sake!

This text came through a few minutes later:

CreepyJointSpiderLoRes

Another morale-boosting call was in order:

M: You’re getting freaked out by a huntsman?
W: I leant over the steps to have a closer look at the snake and as I held onto the banister, this bloody thing ran over my hand.
W: (Said with passion) This is a f*@$ing creepy joint!

Wayne’s lonely vigil finally came to a close at 10.30pm when, true to his word, Jeff from VenomWise arrived. Jeff suspected the metre-long snake probably fell from the rafters when the hail hit.

Wayne may not be a bushman but I’m proud of a man who milks for three hours in a snake pit and then misses dinner to sit with it for another hour and a half to make sure his mate’s safe in the morning.

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Isn’t doing the right thing good enough?

I am itching to watch an industry sustainability promo that stands apart courtesy of three missing words: “billion”, “economy” and “jobs”. Continue reading

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Filed under Community, Environment, Farm