*DF 26-27 Dairy farm's investment in energy business pays off

With current high milk and electricity prices a German dairy farm and its sister energy company are now reaping in the benefits of sound business decisions made a few years ago. Chris McCullough reports.

Back in 2008 six farming families on three farms decided to merge their operations which resulted in a brand new dairy farm complex built in 2014 on a greenfield site.

Today the farm, Plesse Milch, based near Gottingen in Lower Saxony, milks 700 cows in an indoor system that also produces manure to generate 4.4 million kilowatt hours per year.

Although the management structure of the company has changed over the years, Herbert Hardege, 61, is one of the founding farmers and is now the overall manager of both the dairy business, and the energy business called Plesse Energy. Both are located on the same site.

Herbert says: Our company was formed to amalgamate the interests of the different families. Today, with the high milk and energy prices we are certainly doing well financially, thankfully paying off some of the initial loans taken out to fund the initial investment.

In total 760 hectares (1,878 acres) are farmed, with just 7.3ha (18 acres) at the site owned. The remainder is rented from a number of local farmers, including the founding farmers.

Currently the herd of Holsteins is averaging 12,401 litres at 4.06% butterfat and 3.38% protein.

We are on target to produce 8.1 million litres in 2022, says Herbert.

We sell the milk to the DMK Group who are currently paying us 60 euro cents per litre.

The processor is about 230km away so we have two 25,000-litre tanks to store the milk in. At the moment we are producing 22,500 litres per day.

It cost us about 7m to set up both the dairy complex and the power plant. Our initial set up costs worked out at around 6,500 per cow.

While we are receiving a good price for the milk at the moment, our costs of production are also fluctuating. Our cost per litre used to be about 22-24cpl but are now hovering around 35cpl.

The farms biomass business, Plesse Energy, produces 4.4m kWh per year currently selling for 60 euro cents per kWh. Farmyard manure produced from the heifers on straw bedding is mixed with some slurry and is digested in the biogas tanks on the farm.

The methane produced from this process is fed to three generator engines that convert the gas to electricity.

Herbert says: We have three engines, two of which are 265kW and one larger one at 500kW, all running on biodegradable fuel. Only one staff member is required to run the biogas system.

Initially, we had projected a 15-year payback business plan for the biogas plant but with the current prices, that term is being met much quicker.

On the dairy unit there are 10 full-time members of staff looking after the milkings and management of the herd in shifts.

Herbert adds: Our main milkers are from Romania and Bulgaria. One of our staff members, who is from Iran, looks after all the herd inseminations.

In terms of breeding we carry out genomic testing on all the cows and the top cows and heifers are inseminated with the Holstein breed using sexed semen.

We usually follow the US index system breeding for good fertility and production quality. It is more important for me that the cows make money rather than look good.

About half of the older cows are inseminated with British Blue semen, which Herbert says gives him the best returns in calf prices.

Most of these beef calves go to auction at about four to six weeks old weighing up to 100kg. Our most recent sales saw the beef bull calves average 450 per head, reaching 600 for the top ones. The beef heifer calves average 250 per head.

Most of the feed for the cows total mixed ration is grown by the farm on rented land.

One unique aspect to this farm is that it has incorporated a separate company, Plesse Land, to look after all the crop and grass production.

On top of about 200ha (494 acres) of grassland the farm grows more than 500ha (1,236 acres) of winter wheat, spelt, winter barley, winter rye, canola, maize and sugar beet.

Herbert says: In the beginning we were hiring a contractor to harvest our crops but later we asked him to come on board as a partner and look after all our crop production.

He supplies all the machinery required and looks after all the input purchases. His team carries out all the field work throughout the year, which with various harvests, adds up to over 1,050ha per year. It really is a good system that has worked well for us here.

Farm facts

- The herd numbers 711 cows plus 528 followers

- Heifer replacements are reared on the home farms of the original founders

- Cows are milked three times a day through a Boumatic 20-a-side parlour