Last year was an overall poor season, so this year we are budgeting an increase in milk production for both systems which will be aided by the increase in pasture cover and body condition scores at the start of milking.

The conventional side is budgeted to be $380,000 up on revenue, however, it will also be up $354,000 on Farm Working Expenses. Overall, the conventional budget is $26,000 or $174 per/ha more profitable that the regenerative budget.

The conventional risks are fertiliser and feed prices in a highly inflationary environment. We have mostly locked our feed prices in for the season, but not any unanticipated surplus that may be required. Fertiliser on the other hand is very volatile, with potential price increases ahead.

The regenerative risk is milk production with the possibility of a dampening effect on revenue. The cows have wintered ahead of expectations (more to come on that next week) and we had adequate pasture covers on farm, so we are comfortable that we have mitigated some of the risk. We will be closely monitoring pasture quality during the summer months, to ensure satisfactory summer production. The regenerative system will handle a reduction in pay-out per kgMS more comfortably than the conventional side.

Overall, we are optimistic about a similar profitability result for both systems as we have certainly learnt a lot from our previous season and have put those learnings directly into our plans for this coming season. We are mindful of also needing to continue to push our conventional results, as we were not overly happy with our performance last season, in what we re-iterate was a tough season for all Align Farms.