A FOCUS on home-grown fodder to reduce feed costs has paid off for North East dairy farmers Mark and Narelle McDonald.

The couple, from Dederang in the Kiewa Valley, has kept costs down by growing fodder on an irrigated lease block rather than buying supplementary feed.

"We aim to feed cows to the last profitable kilogram of feed by continually testing the response via increased production," Mark said.

The McDonalds milk 310 cows on 167ha under a sharefarming agreement with the McKillop family.

Their passion for the industry paid off recently when they were runners-up in the Genetics Australia Share Dairyfarmers of the Year.

With cattle farming in their blood, Mark and Narelle launched their dairy career in 1998 by converting a King Valley beef farm owned by Mark's parents.

It took the young couple just six weeks to build a new 15-a-side swing-over dairy and begin milking 200 cows.

Seeking more control of their business, they then sharefarmed a sequence of dairies at Yarrawonga, in South Australia and the Upper Murray.

After inspecting more than 1000 cows, they bought 140 registered Holstein cows from the NSW Central Coast.

Wanting to return to the North East, Mark and Narelle took over the dryland dairy at Dederang at the end of 2006.

Today, they are experiencing the best spring since they arrived, with pasture growth six weeks in front of past years. "We had a really good winter - I can't fault the spring so far, it's been brilliant," Mark said.

As well as the registered Holsteins, 20 per cent of the milking herd consists of Jersey and crossbred cows.

The couple aim to breed quiet cows with good type and udders, using proven sires such as Colin, Orana and Ernesto.

Narelle said the bulls chosen had Australian Profit Rankings of more than 100 for type and mammary system, with positive components.

These bulls are matched with progeny-test semen, she said.

Last financial year, the herd of 278 cows produced 2.3 million litres.

They are now averaging 29 litres a day and being fed 4-4.5kg of wheat, mill mix and mineral pellets in the bail.

"We have backed right off on the protein as there is enough pasture growth," Mark said.

The couple recently culled 60 cows on production, pregnancy status and cell count, in response to the 30 per cent drop in milk price.

With a cell count of about 170,000 cells/ml, the herd has ranked in the top five in the Kiewa area.

"With the fresh cows, we strain the milk to detect any lumps and then treat any mastitis with an injectable or tube," Narelle said.

"Muddy tracks have been a problem this year so we use wood chips and this helps to reduce hoof problems."

The dairy is a two-person 50-unit rotary with an automatic feed system and backing gate.

Mark and Narelle are involved with the North East business analysis group, giving them a detailed comparative farm analysis.

They also take part in Pastures for Profit, learning about rotation length, pasture residual, growth stages and fertiliser.

The couple lease a 14ha former tobacco block on the Ovens River, where they spray-irrigate triticale for hay and grow a summer forage crop for silage.

Two-thirds of the milking area at Dederang is oversown with annual ryegrass each year.

About 25ha is summer cropped with winifred rape and chicory to improve feed quality and quantity.

This area is then sown down to perennial ryegrass the next autumn.

Mark said 10ha was watered in autumn for early feed using 10 megalitres of dairy effluent.

The cows graze ryegrass at the three-leaf stage or at canopy closure, whichever occurs first, leaving a residual of 5-6cm to encourage faster growth.

``Supplementary feed is adjusted to make sure the cows don't overgraze paddocks,'' Mark said.

``Heifers are used behind cows if the residual is too high.''

Mark and Narelle normally conserve 230 tonnes of pasture silage, 30 tonnes of ryegrass hay and 34 tonnes of oaten hay on the home farm.

The lease block produces 100 tonnes of triticale hay and 120 tonnes of sorghum silage.

``We follow Murray Goulburn's quality-assurance program and also have been using Easy Dairy computer program for livestock records,'' Narelle said.

``We get a farm income estimate done and do cash flow and feeding budgets at the start of the year.''

Mark and Narelle are on track to lease a dairy near Tallangatta in December, and build the herd to 450 cows.

``Our eventual plan is farm ownership,'' Narelle said.

``In the last six to seven years we have built a lot of equity in our cows and it would be hard to do that in any other job.

``I just love my cows and the lifestyle is an advantage.''

Mark said the job offered flexibility and freedom.

``We see the dairy industry as a viable long-term career that offers good equality and growth despite the tough seasons,'' he said.

``Our long-term goal is to own our own farm, so we can diversify our capital growth on both land and livestock.''