Due to economic and environmental challenges, many dairy farmers are having to reassess their farming operations and significantly adapt their farm systems.

The five steps for successful farm systems change process has been developed by interviewing dairy farmers nationwide and learning from their experiences.

• Step 1: Assess the current farm system.

  Farmers suggested that before embarking on a significant change, understand the current farm situation.

  Start this assessment by answering the following questions:

  • What is the farm’s financial position? To get an overall view of the farm’s financial position, consider:
    • Equity growth over time, the ultimate financial key performance indicator (KPI)
    • Calculate your break-even milk price
    • Know your cashflow
    • Operating profit, to know the farms operating efficiency
    • Operating profit margin, the gap between operating expenses and gross farm revenue, the wider the better
    • Debt to asset ratio

  • How is the farm performing across all other areas and can it be improved?
  • What are the team’s current skills and abilities?

  "We had goals on the way through, we had a goal to buy cows, we had a goal to buy a farm.  You get to these goals and now you’ve got to reset your goals, and that’s actually the hard thing isn't it, it’s resetting." (Southland farmer - System 4)

  For more information, go to the DairyNZ Assessing your current situation page, download the farm fitness checklist, and talk to your consultant, bank manager, or farmers you trust.

  Useful links:

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    Starting your budget

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    Assessing your current situation

• Step 2: Determine your goals and the drivers for change

  The farmers we talked to also said they needed to know why they were changing, what is the problem that significantly changing the farm system will fix?

  Often the actual problem is not the first that comes to mind. Continuing to ask, ‘why is this a problem’ until you get to the root cause, can be helpful. Also consider undergoing a farm assessment and planning process.

  • What is driving the need to change? Examples provided by farmers included: farm improvement, financial, environmental, succession, and boredom with the current system.
  • Do you need to change or can you improve your existing system to solve the problem?
  • Once you know what your existing situation is and what area of change you want to make, farmer advice is to write it down. If it’s not written down then it’s not going to happen. Visit the  'purpose, vision and values' section of our website for help with this process (link below).

  "I think the most important thing when you’re making changes is to really understand the reasons why the changes are being made." (Waikato farmer – System 3)

  Useful links:

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    Whole Farm Assessment

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    Purpose, vision, values and guiding principles

• Step 3: Assess the potential impacts of change

  Before making a change, it is important to think through the potential implications as best you can.

  • Are you the right person to assess this change, do you have enough knowledge? If not, who can you talk to?
    • Can you assess people skills, do you have the right skills on farm to manage the change?
    • How will you need to adjust your life after this change?
    • How will this affect existing goals, for example succession planning?

  • What will a good future system look like, what are the key performance indicators for the business and farm under this new system?
  • How risky will the change be? Would the change make the problems better or worse?
  • Will the change meet regulatory implications? Is there a Plan B if things go wrong?

  "I've learned so much over the last couple of years making all these big changes.  It's not just about the dollar, it's about the personal values too, and the personal values of the farm owners and then how I want to be seen by others as well." (Canterbury farmer – System 3)

  "With an $8.00 payout, the original system I was on was brilliant, because I was stocked to the hilt … you can throw in as much supplement as you want and it still made money. And then we hit the dive and I said "No, this is not how I want to farm. My risk needs to be low, I need low exposure because I'm quite highly geared in my debt.”(Canterbury farmer – System 3)

• Step 4: Manage the change

  Once they decided to change, the farmers questioned if they had the right skills to make the change.

  They suggested asking yourself:

  • Do you have the project management skills necessary?
  • How much investment is needed and how long will the change process take?
  • Have you managed change of this scale before?
  • What are the financial and time implications?
    • Do you need to hire someone to lead the change?
    • Do you have enough time off the farm to manage the change?

  If you are looking for techniques to help you manage the change, a range of tools and templates are available via the 'goals and actions' link below.

  "The essential takeaways are you’ve got to find somebody that you will listen to, you’ve got to be willing to listen to them and you’ve got to want to change." (Canterbury farmer - System 4)

  "I had quite a cumbersome business, it was slow to respond and I hadn't really geared myself up around risk management. It was just the first year [of change] and I was just getting hammered through it. Then suddenly the payout just dropped like a stone, and that's when I needed to sharpen up my business skills." (Canterbury farmer – System 3)

  "I did the Mark and Measure course and it got me thinking a lot about my growth and my business and stuff like that, and the fact that I do believe so much it's a team effort, it's not just me." (Canterbury farmer – System 3)

  Useful links:

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    Goals and actions

• Step 5: Assess success of the change

  In the study, farmers wanted to know how to estimate if they were successful or not.

  They suggested the following guiding questions:

  • Are you prepared for potential negative peer/public response to a system change?
  • Do you need to change how you monitor your business systems, if so to what?
  • Get the whole farm team together and critically analyse whether objectives have been meet by the change
  • Create a process for continuous improvement that includes regular analysis of KPIs and comparisons with industry benchmarks - keep reassessing current performance under the new model.