Economic modelling shows if farmers can decrease their potential loss by up to $1/kg MS this season they could recover from the low milk price three to four years faster.
DairyNZ general manager of research and development David McCall says one of the ways to capture this dollar is by spending on the right things and implementing good budgetary control of costs.
“This is where we can learn from the best, so we’ve created new online information to help show farmers where to prioritise their spend and how to make savings,” says David.
“Dairy farmers have asked us for more practical and specific data on which to benchmark themselves – we have listened to that feedback."
“We’ve pulled together in-depth budgets from a number of top performing farms nationwide with a sub $3.50 /kg MS cost of production. These top performing farms have honed their farm systems. Many of these farmers have learnt lessons from past downturns to build resilience. We’ve bottled that experience in a sense, by creating a new online benchmarking tool that will enable dairy farmers to identify areas for improvement."
“The information will show exactly where and how these guys are getting the most from their dollar. It is more than just the broad spend but a drill down into the detail with a breakdown on what items money is spent on.”
DairyNZ estimates the average New Zealand farm will lose around $150,000 to $200,000 at the current forecast payout for 2015/16.
The average farmer could take a few years to repay this loss. The top 20 percent farmer would be able to recover much sooner.
This illustrates the importance of challenging your budget to improve your business, says David.
“Any savings or efficiencies made will mean less money going into debt and consequently interest payments.
“Reviewing your budget on a line by line basis is a good first step, especially at the start of the busy calving period. The logic is to ask the question about each line and the consequences of any action. Do I retain the expense, can I reduce it, can I defer it (say to next year) or can I remove it? Fertiliser, for example, is a big ticket item that can be reduced on many farms.”
Through its Tactics for Tight Times campaign DairyNZ will continue to provide support and information to help dairy farmers find opportunities to build resilience into their businesses.
“We’ve set ourselves a goal to provide farmers with the support and information necessary to increase profit by $1/kgMS. Economic analyses and research shows that this can be achieved if expenditure is reduced and pasture eaten is increased by one tonne of dry matter/ha by Christmas.”
This latest on-line tool builds on existing information provided through 29 Tactics for Tight Times farmers who have been sharing their decision-making and tips to get through a low milk price period, since February.
“Without the willingness of farmers to share their information I think many would be in a lot darker place – the strength of the dairy industry is its ability to pull together in tough times.”
To access the tool click here
DairyNZ communications and marketing advisor
021 703 068