A tight year and dry conditions both make for a tough dairying season, but the Featherston contract milker says a forward-planning approach, combined with good communication skills, will ease the season’s outcomes.
Nick planned for the tax implications of last year’s bumper milk price early on, in consultation with his accountant Lawrence Field, who plays a valuable accounting and advisory role for Nick.
“We basically worked out back in February last year there would be about $10,000 to pay, and it was better to pay then voluntarily, which left only a smaller amount to deal with this year.”
As a second year contract milker, he was conscious of the impact tax can have on cashflow pressure in year two after paying none in year one.
Nick has found Lawrence to be an ideal financial mentor, given his background in farming which includes Sharemilker of the Year in 1994.
“He understands both the practical issues, and the financial implications and has well qualified rural chartered accountants on staff.”
Discussion groups bring value
Over summer Nick also found discussion days hosted by both DairyNZ and rural consultants, Baker & Associates, brought invaluable insights to better managing the worst of dairy extremes.
“I make a point of getting along to the DairyNZ discussion groups over summer. You get good practical insights on dealing with tight times and realise you are not the only one having to deal with it.”
He also finds the days hosted by Baker & Associates have helped in making the right economic decisions on supplementary feed purchase as grass levels dwindle.
“It has been reassuring to run the numbers on buying in extra palm kernel, knowing it still pays at $4.70/kgMS.”
Crunching the numbers with his farm owner and accountant, Nick has been able to hold farm working expenses at $3.80/kgMS. That has been pushed nearer $4.00 with the extra palm kernel purchases this season, but still considerably below the 2013-14 expenses.
Having planned feed needs at the start of the season has helped. The farm has only experienced one wet summer in the past decade and only has 20ha of irrigation. The stocking rate is kept low at 2.3 cows per hectare, and the feed budget allowed for supplement through to mid March.
Until then, the focus is on monitoring, managing and zero feed wastage, including a zero topping policy.
“I am also using DairyBase to give me a good idea about where we are sitting in relation to our major expenses. The lower milk price certainly helps you stay focused and keeps you working on being efficient.”
This article was originally published in Inside Dairy April 2015