Around 20 farmers with low production costs have opened their budgets for others to learn from. The information, available online, includes their forecast budgets for 2016/17, including the reasons behind each item of expenditure.
The first case study budgets were collected in mid-2015 and more have been added in recent months, with most regions now being represented.
DairyNZ senior developer for people and business, Carolyn Bushell, says the case study budgets provide farmers with a resource to help identify opportunities in their own operations.
“These farmers have put it all on the table, they’ve gone through their expenditure line-by-line and explained the reasons behind those numbers,” says Carolyn.
“The detail is what makes these case studies so useful, from fertiliser policy to how electricity costs are kept low and what the plan is for breeding and herd improvement.”
Farms share similarities
While the details vary across the different farms, they all share similarities in their general approach to how they run their businesses.
“These farmers have been selected because they are some of the more profitable farmers in each region and have very low production costs per kgMS,” says Carolyn.
“In the process of collecting information we’ve noted a number of commonalities these farmers have. They all monitor regularly and have good awareness of the dairy industry as a whole.
“They also have clear, simple, repeatable policies and processes that are documented and communicated across the team.”
More case studies will be added over time and existing ones updated.
To access the budget case studies, visit dairynz.co.nz/tactics.
Actions in common
The farmers who have shared their budgets have a lot in common. They:
- focus on profit before production
- actively monitor, measure and manage all aspects of their farm business – finances, pasture, animals
- can articulate what they are about, have focus and know their business strategies and success factors
- make changes to their systems after considering implications of the change across the whole farm system, particularly the financial implications
- focus on pasture growth and utilisation first. They will use supplement with introduced feeds but they do not substitute
- have good industry awareness and gather information from a range of sources
- are always looking for better prices/will shop around for the best deal
- add value through surplus stock and maximise the value of their outputs
- monitor and identify budget variances throughout the season and reallocate this across other areas of the budget so the overall variance is not high.
- Rural professionals, especially bankers and accountants, are part of the team and their input feeds into decisions.
- have clear, simple, repeatable policies and processes which are documented and communicated across the team.
This article was originally published in Inside Dairy September 2016