increase font size
Agri economist Con Williams.
Dairy farmers with a detailed understanding of their businesses are in the best position to reduce costs, improve efficiency and ride out the dairy downturn.
This is the message revealed from new ANZ research.
"Cash flow pressures in the dairy sector are set to persist and uncertainty exists on the timing and extent of recovery," agri economist Con Williams writes in ANZ Agri-Focus.
"Dairy farmers face the difficult challenge of minimising near-term losses, while not cutting too deeply into the long-term productive capacity of the business. Striking the right balance is no easy task.
"The imperative to minimise losses is likely to be greater if the financial viability of a business is more precarious. However, recalibrating the cost structure and productive efficiency of a farm is usually of greater significance."
Decisions on improving a farm business' viability need to be supported by a formal decision making process. A big part of this is completing a business plan and multi-year budget.
The report says many farmers still use gut feel when making decisions, which can be effective under normal circumstances. But in times of rapid adjustment and heightened risk it doesn't provide a basis for deeper change.
"It's not that there's no place for instinct, but it should be honed and supported by the numbers and a more formal decision making process – particularly when dealing with significant change and complexity," Williams says.
"There needs to be an assessment of where a business sits for its debt servicing and operating expenditure. It isn't possible to stay viable for long if both are high.
"If the gap between revenue and total costs can't be closed it means an equity injection, selling assets, or generating additional income need to be considered to improve business viability. Those who can respond and adapt the best will emerge in the strongest position."
The report features case studies of dairy businesses that have adapted to the current price environment. ANZ Agri-Focus is available here: http://www.anz.co.nz/rural/rural-news-insights/agri-focus
Dairy and beef farmers could be eligible for lower interest lending options for financing Halter on their farms, with ANZ, ASB and BNZ now offering a pathway to sustainability loans for New Zealand’s largest virtual fencing provider.
OPINION: Groundswell has given ANZ a shout-out for, so far, being the only one of the big four Aussie-owned banks not to set emissions reduction targets for its dairy sector loan book.
Major rural lenders are welcoming a call by farmers for the Commerce Commission to investigate their net-zero emissions target.
ANZ agricultural economist Susan Kilsby is describing the 2024-25 dairy season as ‘a cracker’.
ANZ says the latest cut to its floating rates will be welcome news to many of its business and agri customers still feeling the effects of high inflation and interest rates.
The Primary Production Select Committee is calling for submissions on the Valuers Bill currently before Parliament.
Horticulture New Zealand (HortNZ) says that commercial fruit and vegetable growers are getting ahead of freshwater farm plan regulations through its Growing Change project.
Lucidome Bio, a New Zealand agricultural biotech company was recently selected as one of fourteen global finalists to pitch at the Animal Health, Nutrition and Technology Innovation USA event in Boston.
Tractor manufacturer and distributor Case IH has announced a new partnership with Meet the Need, the grassroots, farmer-led charity working to tackle food insecurity across New Zealand one meal at a time.
The DairyNZ Farmers Forum is back with three events - in Waikato, Canterbury and Southland.
To celebrate 25 years of the Hugh Williams Memorial Scholarship, Ravensdown caught up with past recipients to see where their careers have taken them, and what the future holds for the industry.
OPINION: Last week's announcement of Prime Minister’s new Science and Technology Advisory Council hasn’t gone down too well in the…
OPINION: At its recent annual general meeting, Federated Farmers’ Auckland province called for New Zealand to withdraw from the Paris…
