Line-by-line budget grind

Close scrutiny of budgets is crucial so farmers can identify any possible savings, he says.

“Many farmers will be doing that, whereas in the past four or five years they haven’t needed to do it to the same extent. They must take a hard-nose approach and ask ‘what can I do without? Can I pull back fertiliser and feed and what are the long-term implications of doing that? There are many things to consider when determining where to make savings.” 

Newman says he knows low-producing cows are still being culled -- more than in previous years. Slow pasture growth in many regions is making farmers conscious of feed levels. If things don’t improve soon dairy farmers may have to feed PKE at a cost they would rather not bear. 

“The cow cull brings a small injection of cash but not huge money -- about $1000. And there are some savings in not having to feed those animals.” Future mating costs are also saved, he points out.

Meanwhile DairyNZ’s general manager for extension, Andrew Reid, reports lots of requests for advice – some on budgeting and on farm systems. On the budgeting issues they mostly refer the farmers to other rural professionals, but they advise on farm systems.

“Farmers are scrutinising their farm systems and this goes hand in hand with budget advice for the most sustainable system longer term. 

“Rather than looking at the next three-six months, people are looking out longer to make sure that if they go through a downturn in another five years they have a resilient farm system that will let them ride it out. This is becoming a topical issue on farms now.”

DairyNZ has comparative budgets on its website for farmers to look at for guidance or to benchmark themselves against others.