Cash flow is king
Cash flow budgeting is going to be critical for dairy farmers in the coming season.
He told Rural News that while the level of sheep and beef in the region has fallen markedly because of the huge swing to dairying, this season has been a good one for sheep and beef farmers.
Farmers heavily focused on beef production are having one of their best years ever, he says. “The real beef traders have had large swings in profitability over the past decade or so, but those who have been smart traders this year will probably have one of their best years ever.
“The irony is that when the number of beef calves drops, the prices go high. I guess that is just a supply and demand thing. At the moment, those bull beef farmers who have stuck to their game and done the job well are looking at margins well in excess of $600-$700.”
The deciding thing is how they trade rather than the sort of animals they have, he says. The type of animal is important, but trading margin is the key thing.
In the past, there’s been a bias towards the big white animal for bull beef but that is changing. “There are not as many straight Friesian animals anymore because the national dairy herd has tended towards crossbreds. The idea of some beef-cross bulls going across crossbred cows has got a lot of merit – as long as the animals can grow quickly and convert feed efficiently.”
Livingston believes the Angus, as a breed, has made a lot of advances over the last few decades and is probably the preferred beef animal and the one used by many dairy farmers.
But he says there are other issues. “Recently dairy farmers who might have reared 40-50 beef calves and sold them in November for a bit of cashflow have now tended to get more cows in calf with AB and retain heifers to sell to other farmers or for export.
“It probably needs a rethink as to how we make sure the number of beef animals we have on the ground each year to be reared and taken through to slaughter is handled.”
Another issue in the Rotorua region is the lack of good winter grazing land for heifers and cows. The area once had plenty of good grazing land but this has been gobbled up by dairy conversions, pushing dairy grazing back to ‘fringe’ areas.
