Milking longer with maize silage
This season's dry conditions have made one thing clear: not having enough feed on hand can bring your season to an early close.
THE ANZ Bank’s head of agri and commercial, Graham Turley, says farmers appear to be concentrating on profitability, which will help mitigate some of the Reserve Bank’s concern about the high level of debt in the dairy sector.
Reserve Bank deputy governor Grant Spencer says high debt in the dairy sector is a risk to New Zealand’s financial stability, as is the high level of external indebtedness.
He says that while the dairy sector is currently enjoying record prices, its high level of indebtedness makes it vulnerable to a fall in commodity prices or an increase in interest rates. In recent years dairy farmers have taken a more cautious approach to investment and this will need to continue to help mitigate any risk, he says.
MPI made a similar point in June when it noted that about half of the $30 billion debt in the sector was held by just 10% of farmers.
Turley says in the last couple of years dairy farmers have become more focused on and better at financial management. Until recently, few farmers would have been able to produce spread sheets with data on cashflows, financials, milk solids per cow and hectares and other data. But the financial skills of progressive farmers have increased significantly, he says.
“Certainly, we can expect to see continued volatility in commodity prices, but every review of the rural sector shows improvements in farm business management and efficiency,” he told Rural News. “Reinvestment by farmers is driving farm profitability, rather than solely commodity prices. Last year, for example, the dairy industry invested $1.2 billion in driving farm productivity.”
Turley says the ANZ Privately Owned Business Barometer survey shows an emerging focus on profitability is driving the decision-making of leaders in all sectors of agribusiness.
“This signals a move from farming for capital gain, based on land acquisition, to decision-making focused more on investment. This new model is more concerned with cash flow and sustainable growth, and careful consideration of return on investment. More farmers in all agri sectors are now talking about profit performance, where before they talked about hectares, stock numbers and production numbers.”
According to Turley, debt is a reflection of confidence by the farming sector in the opportunities available to New Zealand primary exporters and recognition of the need to invest and expand to take advantage of those opportunities.
“The recent Greener Pastures report by ANZ found that New Zealand has the potential to capture $1.3 trillion more in agricultural exports between now and 2050. However, it is a conditional opportunity. Constraints on capital, skills, R&D and extension services, land access, supply chain costs and market access will need to be overcome.”
Turley says if farmers don’t invest in this capability, New Zealand will become less competitive against other primary producing nations who will challenge our position in the decades ahead.
Recent rain has offered respite for some from the ongoing drought.
New Zealand's TBfree programme has made great progress in reducing the impact of the disease on livestock herds, but there’s still a long way to go, according to Beef+Lamb NZ.
With much of the North Island experiencing drought this summer and climate change projected to bring drier and hotter conditions, securing New Zealand’s freshwater resilience is vital, according to state-owned GNS Science.
OPINION: Otago farmer and NZ First MP Mark Patterson is humble about the role that he’s played in mandating government agencies to use wool wherever possible in new and refurbished buildings.
For Wonky Box co-founder Angus Simms, the decision to open the service to those in rural areas is a personal one.
The golden age of orcharding in West Auckland was recently celebrated at the launch of a book which tells the story of its rise, then retreat in the face of industry change and urban expansion.
OPINION: The appendage swinging contest between the US and China continues, with China hitting back with a new rate of…
OPINION: The irony of President Trump’s tariff obsession is that the worst damage may be done to his own people.