Bill Webb Feed Solutions Outlook

Many dairy farmers have responded to the drop in payout by taking long hard looks at their businesses and making savings of between $1 kg/ms and $1.20 per kg/ms, according to DairyNZ’s figures.

DairyNZ also reports more farmers than ever are preparing farm budgets, which is excellent news. In the past I’ve been amazed at how many farmers don’t have budgets. I guess in the good times they didn’t have to but they are running big businesses and need to know exactly how they are tracking.

Banks will support farmers with a strong balance sheet, even if profit and cash flows are negative. If the farm has a strong balance sheet and there is plenty of security, banks will work with farmers to get through the tough times.

The concern is much of the savings farmers are making are probably coming from deferred repairs and maintenance; and although it makes sense to put off that expenditure, care must be taken not to let machinery, buildings, fences and races deteriorate too much.

Pro-active farmers

It’s easy to say “she’ll go another turn” over that tired tractor or piece of machinery, but sometimes it’s a false economy.

Another indication of farmers being proactive over costs is DairyNZ all grass farming workshops have increased in popularity as farmers go back to basics. There’s no doubt grass-based production is the cheapest, especially in a low payout environment.

However, the weather since December isn’t helping. From a cold wet spring we’ve gone to a windy, dry, hot summer with temperatures in the 30s and very little rain. Many farmers went to once-a-day milking in January and most are now feeding some supplement.

Even farmers in the normally summer-safe Mamaku Ranges says pasture was drying out by mid-January.

Pasture management

Careful pasture management is vital, especially once the rain comes. Cows will milk quite well on dry pasture, so long as they are not pushed too hard. But once it rains, the risk of facial eczema increases and the feed value crashes until the grass starts growing again.

Indications are that dairy prices are on the rise even though the last few Global Dairy Trade auctions have been down slightly. The most previous auction was slightly up by 0.6 per cent, but at least it was up. Let’s hope an improved payout will offset the drop in production most farmers have experienced.

When incomes improve farmers will still have to be careful of personal spending on such things as holidays and new vehicles, managing their incomes to strengthen their businesses for the years ahead.

Fresh milk supply

For many farmers the last few years have been a time to consider their futures in the industry. Some have decided to quit altogether, others to chance how they manage their business.

This might include becoming one of Fonterra’s suppliers of fresh milk. It will require some changes to farm schedules but why not maximise the staff and infrastructure already in place to improve returns?

While the dairy downturn has been tough, machinery and equipment suppliers tell me they’ve had record sales – which is surprising and I’m not sure how much of that has been generated by the kiwifruit and avocado industries, which are both doing well – so it’s not all gloom and doom in the rural sector.

Our maize planting got off to a slow start because of the wet conditions, and then things dried out really quickly. I’m predicting it will be an average season for yields but that will depend on rain at crucial times, including pollination.