Family plans to keep its foot down

07-12-2009 | Not Specified

Before becoming Monitor Farmers, the Horrell family's EBIT was just below the average of the top 20% of farms in their class (Meat & Wool NZ Economic Service).

During their tenure, EBIT/ha on their Southland farm ranged between 17% and 37% above the average of the top 20% for each of those three years.

Wanting it to be something the community group and readers could easily relate to, Andrew says he defines EBIT as what is left over to pay the bank, the taxman, capital expenditure items and drawings. To keep it in line with a husband and wife farming team one wage has been included in their costs.

Monitor Farm facilitator, PGG Wrightson Invercargill farm consultant Randall Aspinall, says that despite the difficult times, the Horrells results have been very positive.

Their EBIT/ha has gone from $432 in 2005-06 to $924 in 2007-08 and $999 in 2008-09.

"It has been a very good story of diversifying towards grain, bull finishing and dairy grazing to maintain profitability while lamb prices were down. Retaining their core breeding ewes and ewe hoggets also enabled the Horrells to still take advantage of last season's lamb prices and lift profitability even further."

The 2008-2009 result reflects record prices for lamb and grain. However, the 2007-2008 budget has grain down by more than $100/tonne, lamb back $10/head, but more to sell and cattle up a bit as they should be heavier.

Profitability in 2007-2008 was driven by returns from dairy grazing and grain. Expecting their efforts to retain the ewe lamb crop in the autumn of 2008 will be repaid, Andrew says it will be lamb returns that drive profitability during the current financial year.

What pleases the family most is they have managed to maintain the upward EBIT momentum despite the volatility in product prices.

As well as being prepared to adapt to changes in market returns, Andrew says addressing weaknesses, focusing on gross margin returns and whole farm profitability are three of the key planks in their strategy to achieve their goals.

Looking ahead, the family plans to keeps its foot down and consolidate its financial position so it is well placed to capitalise on opportunities which will no doubt occur during the next few years.

  Printable View