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Survey results grim reading
01-02-2010
The challenge for the Waikato/Franklin Monitor Farm group is to get the operation into the top 20% of farms of its type for economic farm surplus, facilitator Brendan Brier says.
Using economic farm surplus (EFS) as a key criteria, Meat & Wool NZ's Nicola Bradstreet highlighted survey results by Meat & Wool of 60 Class-4 farms in the Waikato, Bay of Plenty and King Country regions.
The results made for grim reading and showed that the average farmer made an EFS deficit of $94/ha during the past three years - a period which included low product returns and, of course, the major drought of 2007-08.
Farmers in the top 20%, however, still achieved an average EFS of $174/ha during this period.
If the owners, the Bodley family were in the top 20%, they could expect a total EFS of $64,900 ($174 x 373ha) which would equate to a net gain of just under $100,000.
Brier said that to increase farm profitability, the Bodleys might have to consider increasing soil fertility and pasture growth, and making changes to the stock policy.
He used Farmax Pro to assess some different potential options (see table). The 2009-10 year is the current season result assuming there are no changes to the current policy and the "base" scenario considers farm performance in a status-quo situation. This option is based on the farm running 550 yearling steers and 1200 breeding ewes, which lamb at 122%.
Option A considers the impact of increased soil fertility which results in increased pasture growth and better ewe performance from more ewes. This option assumes the farm is running 550 yearling steers and 1615 breeding ewes at 135% lambing.
Option B also considers the impact of increased soil fertility and pasture growth along with a change to a winter lamb policy and the use of bulls to use spring and summer feed. This option is based on 7200 winter lambs and 750 summer yearling bulls.
The long-term pricing in this analysis assumes January lamb prices of $4.45/kgCW, a prime steer price of $3.55/kgCW and bull at $3.40/kgCW.
While both Option A and Option B show a significant potential increase in gross income and production, Brier pointed out that these options were simply a starting point for discussions.
"The challenge for the community group will be to find a policy that achieves a good match between long-term profitability and risk management."
The issue of labour is also bound to crop up at some stage and farm manager Robert Bodley would consider employing a labour unit, but only if it was profitable. Otherwise he is happy to continue running the farm on his own.
Robert returned to the family farm at Rangiriri last year after working for an agricultural contractor for three years and running his own bobcat landscaping business. He also spent time on a cattle feedlot and cropping farm in Canada.
His goal has always been to go farming. The Kerr Road farm was an attractive property because it had "good bones", including good contour, plenty of natural water, reasonable facilities, an excellent central lane and tracks and its own quarry.
It also has duckponds - another bonus for Robert who is a keen duckshooter and deerhunter.
He and his partner, Emma, who works in Auckland, also enjoy the location "because the Naike-Waikaretu area has always had a really strong and friendly farming community".