5 Lower North Island Dairy
The lower North Island dairy farm
This model represents just under 3100 seasonal supply dairy farms in the bottom half of the North Island, including the regions of Taranaki, Manawatu, Horowhenua, Wairarapa, and Southern Hawkes Bay. These dairy farms supply the Fonterra Co-operative Dairy Company. Generally, they are well-developed farms, have good soil fertility levels and a modest level of well maintained buildings, plant, and equipment. On average, the farms are 105 effective hectares in size, milking 280 cows. For the 2006/07 season, milk production is anticipated to be around 95 000 kilograms of milksolids or 905 kilograms of milksolids per hectare.
Most of the lower North Island has reliable summer rainfall, especially the Taranaki province; however, many farms in the Manawatu and the East Coast are, by New Zealand dairy standards, somewhat drought-prone. Approximately 250 farms, mainly in the south Wairarapa, Hawkes Bay and Manawatu, have irrigation.
The model budgets are for owner/operator farms, with labour employed, and represent an estimated 70 to 80 percent of dairy farms, the other 20 to 30 percent fitting into the sharemilking or equity partnership categories.
Table 5.1: Lower North Island dairy model summary, 2005/06
| Effective area | 100 ha |
| Opening stock wintered | 348 hd |
| Milking cows | 275 hd |
| Replacement heifers | 70 hd |
| Breeding bulls | 3 hd |
Table 5.2: Key Parameters of the Lower North Island Dairy Model
| 2002/03 | 2003/04 | 2004/05r | 2005/06 | 2006/07f | |
|---|---|---|---|---|---|
| Effective area (ha) | 85 | 90 | 90 | 100 | 105 |
| Cows wintered | 225 | 243 | 250 | 275 | 290 |
| Cows milked at 15 December | 210 | 230 | 236 | 265 | 280 |
| Stocking rate (cows/ha) | 2.5 | 2.6 | 2.6 | 2.7 | 2.7 |
| Total milksolids (kg) | 59 500 | 73 500 | 75 600 | 89 000 | 95 000 |
| Milksolids/ha | 700 | 817 | 840 | 890 | 905 |
| kgMS/cow milked | 283 | 320 | 320 | 336 | 339 |
| MS advance to end June ($/kg) | 3.30 | 3.72 | 3.95 | 3.60 | 3.65 |
| MS deferred payment ($/kg) | 0.60 | 0.27 | 0.50 | 0.64 | 0.47 |
| Gross farm revenue ($) | 264 650 | 313 826 | 358 718 | 406 628 | 424 715 |
| Net trading profit ($) | 43 467 | 86 903 | 109 455 | 94 022 | 92 510 |
| Disposable surplus/deficit ($) | – 33 415 | 3 958 | 9 663 | – 9 264 | 1 636 |
Symbol
r Revised
f Forecast
Key points
- Given the favourable weather conditions and increased pasture production, the 5 percent improvement in milk production in 2005/06, compared with 2004/05, which was a relatively poor year, was disappointing.
- Production peaked earlier than normal and at lower levels. Because farms have milked on longer in autumn, the Peak Note requirement has been reduced.
- Farmers are indicating that at a payout of around $4 per kilogram milksolids they are not making any money.
- Many farmers will make a loss in 2005/06. They will make a small surplus in 2006/07 if the advance payment for milk is increased.
- The demand for dairy farms to purchase exceeds the supply.
- Labour continues to be an issue and is considered to be putting some existing farmers off expanding.
Physical factors
The Taranaki province had an above average 2005 winter as a result of below average rainfall, and higher than normal pasture growth rates. This was followed by a brilliant early spring, which was dry and mild, resulting in good pasture growth rates and utilisation, and high early-spring milk production. There was three times the normal rainfall in October 2005, with below average pasture growth rates, suppressing milk production and having a negative effect on mating. November was dry, with low pasture quality impacting on milk production and mating. There was adequate rainfall through December with good pasture growth rates which continued through the early summer. By Taranaki standards, March 2006 was dry, and this had an impact on milk production. There were good autumn rains and corresponding good pasture growth rates; however, per cow milk production did not reflect the good growth rates and pasture cover over the late autumn. Fewer supplements were harvested, due to the poor October/November. But as a result of the good early spring period, less supplement was used and most dairy farms in Taranaki are going into the winter with normal levels of supplement. Overall, milk production has been disappointing when compared to the generally good year and pasture production.
On the East Coast, while the early winter was wet, over the late winter there was less rainfall and ground conditions were dry. The spring was one of the best seen for many years, with dry ground conditions through July, August and September 2005. The late spring was better than normal and, as a result, higher levels of supplement were harvested. The summer for the East Coast was good and better than normal, with only a short dry period of approximately six weeks. The autumn was very good, with higher than normal pasture growth rates and, as a result, pasture covers are higher than normal going into the winter. Milk production was disappointing when compared to the very good year in terms of weather conditions and pasture production. The higher pasture growth rates led to a loss of some pasture quality through mid to late spring, which may have had an impact on per-cow production. While the quantity of supplement used through the year was normal, more supplement was harvested as a result of the good spring and farms are going into the winter with better than average supplementary feed levels.
In the Manawatu, following the dry autumn in 2005 (first significant rain in early May) there was a significant lift in pasture growth rates and cover through May and June 2005. This resulted in normal to good pasture covers from mid-winter on. One of the driest July, August and Septembers was experienced in the Manawatu, resulting in above-average pasture growth rates and good utilisation with minimal pugging or pasture damage. The per-cow production over this period was higher than normal, as a result of good feeding levels and the mild climatic conditions. Pasture covers continued to increase and, as a result, early supplement was harvested from the beginning of September 2006 onwards, which is uncommon in the Manawatu. Higher than normal rainfall through October and cool conditions in November suppressed pasture growth rates and milk production. This also had a negative effect through the mating period. Little rainfall from late December onwards, and high wind run, resulted in a severe dry spell. This had a major impact on milk production until early April 2006 when the first significant rains started to lift pasture growth rates and cover. Even with the lift in feeding levels, per-cow production was disappointing through April and May 2006. Most farms are going into the winter with an adequate to higher than normal level of pasture cover. As a result of the prolonged dry summer, higher than normal levels of supplement were used. However, with less supplement used through the spring, there are generally adequate levels of supplement going into the winter.
There was a good start to the season with high milk production, which was eroded by the dry summer and autumn leaving total milk production only slightly ahead of the previous season. Milk production for this model farm is 89 000 kilograms of milksolids in 2005/06, compared with 84 700 kilograms of milksolids in 2004/05.
The level of supplement going into winter is normal for Taranaki and Manawatu, and higher than normal for the East Coast. Pasture covers throughout the lower North Island are at good levels and higher than normal going into the winter, placing farms in a good position for the start of the coming season.
In general, crop yields were good, especially maize, yielding up to 10 percent higher than normal due to more favourable weather conditions.
With a good early spring, generally more supplement was made on-farm and on runoffs. Higher than normal levels of supplement were available to be purchased in terms of haylage, hay, and maize silage over the autumn. There has been a steady and increasing use of Palm kernel on dairy farms as it is priced competitively with other forms of supplementary feed. This trend is anticipated to continue so long as the price relativity of different supplements is maintained. Palm kernel is now around $220 per tonne delivered in the Manawatu.
Cow condition over spring 2005 was normal at around 4.75 condition score, and is at a similar level going into this winter. The only exception is the Manawatu, where cow condition is slightly less at around 4.5 condition score as a result of the long dry summer.
Empty rates throughout the lower North Island are higher than normal, with Taranaki averaging around 13 to 14 percent, Manawatu-Rangitikei 13 to 15 percent, and East Coast 14 to 16 percent. There is farmer concern that empty rates have increased over time. As a result, some empty cows have been carried over for replacements and in some areas more empty cows are being milked through the winter to help maintain cow numbers for the following season.
The normal amount of summer cropping on dairy farms was undertaken; minimal in Taranaki, and around 4 to 6 percent of the effective area in the Manawatu and East Coast. Crop yields were higher than normal as a result of more favourable weather conditions.
There were no major animal health problems this season, with fewer metabolic problems as a result of the mild and dry early spring. There were some minor incidents of facial eczema in Taranaki and Manawatu.
There has been an emphasis on reducing the level of inductions used by farmers and also a greater reluctance to use CIDRs. On some farms, the bulls were taken out earlier to eliminate late calving cows, which has added to the empty rate.
The cull cow price and surplus calf prices are higher than in 2004/05. The capital price of cows has increased again compared with 2004/05, with the average price around $1,200 to $1,400 per cow. The price of cows has been at a level not seen for a number of years. This increase in cow prices has been attributed to the export trade of heifers to China and Mexico, increasing land area going into dairying, and higher empty rates.
The cost of heifer and dry cow grazing has remained basically unchanged, even though there appears to be a greater supply of heifer grazing compared to previous years, especially in the Taranaki region. There is some downward pressure on heifer grazing prices where charges are higher than average.
In summary, the model farm had favourable weather conditions except for the prolonged dry summer in the Manawatu, with increased pasture production. However, milk production was disappointing when compared with expectations, given the favourable weather conditions and higher than normal pasture growth. The level of milk production for 2005/06 was 89 000 kilograms of milksolids, or 890 kilograms of milksolids per hectare, a 5 percent increase on production in 2004/05, which was a poor production year throughout the lower North Island.
The model has grown in size, reflecting the trend of increasing farm size in the lower North Island and amalgamations of smaller dairy farms. Farm size for the 2006/07 season will increase to 105 hectares, milking 280 cows at the peak. Farms are ceasing milk production for a variety of reasons, including subdivision, lifestyle, and other personal factors.
Financial position of the farm
Review of 2005/06
Revenue
The expected interim payout to the end of June 2006 is $3.60 per kilogram of milksolids, which is 35 cents less per kilogram of milksolids than in 2004/05. The total payout for the 2004/05 season was $4.59 per kilogram of milksolids. Milk revenue for 2005/06 is up by approximately $37,000, or 11 percent to $374,600. However, farm size has increased by 10 hectares effective, or 11 percent. Stock revenue (sales less purchases) has increased by $10,900, or 50 percent, to around $32,000 for the 2005/06 year. This is mostly due to the increase in farm size with higher numbers of stock for sale compared to the previous season, and also to fewer purchases of mixed age cows.
Expenditure
Overall cash expenditure in 2005/06 is up by $40,000 on the previous year to $244,000 – an increase of 20 percent, remembering the model size has increased by 11 percent. The areas where there has been an increase in expenditure are labour, with rising salaries/wages; animal health; electricity; and in feed, reflecting increases in fuel prices. There have been increases in fertiliser prices, vehicle and fuel costs, repairs and maintenance, and rates. Cash farm expenditure has increased from $2.71 per kilogram of milksolids in 2004/05, to $2.74 in 2005/06.
Net result
Cash farm surplus (before interest payments) is approximately $162,000, an increase of $9,000 or 5.5 percent. Cash farm surplus after interest payments is $105,000 in 2005/06, down 8 percent on 2004/05.
Debt servicing costs have increased in 2005/06, reflecting the purchase of extra land and stock. Debt servicing on the surveyed farms is around 20 percent of gross farm income. Interest costs have increased to $57,500 in 2005/06, up from $40,000 in 2004/05, an increase of 43 percent. Principal repayments in the model increased by $3,000 in 2005/06 compared with 2004/05. Taxation has reduced by 62 percent to $18,000.
Overall, the model shows a net cash change of $2,700, which includes $12,000 off-farm revenue. However, surveyed farms have higher levels of taxation, interest payments, principal repayments, development costs and capital purchases, and the various combinations of these factors indicate that up to two thirds of the dairy farms in the lower North Island are likely to have made a cash loss in 2005/06. The development and capital expenditure in the model has increased to $30,000 for this financial year, which includes some farms purchasing extra dairy company shares. Only seven of the twenty surveyed farms had a positive net cash change. Overall in the lower North Island, there has been a net cash loss reflecting a difficult financial season. Many dairy farmers are indicating that “at around $4 per kilogram of milksolids there is no money to be made in farming”.
Forecasts for 2006/07
Revenue
The budget for the 2006/07 season is based on 95 000 kilograms of milksolids, reflecting a more normal level of production and increase in the model farm size to 105 hectares effective, continuing the trend of increasing farm sizes in the lower North Island.
The model assumes a total payout of $4.07 per kilogram of milksolids for the 2005/06 season, and an advance price to the end of June 2007 of $3.65 per kilogram of milksolids. Overall, there is a forecast increase in milksolids revenue in 2006/07 of approximately $14,000 to $388,600 – an increase of 3.7 percent. This reflects the increase in model farm size of approximately 5 percent, combined with an increase in the advance payment of 5 cents per kilogram of milksolids, and a reduction in the deferred payment from the previous season of 17 cents per kilogram milksolids. Farmers surveyed, however, expect the final payout for the 2005/06 year to be increased to $4.10 per kilogram of milksolids, and that the advance price to the end of June 2007 will increase by 10 cents to $3.70 per kilogram of milksolids. This would increase the milksolids revenue in 2006/07 by $10,000 compared with the current model forecast.
Stock revenue is expected to increase by $4,000 to $36,000. Overall gross farm revenue for the 2006/07 season is expected to increase by $13,500 (3.3 percent) to $420,000.
Expenditure
Overall cash expenditure in 2006/07 is expected to increase by $12,000, or 5 percent, to $256,000. The main areas of increased expenditure are labour, electricity, feed, fuel, and vehicle costs. Repairs and maintenance expenditure in the model is reduced by $7,000, or 27 percent compared with 2005/06, to $18,500. This reflects the reduction in discretionary expenditure that would be made if the advance payment for milk does not increase further. Farmers who were surveyed were hoping to decrease their level of repairs and maintenance expenditure compared with the 2005/06 by around $4,500 or 20 percent.
Cash farm expenditure in 2006/07 is forecast at $2.70 per kilogram of milksolids or 60 percent of gross farm revenue, compared with $2.74 per kilogram of milksolids in 2005/06.
Net result
Cash farm surplus has decreased by $2,000 to $107,000 for the 2006/07 year. With the increased size of the model farm to 105 effective hectares, total borrowings have increased in 2006/07, with a level of debt servicing around 16 to 17 percent of gross farm income. Interest costs are forecast to increase to $61,800 in 2006/07, but principal repayments in the model have reduced compared with 2005/06. Most new loans are being taken out on an interest-only basis. This trend started about three years ago after the drought and then floods in the following year. Competition in the banking sector led to loans being fixed at lower rates and on an interest-only basis. This allows growth to be funded out of term debt rather than overdraft.
Taxation in the model forecast for 2006/07 has increased by around $7,000 to $24,600. Personal drawings have increased by $1,000 to $51,000. Capital purchases are forecast to reduce in 2006/07, and the current provision in the model ($15,000) would largely be required to meet purchases of dairy company shares. However, most dairy company share purchases would be funded by increased borrowing. This leaves a relatively modest sum for other capital purchases.
The net cash change for 2006/07 is estimated to be $30,800. However, this includes a payment from Fonterra of $17,200 resulting from the conversion of Peak Notes to ordinary shares. If this payment is excluded the net cash change would be $13,600 compared with $2,700 in the 2005/06 season. The cash position includes $12,000 of non-farm revenue. If the advance payment was increased to $3.70 per kilogram of milksolids then additional capital expenditure is likely.
Figure 5.1: Lower North Island dairy profitability trends
Issues and trends
The new capital structure voted in by Fonterra shareholders, separating the capital requirement and the milk payment associated with peak milk production, will be introduced at the end of 2005/06 season. There has been minimal requirement to purchase extra shareholding this year. However, a number of farms, including winter milk properties, do not have sufficient value as Peak Notes and will need to provide extra capital to Fonterra to meet the required 76 cents per kilogram milksolids as Peak Notes As part of the capital restructuring, indications are most farmers are electing to hold as much shareholding as possible, including surplus shares. They see this as a great investment.
Fonterra has provided the option of contract milk; however, the interest in this was very low.
There has been some talk about separating the value-added component out of the “bundled” payout, to give a milk price and a dividend that reflect the returns from Fonterra’s activities and investments.
There have been very few 50/50 sharemilking positions available, a continuing trend from previous years. This has resulted from farm amalgamations, and farm owners opting to purchase livestock and employ lower order sharemilkers or managers. There is a small but steady interest in equity partnerships as an avenue for people to enter land ownership.
Fonterra has introduced a new payment structure and pricing system for its winter milk requirements, which will be introduced for the winter of 2007. The price payable in the lower North Island is $1.40 per kilogram milksolids for the winter contract, less 2.5 cents for every 10 kilometres from Longburn. There has been a steady increase in the number of winter milk farms in the Manawatu, given the proximity to the Longburn factory. The previous winter premiums were $1.80 per kilogram milksolids.
There has been a significant increase in the price of livestock, with herds averaging $1,200 to $1,400 per cow in 2005/06, and in-calf heifers around $1,000 to $1,100 per head. This is an increase of $200 to $300 per head, with prices in 2004/05 averaging around $1,050–$1,150 per cow. The increases in livestock prices have been associated with sales of heifers to China and Mexico, higher empty rates, and more land in dairying, especially in the South Island and Central Plateau.
There is increasing interest in winter milk production by milking empty cows through the winter. Many farmers are commenting on the difficulty of getting cows in calf and maintaining a low empty rate with breeding for higher milk production. This has been compounded by the emphasis on reducing the level of inductions. Mating and the higher empty rates are becoming a serious issue and concern for dairy farmers, and nutritional solutions are being sought.
One of the main issues and concerns in the dairying industry is the continuing shortage of skilled labour, especially managers and herd managers. The salary and wages of farm staff have continued to rise. There is an interest in automation from large-scale farming operations, to help address declining skill levels and the shortage of skilled labour/managers. These improvements would make working conditions more attractive for staff and help with retention of staff. Areas of interest include automatic cup removers, electronic ear tags, automatic drafting, heat detection, and in-line somatic cell count detection. Labour and staffing issues are quoted as some of the major challenges and issues for dairy farming, and are reasons why some people have exited the dairy industry and why others are not expanding.
There is only limited interest in once-a-day milking in the lower North Island (with most of that interest in Taranaki), with those farms considering that option placing high value on lifestyle changes.
There is an increasing cost in paperwork with compliance and resource management issues.
There appears to be an increasing availability of grazing for heifers; however, as yet this has not resulted in lower grazing charges for heifers.
There has been a steady increase in the use of Palm kernel as a feed supplement, given its cost relative to other forms of supplementary feed, including pasture and maize silage. As supplement it can be purchased if and when required, and as a result, less maize silage is being grown.
The price of dairy farms reflects a steady market; however, there have been small increases in some areas. The value of dairy farms, including dairy company shareholding, for the different areas is:
- Manawatu $33–$38 per kilogram of milksolids
- Wairarapa/East Coast $27–$30 per kilogram of milksolids
- Taranaki $38–$42 per kilogram of milksolids
With increasing land values over the last few years, and income/cash farm surpluses not increasing, there is a requirement for a higher level of equity as farmers cannot service any greater level of debt.
Farmer comments indicate there is no money/profit in dairy farming at around $4 per kilogram of milksolids, and they are finding it extremely tight with the current income and expenditure levels. This has been reflected in the disposable deficit of $9,300 in the model farm budget for 2005/06, and the small disposable surplus of $1,600 forecast for 2006/07. Without an improvement in payout, there will be increasing pressure to contain expenditure over the next 12 months.
Table 5.3: Lower North Island Dairy Budget
| 2005/06 | 2006/07f | |||||
|---|---|---|---|---|---|---|
| Whole farm | Per cow | Per kgms | Whole farm | Per cow | Per kgms | |
| ($) | ($) | ($) | ($) | ($) | ($) | |
| >Revenue | ||||||
| Milksolids | 374 608 | 1 414 | 4.21 | 388 580 | 1 388 | 4.09 |
| Cattle | 34 960 | 132 | 0.39 | 40 056 | 143 | 0.42 |
| Other farm income | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Less | ||||||
| Cattle purchases | 2 940 | 11 | 0.03 | 3 921 | 14 | 0.04 |
| Gross farm revenue | 406 628 | 1 534 | 4.57 | 424 715 | 1 517 | 4.47 |
| Cash farm expenditure | 244 231 | 922 | 2.74 | 256 030 | 914 | 2.70 |
| Interest | 57 500 | 217 | 0.65 | 61 800 | 221 | 0.65 |
| Rent and/or leases | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Cash farm surplus | 104 897 | 396 | 1.18 | 106 885 | 382 | 1.13 |
| Stock value adjustment | 300 | 1 | 0.00 | – 1 126 | – 4 | – 0.01 |
| Minus depreciation | 11 175 | 42 | 0.13 | 13 249 | 47 | 0.14 |
| Net trading profit | 94 022 | 355 | 1.06 | 92 510 | 330 | 0.97 |
| Taxation | 17 973 | 68 | 0.20 | 24 600 | 88 | 0.26 |
| Net trading profit after tax | ||||||
| Allocation of Funds | ||||||
| Add back depreciation | 11 175 | 42 | 0.13 | 13 249 | 47 | 0.14 |
| Reverse stock value adjustment | – 300 | – 1 | 0.00 | 1 126 | 4 | 0.01 |
| Drawings | 50 000 | 189 | 0.56 | 51 000 | 182 | 0.54 |
| Principal repayments | 16 189 | 61 | 0.18 | 9 648 | 34 | 0.10 |
| Development | 5 000 | 19 | 0.06 | 5 000 | 18 | 0.05 |
| Capital purchases | 25 000 | 94 | 0.28 | 15 000 | 54 | 0.16 |
| Disposable surplus/deficit | – 9 264 | – 35 | – 0.10 | 1 636 | 6 | 0.02 |
| Other Cash Sources | ||||||
| New borrowing | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Off-farm income | 12 000 | 45 | 0.13 | 12 000 | 43 | 0.13 |
| Other cash income | 0 | 0 | 0.00 | 17 200 | 61 | 0.18 |
| Net cash change | ||||||
| Assets and Liabilities | ||||||
| Farm, forest and | 2 500 000 | 9 434 | 28.09 | 2 800 000 | 10 000 | 29.47 |
| building (opening) | ||||||
| Plant and machinery (opening) | 74 500 | 281 | 0.84 | 88 325 | 315 | 0.93 |
| Stock valuation (opening) | 358 643 | 1 353 | 4.03 | 379 522 | 1 355 | 3.99 |
| Dairy company shares | 541 233 | 2 042 | 6.08 | 583 840 | 2 085 | 6.15 |
| Total farm capital | 3 474 376 | 13 111 | 39.04 | 3 851 687 | 13 756 | 40.54 |
| Total debt opening | 690 000 | 2 604 | 7.75 | 742 000 | 2 650 | 7.81 |
| Equity | 2 784 376 | 10 507 | 31.29 | 3 109 687 | 11 106 | 32.73 |
Symbol
f Forecast
Table 5.4: Lower North Island Dairy Expenditure
| 2005/06 | 2006/07f | |||||
|---|---|---|---|---|---|---|
| Whole farm | Per cow | Per kgms | Whole farm | Per cow | Per kgms | |
| ($) | ($) | ($) | ($) | ($) | ($) | |
| Farm Working Expenses | ||||||
| Permanent wages | 28 000 | 106 | 0.31 | 30 000 | 107 | 0.32 |
| Casual wages | 2 000 | 8 | 0.02 | 2 000 | 7 | 0.02 |
| ACC | 4 641 | 18 | 0.05 | 5 680 | 20 | 0.06 |
| Animal health | 14 300 | 54 | 0.16 | 15 500 | 55 | 0.16 |
| Breeding | 8 200 | 31 | 0.09 | 9 000 | 32 | 0.09 |
| Dairy shed expenses | 6 500 | 25 | 0.07 | 6 700 | 24 | 0.07 |
| Electricity | 9 400 | 35 | 0.11 | 10 700 | 38 | 0.11 |
| Feed (hay and silage) | 21 720 | 82 | 0.24 | 24 730 | 88 | 0.26 |
| Feed (feed crops) | 2 000 | 8 | 0.02 | 2 800 | 10 | 0.03 |
| Feed (grazing) | 24 544 | 93 | 0.28 | 26 120 | 93 | 0.27 |
| Feed (other) | 12 300 | 46 | 0.14 | 12 300 | 44 | 0.13 |
| Fertiliser | 32 950 | 124 | 0.37 | 34 820 | 124 | 0.37 |
| Lime | 1 100 | 4 | 0.01 | 1 100 | 4 | 0.01 |
| Freight (not elsewhere deducted) | 2 300 | 9 | 0.03 | 2 700 | 10 | 0.03 |
| Re-grassing costs | 2 700 | 10 | 0.03 | 2 900 | 10 | 0.03 |
| Weed and pest control | 2 100 | 8 | 0.02 | 2 500 | 9 | 0.03 |
| Fuel | 7 600 | 29 | 0.09 | 9 000 | 32 | 0.09 |
| Vehicle costs (excluding fuel) | 7 500 | 28 | 0.08 | 8 000 | 29 | 0.08 |
| Repairs and maintenance | 25 500 | 96 | 0.29 | 18 500 | 66 | 0.19 |
| Communication costs | 3 300 | 12 | 0.04 | 3 400 | 12 | 0.04 |
| (phone and mail) | ||||||
| Accountancy | 2 700 | 10 | 0.03 | 3 000 | 11 | 0.03 |
| Legal and consultancy | 2 100 | 8 | 0.02 | 2 100 | 8 | 0.02 |
| Other administration | 3 476 | 13 | 0.04 | 3 680 | 13 | 0.04 |
| Water charges (irrigation) | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Rates | 8 000 | 30 | 0.09 | 9 000 | 32 | 0.09 |
| Insurance | 4 800 | 18 | 0.05 | 4 800 | 17 | 0.05 |
| Other expenditure | 4 500 | 17 | 0.05 | 5 000 | 18 | 0.05 |
| Cash farm expenditure | 244 231 | 922 | 2.74 | 256 030 | 914 | 2.7 |
| Calculated Ratios | ||||||
| Economic farm surplus (EFS1) | 78 778 | 297 | 0.89 | 79 310 | 283 | 0.83 |
| Cash farm expenditure/GFR2 | 60% | 60% | ||||
| EFS/total farm capital | 2.3% | 2.1% | ||||
| EFS less interest and lease/equity | 0.8% | 0.6% | ||||
| Interest+rent+lease/GFR | 14.1% | 14.6% | ||||
| EFS/GFR | 19.4% | 18.7% |
Notes
1 EFS (or Earnings before interest and tax) is calculated
as follows: gross farm revenue plus change in livestock values less working
expenses less depreciation less wages of management (WOM). WOM are calculated as
follows: $38,000 allowance for labour input plus 1 percent of total capital as
managerial reward. An upper limit for WOM of $75,000 has been set.
2 Gross farm revenue.
Symbol
f Forecast
Contact for Enquiries
Farm Monitoring Programme Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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