6 Canterbury Dairy
The Canterbury dairy farm
This model represents approximately 700 dairy farms throughout Canterbury and North Otago.
The model is based on a sample of 20 owner-operated farms, ranging from 300 to 1500 milking cows, supplying Fonterra’s Clandeboye factory. The surveyed farms represent a similar geographic and size distribution to the statistical population.
Canterbury has a mix of border dyke and spray irrigated properties with a wide range of grazing, feeding and stocking policies. The model represents a farm that has a mix of spray and border irrigation, and does not own a run-off. All off-farm winter grazing costs are included in feed costs.
Table 6.1: Canterbury dairy model summary, 2005/06
| Effective area | 195 ha |
| Opening stock wintered | 821 hd |
| Milking cows | 647 hd |
| Replacement heifers | 162 hd |
Table 6.2: Key Parameters of the Canterbury dairy model
| 2002/03 | 2003/04 | 2004/05r | 2005/06 | 2006/07f | |
|---|---|---|---|---|---|
| Effective area (ha) | 185 | 192 | 195 | 195 | 198 |
| Cows wintered | 579 | 607 | 637 | 647 | 657 |
| Cows milked at 15 December | 553 | 586 | 613 | 621 | 631 |
| Stocking rate (cows/ha) | 3.0 | 3.1 | 3.1 | 3.2 | 3.2 |
| Total milksolids (kg) | 210 000 | 225 000 | 237 700 | 246 500 | 255 600 |
| Milksolids/ha | 1 135 | 1 172 | 1 219 | 1 264 | 1 291 |
| KgMS/cow milked | 380 | 384 | 388 | 397 | 405 |
| MS advance to end June ($/kg) | 3.30 | 3.72 | 3.95 | 3.60 | 3.65 |
| MS deferred payment ($/kg) | 0.60 | 0.27 | 0.45 | 0.64 | 0.47 |
| Gross farm revenue ($) | 881 100 | 961 000 | 1 127 000 | 1 130 400 | 1 142 865 |
| Net trading profit ($) | 104 000 | 180 100 | 286 400 | 249 500 | 244 432 |
| Disposable surplus/deficit ($) | – 228 200 | – 52 600 | – 139 500 | – 131 800 | – 70 060 |
Symbol
f Forecast
Key points
- The 2005/06 season was highly variable and therefore challenging for dairy production.
- Total milksolids production was up 3.7 percent and met model budget expectations.
- Forecast for 2006/07 is for increased production but static farm revenue.
- Forecast expenditure reductions on a per kilogram of milksolids basis will be difficult to achieve.
- Dairy farmers, with considerable industry support, are being proactive about reducing fertiliser use and adopting nutrient budgeting approaches.
- Water issues remain the most important consideration for dairy farming in Canterbury.
Physical factors
Overall, the 2005/06 season was challenging for Canterbury dairy farmers due to variable weather throughout. The 2005 winter was very mild and dry with adequate feed supplies. Soil temperatures in July, August and September were 1.7 degrees Celsius, 0.9 degrees Celsius, and 0.8 degrees Celsius respectively above average, so spring growth began a month earlier than usual. Silage was made on many farms in August and September to control feed surpluses. Cows were in very good condition at calving and through the early spring.
In mid-September, conditions became cooler with a snowfall on the upper plains. Growth slowed considerably and silage was fed out to maintain production. The cooler conditions meant that the production peak was not as high as in previous years, and pasture quality was difficult to maintain at high levels without very proactive management.
In addition, the dry winter, and several preceding years of low aquifer recharge, meant that irrigation restrictions for the river-fed irrigation schemes from the Waimakariri, Rakaia and Rangitata came into effect in November and December, much earlier than usual. Shallow irrigation wells nearer the coast were also severely affected due to the poor recharge from both the lack of rainfall and the restrictions on the irrigation schemes further up the plains. However, most dairy farms have deepened wells in recent years. Some wells deemed to be hydraulically connected to nearby streams and drains were required to cease irrigation.
Farms affected by these irrigation restrictions fed large amounts of supplements to maintain production. While irrigation demand wasn’t as high as usual and intermittent showers helped alleviate the dryness, some farms were significantly affected. In the most severe case, 30 percent of a herd was sold.
Mid-December saw a return to more normal Canterbury weather patterns. Rain in the Southern Alps filled rivers and irrigation restrictions were eased. However, there was no snow in the Alps to ensure this situation continued, so farmers remained concerned that restrictions could occur at any time.
The new irrigation scheme in North Otago was unable to fully operate as initially planned, although dairy farms on the scheme operated well until December when soil moisture levels became limiting.
January and February were very good for grass production, with warm conditions and minimal very hot dry days. The irrigation schemes supplied from the Rangitata, and particularly the Waimakariri, rivers were restricted from irrigating by low flows in the summer and autumn. March was cooler than normal, which slowed growth and meant that winter feed crops were slow to establish. April was warmer and drier, and irrigation resumed in earnest to try to ensure sufficient feed was grown to keep production levels up until the end of the season and to provide winter feed. Ironically, as May became wetter and colder than average, irrigated areas were wetter than ideal, particularly on the medium and heavy soils. In some cases, cows were dried off up to ten days early as a result.
At the time of writing, an unusually heavy dump of snow has again put pressure on feed supplies for the rest of the winter. Until this snowfall, the winter feed situation was good, although dryland crop yields were down 33 to 50 percent on expectations. Considerable wastage of feed and greater use of supplements will have changed this situation somewhat, but much depends on the weather over the rest of the winter. Many dairy farms in Canterbury have not experienced a cold, wet winter since 1992.
The proportion of cows not in calf has improved from 15–20 percent last year to 10–15 percent in 2005/06, due to the better weather. Summer growth rates of young stock were lower due to dry and variable conditions, resulting in pressure on graziers to meet targets.
The model farm shows a 2.3 percent increase in per-cow production compared to last year. The stocking rate continues to increase, reflecting the continuing trend on most Canterbury farms to run a few more cows each year. The industry meeting held as part of the information gathering for this report suggested that there was more variability in production across farms this season, for all the reasons described above. Production on the sample of farms ranges from 337 kilograms of milksolids to 484 kilograms of milksolids per cow, and on a per hectare basis from 1000 kilograms of milksolids to 1700 kilograms of milksolids per hectare.
Farmers’ forecast per cow production for the model will increase again by 2 percent for the year ahead. Farmers are improving management and installing feeding systems, but the industry group considered that the season and management would have to be very good for the 2 percent increase to be achieved.
Financial position of the farm
Review of 2005/06
Revenue
Gross farm revenue increased by only $3,400 from 2004/05. The payout was higher than expected in the forecast budget in 2005, but farmers are disappointed it wasn’t better as their costs are increasing. The total production from the model farm increased 3.7 percent to 246 500 kilograms of milksolids, which was in line with expectations in the forecast budget in 2005. However, within the sample there was more variation than normal because of the difficult climatic conditions.
Cattle income was in line with expectations, with calf and cull cow prices rising slightly and a drop off in heifer prices as the live export trade slowed.
Expenditure
Expenditure per kilogram of milksolids produced continues to increase for this farm model. In the 2005 report, farmers forecast the model budget expenditure for 2006/07 to reduce from $2.78 per kilogram of milksolids to $2.67 per kilogram of milksolids. In reality, the 2006/07 costs have increased to $2.83 per kilogram of milksolids, a 1.8 percent increase, or $37,000 for the farm.
The main expenditure increases have been on labour, energy, and fertiliser. Labour increases are due mainly to higher rates being paid to good employees, and for additional employees required to fulfil the requirements of labour legislation and improve conditions for existing workers. Industry people commented more farm owners are reducing their active role in the farm and employing labour or entering into lower order sharemilking and management contracts.
The 30 percent rise in expenditure on electricity reflects a combination of increased irrigation pumping (the 2004/05 year was a lower use year), increased energy unit cost, particularly for those on the spot market, and the continuing trend to spray irrigation from border strip systems.
Feed expenditure was about the same as in 2004/05. Potential savings from lower feed prices, resulting from the excess of feed after the mild 2005 winter and static grazing prices, were cancelled out by rises in contracting costs and the amount of feed made during the spring and summer. Grain supplements also held their price in line with the world cereal markets being stronger than expected. Alternative cheaper feeds, such as Palm kernel are available, but are not as easy to feed as grain.
Fertiliser expenditure rose by 4.5 percent. This was primarily cost-driven as the price of urea increased significantly. Farmers report reduced nitrogen use, particularly where excessive rates have been used in the past. Nitrogen use is being reassessed due to the cost and also increased pressure from society. Tools such as nutrient budgeting are being used more to ensure that nutrients are not wasted and that production will not be affected. An estimated 10 to 20 percent of Canterbury dairy farmers are using nitrogen inhibitors as a substitute for urea to improve production and reduce nitrate leaching risk. However, some have commented that it is difficult to determine the results and it is a more expensive approach.
Fuel, vehicle costs, and general repairs and maintenance add up to a 13 percent increase in expenditure. Fortunately for many, several years of capital investment has improved the standard of machinery and irrigation equipment, and consequently reduced the need for increasingly expensive parts and service people.
Expenditure areas that occur in the budget below the cash farm surplus line have also increased significantly. Interest rate rises as farms come off fixed rate have generally increased debt-servicing costs, and more debt continues to be taken on to fund share purchases and capital expenditure. Banks report that more farmers are on interest-only payments, continuing a recent trend.
Capital for share purchases, sheds and irrigation equipment, and infrastructure is being kept at similar levels to 2004/05, while spending on other capital plant is slowing. This bodes well for the maintenance of productivity gains in the last few years. The cost of living also continues to increase for farming families, with drawings rising to $70,000 despite forecast reductions in this area in the 2005 report. The calculated tax payable is significantly higher than for 2004/05.
Net result
At $249,500 net trading profit is down 13 percent on 2004/05. Despite principal repayment and capital items being reduced, the disposable cash situation is only about $8,000 better than 2004/05 at a deficit of $132,000. This deficit is made up by new borrowing in the model budget.
Farmers estimate the value of land and buildings has increased by only 5 percent this year, compared to
15 percent for 2004/05. Rural valuers agreed with this estimate, based on recent sales.
Forecasts for 2006/07
Revenue
Farmers expect to increase the gross revenue by 1.1 percent for 2006/07. This reflects a slightly higher payout but a lower deferred component for the 2006/07 year. Cattle revenue is expected to rise 4 percent. A production lift for the model of 3.7 percent to 255 600 kilograms of milksolids is reflected in these forecasts. Per-cow production rises by 2 percent to 405 kilograms of milksolids. Industry commentators noted that the production season would need to go well to achieve these production increases.
Expenditure
The forecast expenditure is 3 percent lower than for the 2005/06 year at $2.75 per kilogram of milksolids, although the total forecast expenditure for the farm model is up 1 percent to $703,400. In previous years, forecasts of lower expenditure on a milksolids basis have been shown to be overly optimistic. Industry commentators note that farmers are expecting the big ticket items of labour and energy to rise. They will try to hold all other costs to compensate, such as animal health, repairs and maintenance, and feed. In practice, these other costs tend to be also rising steadily, with little opportunity for the farmer to influence this.
Labour costs are forecast by farmers to rise a further 8 percent, but industry people believe this figure could be on the low side, given the very tight labour market and new labour legislation that effectively means more staff are required to carry out the same amount of work.
Total feed costs are forecast to reduce by 3 cents per kilogram of milksolids because of forecast higher production and maintaining feed costs per kilogram of feed. Industry commentators noted this may be difficult to achieve. Since then, the winter conditions have become colder and feed prices are lifting, so this forecast is likely to be revised upwards as the expected surplus of winter feed will be affected.
Fertiliser is expected to increase in price, although this will be countered by reduced use where possible. Winter feed prices for 2006 had lifted before the snow from 18 cents per kilogram dry matter to 20 cents per kilogram dry matter.
Energy costs are expected to remain similar to the 2005/06 year, on the basis that the demand for irrigation will be less but the cost per unit will continue to rise. Industry people believe energy costs are likely to be greater than farmers think and that use is unlikely to drop enough to compensate.
Stock prices have lifted from $1,100–$1,200 per cow last year to $1,250–$1,400 per cow in 2005/06. Heifer prices have risen from $950–$1,000 last year to $1,100–$1,150. High empty rates, continuing live export, dairy farm expansion, and new conversions have all added to the pressure on herd sales.
Recent interest rate increases have been factored in by farmers, with the model showing an 8 percent increase in interest payments. However, the calculated tax due is reduced considerably, reflecting the lower profits of 2005/06. Accountants have been recommending the use of equalisation provisions to smooth tax payments.
In reality, the increased disposable profit that the model forecast budget shows for 2006/07 may have been nullified by the use of equalisation in the 2005/06 year. Dairy farming structures are also continually altering, with one effect being to reduce tax liability compared to the model owner/operator with a partner.
Farmers intend to keep up development expenditure while reducing capital purchases. The rebate from the share conversion of Peak Notes during the year means the amount of new borrowing required to cover the disposable deficit will be lower than in previous years. Nevertheless, the debt level of the model farm continues to increase.
Net result
The model farm net trading profit is expected to fall by 2 percent to $244 432 for the 2006/07 year. This is primarily due to farmers’ expectations of higher expenses. These expectations may have been underestimated.
Figure 6.1: Canterbury dairy profitability trends
Symbol
f Forecast
Issues and trends
Water issues remain the most important consideration for dairy farming in Canterbury. A hearing of 70 groundwater consents from a zone considered by Environment Canterbury to be fully allocated is due to begin in August. The outcome will be very important to all water users in Canterbury. Some farmers among the group have been waiting for over two years for a ruling on their allocation applications, having already spent considerable money on developing their land for irrigation. Changes to the Waimakariri River flow regime will impact on water available for irrigation in January and February, and some issues remain with regard to the Waitaki area water plan and how it will be operationalised. Reliability of the Hurunui River schemes may be affected by a review. Farmers are generally taking the view that while there is still some chance of getting an allocation of water, they must be in the queue otherwise they will miss out for a long time.
The conversion from border-dyke irrigation to spray, mainly by centre pivot irrigators, continues to gain momentum. On-farm storage ponds are being formed in areas where existing run-of-river schemes cannot supply water for on-demand irrigation. These storage areas are typically of 2 to 4 hectares in size and are of comparable cost to sinking a bore. They improve the efficiency of water used by allowing pumping and spray irrigating as the soil needs it, rather than irrigation when the water supply is available on the scheme roster. However, the ponds are not large enough to hold surplus water to counter restriction periods. These systems require more energy than border-dykes, but considerably less than irrigation from groundwater bores..
Proposals for new water supply schemes continue to be promoted, primarily to provide more irrigation, but also with other objectives such as restoration of environmental flows, reduction of pressure on groundwater systems, and recreational opportunities. However, the hurdles faced by the promoters are increasing.
Of particular concern to those who can see the wider benefits is the opposition from within communities. One scheme in North Otago will be operational for the 2006/07 season, bringing several new dairy farms into production. Including this area, there are 25 new dairy sheds becoming operational between Timaru and Oamaru.
Overall, there has been a considerable amount of money and time spent on water issues by dairy and other farmers throughout Canterbury. Farmers’ attitudes appear to be changing from believing that there is plenty of water for everyone, to being more circumspect that the supply under current arrangements and infrastructure is indeed limited. The 2005/06 situation has been a reality check for many. Many farmers believe that either the allocation line must be drawn somewhere, or that the supply of water needs to be increased, or a combination of both. The unfortunate side of the current situation is that some farmers with irrigation are refusing to support neighbours’ consent applications when they have in the past, thus setting community members against one another. Experienced industry consultants note that the whole community, including environmental and recreational users, need to be brought on side before progress can be made.
Farmers are also concerned about water quality issues, both from the point of view of minimising impacts on water quality and the misinformation being touted in the media about the severity and causes of problems. Peer pressure within communities is the greatest driver to address these issues – from farmers’ children and partners, and from each other through success in community awards such as the Ballance Farm Environment Awards. Generally, farmers are showing greater interest in fencing streams and keeping stock out, reducing nitrogen fertiliser inputs, doing nutrient budgets, and using nitrification inhibiting products. Areas of the farm where potential overuse occurs, such as where dairy shed waste is recycled onto the pastures, are being actively assessed to balance fertiliser use with need. Fonterra and the industry bodies are driving this message, while the high cost of urea is also providing an incentive for more judicious fertiliser use. The main motivation for farmers is to reduce costs, but many are prepared to sacrifice some profit to do the right thing in the short term for long-term sustainability and public acceptability reasons.
The drive to increase production continues as Fonterra sees Canterbury and North Otago region as one of the most suitable parts of the country to meet their target of 4 percent annual production increases. Fonterra has increased their DDT weighted average limit from 0.2ppm to 0.7ppm. New farms with levels higher than 0.3ppm will be tested daily for a minimum of three years. With greater dilution volumes of milk through Clandeboye and improved understanding and management of soils, Fonterra has the confidence to raise the level from what was a very cautious stance. These new limits may help ease land price pressure by qualifying more land for potential conversion.
There were 20 new conversions in the North Otago and Canterbury region for the 2005/06 year, with an expected 35 more for next season. Industry observers note that the cost of conversion plus land and share prices means conversion margins are very tight, and outside equity is usually required. Banks are actively encouraging conversion from other land uses and are involved in developing equity relationships with other investors. There is a mature industry around equity partnerships now, with investors moving into and out of arrangements in an orderly way.
Concentrate feeding of herds is an increasing trend as farmers continue to seek higher performance and more automation. Small groups are looking at driving this to more European-style intensive systems, but this is not widespread and has yet to be proved profitable given Canterbury’s relatively high feed costs.
Labour shortages continue to affect the industry. Many farmers are questioning where the labour will come from to milk the predicted lift in cow numbers over the next few years. Young workers with no experience are able to get work in many industries and the minimum wage is effectively around $25,000 per annum, up from $22,000 last year. More workers from overseas are being sought and are highly valued. The trend of recent years to once-a-day milking has stabilised.
Land values have not lifted significantly over the last year. Any increase has been in the value of shares. Typically, spray irrigated land is selling between $30,000 and $32,000 per hectare. Values between the North and South Island for bona fide dairy land (i.e. land where values are not driven by lifestyle or racehorse uses) are now very similar. A valuer reported that there is more interest in border strip irrigated areas compared to areas that are spray irrigated from deep wells. This reflects the perceived reliability of the different water sources following a year of very low groundwater levels, and the energy costs of pumping water from deep wells. Many farmers are questioning the high price of dairy company shares in relation to Fonterra’s payout and neighbouring Westland Dairy Company’s payout. The change in share holding structures is still not fully understood by many suppliers and is creating concern as to how it will affect sharemilkers and owners.
Farmers are generally satisfied with the industry. Few in this region are selling their shares unless they are at the stage of life where releasing cash from the business is important to them. New options for capital realisation from shares are of only minor interest to this group. Several farmers are looking to diversify to Australia and elsewhere, although prefer to be where Fonterra has some influence. Some are concerned about the future of the traditional discussion group, which has been a proven technology transfer approach in the past, with seminar-based methods. Some may continue as self-funded groups.
Table 6.3: Canterbury Dairy Budget
| 2005/06 | 2006/07f | ||||||
|---|---|---|---|---|---|---|---|
| Whole farm | Per cow | Per kgms | Whole farm | Per cow | Per kgms | ||
| ($) | ($) | ($) | ($) | ($) | ($) | ||
| Revenue | |||||||
| Milksolids | 1 039 516 | 1 674 | 4.22 | 1 048 795 | 1 662 | 4.10 | |
| Cattle | 87 360 | 141 | 0.35 | 91 070 | 144 | 0.36 | |
| Other farm income | 9 000 | 14 | 0.04 | 9 000 | 14 | 0.04 | |
| Less | |||||||
| Cattle purchases | 5 500 | 9 | 0.02 | 6 000 | 10 | 0.02 | |
| Gross farm revenue | 1 130 376 | 1 820 | 4.59 | 1 142 865 | 1 811 | 4.47 | |
| Cash farm expenditure | 697 436 | 1 123 | 2.83 | 703 430 | 1 115 | 2.75 | |
| Interest | 170 986 | 275 | 0.69 | 184 144 | 292 | 0.72 | |
| Rent and/or leases | 0 | 0 | 0.00 | 0 | 0 | 0.00 | |
| Cash farm surplus | 261 954 | 422 | 1.06 | 255 291 | 405 | 1.00 | |
| Stock value adjustment | 15 616 | 25 | 0.06 | 16 740 | 27 | 0.07 | |
| Minus depreciation | 28 058 | 45 | 0.11 | 27 599 | 44 | 0.11 | |
| Net trading profit | 249 513 | 402 | 1.01 | 244 432 | 387 | 0.96 | |
| Taxation | 118 798 | 191 | 0.48 | 70 150 | 111 | 0.27 | |
| Net trading profit after tax | 130 715 | 210 | 0.53 | 174 282 | 276 | 0.68 | |
| Allocation of Funds | |||||||
| Add back depreciation | 28 058 | 45 | 0.11 | 27 599 | 44 | 0.11 | |
| Reverse stock value adjustment | – 15 616 | – 25 | – 0.06 | – 16 740 | – 27 | – 0.07 | |
| Drawings | 70 000 | 113 | 0.28 | 69 000 | 109 | 0.27 | |
| Principal repayments | 25 000 | 40 | 0.10 | 25 000 | 40 | 0.10 | |
| Development | 73 950 | 119 | 0.30 | 76 680 | 122 | 0.30 | |
| Capital purchases | 106 038 | 171 | 0.43 | 84 522 | 134 | 0.33 | |
| Disposable surplus/deficit | – 131 832 | – 212 | – 0.53 | – 70 060 | – 111 | – 0.27 | |
| Other Cash Sources | |||||||
| New borrowing | 130 000 | 209 | 0.53 | 30 000 | 48 | 0.12 | |
| Off-farm income | 0 | 0 | 0.00 | 0 | 0 | 0.00 | |
| Other cash income | 0 | 0 | 0.00 | 47 643 | 76 | 0.19 | |
| Net cash change | – 1 832 | – 3 | – 0.01 | 7 583 | 12 | 0.03 | |
| Assets and Liabilities | |||||||
| Farm, forest and building (opening) | 4 500 000 | 7 246 | 18.26 | 4 725 000 | 7 488 | 18.49 | |
| Plant and machinery (opening) | 187 050 | 301 | 0.76 | 183 993 | 292 | 0.72 | |
| Stock valuation (opening) | 850 495 | 1 370 | 3.45 | 866 111 | 1 373 | 3.39 | |
| Dairy company shares | 1 437 750 | 2 315 | 5.83 | 1 604 354 | 2 543 | 6.28 | |
| Total farm capital | 6 975 295 | 11 232 | 28.30 | 7 379 457 | 11 695 | 28.87 | |
| Total debt opening | 2 011 600 | 3 239 | 8.16 | 2 116 600 | 3 354 | 8.28 | |
| Equity | 4 963 695 | 7 993 | 20.14 | 5 262 857 | 8 341 | 20.59 |
Symbol
f Forecast
Table 6.4: Canterbury Dairy Expenditure
| 2005/06 | 2006/07f | ||||||
|---|---|---|---|---|---|---|---|
| Whole farm | Per cow | Per kgMS | Whole farm | Per cow | Per kgMS | ||
| ($) | ($) | ($) | ($) | ($) | ($) | ||
| Farm Working Expenses | |||||||
| Permanent wages | 110 925 | 179 | 0.45 | 120 132 | 190 | 0.47 | |
| Casual wages | 7 395 | 12 | 0.03 | 7 668 | 12 | 0.03 | |
| ACC | 10 568 | 17 | 0.04 | 11 785 | 19 | 0.05 | |
| Animal health | 44 370 | 71 | 0.18 | 40 896 | 65 | 0.16 | |
| Breeding | 17 255 | 28 | 0.07 | 17 892 | 28 | 0.07 | |
| Dairy shed expenses | 12 325 | 20 | 0.05 | 12 780 | 20 | 0.05 | |
| Electricity | 61 625 | 99 | 0.25 | 61 344 | 97 | 0.24 | |
| Feed (hay and silage) | 81 345 | 131 | 0.33 | 81 792 | 130 | 0.32 | |
| Feed (feed crops) | 0 | 0 | 0.00 | 0 | 0 | 0.00 | |
| Feed (grazing) | 78 880 | 127 | 0.32 | 79 236 | 126 | 0.31 | |
| Feed (other) | 32 045 | 52 | 0.13 | 30 672 | 49 | 0.12 | |
| Fertiliser | 80 725 | 130 | 0.33 | 80 250 | 127 | 0.31 | |
| Lime | 2 958 | 5 | 0.01 | 2 556 | 4 | 0.01 | |
| Freight (not elsewhere deducted) | 4 930 | 8 | 0.02 | 5 112 | 8 | 0.02 | |
| Re-grassing costs | 8 628 | 14 | 0.04 | 7 668 | 12 | 0.03 | |
| Weed and pest control | 5 916 | 10 | 0.02 | 5 112 | 8 | 0.02 | |
| Fuel | 12 325 | 20 | 0.05 | 12 780 | 20 | 0.05 | |
| Vehicle costs (excluding fuel) | 19 720 | 32 | 0.08 | 20 448 | 32 | 0.08 | |
| Repairs and maintenance | 56 695 | 91 | 0.23 | 53 676 | 85 | 0.21 | |
| Communication costs | 4 930 | 8 | 0.02 | 5 112 | 8 | 0.02 | |
| (phone and mail) | |||||||
| Accountancy | 2 465 | 4 | 0.01 | 2 556 | 4 | 0.01 | |
| Legal and consultancy | 1 972 | 3 | 0.01 | 2 556 | 4 | 0.01 | |
| Other administration | 6 409 | 10 | 0.03 | 7 668 | 12 | 0.03 | |
| Water charges (irrigation) | 4 437 | 7 | 0.02 | 5 112 | 8 | 0.02 | |
| Rates | 10 846 | 17 | 0.04 | 10 224 | 16 | 0.04 | |
| Insurance | 7 395 | 12 | 0.03 | 7 668 | 12 | 0.03 | |
| Other expenditure | 10 353 | 17 | 0.04 | 10 735 | 17 | 0.04 | |
| Cash farm expenditure | 697 436 | 1 123 | 2.83 | 703 430 | 1 115 | 2.75 | |
| Calculated Ratios | |||||||
| Economic farm surplus (EFS1) | 345 499 | 556 | 1.40 | 353 576 | 560 | 1.38 | |
| Cash farm expenditure/GFR2 | 62% | 62% | |||||
| EFS/total farm capital | 5.0% | 4.8% | |||||
| EFS less interest and lease/equity | 3.5% | 3.2% | |||||
| Interest+rent+lease/GFR | 15.1% | 16.1% | |||||
| EFS/GFR | 30.6% | 30.9% |
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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