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9 National Dairy Budget

The following budget has been constructed via a weighted average of the models. The weighting, on a model basis, was as follows: Northland 9.1 percent, Waikato/Bay of Plenty 43.6 percent, Lower North Island

24.0 percent, Canterbury 12.6 percent, and Southland 10.8 percent. This weighting is based on the number of dairy cows in each region from the 2005 Livestock Improvement survey.

Table 9.1: National Dairy Model Summary

	2002/03	2003/04	2004/05	2005/06	2006/07f
Total milksolids/cow	1 268	1 322	1 400	1 405	1 374
kg milksolids/ha	888	898	873	958	979
kg milksolids/cow milked	333	340	327	346	347
Milksolids advance to end June ($/kg)	3.30	3.72	3.95	3.60	3.65
Milksolids deferred payment ($/kg)	0.60	0.27	0.50	0.64	0.47
Cattle income ($)	35 100	32 470	37 981	42 923	46 347
Other farm income ($)	2 004	1 643	1 225	1 654	1 418
Gross farm revenue ($)	378 527	446 019	486 191	536 685	540 786
Cash farm expenditure ($)	262 355	259 635	286 062	326 462	330 157
Net trading profit ($)	48 739	98 959	111 911	110 358	104 167
Disposable surplus/deficit ($)	– 71 491	– 6 693	– 29 021	–  30 162	– 25 337

Symbol
f Forecast

Figure 9.1: National dairy profitability trends

Symbol
f Forecast

Table 9.2: National Dairy Budget

		2005/06			2006/07f
	Whole farm	Per cow	Per kgMS	Whole farm	Per cow	Per kgMS
	($)	($)	($)	($)	($)	($)
Revenue
Milksolids	495 598	1 409	4.21	496 789	1 374	4.09
Cattle	42 923	127	0.39	46 347	134	0.40
Other farm income	1 654	3	0.01	1 418	3	0.01
Less
Cattle purchases	3 489	11	0.03	3 767	11	0.03
Gross farm revenue	536 685	1 529	4.57	540 786	1 499	4.47
Gross farm expenditure	326 462	927	2.77	330 193	914	2.72
Interest	80 829	224	0.66	84 469	227	0.67
Rent and/or leases	0	0	0.00	0	0	0.00
Cash farm surplus	129 395	378	1.14	126 125	358	1.08
Stock value adjustment	5 380	12	0.03	3 266	7	0.02
Minus depreciation	24 417	74	0.23	25 224	75	0.23
Net trading profit	110 358	315	0.95	104 167	290	0.87
Taxation	38 674	105	0.32	21 888	55	0.16
Net trading profit after tax	71 685	210	0.63	82 279	235	0.71
Allocation of Funds
Add back depreciation	24 417	74	0.23	25 224	75	0.23
Reverse stock value adjustment	–5 380	–12	–0.03	–3 266	–7	–0.02
Drawings	57 159	178	0.55	59 040	180	0.55
Principal repayments	8 246	25	0.08	6 884	19	0.06
Development	13 980	31	0.09	15 179	34	0.09
Capital purchases	41 499	116	0.35	48 471	139	0.42
Disposable surplus/deficit	–30 162	–77	–0.23	–25 337	–67	–0.20
Other Cash Sources
New borrowing	17 290	30	0.08	3 780	6	0.01
Off-farm income	11 603	41	0.13	12 233	42	0.13
Other cash income	0	0	0.00	19 259	55	0.17
Net cash change	– 1 270	– 6	– 0.02	9 936	35	0.11
Assets and Liabilities
Farm, forest and	2 932 689	8 842	26.82	3 309 879	9 785	29.65
building (opening)
Plant and machinery (opening)	120 270	354	1.07	126 710	367	1.11
Stock valuation (opening)	457 812	1 340	4.04	468 131	1 333	4.01
Dairy company shares	708 513	2 026	6.06	774 832	2 145	6.39
Total farm capital	4 219 283	12 562	38.00	4 679 552	13 630	41.16
Total debt opening	955 534	2 641	7.77	985 537	2 652	7.77
Equity  (assets-liabilities)	3 263 749	9 921	30.23	3 694 016	10 978	33.39

Symbol
f Forecast

 Table 9.3: National Dairy Expenditure

		2005/06			2006/07f
	Whole farm	Per cow	Per kgms	Whole farm	Per cow	Per kgms
	($)	($)	($)	($)	($)	($)
Farm Working Expenses
Permanent wages	48 880	134	0.39	51 385	137	0.40
Casual wages	2 842	8	0.03	2 906	8	0.03
ACC	6 031	18	0.06	6 362	18	0.06
Animal health	21 839	63	0.19	21 398	61	0.18
Breeding	10 030	30	0.09	10 409	30	0.09
Dairy shed expenses	7 036	21	0.06	7 062	20	0.06
Electricity	15 984	40	0.12	16 536	41	0.12
Feed (hay and silage)	30 451	82	0.24	30 195	79	0.23
Feed (feed crops)	2 920	8	0.03	3 172	9	0.03
Feed (grazing)	32 717	89	0.26	33 169	88	0.26
Feed (other)	13 923	40	0.12	13 849	39	0.11
Fertiliser	43 526	127	0.38	44 839	128	0.39
Lime	1 267	3	0.01	1 226	3	0.01
Freight (not elsewhere deducted)	2 706	8	0.02	2 895	8	0.02
Re-grassing costs	3 808	11	0.03	3 645	10	0.03
Weed and pest control	2 553	7	0.02	2 490	7	0.02
Fuel	9 287	28	0.09	10 225	31	0.09
Vehicle costs (excluding fuel)	10 477	31	0.09	9 989	28	0.08
Repairs and maintenance	25 037	72	0.21	22 022	60	0.18
Communication costs	3 449	10	0.03	3 520	10	0.03
(phone and mail)
Accountancy	3 258	10	0.03	3 329	10	0.03
Legal and consultancy	2 826	9	0.03	2 859	9	0.03
Other administration	2 846	8	0.02	3 238	9	0.03
Water charges (irrigation)	559	1	0.00	644	1	0.00
Rates	8 733	27	0.08	9 042	27	0.08
Insurance	5 391	17	0.05	5 541	17	0.05
Other expenditure	8 084	25	0.08	8 210	25	0.08
Cash farm expenditure	326 462	927	2.77	330 157	914	2.72
Calculated Ratios1
Economic farm surplus (EFS2)	116 776	302	0.87	114 688	289	0.83
Cash farm expenditure/GFR3	60.9%			61.0%
EFS/total farm capital	2.5%			2.2%
EFS less interest and lease/equity	0.9%			0.7%
Interest+rent+lease/GFR	14.5%			15.0%
EFS/GFR	19.2%			18.7%
Physical Parameters
Effective area (ha)	123			124
Cows milked	341			350
Milksolids (kg)	117 881			121 502

Notes
1 The ratios are weighted average ratios calculated from the regional ratios. These results differ slightly from ratios calculated using the national model data.
2 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.
3 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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