- The South Island merino farm
- Key points
- Physical factors
- Financial position of the farm
- Issues and trends
- Budget
9 South Island merino
The South Island merino farm
This model represents 190 hill and high country merino properties in the South Island. It does not represent lowland merino properties or merino properties with less than 3000 stock units. More than 80 percent of revenue comes from sheep and beef, and less than 15 percent of total stock units are made up of deer. All sheep are merino.
Approximately 70 percent of merino sheep are located in the Central Otago/Mackenzie Country area and the remainder are almost exclusively in the Canterbury and Marlborough regions.
These farms range in size from 1000 to 40 000 hectares and are normally 30 minutes drive from a rural servicing centre, but are a considerable distance from the main centres.
The average size of the property is 6500 hectares. Three years previous, the average size was 6000 hectares. This reflects smaller properties changing breed of sheep and some property amalgamation occurring. Summers are hot and dry, and winters are cold with most properties experiencing winter snow falls.
Table 9.1: South Island merino model summary, 2005/06
| Effective area | 6 500 ha | Total stock units wintered | 9 363 su | |
| Opening stock wintered | Breeding cows | 139 hd | ||
| Breeding ewes | 5 010 hd | R1yr cattle | 63 hd | |
| Replacement ewe hoggets | 1 500 hd | R2yr cattle | 29 hd | |
| Other sheep | 2 868 hd | Other cattle | 3 hd |
Key points
- The 2005/06 was a difficult season climatically for farmers because of exceptionally dry conditions during the summer and autumn of 2006.
- The model’s record-high lambing percentage of 93 percent in 2005/06 was due to very good mating weights in autumn 2005 and a mild winter with no spring storms.
- The average store lamb price fell $19.64 (38 percent) to $31.66 per head, reflecting the dry conditions compared with moist conditions the previous autumn.
- The 2005/06 budget result is a cash loss of $62,000. Farmers are concerned about the ongoing viability for this model. This is the third year of a significant cash loss for merino high country farms.
- The average wool price at $6.16 per kilogram is the lowest it has been for seven years.
Table 9.2: Key parameters of the South Island merino model
| 2002/03 | 2003/04 | 2004/05 | 2005/06 | 2006/07f | |
|---|---|---|---|---|---|
| Effective area (ha) | 6 000 | 5 900 | 6 500 | 6 500 | 6 500 |
| Opening sheep stock units | 8 172 | 7 978 | 7 654 | 8 116 | 7 841 |
| Opening cattle stock units | 1 387 | 1 384 | 1 167 | 1 246 | 1 209 |
| Opening total stock units | 9 559 | 9 362 | 8 821 | 9 363 | 9 050 |
| Stocking rate (su/ha) | 1.6 | 1.6 | 1.4 | 1.4 | 1.4 |
| Ewe lambing (percent) | 84 | 86 | 90 | 93 | 90 |
| Average lamb price ($/hd) | 52.50 | 44.50 | 54.31 | 36.24 | 43.42 |
| Average wool price ($/kg) | 8.37 | 9.15 | 6.83 | 6.16 | 6.89 |
| Total wool produced (kg) | 35 959 | 37 185 | 37 286 | 40 101 | 36 876 |
| Wool production (kg/ssu1) | 4.40 | 4.70 | 4.90 | 4.94 | 4.70 |
| Average R2 yr steer ($/hd) | 843 | 748 | 594 | 745 | 755 |
| Average cull cow ($/hd) | 790 | 550 | 473 | 477 | 445 |
| Gross farm revenue ($) | 589 140 | 467 058 | 480 812 | 496 492 | 483 208 |
| Cash farm surplus ($) | 212 800 | 82 444 | 75 737 | 66 862 | 41 576 |
| Net trading profit ($) | 144 386 | 58 267 | 103 594 | 21 060 | 27 514 |
| Disposable surplus/deficit ($) | 61 300 | – 47 182 | – 40 626 | – 62 338 | – 18 252 |
Notes
1 2004/05 figures have been revised because of changes to the sale
and purchase price of lambs and the stocking rate calculation.
2 Sheep stock unit.
Symbol
f Forecast
Physical factors
The 2005/06 season contrasted with the previous wetter year by being one of the driest years since the 1960s. Most areas had a very mild winter followed by a calm spring. The combination of the mild weather conditions and above-average stock condition lead to the highest lambing percentage (93 percent) the model has recorded. Increased lamb survival over the 2005 spring contributed to the record lambing percentage.
Most areas had a dry late spring and summer and below-average rainfall until late April 2006, resulting in lower than average feed levels. A number of properties through Central Otago and the Mackenzie Basin have been feeding out since March, and some farmers in Marlborough have had cattle away grazing since Christmas.
Farmers made good quantities of supplementary feed in the 2004/05 year, some of which was carried forward into 2005/06 because of the mild winter. In 2005/06, although most properties made first cuts of supplementary feed, some areas of Central Otago did not make any supplementary feed. Winter crops on dryland are very disappointing this year, and reflect the lack of rainfall and soil moisture. Farmers with reliable irrigation have made adequate levels of supplementary feed. The cumulative effect of the poor growing season and low supplementary feed harvest in 2005/06 is farms entered the 2006 winter with low reserves of silage, hay and green feed crops.
Total stock units declined by 3 percent, or 313 stock units, during the 2005/06 year due to higher numbers of young stock being sold because of the dry autumn and low supplement reserves going into the winter. The number of lambs sold store after weaning increased, resulting in 160 (6 percent) fewer merino hoggets being wintered in 2006. Cattle numbers wintered have declined from 234 in 2005 to 220 head in 2006. Cow numbers have remained the same but more calves were sold store and less finishing cattle are being wintered. Any surplus trading stock were sold off because of the dry conditions.
Merino wether numbers continue to decline and are down 6 percent from 1500 in 2005/06 to 1410 in 2006/07. The main reduction is in the number of two-tooth wethers being kept for replacements, with the replacement rate falling from 20 percent to 15 percent. Wether numbers are expected to continue to decline in 2006/07 by a further 2 percent to 1380.
On some properties owners are grazing the easier traditional wether country with ewes, because of the better economic performance of this stock class. This trend is expected to continue while wool prices are low and the replacement cost of wether hoggets remains relatively high. The tenure review process is also contributing because it has resulted in large areas of wether country being transferred to Department of Conservation management.
Financial position of the farm
Review of 2005/06
Revenue
Gross farm revenue is $496,000 ($53.03 per stock unit) for the 2005/06 year. When adjusted for the sale of capital stock (due to the drought) the adjusted revenue is $483,000 ($51.58 per stock unit). This compares to adjusted gross farm revenue of $541,000 ($61.35 per stock unit) in the 2004/05 financial year.
The average wool price for this model decreased from $6.83 per kilogram in 2004/05 to $6.16 per kilogram in 2005/06. Wool prices were volatile throughout the season. The New Zealand Merino Company average sale price for merino wool pre-Christmas was $5.68 per kilogram, compared with the average price post-Christmas (January to May 2006) of $7.83 per kilogram. This represents an increase of 38 percent compared with the pre-Christmas period. The average Merino Company contract price across all merino wool types was $7.21 per kilogram and 40 to 50 percent of the Merino Company wool clip is now in some form of short to medium-term contract.
Sheep revenue increased from 2004/05 by $3,200 to $183,700 in 2005/06, due to more lambs being sold at weaning instead of being carried over winter. The increase in sheep sales less purchases to $173,000 (see Table 9.3) was considerably lower than the budgeted figure of $226,000 because the average lamb price decreased by $18.07 per head, from $54.31 per head in 2004/05 to $36.24 per head in 2005/06.
Store lamb prices fell $19.45 per head from $51.11 per head. Lambs sold to the works fell $11.68 per head, from $56.80 per head to $45.12 per head. There were large variations in price depending on when lambs were sold. In some cases significant discounting occurred as farmers had to sell on weak markets because of the dry conditions experienced up the east coast of the South Island. Most of these properties were selling lambs later than other areas and after the lamb schedule had fallen. Thirty-eight percent of all lambs were sold to the works, compared with 56 percent in 2004/05.
The average merino hogget price of $61.18 in 2005/06 remained at a similar level to 2004/05 because the lamb schedule remained strong through the early spring period of 2005 when the merino hoggets were finished for the spring market. This continues to be an important income stream for merino farmers.
Cattle revenue increased by $25,200 to $71,200. This reflects strong demand for calves through the autumn and more sales of store cattle because of the drought.
The average price of annual draft ewes in 2005/06 fell to $31.14 per head, a drop of 28 percent on the 2004/05 season, because the drought reduced the demand for annual draft ewes. Mating some merino ewes to a terminal sire continues to provide additional flexibility for merino farmers as their lambs are more marketable after weaning and can be sold store or kept on and finished.
Table 9.3: South Island merino cash farm revenue
| 2002/03 ($) | 2003/04 ($) | 2004/05 ($) | 2005/06 ($) | 2006/07f ($) | |
|---|---|---|---|---|---|
| Sheep sales less purchases | 162 275 | 143 298 | 171 390 | 173 425 | 163 623 |
| Cattle sales less purchases | 76 705 | 36 228 | 42 218 | 67 745 | 57 009 |
| Wool | 340 240 | 274 833 | 254 605 | 247 022 | 254 076 |
| Other income | 9 920 | 12 700 | 12 600 | 8 300 | 8 500 |
| Gross farm revenue | 589 140 | 467 058 | 480 812 | 496 492 | 483 208 |
Symbol
f Forecast
Expenditure
Cash farm expenditure for 2005/06 of $367,800 was an increase of $14,000 (4 percent) from 2004/05. However, the 2005/06 expenditure per stock unit of $39.28 was down from $40.11 per stock unit in 2004/05 due to the high opening stock numbers in 2005/06.
Farm working expenses in 2005/06 were 74 percent of gross farm income, which is similar to the 2004/05 year.
Labour costs were up from $49,000 in 2004/05 to $54,500 in 2005/06, an 11 percent increase. The increase occurred mainly in permanent staff wages, reflecting the higher cost in retaining quality staff. Animal health at $2.78 per stock unit was similar to the 2004/05 level in 2005/06.
The use of drench capsules has decreased and the use of flystrike prevention products has increased. Hay and silage costs were down from $34,000 in 2004/05 to $25,000 in 2005/06, a decrease of 26 percent, reflecting the reduction in supplementary feed made.
Other feed increased from $5,500 to $8,000, being mainly hay and grain purchases to increase supplements going into the winter.
Fertiliser costs decreased from $5.22 per stock unit in 2004/05 to $4.70 per stock unit (down 6 percent) in 2005/06. Farmers concentrated fertiliser application on to intensive irrigated and cultivated areas where they gained the most benefit from the applications. There is more use of high analysis fertiliser on irrigated areas. Further applications were delayed because of dry conditions and farmers being more conscious of expenditure. Re-grassing costs decreased from $1.69 per stock unit in 2004/05 to $1.50 per stock unit (down 11 percent) in 2005/06, reflecting less re-grassing occurring due to the dry conditions.
Shearing costs at $6.78 per sheep stock unit in 2005/06 remain at similar levels to 2004/05. This is the first year for three years farmers have not seen a price increase in shearing costs. Weed and pest control costs increased from $1.02 per stock unit in 2004/05 to $1.64 in 2005/06, up 60 percent. Some properties in parts of Central Otago are making significant investments in rabbit control, including night shooting and poisoning. There is also more herbicide use on intensive areas, as well as a continuation of spraying woody weeds on hill country.
Fuel costs increased by 19 percent from $14,100 in 2004/05 to $16,800 in 2005/06 (19 percent) reflecting the increasing price of fuel. Vehicle costs, excluding fuel, declined slightly by 4 percent to $13,000. Repairs and maintenance increased slightly by $1,300 to $26,000 in 2005/06. The level of improvements on properties is generally high given the significant reinvestment in property maintenance that has occurred over the last five years.
Drawings have not increased for some years, with most farmers tightening up recently to minimise cash losses. Development costs increased from $21,000 in 2004/05 to $40,000 in 2005/06 – an increase of $19,000. This reflects an increased investment in irrigation.
Net capital purchases decreased from $31,000 in 2004/05 to $20,000 in 2005/06. In previous years farmers have been replacing equipment at rates higher than depreciation levels.
Tax will increase from $11,300 in 2004/05 to $16,200 in 2005/06. This is due
to a carry over of terminal tax from the previous year.
Interest costs have increased from $45,925 in 2004/05 to $56,430 in 2005/06.
This was due to an increase in debt, interest rates having increased slightly
and some loans coming out of fixed-rate agreements onto higher interest rates.
Net result
The net cash result in 2005/06 was a deficit of $49,800 compared with a deficit of $28,100 for 2004/05. The deficit was $84,800 lower than budgeted in 2005 when a net cash surplus of $35,000 was forecast. This large decrease from budget to actual is predominantly due to lower than budgeted sheep and wool revenue. This is the third year of cash loss for this model, causing concern for farmers about the ongoing viability of these farms.
The return on total farm capital is 0.1 percent in 2005/06, compared with 1.3 percent in 2004/05. Both are disappointingly low. These properties have high farm working expenses compared with gross farm revenue at 74 percent. When farm working expenses are combined with interest and rent it is 86 percent, a more desirable figure would be 75 percent. The margin between income and farm working expenses needs to be a lot wider for these properties to be sustainable.
Land prices continue to rise. The land price opened at $614 per stock unit and is forecast to increase to $654 per stock unit though there have been few sales in recent months. Those sales that have occurred have been for values rather than production. The ratio of land price to gross farm revenue is now above a ratio of 10:1, showing the widening gap between land price and returns.
Forecasts for 2006/07
Revenue
Gross farm revenue is budgeted to decrease from $496,000 in 2005/06 to $483,000 in 2006/07. Gross farm revenue per stock unit is expected to be $53.56 per stock unit in 2006/07, which is similar to 2005/06 stock unit revenue. However, the reduction in total farm stock units of 312 stock units between years reduces the revenue forecast.
Sheep revenue is budgeted to decrease by $9,800 (5 percent) to $173,800 in 2006/07. This is because of lower spring hogget sales due to less hoggets being wintered in 2006. The lambing percent is expected to drop to 90 percent in 2006/07, compared with 93 percent for 2005/06. Farmers’ expectations of a lower lambing percentage is because stock are generally in lighter condition than in 2005, although industry commentators consider farmers are somewhat optimistic in their expectations.
Wool revenue is forecast to increase by $7,000 to $254,000 in 2006/07. The wool price is expected to increase 12 percent to $6.89 per kilogram. Wool production is forecast to decrease slightly because of lower sheep bodyweights due to the dry conditions and less feed available in the summer and autumn of 2006. Less hoggets will be shorn so the total kilograms for sale will fall by 8 percent to 36,900 kilograms in 2006/07. Wool production per head is also forecast to fall from 4.94 kilogram per head to 4.70 kilogram per head.
Cattle revenue is budgeted to decrease by $10,730 to $60,500 in 2006/07. The main reason for this is fewer cattle to be sold. Prices are expected to decrease by $10 to $20 per head.
Other farm income in 2006/07 is expected to remain at a similar level as 2005/06.
Expenditure
Cash farm expenditure in 2006/07 is budgeted to be $373,000, an increase of $5,000 (1.4 percent) above 2005/06. This equates to $41.32 per stock unit, an increase between years of 5 percent per stock unit resulting from the forecast decrease in stock units from 2005/06 to 2006/07.
Labour costs are expected to rise by a further $3,500 to $58,000 in 2006/07, due to increased competition for quality staff. Shearing costs are forecast to increase 3 percent from $6.78 per sheep stock unit to $6.98 per sheep stock unit.
Fertiliser expenditure is budgeted to increase by 10 percent to $5.21 per stock unit in 2006/07. Less fertiliser was applied in the 2005/06 year due to the dry conditions and it is expected that additional fertiliser will be applied in the coming year. Feed costs are budgeted to be similar between years at $34,000. However, expectations are that more supplements will be made and less supplements purchased. Re-grassing costs are expected to remain similar at $1.50 per stock unit. Weed and pest control is budgeted to increase slightly by $1,100 to $16,500 in 2006/07. Farmers are still concerned about rabbit numbers and continue to invest in controlling them.
Fuel is expected to increase by 10 percent to $18,500. This reflects the pressure on fuel supplies and concern about rising costs of fuel. Spending on repairs and maintenance is expected to drop by $2,000 (5 percent) to $2.65 per stock unit.
Development expenditure is expected to decline from $40,000 in 2005/06 to $6,000 in 2006/07 as there is expected to be significantly less irrigation development undertaken in the coming year. Capital purchases in 2006/07 are forecast to decline to $10,000.
A tax refund in 2006/07 of $9,200 is forecast compared with a payment of $16,200 in 2005/06.
Net result
The net cash result is forecast to be –$7,300 compared with –$49,800 in 2005/06. The net trading profit before tax is expected to be up from $17,600 to $27,500 in 2006/07.
Figure 9.1: South Island merino profitability trends
Issues and trends
Financial performance is a challenge in this farm class. Merino properties that have high wether numbers and/or sell significant numbers of store lambs are coming under the most financial pressure. There is growing concern about the high cost of production on this class of property, which leaves them exposed to reductions in income. Many farmers are aiming to run high-performance merino flocks that require higher animal health and feed costs.
Total debt has increased to $81.00 per stock unit. However, the average property has equity of $6,099,000 or 90 percent resulting from the rapid increase in land values over recent years. This does, though, make farm succession increasingly difficult.
Tenure review continues to be an area of uncertainty for high country farmers. Approximately 18 percent of the original 304 pastoral leases have received freehold title or accepted proposals. A further 46 percent are in varying stages of the tenure review process while 36 percent have not entered the process. Rents on crown pastoral leases are increasing dramatically when they come up for review but many of these have gone to appeal and not yet been implemented. Some properties that have completed tenure review are no longer paying pastoral lease rental. Consequently, the rent in the model budget remains unchanged.
The New Zealand Merino Company merged with PGG Wrightson Fine Wool business during the year and now market 90 percent of merino wool. They run a value added selling model through Melbourne and a low-cost option selling through Christchurch. One to three-year contracts remain popular with farmers, with 40 to 50 percent of the Merino Company clip contracted.
The number of merino ewes mated to a terminal sire at 15 percent has remained at similar levels to the 2004/05 year. There is some experimentation with alternative sheep breeds, particularly dual purpose sheep which have better fertility, lamb survival and growth rates.
Farmers who have invested in irrigation development on their properties have shown it to be of benefit because of the strategic value that it adds to their farming system. Irrigation allows them to move from a more traditional store stock enterprise to be able to finish lambs and hoggets. The gain in control and confidence for farmers in their farming systems has proven of great value. Irrigation is therefore seen by many as a good strategic move for high country properties that are able to do this. Water allocation and water rights continue to be difficult for farmers to progress. Many farmers are delaying irrigation developments until water allocation issues are finalised. There is significant potential for large-scale irrigation in the upper Wataki catchment given the allocation of 25 000 hectares of water provided through the Waitaki Water Allocation Board process.
Compliance issues such as occupational safety and health, public access, local district plans, biodiversity strategies, hazardous substances, employment law, water allocation and tenure review take up a considerable amount of farmers’ time and are impacting on farmers ability to run their businesses given the large amount of time required for these issues.
Public access onto high country properties is increasing at a rate that is concerning and it is becoming more difficult to manage for some high country farmers.
Income from tourism has a small impact on total income for high country properties. The majority of developments to date are small scale, low impact ventures, such as accommodation, trekking and hunting. The benefits derived from these activities are as much social as they are financial. There are a few properties that are strategically located and have invested heavily in tourism and will derive significant amounts of their income from this in the future. This trend is expected to continue slowly as farmers identify opportunities in the tourism industry.
Rabbit numbers remain low in many areas due to Rabbit Haemorrhagic Disease. There are pockets developing in some areas of Central Otago where rabbit numbers have increased to a level where poisoning is now necessary.
Table 9.4: South Island merino budget
| 2005/06 | 2006/07f | |||||
|---|---|---|---|---|---|---|
| Whole farm ($) | Per ha ($) | Per su ($) | Whole farm ($) | Per ha ($) | Per su ($) | |
Revenue | ||||||
| Sheep | 183 685 | 28 | 22.63 | 173 883 | 27 | 22.18 |
| Wool | 247 022 | 38 | 30.43 | 254 076 | 39 | 32.40 |
| Cattle | 71 245 | 11 | 57.17 | 60 509 | 9 | 51.24 |
| Grazing income | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Other farm income | 8 300 | 1 | 0.89 | 8 500 | 1 | 0.94 |
| Less | ||||||
| Sheep purchases | 10 260 | 2 | 1.26 | 10 260 | 2 | 1.31 |
| Cattle purchases | 3 500 | 1 | 2.81 | 3 500 | 1 | 2.96 |
| Gross farm revenue | 496 492 | 76 | 53.03 | 483 208 | 74 | 53.56 |
| Cash farm expenditure | 367 800 | 57 | 39.28 | 372 819 | 57 | 41.32 |
| Interest | 56 430 | 9 | 6.03 | 63 413 | 10 | 7.03 |
| Rent and/or lease | 5 400 | 1 | 0.58 | 5 400 | 1 | 0.60 |
| Cash farm surplus | 66 862 | 10 | 7.14 | 41 576 | 6 | 4.61 |
| Stock value adjustment | – 17 031 | – 3 | – 1.82 | 16 351 | 3 | 1.81 |
| Minus depreciation | 32 250 | 5 | 3.44 | 30 413 | 5 | 3.37 |
| Net trading profit | 17 581 | 3 | 1.88 | 27 514 | 4 | 3.05 |
| Taxation | 16 200 | 2 | 1.73 | – 9 172 | – 1 | – 1.02 |
| Net trading profit after tax | 1 381 | 0 | 0.15 | 36 686 | 6 | 4.07 |
Allocation of funds | ||||||
| Add back depreciation | 32 250 | 5 | 3.44 | 30 413 | 5 | 3.37 |
| Reverse stock value adjustment | 17 031 | 3 | 1.82 | – 16 351 | – 3 | – 1.81 |
| Drawings | 53 000 | 8 | 5.66 | 53 000 | 8 | 5.87 |
| Principal repayments | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Development | 40 000 | 6 | 4.27 | 6 000 | 1 | 0.67 |
| Capital purchases | 20 000 | 3 | 2.14 | 10 000 | 2 | 1.11 |
| Disposable surplus/deficit | 62 338 | 10 | 6.66 | 18 252 | 3 | 2.02 |
Other cash sources | ||||||
| New borrowing | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Off–farm income | 12 500 | 2 | 1.34 | 11 000 | 2 | 1.22 |
| Other cash income | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Net cash change | 49 838 | 8 | 5.32 | 7 252 | 1 | 0.80 |
| Assets and liabilities | ||||||
| Farm, forest & building (opening) | 5 750 000 | 885 | 614.14 | 5 900 000 | 908 | 653.93 |
| Plant and machinery (opening) | 215 000 | 33 | 22.96 | 202 750 | 31 | 22.47 |
| Stock valuation (opening) | 748 975 | 115 | 80.00 | 731 944 | 113 | 81.13 |
| Total farm capital | 6 713 975 | 1 033 | 717.10 | 6 834 694 | 1 051 | 757.53 |
| Total debt opening | 675 000 | 104 | 72.09 | 735 383 | 113 | 81.51 |
| Equity | 6 038 975 | 929 | 645.01 | 6 099 311 | 938 | 676.02 |
Symbol
f Forecast
Table 9.5: South Island merino expenditure
| 2005/06 | 2006/07f | |||||
|---|---|---|---|---|---|---|
| Whole farm ($) | Per ha ($) | Per su ($) | Whole farm ($) | Per ha ($) | Per su ($) | |
Farm working expenses | ||||||
| Permanent wages | 52 300 | 8 | 5.59 | 56 000 | 9 | 6.21 |
| Casual wages | 2 200 | 0 | 0.23 | 2 000 | 0 | 0.22 |
| ACC | 3 550 | 1 | 0.38 | 2 919 | 0 | 0.32 |
| Animal health | 26 000 | 4 | 2.78 | 26 500 | 4 | 2.93 |
| Breeding | 2 300 | 0 | 0.25 | 1 500 | 0 | 0.17 |
| Electricity | 6 700 | 1 | 0.72 | 8 300 | 1 | 0.92 |
| Feed (hay and silage) | 25 000 | 4 | 2.67 | 26 000 | 4 | 2.88 |
| Feed (crops) | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Feed (grazing) | 1 500 | 0 | 0.16 | 300 | 0 | 0.03 |
| Feed (other) | 8 000 | 1 | 0.85 | 7 500 | 1 | 0.83 |
| Fertiliser | 44 000 | 7 | 4.70 | 47 000 | 7 | 5.21 |
| Lime | 1 700 | 0 | 0.18 | 300 | 0 | 0.03 |
| Farm forestry costs | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Freight (not elsewhere deducted) | 10 500 | 2 | 1.12 | 8 400 | 1 | 0.93 |
| Re-grassing costs (contractors) | 14 000 | 2 | 1.50 | 13 500 | 2 | 1.49 |
| Shearing costs (per ssu) | 55 000 | 8 | 6.78 | 54 700 | 8 | 6.98 |
| Weed and pest control | 15 400 | 2 | 1.64 | 16 500 | 3 | 1.82 |
| Fuel | 16 800 | 3 | 1.79 | 18 500 | 3 | 2.04 |
| Vehicle costs (excluding fuel) | 13 000 | 2 | 1.39 | 13 300 | 2 | 1.47 |
| Repairs and maintenance | 26 000 | 4 | 2.78 | 24 000 | 4 | 2.66 |
| Communication costs (phone and mail) | 3 900 | 1 | 0.42 | 3 900 | 1 | 0.43 |
| Accountancy | 5 100 | 1 | 0.54 | 5 300 | 1 | 0.59 |
| Legal and consultancy | 3 150 | 0 | 0.34 | 2 600 | 0 | 0.29 |
| Other administration | 3 100 | 0 | 0.33 | 3 500 | 1 | 0.39 |
| Rates | 8 900 | 1 | 0.95 | 8 900 | 1 | 0.99 |
| Insurance | 8 200 | 1 | 0.88 | 8 300 | 1 | 0.92 |
| Water charge | 200 | 0 | 0.02 | 200 | 0 | 0.02 |
| Other expenditure | 11 300 | 2 | 1.21 | 12 900 | 2 | 1.43 |
| Cash farm expenditure | 367 800 | 57 | 39.28 | 372 819 | 57 | 41.32 |
Calculated ratios | ||||||
| Economic farm surplus (EFS1) | 4 411 | 1 | 0.47 | 21 327 | 3 | 2.36 |
| Cash farm expenditure/GFR2 | 74% | 77% | ||||
| EFS/total farm capital | 0.1% | 0.3% | ||||
| EFS less interest & lease/equity | – 0.9% | – 0.8% | ||||
| Interest+rent+lease/GFR | 12.5% | 14.2% | ||||
| EFS/GFR | 0.9% | 4.4% |
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:
$31,000 allowance for labour input plus 1% 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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