- The Manawatu/Rangitikei intensive sheep and beef farm
- Key points
- Physical factors
- Financial position of the farm
- Issues and trends
- Budget
8 Manawatu/Rangitikei intensive sheep and beef
The Manawatu/Rangitikei intensive sheep and beef farm
This model is situated on flat to easy rolling country in the Manawatu and Rangitikei districts. The model farm is 393 effective hectares, with 318 owned and 75 leased. The annual rental on the lease block is $37,500, or $500 per hectare. Farms are mainly involved in lamb and cattle purchasing and finishing, but the model includes a 1500 ewe flock. In addition to purchasing and selling stock, farmers contract-graze stock for other farmers. In the model 2950 lambs are grazed for 16 weeks and 110 dairy heifers for 50 weeks. Many farms in this district also undertake a small amount of cropping, largely as part of their re-grassing programme.
Table 8.1: Manawatu/Rangitikei intensive sheep and beef model summary, 2005/06
| Effective area | 393 ha | Total stock units wintered1 | 4 561su | |
| Opening stock wintered | Breeding cows | 0 hd | ||
| Breeding ewes | 1 500 hd | R1yr cattle | 190 hd | |
| Replacement ewe hoggets | 500 hd | R2yr cattle | 135 hd | |
| Other sheep | 1 820 hd | Other cattle | 0 hd |
Note
1 Includes opening grazing stock numbers.
Key points
- 2005/06 was a mixed season. Winter and early spring 2005 were good, but were followed by a wet, cool October and November, then a dry period in February and March 2006.
- Growth rates in young stock were disappointing and delayed finishing.
- Lamb price declined rapidly and unexpectedly in autumn due to an unforeseen collapse in the export market.
- This class of farm is very dependent on trading margins for stock and grazing revenues. The difficulties in trading and finishing lambs have led to an increasing trend toward grazing lambs on contract.
- Reduced trading margins on cattle and lambs were primarily responsible for the reduced gross farm revenue and a sizable disposable deficit in 2005/06.
- Farmers are more optimistic about trading margins and an improved financial result in 2006/07 after the disappointing result in 2005/06.
- Closure of the McCain Foods vegetable processing plant at Feilding has reduced cropping options for these farmers.
Table 8.2: Key parameters of the Manawatu/Rangitikei intensive sheep and beef model
| 2002/03 | 2003/04 | 2004/051 | 2005/06 | 2006/07f | |
|---|---|---|---|---|---|
| Effective area (ha) | 393 | 393 | 393 | 393 | 393 |
| Opening sheep stock units | 3 089 | 2 496 | 3 070 | 3 126 | 3 231 |
| Opening cattle stock units | 1 900 | 2 284 | 2 109 | 1 435 | 1 695 |
| Opening total stock units | 4 989 | 4 780 | 5 179 | 4 561 | 4 926 |
| Stocking rate (su/ha) | 12.7 | 12.2 | 13.2 | 11.6 | 12.5 |
| Ewe lambing (%) | 129 | 122 | 132 | 130 | 130 |
| Average lamb price ($/hd) | 69.00 | 69.00 | 70.60 | 60.00 | 63.00 |
| Average wool price ($/kg) | 3.07 | 2.78 | 2.74 | 2.55 | 2.71 |
| Total wool produced (kg) | 14 832 | 14 822 | 9 830 | 13 940 | 14 550 |
| Wool production (kg/ssu2) | 5.3 | 5.9 | 3.2 | 4.5 | 4.5 |
| Average 30-month bull ($/hd) | 0 | 0 | 1 010 | 1 100 | 1 120 |
| Gross farm revenue ($) | 408 165 | 449 552 | 422 165 | 397 757 | 450 829 |
| Cash farm surplus ($) | 110 929 | 132 957 | 76 646 | 28 751 | 83 427 |
| Net trading profit ($) | 70 717 | 114 152 | 65 634 | 35 426 | 60 487 |
| Disposable surplus/deficit ($) | – 16 876 | 12 607 | – 27 355 | – 57 849 | – 2 261 |
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 season from July to September 2005 was milder and drier than average. This improved pasture growth rates and feed utilisation. Lamb survival also improved but high ewe death rates were a feature, attributed largely to a higher incidence of bearings in ewes.
The October to December period was characterised by dull, cool weather. Properties were tight for feed over this period. Growth rates in young stock, particularly lambs, were disappointing, with cold weather being largely blamed for the poor performance. As a result, a greater proportion of lambs were sold store in 2005/06 (15 percent) than in 2004/05 (5 percent).
There was a noticeable lack of clover in pastures. This was attributed
largely to clover root weevil damage but the same problem arose in other parts
of the country where clover root weevil was not present. Apart from the cold
weather, another suggested cause was the much lower level of nitrogen applied
over the early spring period, along with leaching by heavy rains in October,
resulting in low nitrogen levels by early summer.
By December 2005, weaning weights in lambs and growth rates in young cattle were
10 percent to 15 percent behind, which delayed the processing of this stock.
Ewes also lost condition over this period, and the growth rate of two-tooth ewe
replacements, particularly those that had lambed as hoggets, suffered.
The region went through a very dry spell from late January to mid-March 2006. This had negative consequences for both production and revenue. The diminished feed supply delayed the finishing of cattle and particularly lambs. This coincided with a downward correction in prime lamb and store lamb prices due to an unforeseen collapse in the export market for lamb. This delay in the finishing and sale of stock further exposed properties in this region to the rapid decline in sheep prices.
Cereal crops were established on time due to the dry weather through September and early October. Later-sown feed crops were, however, adversely affected by very wet conditions in late November and early December. This reduced the subsequent summer yield in some of these crops.
Yields in cereal crops were variable through February and March 2006. Some good crops of greenfeed maize and squash grown to contract, and good yields of malting and feed barley were reported.
The season improved with good rain in late March resulting in very strong pasture recovery and feed covers building through April and May. Air temperatures in April and May were 1 to 1.5 degrees above-average.
The Rangitikei region did not suffer the extremes of dry weather that Manawatu experienced over the January to March 2006 period and stock production from that region are likely to be less affected. By contrast, the coastal sand country of Manawatu dried off very early and took longer to recover after rain in the autumn.
There has been a very cold start to winter, and although feed covers at the end of May 2006 were 10 to 15 percent ahead of normal, they have disappeared quickly.
The lambing percentage for 2005 at 130 percent was 2 percent lower than 2004. This was due primarily to bearings in ewes. This lower lambing percentage is expected to continue for the 2006 lambing. Breeding ewes were under feed pressure through March 2006 and this is expected to have had some negative effect on ovulation rates. This is forecast to reduce lambing percentages, particularly for later lambing ewes. However, the scanning rates for early March tupping flocks have been good.
The feed carried through from the early spring surpluses in 2005 was much more suited to cattle, and cows and weaned calves did well. The good pasture growth rates supported the beef cattle markets (prime and store) and led to some substitution of cattle for lambs.
Due to the difficulties experienced in trading and finishing lambs over the summer period, and with the decline in the lamb schedule, there is an increasing trend away from trading lambs toward grazing lambs on contract to meat companies, large-scale breeding operations and private stockowners. As a result, there was a reduced turnover of traded lambs in 2005/06 (2800 lambs purchased) compared with 2004/05 (3100 lambs purchased). This trend is forecast to carry on into 2006/07 (2550 lambs purchased) with substitution of lamb grazing in place of lamb trading. Grazed lambs have increased from 570 in 2004/05, to 2950 in 2005/06, and 3200 forecast in 2006/07.
Declining store cattle numbers and increasing demand for store cattle, has seen the trading margins in finishing cattle diminish over the last two years. This in turn has resulted in a lower turnover in trading stock; finishers trading down an age class to reduce the cost of replacements and holding cattle for longer periods; and an increase in the number of grazing cattle, particularly dairy stock (largely 12-month replacement heifer grazing as opposed to short-term cow grazing in the winter).
There is an expectation of a 6 percent higher stocking rate by 30 June 2006 but whether this eventuates will depend very much on influences from the market and the season in June 2006.
Financial position of the farm
Review of 2005/06
Revenue
Gross farm revenue of $398,000 was 6 percent lower than 2004/05 and 15 percent down on the forecast due primarily to the high exchange rate, the unexpected and rapid decline in the lamb price, and poor animal growth rates. Trading margins on cattle and particularly on lambs were reduced, but grazing income was higher than forecast. The price of wool in this model also declined further to $2.55 per kilogram in 2005/06, compared with $2.74 in 2004/05.
The net revenue per hectare derived from sheep (sales less purchases) for 2005/06 is expected to be $440, compared to $470 per hectare for the 2004/05 year. The net beef revenue was $208 per hectare in 2005/06 ($326 per hectare in 2004/05), and revenue from grazing was $209 per hectare ($169 per hectare in 2004/05). The gross farm revenue per hectare for 2005/06 is $1,012 per hectare ($1,074 per hectare in 2004/05), a decline of approximately 6 percent.
Table 8.3: Manawatu/Rangitikei intensive sheep and beef cash farm revenue
| 2002/03 ($) | 2003/04 ($) | 2004/05r ($) | 2005/06 ($) | 2006/07f ($) | |
|---|---|---|---|---|---|
| Sheep sales less purchases | 171 388 | 182 732 | 185 816 | 173 175 | 187 715 |
| Cattle sales less purchases | 164 250 | 166 905 | 128 066 | 81 855 | 110 250 |
| Wool | 45 534 | 41 205 | 26 886 | 35 557 | 39 399 |
| Grazing income | 18 843 | 57 270 | 66 397 | 82 170 | 91 465 |
| Other income | 8 150 | 1 440 | 15 000 | 25 000 | 22 000 |
| Gross farm revenue | 408 165 | 449 552 | 422 165 | 397 757 | 450 829 |
Symbol
f Forecast
r Revised
Expenditure
Total farm expenses for 2005/06 were $253,000, or $644 per hectare, 1.5 percent lower than in 2004/05. Despite this, cash farm expenditure as a percentage of gross farm revenue increased between these years from 60 percent in 2004/05 to 64 percent in 2005/06 because of the lower revenue.
Some key movements in the model were a 20 percent increase in wages, a 30 percent increase in vehicle and fuel costs, a 44 percent increase in rates (some rate relief post-flooding applied in 2004/05), a 10 percent decrease in expenditure on fertiliser and lime, an 18 percent reduction in re-grassing expenditure, and a 15 percent decrease in repairs and maintenance. There was a 23 percent increase in agricultural contracting costs on surveyed farms.
The reality of the decline in farming incomes was not apparent until February/March 2006, by which time the expenditure programmes had already been committed, resulting in higher than expected cash deficits for the year.
The model shows tax refunds in 2005/06 and a low payment in 2006/07, but most farmers will be paying tax in 2005/06 if they do not adjust or re-estimate their provisional tax. This could add $13,000 to the deficit in 2005/06 and result in a larger tax refund in 2006/07.
Net result
The net trading profit before tax in the model amounted to $35,400 ($90 per hectare) around 50 percent of the 2004/05 result. This is some $50,000 less than forecast, and was mainly attributable to net cattle revenue being 41 percent lower than forecast and net sheep revenue 13 percent lower than forecast. Net trading profits on surveyed farms ranged from –$197 per hectare to $585 per hectare and seven of the 20 farms contributing to the model had negative net trading profits before tax.
The disposable deficit after debt repayments, drawings, capital purchases, and tax for the 2005/06 year is $57,800. This compares with a deficit of $27,000 in the 2004/05 year. The properties represented by this model are quite highly geared with farm working expenses at 64 percent of gross farm revenue and interest and rent at 29 percent of gross farm revenue.
Forecasts for 2006/07
Revenue
Farmers in this model expect gross farm revenue to increase by 13 percent in 2006/07 compared with 2005/06. There is a general expectation of bigger trading margins for both lamb and cattle finishing. Farmers are expecting to pay less for store lambs in 2006/07 than in 2005/06 ($46 versus $47) and they are expecting a slight increase in the works lamb price from $62 to $63 in 2006/07. Compared with 2005/06, when 15 percent of lambs were sold store, farmers are expecting to return to more normal levels of 95 percent of lambs being sold to the works. The resulting forecast is an increase in average lamb price from $60.00 in 2005/06 to $63.00 in 2006/07.
Farmers are expecting the margin between cattle sales and purchases to increase to $450 in 2006/07 from $370 in 2005/06. This increased margin is expected to result from the purchase of younger cattle, purchasing cattle earlier in the season and a return to holding more cattle over winter. Fewer cattle are expected to be traded in 2006/07.
The wool price is expected to recover to $2.71 per kilogram in 2006/07, up from $2.55 per kilogram in 2005/06. Wool weights have been variable depending on the number of trading lambs that were shorn.
The revenue achieved from grazing stock (cattle and sheep) increased from $66,000 in 2004/05 to $82,000 in 2005/06, and is expected to be $91,000 in 2007.
The net revenue per hectare derived from sheep (sales less purchases) is forecast to increase to $478 per hectare in 2006/07, (from $440 per hectare in 2005/06). Net cattle revenue is forecast to increase to $281 per hectare (from $208), grazing revenue to increase to $232 per hectare (from $209) and gross farm revenue per hectare is forecast to be $1,147, compared with $1,012 per hectare in the 2005/06 year.
Expenditure
The forecast for 2006/07 has total farm expenses reduced from $644 to $627 per hectare (down 3 percent). The main budget reductions are discretionary items of expenditure such as fertiliser (down 11 percent), and repairs and maintenance (down 17 percent). These reductions may be hard to achieve in practice.
There is a trend for owner-operators to do more work themselves rather than employ contractors (for cultivation work, shearing, etc.). Most of these properties have had above-maintenance levels of expenditure on their infrastructure and facilities in the last four to five years and can afford to live off this for a couple of years if they have to.
Cost increases are expected for freight, fuel, insurance, and interest costs. Fixed rate mortgages are beginning to roll over at higher interest rates. Development and capital purchases are expected to be reduced.
Local government rating policies in these districts have been adjusted and farmers are expecting rural rates to hold at current levels in 2006/07 and, in some cases, to even reduce.
Net result
The net trading profit before tax in the model for 2006/07 is forecast to be $60,000 compared with $35,000 in 2005/06. The net result forecast for 2006/07 is an economic farm surplus (EFS) of $271 per hectare (40 percent up on 2005/06).
Figure 8.1: Manawatu/Rangitikei intensive sheep and beef profitability trends
Issues and trends
The decline in the exchange rate has restored some confidence to farmers. Despite a difficult trading environment in the second half of 2005/06, there is a general perception among farmers that the worst is behind them in terms of the sheep market and the high exchange rate. If commodity prices do not improve in the early part of the 2006/07 year, we will see a further reduction in expenditure in these businesses in order to preserve profitability.
The high exchange rate that prevailed through to late February 2006, in combination with the collapse of the export lamb market through the autumn, and the dry conditions that prevailed over that period, put a lot of pressure on farm businesses in this region. This has brought about serious scrutiny of profitability, particularly in light of the declining margins in lamb and cattle trading. The lack of market intelligence in forecasting the fall off in lamb prices for the 2006 autumn has appalled and frustrated sheep farmers.
Inflation in costs is having a large impact on profitability. The 35 percent increase in fuel costs over the last 18 months has impacted on transport and service costs. In addition, shearing and wages increased along with the cost of fertiliser, and materials for repairs and maintenance.
There has been increased use of Palm kernel extract as a feed supplement to substitute for maize silage, but the variable metabolisable energy provided by Palm kernel extract is noted.
Property values in the Manawatu and Rangitikei continue to firm. The value of land and buildings in the model has been increased from $9,000 per hectare in 2004/05 to $11,200 per hectare by June 2006, an increase of 25 percent. These estimates of value are borne out by recent land sales.
Some expansionary activity in the form of purchases of land and acquisitions of leases continues. The average property size in our 20-farm survey sample was relatively static from 2004/05 to 2005/06, but has increased 6 percent from 2006/07, primarily through land purchase. Total debt on these properties has increased from $650,000 in 2004/05, to $900,000 in 2005/06, moving up to $940,000 in 2006/07. One of the main reasons for the increase in debt in 2006/07 is a significant amount of land purchase within the surveyed farms.
The miss-match between property values and the profitability of those properties is putting pressure on those businesses that have recently bought land and even those that are leasing land to find alternative, more profitable land uses. There is also increasing difficulty in implementing succession plans because of the high value of the asset involved in relation to the viability of farming that asset, and the difficulty it imposes in terms of achieving parity in the treatment of siblings and providing for the retiring family’s needs.
Off-farm investment into residential, industrial and commercial property continues as farmers seek to diversify their asset base.
The influence of the dairy sector on this class of property is considerable. We see this through increased grazing of dairy heifers and growing of supplementary feed such as maize silage. The dairy sector is competing to lease this class of land with prices of up to $600 per hectare annual lease rental being paid for land that can be milked off, compared to the $390 to $420 per hectare being paid by dry stock sheep and beef farmers to lease similar land. Dairy heifer grazing is predicted to reduce as more dairy farms purchase run-offs. There is a surplus of dairy heifer grazing being offered, but this has not translated into reduced prices except for above-average grazing rates.
There appears to be further decline in cash cropping area although there is some optimism that the malting barley and feed barley prices may increase in 2007.
The withdrawal of McCain’s contracts from this area has removed this option from those who are growing potatoes and sweet corn for this company. These growers may now turn to maize or squash as an alternative, which will effectively increase competition for the growing of these crops. Some properties are likely to revert to livestock.
There is concern at the gradual erosion of property rights through the imposition of the Resource Management Act, local body legislation, walking access proposals, nutrient budgeting and water quality regulation, and subdivision laws.
There is an ongoing difficulty in finding qualified staff to employ on these properties (as in other primary industry sectors).
There is a perception that the government is unsupportive of producers and exporters, and doesn’t understand the relationship between production, employment, exports and GDP, and, therefore, the wealth and well-being of the country’s population.
Table 8.4: Manawatu/Rangitikei intensive sheep and beef budget
| 2005/06 | 2006/07f | |||||
|---|---|---|---|---|---|---|
| Whole farm ($) | Per ha ($) | Per su ($) | Whole farm ($) | Per ha ($) | Per su ($) | |
Revenue | ||||||
| Sheep | 306 525 | 780 | 119.46 | 306 765 | 781 | 114.85 |
| Wool | 35 557 | 90 | 13.86 | 39 399 | 100 | 14.75 |
| Cattle | 251 420 | 640 | 225.49 | 252 460 | 642 | 189.11 |
| Grazing income | 82 170 | 209 | 93.38 | 91 465 | 233 | 18.57 |
| Other farm income | 25 000 | 64 | 5.48 | 22 000 | 56 | 4.47 |
| Less | ||||||
| Sheep purchases | 133 350 | 339 | 51.97 | 119 050 | 303 | 44.57 |
| Cattle purchases | 169 565 | 431 | 152.08 | 142 210 | 362 | 106.52 |
| Gross farm revenue | 397 757 | 1 012 | 87.21 | 450 829 | 1 147 | 91.52 |
| Cash farm expenditure | 253 131 | 644 | 55.50 | 246 252 | 627 | 49.99 |
| Interest | 78 375 | 199 | 17.18 | 83 650 | 213 | 16.98 |
| Rent and/or lease | 37 500 | 95 | 8.22 | 37 500 | 95 | 7.61 |
| Cash farm surplus | 28 751 | 73 | 6.30 | 83 427 | 212 | 16.94 |
| Stock value adjustment | 28 575 | 73 | 6.27 | – 1 325 | – 3 | – 0.27 |
| Minus depreciation | 21 900 | 56 | 4.80 | 21 615 | 55 | 4.39 |
| Net trading profit | 35 426 | 90 | 7.77 | 60 487 | 154 | 12.28 |
| Taxation | – 2 543 | – 6 | –0.56 | 723 | 2 | 0.15 |
| Net trading profit after tax | 37 970 | 97 | 8.32 | 59 764 | 152 | 12.13 |
Allocation of funds | ||||||
| Add back depreciation | 21 900 | 56 | 4.80 | 21 615 | 55 | 4.39 |
| Reverse stock value adjustment | – 28 575 | – 73 | – 6.27 | 1 325 | 3 | 0.27 |
| Drawings | 46 000 | 117 | 10.09 | 46 000 | 117 | 9.34 |
| Principal repayments | 20 000 | 51 | 4.39 | 22 000 | 56 | 4.47 |
| Development | 3 144 | 8 | 0.69 | 1 965 | 5 | 0.40 |
| Capital purchases | 20 000 | 51 | 4.39 | 15 000 | 38 | 3.05 |
| Disposable surplus/deficit | 57 849 | 147 | 12.68 | 2 261 | 6 | 0.46 |
Other cash sources | ||||||
| New borrowing | 20 000 | 51 | 4.39 | 0 | 0 | 0.00 |
| Off–farm income | 9 000 | 23 | 1.97 | 9 000 | 23 | 1.83 |
| Other cash income | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Net cash change | 28 849 | 73 | 6.33 | 6 739 | 17 | 1.37 |
Assets and liabilities | ||||||
| Farm, forest & building (opening) | 4 410 500 | 11 223 | 967.00 | 4 410 500 | 11 223 | 895.35 |
| Plant and machinery (opening) | 146 000 | 372 | 32.01 | 144 100 | 367 | 29.25 |
| Stock valuation (opening) | 350 730 | 892 | 76.90 | 387 080 | 985 | 78.58 |
| Total farm capital | 4 907 230 | 12 487 | 1075.91 | 4 941 680 | 12 574 | 1 003.18 |
| Total debt opening | 900 000 | 2 290 | 197.33 | 940 000 | 2 392 | 190.82 |
| Equity | 4 007 230 | 10 197 | 878.59 | 4 001 680 | 10 182 | 812.36 |
Symbol
f Forecast
Table 8.5: Manawatu/Rangitikei intensive sheep and beef expenditure
| 2005/06 | 2006/07f | |||||
|---|---|---|---|---|---|---|
| Whole farm ($) | Per ha ($) | Per su ($) | Whole farm ($) | Per ha ($) | Per su ($) | |
Farm working expenses | ||||||
| Permanent wages | 35 370 | 90 | 7.75 | 35 763 | 91 | 7.26 |
| Casual wages | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| ACC | 4 187 | 11 | 0.92 | 3 441 | 9 | 0.70 |
| Animal health | 14 541 | 37 | 3.19 | 13 755 | 35 | 2.79 |
| Breeding | 1 572 | 4 | 0.34 | 1 965 | 5 | 0.40 |
| Electricity | 5 109 | 13 | 1.12 | 5 502 | 14 | 1.12 |
| Feed (hay and silage) | 3 930 | 10 | 0.86 | 3 930 | 10 | 0.80 |
| Feed (crops) | 3 930 | 10 | 0.86 | 4 323 | 11 | 0.88 |
| Feed (grazing) | 1 572 | 4 | 0.34 | 0 | 0 | 0.00 |
| Feed (other) | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Fertiliser | 54 627 | 139 | 11.98 | 48 339 | 123 | 9.81 |
| Lime | 393 | 1 | 0.09 | 393 | 1 | 0.08 |
| Farm forestry costs | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Freight (not elsewhere deducted) | 9 825 | 25 | 2.15 | 10 611 | 27 | 2.15 |
| Re-grassing costs (contractors) | 9 039 | 23 | 1.98 | 9 825 | 25 | 1.99 |
| Shearing costs (per ssu) | 23 362 | 59 | 9.10 | 23 517 | 60 | 8.80 |
| Weed and pest control | 6 681 | 17 | 1.46 | 6 288 | 16 | 1.28 |
| Fuel | 11 790 | 30 | 2.58 | 13 362 | 34 | 2.71 |
| Vehicle costs (excluding fuel) | 13 362 | 34 | 2.93 | 11 004 | 28 | 2.23 |
| Repairs and maintenance | 20 829 | 53 | 4.57 | 17 292 | 44 | 3.51 |
| Communication costs (phone and mail) | 2 751 | 7 | 0.60 | 2 751 | 7 | 0.56 |
| Accountancy | 3 930 | 10 | 0.86 | 3 930 | 10 | 0.80 |
| Legal and consultancy | 1 572 | 4 | 0.34 | 1 572 | 4 | 0.32 |
| Other administration | 2 751 | 7 | 0.60 | 2 751 | 7 | 0.56 |
| Rates | 14 148 | 36 | 3.10 | 14 148 | 36 | 2.87 |
| Insurance | 5 502 | 14 | 1.21 | 6 681 | 17 | 1.36 |
| Water charges | 0 | 0 | 0.00 | 0 | 0 | 0.00 |
| Other expenditure | 2 358 | 6 | 0.52 | 5 109 | 13 | 1.04 |
| Cash farm expenditure | 253 131 | 644 | 55.50 | 246 252 | 627 | 49.99 |
Calculated ratios | ||||||
| Economic farm surplus (EFS1) | 76 301 | 194 | 16.73 | 106 637 | 271 | 21.65 |
| Cash farm expenditure/GFR2 | 64% | 55% | ||||
| EFS/total farm capital | 1.6% | 2.2% | ||||
| EFS less interest & lease/equity | – 1.0% | – 0.4% | ||||
| Interest+rent+lease/GFR | 29.1% | 26.9% | ||||
| EFS/GFR | 19.2% | 23.7% |
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:
$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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