Financial skills getting farmers through drought
As drought bites throughout the North Island, Kevin White is one dairy farmer who, at first glance, seems to have a secret for staving off panic.
Kevin has farmed for seven years and currently manages a 350-cow herd just south of Te Aroha. He says he’s like every other dairy farmer around the North Island, in that he’s watching the clouds and hoping for rain. In the meantime, he says the key to getting through and managing anxiety levels is pretty simple: have a plan.
He completed the National Diploma in Agribusiness Management two years ago, having started it during the last drought in 2007/08, and says, "one major thing I took away was that smart farmers always have a contingency plan in place for the worst case scenarios - in this case a major drought.
"It sounds simple, but it’s just thinking ahead of time about your critical financials - in particular, right now, it’s about managing our supplement budgets and how we stretch our resources if we don’t get rain.
"It’s a balancing act as we’re continuously looking at how much palm kernel and maize silage we can bring in to keep a core group of cows milking and at a healthy weight to set them up for winter. But at the same time, we don’t have an endless pot of money.
"Since early December, palm kernel has skyrocketed from $260/tonne to over $350/tonne. To manage our budgets we’ve already reduced the herd by around 70 cows with culls gone and low producers dried off. We will probably dry off more in the coming weeks, based on how the forecast is looking.
"Every ten days or so, we just keep adjusting the plan based on what’s happening in real time.
"Having a plan doesn’t change the fact that it’s going to be a really tough financial year. I can’t control the weather, but what I can control is how I manage my business through hard times. And I’ve learned the skills I need to do just that through the Diploma programme," he explains.
Diploma Tutor, Gaynor Tierney, says Kevin is on the right track in terms of having a plan and adjusting as he goes. "We teach our Diploma students how to prepare for crises, like drought, in this way.
"You can adjust cashflow as required to allow for the increase in bought-in feed and a reduction in milksolids. Most importantly, working this way helps farmers know the effect on their bank balance and cash surplus. From there, they know which suppliers and or advisors they need to talk to."
DairyNZ and AgITO have joined forces to help the dairy farming industry build the human capability skills it needs to create a productive, sustainable future.
The organisations have the shared goal of wanting to see dairy farmers across New Zealand increase their business skills by engaging in formal farm business training.
DairyNZ Strategy and Investment Leader for People and Business, Mark Paine, says by up-skilling a significant number of dairy farmers, there is the opportunity to add $1 billion to farmers’ bottom lines.
"There is currently huge variation in profitability between New Zealand’s best and worst performing dairy farms. Through research DairyNZ has completed, we’ve pinpointed that most of that variation in profitability is caused by differences in the management capability of the people running our farms.
"Our economists have done the numbers and we believe there is an opportunity to improve industry profitability over $1 billion per year if we can encourage a significant increase in dairy farmers completing business training like the National Diploma in Agribusiness Management.
"That’s a billion more dollars in the pockets of dairy farmers, and much of that will be spent in our rural communities across New Zealand. That’s good news for our industry and good news for New Zealand’s economy as a whole," Mr Paine says.
Intake into the Diploma programme happens at intervals throughout the year, with new classes kicking off in the next few months. Courses are delivered by local tutors and are run to fit the farm work day.
Kevin White says he would recommend the Diploma programme for anyone who is currently managing a farm business or those looking to get into management.
"If you want to progress in your career, completing the National Diploma in Agribusiness Management is a must. I’ve got a guy working for me now who’s taking it and he’s finding it really good.
"The skills he’s learning and the confidence he’s gaining are opening up a whole new world for him - just like it did for me."
The Diploma is divided into a series of professional development training modules targeting key areas of farm business management. Farmers use their own business as a case study and the training is facilitated by highly experienced agribusiness practitioners.
For farmers interested in training, a local AgITO adviser is available to visit on farm to discuss the Diploma and next training steps.
Call 0800 691 11 or visit www.farmingsmarter.co.nz .
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