WestVic Dairy News - March 2011 Edition
Is your farm system the right one for you?
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By Clare Leddin and Helen Chenoweth, DPI Warrnambool
As a dairy farmer, while milk price is largely outside of your control, you can choose how you set up your farm system to be viable into the future. However, without a crystal ball, it can be difficult to know the answers to questions such as: should I buy more cows? Should I buy the block next door? Is leasing land a good idea? Is irrigation a worthwhile investment? Or should I in fact consolidate my assets?
The difficulty of this type of decision-making was shown in the results of an audience vote at some recent field days hosted by local discussion groups. Participants were asked to come up with the ‘best’ option to improve the profitability of a particular case study farm in SW Victoria. After hearing an overview of the farm and its current economic performance, a vote was cast as to whether the herd size should get bigger or smaller or cow numbers stay the same with changes to the area grazed by the milking herd.
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Janna Heard and Clare Leddin Speaking at the Doolan family farm. |
The results of the group votes differed with one group selecting keeping the herd same, another roughly spreading its votes across the 3 options, with the third group selecting the downsizing option.
In many ways this was an unfair vote, because the answer to which is the “best” or “right” system for a particular farm is: “it depends.”
- Many types of farm system are/can be successful
- Farmers need to look at a number of indicators of “success”, not just how well components of your business are performing (ie there is no one “right” stocking rate or per cow production value...)
- The impact of any change needs to be considered at the whole farm level
- Cash, profit and wealth creation are all important aspects of a viable and sustainable business for the long-term
- It is vital to consider risk in any future planning
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Some of the crowd at Doolan's. |
It is important that all people involved with the business sit down and together set clear and agreed goals (including both financial and non-financial) detailing where you all want to be in, say 10 years time.
The concept of “where you want to be” will include a range of options relating to both financial and lifestyle aspects. For example they may involve some of the following future options: still milking the same herd size, retired off the farm, maybe running a bigger farm, having off-farm real estate investments, employing a sharefarmer, having a family member now running the show, maybe even own a farm by then or just have paid debt down to a more acceptable level; the list of possibilities is endless!
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Economist Bill Malcolm at Bell's farm |
If possible, why not discuss how you will achieve your financial and personal goals with a wide range of trusted service providers, such as your lender, accountant, private consultant or factory field staff?
Often we don’t spend enough time working on the business rather than in the business and this could be a very useful way to “stress test” whether your current farm system will deliver the goods you and your family have identified as important in both the short and long term.
Thanks to the Bell, Doolan and Bond families for hosting the field days and Commonwealth and NAB banks for supplying lunch. If you would like a copy of the field day notes, contact Helen Chenoweth on 0428 581004.
