Dairy: Fertiliser/supplement expenditure must yield return

4 November 2011

Dairy farmers urged to ensure fertiliser/supplement expenditure is yielding return

A recent analysis of farm working expenses on dairy farms nationwide has revealed farmers are spending around one-third of their gross farm revenue on just two expenses: fertiliser and supplements. These two expenses, combined, make up the largest expenditure on most dairy farms.

This trend is relatively consistent from year-to-year with only slight variations due to weather or other economic factors.

Fertiliser expenditure as a percentage of gross farm revenue was around 7.6% for 2010-11, 5.9% in 2009-10 and 11.0% in 2008-09.

Supplement expenditure as a percentage of gross farm revenue was around 11.2% for 2010-11, 11.2% in 2009-10 and 15% in 2008-09.

The higher figures in 2008-09 reflect a year where feed costs were high and most of the country was coming off of a drought.

The full analysis of these figures includes:

DairyNZ DairyBase manager, Adam Barker, says this analysis can be used by farmers as a benchmark to perform a quick check of how their spending compares to other farms.

“Making benchmarking a regular practice helps ensure your spend on major expenses isn’t out of line with others in the industry,” says Adam.

“Now is the time of year when dairy farmers are finalising their budgets for fertiliser and planning their supplement spend, so it’s a good time to take a look at your numbers and ensure your spend will yield your targeted return.”

DairyNZ consulting officer, Murray Perks, says the good news about fertiliser and supplement expenditure is that they are more controllable than other farm working expenses.

“When it comes to fertiliser and supplement spend, your budget is more of a conscious decision as opposed to other farm working expenses like animal health or repairs and maintenance,” says Murray.

“You can make small changes in relation to these big ticket items that can make a big dent in your budget. For instance, when it comes to supplements, a simple decision to contract earlier can get prices down.”

Adam Barker says the first step to getting costs under control is knowledge.

“Unfortunately, there are still some farmers out there who don’t have a good handle on what their farm working expenses are and how their spend affects farm revenues. Getting registered in DairyBase is a great way to get started tracking expenditure and revenues. By gaining this knowledge you’ll be able to manage your finances in the smartest way possible,” says Adam.

DairyBase is a web based software tool that enables dairy farmers, their accountants and consultants to analyse farm physical information and financial statements. It is an investment by New Zealand dairy farmers through the dairy industry good levy and operated by DairyNZ.

Dairy farmers can register for DairyBase by phoning 0800 4 DAIRYNZ or learn more at www.dairybase.co.nz.

About DairyNZ
DairyNZ is the industry good organisation representing New Zealand’s dairy farmers. We are funded by a levy on milksolids and our purpose is to secure and enhance the profitability, sustainability and competitiveness of New Zealand dairy farming. We deliver value to farmers through leadership, influencing, investing, partnering with other organisations and through our own strategic capability. Our work includes research and development to create practical on-farm tools, leading on-farm adoption of best practice farming, promoting careers in dairying and advocating for farmers with central and regional government. For more information, visit www.dairynz.co.nz

ENDS

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