Re­flect­ing on the past six months

Matamata Chronicle - - Rural Delivery - By PETER HEXTER,

The start of the new year is a good time for farm­ers to look back on what has hap­pened in the first half of the sea­son and plan with con­fi­dence for the sec­ond half.

At this stage of the sea­son you should be about 75 per cent through your costs, de­pend­ing on your feed sys­tem.

Are you in the po­si­tion you ex­pected to be in when you did your bud­gets seven months ago? Are your ex­penses on tar­get? Is your pro­duc­tion on tar­get?

If the sea­son is look­ing bet­ter than ex­pected, you can give some thought to how best to use the sur­plus funds. Op­tions in­clude re­duc­ing debt, buy­ing cap­i­tal as­sets, main­te­nance, in­vest­ing of­farm or achiev­ing per­sonal goals.

But if the sea­son is prov­ing to be worse than you planned, es­pe­cially with the pay­out re­duc­tion which would have seen many farms los­ing close to $50,000, then thought needs to go to ar­eas where you can re­duce costs.

In this cir­cum­stance make sure you keep your bank in the loop, con­sider go­ing in­ter­est only, cut main­te­nance or cap­i­tal ex­pen­di­ture.

Re­mem­ber, Fe­bru­ary 28 is when the sec­ond in­stal­ment of your pro­vi­sional tax is due for those with a May bal­ance date.

You and your ac­coun­tant would have done tax plan­ning in Oc­to­ber and now have the ben­e­fit of half-ayear of ac­tu­als and a bet­ter idea of pro­duc­tion and costs for the rest of the sea­son.

It’s bet­ter to work with your ac­coun­tant and get your pro­vi­sional tax right rather than pay too lit­tle and get use of money in­ter­est charges, or pay too much when you are al­ready strug­gling.

Now is a good time to think about what you want for next sea­son. Jobs will be ad­ver­tised – it is im­por­tant to have your CV up to date.

If you’re look­ing for the next big­ger po­si­tion, for ex­am­ple mov­ing from con­tract milker to sharemilker, start hav­ing dis­cus­sions with your bank or ac­coun­tant now so you can con­firm you have the abil­ity to bor­row money, if needed, for cows and equip­ment.

If you are a farm owner and are look­ing for sharemilk­ers, con­tract milk­ers and waged staff, start in­ves­ti­gat­ing op­tions now.

How many more years are you want­ing to milk cows for?

Whether or not you are think­ing about selling.

When to bring a sharemilker into the busi­ness.

How as­sets are to be split among the fam­ily.

Work with your ac­coun­tant on your bud­gets to as­cer­tain whether you can af­ford the op­tions above.

You’ve prob­a­bly had your 2011 ac­counts com­pleted so now you should give some thought to work­ing with your ac­coun­tant to bench­mark your per­for­mance against sim­i­lar farms.

This pro­vides pow­er­ful in­for­ma­tion that will al­low you to eas­ily see the ar­eas of your farm which are out-per­form­ing oth­ers and those where you might want to con­sider changes to in­crease prof­itabil­ity. Nat­u­rally this bench­mark­ing leads to goal set­ting for 2012.

The in­for­ma­tion will show you whether in­creas­ing prof­itabil­ity could be done by im­prov­ing pro­duc­tion by cow, by hectare, or whether your costs are higher than com­pa­ra­ble farms and min­imis­ing costs is where you should fo­cus your at­ten­tion.

Your goal may be to grow your net as­sets and the re­port will help you de­ter­mine whether this is done by re­duc­ing debt or in­creas­ing your cow num­bers.

The bench­mark­ing won’t help you de­ter­mine your per­sonal as­pi­ra­tions and goals but it may help you af­ford and achieve them.

Tak­ing the time to re­flect to­day will of­fer re­wards for to­mor­row.


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