The ups and downs of dairying
After attending the quarterly meeting of the Council Farm and Aerodrome Committee, I found myself thinking about the importance of dairying and agriculture in general to the economic wellbeing of New Zealand.
The financial rewards flow through into the district as well, because so much of the local and regional economy is based around servicing and supporting the dairy and broader farming sector. As a dairy farm owner, the Stratford District Council is susceptible to the ups and downs of the industry, just like all other dairy farmers.
It follows that their good times become our good times and their pain becomes our pain. Right now, we are in good times with the forecast dairy payout predicted to be around the mid-range point of $9.60 per kg/ms. This high return will inject millions more dollars into the local economy and will stimulate spending on all sorts of farm products and equipment, as well as other offfarm spending. But there is a touch of reality and balance needed as well. Farmers are the first to know that there are many things that can happen that will quickly undo the euphoria of a high payout; the impact of the weather being one of them.
Owning and monitoring the council farm is a good hands-on way for elected members to keep in touch with what is happening in the farming sector. Naturally, it’s pleasing to see that the council farm’s quarterly report confirms the farm is performing really well and continues to be a good investment. Key points were:
Operating costs are higher than this time last year as continuous poor weather conditions reduced grass growth, which resulted in more feed being purchased. Supply issues have pushed up the price of farm feed and fertiliser. Milk production to the end of January was 8 per cent lower than last season, which is consistent with other farms across the region. However, this has picked up notably in February and production is back on track to achieve the season’s target of 150,000 kg/ms.
Revenue is up on our very conservative budget figure of $7.50 per kg/ms, as the Fonterra forecast payout assumption is within a range of $9.30 to $9.90 and a dividend of $12,489 was received, after apportionment.
A considerable amount (circa $100,000) has been spent on capital expenditure and improvements during the year.
But farming is not just about dollars and cents. We know the environmental impacts of farming practices are considerable. There is a huge awareness of the issues among farmers, who have accepted the challenges confronting them and are investing heavily to address environmental issues. On the council farm, the monitoring report informs us that the dairy records have been submitted and received by Fonterra who will use this information to prepare an environmental report, which includes a ‘nitrogen risk scorecard’ and ‘greenhouse gas emissions assessment’. A cropping plan is now in place, where we comply with all the rules and regulations and follow best practices. The Taranaki Regional Council has completed the audit for the riparian planting programme, with more plants to be delivered in May for planting in June. The environmental aspects are clearly to the fore.
What about the general ratepayer, where is the benefit for you? Well, this year I am pleased to say that we have been able to fund significant capital works on the farm, as well as pay down some of the farm loan and also fund the neighbouring aerodrome maintenance, all from farm profits. But most importantly we’ve been able to provide a financial contribution of around $140,000 to use as a subsidy for the district’s general rates. For ratepayers, this represents a savings of 1.0 per cent off your rates bill and a welcome benefit to every ratepayer in the district.