After the last 20 years of expansion of the dairy industry where production, growth and capital gain were the major drivers, we are entering a period of emphasis on positive cash flows rather than capital gains.
The shift is changing the real estate market, with land prices stagnant and falling, and with lack of capital gains the market is refocusing on the productive yield of a farm – including how much debt can be serviced by that business.
Anne Lee takes a deep dive with author Emma Higgins into the recent Rabobank report called Staying Afloat but drifting backwards. We also canvas the opinions of real estate industry players who think the Rabo report was a bit pessimistic suggesting a 10-20% decline in farm values (p28). But they flag the need for vendors to understand the shift to yield as a mechanism for valuing land and the requirement to adjust expectations away from previous prices in order for a sale to complete.
Part of the shift is the move to selecting more efficient animals – not production for production’s sake, which often leads to higher costs, but more production from more efficient cows, operating at a lower running cost.
LIC general manager NZ markets Malcolm Ellis told Anne Lee culling on production did not tell the whole story, but that culling on PW was a much more valuable tool as PW accounts for production but includes efficiency, liveweight and the age of the cow (p49).
The breeding companies are all getting together to work on NZAEL 2.0 which will include better recognition of trait difference between breeds and removal of the effect of inbreeding on breeding values. Stage 3.0 will include genomic data, which will be a great step forward for NZ farmers (p50).
Efficiency and sustainability were major reasons Andrew Hoggard has embraced electric bikes for his staff to ride onfarm (p26) and efficiency of water use also encouraged Jonathon and Linda Sievwright to install green wash in their new dairy shed. They are using less than half the typical clean water use for shed and yard washdown on their Manawatu farm by recycling their greenwater on to the dairy yard (p54).
It’s a world-wide movement – efficiency, sustainability, using less, trying to make the earth’s resources go further. Join the movement.
Our dairy farmers’ tour to Ireland in June is all about seeing Irish farmers in action around their efficiency in and focus on pasture use. Get aboard now if you want to come and check it out (p61).
