Sustaining profit

Dairy Farm Monitor Project

Claire Waterman

Profitable farmers…

• Identify critical variables

• Know their farm business

• Match the farm’s resources to their farming system

• Appropriately match business and financial risk to their farming system

Dairy Farm Monitor Project

Outline

• 2012-13 Dairy Farm Monitor Project

• Farm case studies

• Summary

Dairy Farm Monitor Project

DFMP method

divided byassets managed

Return on asset divided byequity

Return on equity

Dairy Farm Monitor Project

Business Risk

Financial Risk

Historical – return on assets and milk price

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

North South West Gippsland Milk income (net)

Perc

ent r

etur

n

$/kg

MS

(real

)

Dairy Farm Monitor Project

Historical – return on equity

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

North North (ROE)

Perc

ent r

etur

n

Dairy Farm Monitor Project

Farm case studies

Dairy Farm Monitor Project

  NO044 GI029 SW021

Annual rainfall (mm) 1,258 944 618

Usable area (ha) 93 137 420

Milking cows 243 246 665

Concentrates fed (t DM/cow) 2.2 1.2 2.6

Milk solids sold (kg MS/cow) 561 485 561

Milk price ($/kg MS) 6.29 5.12 5.67

Cost of production ($/kg MS) 4.63 3.52 4.21

Return on assets (%) 11.1 6.9 8.8

Return on equity (%) 12.4 7.7 9.2

Dairy Farm Monitor Project

NO044: Solid performer

• Rank well in every technical category

• Timely operations

• Labour efficient

• Regularly analyses their business

• Seeks advice

Dairy Farm Monitor Project

GI029: Keeping it simple

• Simple yet robust system

• 80/20 rule

• Annual and partial budgets

• Environmentally sustainable

• A love of farming

Dairy Farm Monitor Project

SW021: Crunching the numbers

• ‘Doing the numbers’

• Labour management

• Work smarter, not harder

• Advice for future entrants is be financially literate

Dairy Farm Monitor Project

Profitable farmers…

• Identify critical variables

• Know their farm business

• Match the farm’s resources to their farming system

• Appropriately match business and financial risk to their farming system

Dairy Farm Monitor Project

Project websites

• www.depi.vic.gov.au/dairyfarmmonitor

• www.dairyaustralia.com.au/dairyfarmmonitor

• Claire Waterman, Bendigo – 03 5430 4697

Dairy Farm Monitor Project