Simple system, high profits

By Tony Leggett

Derek and Leanne White (picured) had an exceptional year in 2021/22.

Their gross farm revenue (GFR) just squeaked past $2000/ha (see Time series analysis). The economic farm surplus (EFS) was an impressive $897/ha, mostly from a high lamb survival to sale performance, stronger farm gate prices for lamb, and a tight rein on costs, which were 55% of GFR.

It was a performance which won them the 2023 Wairere Central Districts Red Meat Farm Business of the Year award.

The Whites are running 3000 breeding ewes and 900 hoggets (mated) on their 470ha farm (435ha effective) at Waiouru on the North Island’s Central Plateau.

Their $2001/ha GFR was $200/ha above the average of the top 25% of similar farms compared in the BakerAg FAB analysis for that year.

Their EFS (GFR less standardised total farm expenses and independent of capital structure and debt levels) has averaged $700/ha for the past four years. In 2021/22 it was $897/ha. The top 25% average for the same year in the FAB report was $825/ha.

This helped the farm achieve a 6.6% return on capital invested, based on a capital value of just over $6m as a going concern.

BakerAg consultant Tim Abbiss says the Whites’ farm business is consistently producing high profits from a simple system.

“The key point here is Derek and Leanne understand that simple system really well and that is what drives that repeatability of performance.”

Abbiss says their financial monitoring and willingness to seek constant improvement are also helping with that consistency of performance.

John Stantiall, a farm consultant who has visited the Whites’ farm in the past and attended their winners’ field day in April this year, also praised the “power of two” in the exceptional physical and financial performance they consistently achieve.

“Derek and Leanne’s grazing management is a bit smarter than they let on at the field day.”

He says they know how to prioritise some stock and restrict others at critical times to get performance at a good stocking rate.

“Perhaps the cattle take a back seat at key times.”

Stantiall says it’s common for strong performers like the Whites to not be able to explain exactly their approach, especially their grazing management. They operate on a “gut feel” which is difficult to put into words.

“They’re unable to explain what they do, but through education, both formal and informal, and experience, they just do it,” he says.

Note: Two lines of expenditure are standardised in the FAB reporting to remove the impact on performance of capital investment. Fertiliser and lime is standardised at $13/su and repairs and maintenance is $8.50/su.