Turn headwinds into tailwinds

By Peter Andrew

In Business5 Minutes

Farming is a little like cycling. Headwinds and climbing hills can certainly test one’s tolerance and build character. There seems to be a lot of strong wind coming out of Wellington right now that seems to be heading straight for farmers.

Throw in Ukraine and Covid-19 and I don’t think I have ever seen a time when there have been so many different potential influences on our farming environment. It’s a stormy world of change out there.

Sadly, amongst the turmoil, one of the few certainties we can rely on are increased costs. Not just small increases but a wave of increases powered by inflation running at a 30-year high.

It is going to get tough out there, higher costs are a reality. It is timely to reset the sail into this stormy new world. It is timely to learn from what has worked in the past and learn from the best.

Pooled experience of survivors is critical in these times with discussion groups being a trusted environment to exchange ideas.

Pushing hard to increase gross income is still critical, I loved the saying “Cash is not the most important thing, but it comes a close second to oxygen”.

Top farmers are not only great at pushing gross income, but they are also great at keeping costs under control.

Over the past five years on our AgFirst accounts analysis database our top 10 farmers have spent only 49 % of their gross income on expenditure.

That is for every dollar that comes in from sales 51 cents goes straight to profit and 49 cents to expenditure. Where they spend it is critical, they never underspend in key areas such as animal health, fertiliser, fencing etc. They are frugal and will work hard to save a few cents when making purchases.

The times are telling us we have to move away from petrol, diesel and mains electricity and head down the low-cost sustainable route.

We need to look at sustainable solutions at every opportunity such as solar and electric battery solutions. Just look at the innovation that has been achieved with electric bikes, imagine if it had been applied to farm ATVs.

I have never been more convinced of the future of clover-based pastures and the farms they drive.

Nitrogen in a bag, truck or plane has made us lazy.

We have known for decades, almost centuries, that the cheapest way to create nitrogen is through clover fixation. Putting on adequate levels of nutrients are crucial to drive clover content.

However, we have become besotted with high covers (grazing residuals), Kg drymatter/ha. This being driven by optimising the grazing animal intake and animal performance. High covers mean low clover content in the sward.

In the Gisborne and Wairoa districts we are blessed with lots of breeding cows and ewes.

Cows tidy up the rank pasture and weeds, and sheep graze a little lower so the clover can have a decent peek of the sun. This normal grazing practice on our sheep and beef farms allows the clover to flourish in our sward.

Many have become lazy in our thoughts around clover and nitrogen fixing. The high price of nitrogen is a timely reminder to get the balance right.

Sheep and cattle are the perfect team to maximise the clover we have to take us into the future.

What is your or your farm’s weak point? Now is a good time to either learn the necessary skills and improve or cull it.

Now is a good time to do a breakdown on costs for running the farm. What is the real cost/benefit of putting in a feed crop? What is the real cost/benefit of putting on nitrogen?

We must chase innovation such as precision fertiliser as it will save costs.

The cream in farming comes to the surface during these tough times. Our sheep and beef industry is well positioned to learn from this wave of costs and build an even stronger model for our future farmers.

  • Peter Andrew is an AgFirst farm consultant based in Gisborne.