10 50:50 Sharemilkers: Regional Financial Analysis
10.1 Regional Profitability
DairyBase® classifies farms into eight regions, five in the North Island and three in the South Island (refer to Section 2.6). Table 10.1 and 10.2 shows key 2019-20 average performance indicators per kilo milksolids for 50:50 sharemilker farms in these eight regions. The low number of farms in the regions presented here may also reduce the representativeness of the sample. Both Table 10.1 and 10.2 report median values to reduce numerical bias created by the average of sums methodology in regional samples. Thus, totals and sub-totals in these tables will not add up but will better represent average values of the data sample. See section 2.11 for an explanation of this methodology.
Key Points from Table 10.1 include:
Malborough-Canterbury had the largest farms by hectares, cows and milksolids, followed by Otago-Southland and then Lower North Island
The cash operating surplus per kg MS was highest in Waikato ($1.70), and lowest in Malborough-Canterbury ($1.25)
All regions had an average profit per hectare between $708 and $1,270 per hectare.
| Northland | Waikato | Bay of Plenty | Taranaki | Lower North Island | West Coast-Tasman | Marlborough-Canterbury | Otago-Southland | |
|---|---|---|---|---|---|---|---|---|
| PHYSICAL CHARACTERISTICS: | ||||||||
| Number of herds | 16 | 33 | 10 | 17 | 13 | 5 | 8 | 22 |
| Effective hectares | 150.5 | 108.0 | 115.0 | 101.0 | 136.0 | 128.0 | 227.5 | 213.5 |
| Peak cows milked | 375 | 303 | 302 | 277 | 410 | 400 | 780 | 582 |
| Stocking rate (cows/ha) | 2.5 | 3.0 | 2.8 | 2.9 | 2.8 | 3.0 | 3.5 | 2.8 |
| Kg milksolids sold | 112,931 | 115,248 | 110,095 | 111,291 | 160,705 | 174,893 | 349,130 | 261,508 |
| Milksolids sold per hectare | 920 | 1,157 | 1,052 | 1,190 | 1,024 | 1,366 | 1,502 | 1,258 |
| Milksolids sold per cow | 322 | 380 | 373 | 409 | 367 | 443 | 447 | 444 |
| PAYOUT RECEIVED: $/kg MS sold | 3.49 | 3.50 | 3.39 | 3.51 | 3.48 | 3.55 | 3.49 | 3.52 |
| DAIRY CASH INCOME $: MS BASIS | ||||||||
| Milk sales (net of dairy levies) | 3.49 | 3.50 | 3.39 | 3.51 | 3.48 | 3.55 | 3.49 | 3.52 |
| Net livestock sales (sales - purchases) | 0.52 | 0.38 | 0.48 | 0.42 | 0.43 | 0.64 | 0.37 | 0.37 |
| Other dairy cash income | 0.00 | 0.01 | 0.00 | 0.00 | 0.00 | 0.03 | 0.00 | 0.00 |
| Net dairy cash income | 4.08 | 3.90 | 3.82 | 3.94 | 3.94 | 4.23 | 3.90 | 3.90 |
| CASH FARM WORKING EXPENSES: MS BASIS | ||||||||
| Wages | 0.30 | 0.28 | 0.33 | 0.30 | 0.48 | 0.37 | 0.52 | 0.47 |
| Animal health | 0.23 | 0.21 | 0.29 | 0.22 | 0.26 | 0.25 | 0.27 | 0.20 |
| Breeding & herd improvement | 0.16 | 0.15 | 0.17 | 0.15 | 0.23 | 0.16 | 0.15 | 0.17 |
| Farm dairy | 0.04 | 0.05 | 0.03 | 0.08 | 0.06 | 0.06 | 0.05 | 0.04 |
| Electricity | 0.10 | 0.10 | 0.15 | 0.11 | 0.14 | 0.09 | 0.10 | 0.08 |
| Net feed made, purchased, cropped | 0.56 | 0.62 | 0.39 | 0.55 | 0.68 | 0.50 | 0.37 | 0.46 |
| Stock grazing | 0.15 | 0.20 | 0.07 | 0.20 | 0.26 | 0.25 | 0.68 | 0.47 |
| Support block lease | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Fertiliser (incl Nitrogen) | 0.21 | 0.11 | 0.13 | 0.12 | 0.14 | 0.19 | 0.17 | 0.16 |
| Irrigation | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.04 | 0.11 | 0.00 |
| Regrassing | 0.01 | 0.00 | 0.02 | 0.00 | 0.01 | 0.02 | 0.01 | 0.01 |
| Weed & pest | 0.02 | 0.01 | 0.01 | 0.01 | 0.01 | 0.04 | 0.01 | 0.00 |
| Vehicles & fuel | 0.24 | 0.19 | 0.18 | 0.15 | 0.15 | 0.21 | 0.11 | 0.14 |
| Repairs & maintenance | 0.08 | 0.05 | 0.08 | 0.05 | 0.07 | 0.12 | 0.05 | 0.07 |
| Freight & general | 0.05 | 0.05 | 0.04 | 0.05 | 0.05 | 0.10 | 0.04 | 0.04 |
| Administration | 0.12 | 0.08 | 0.07 | 0.09 | 0.09 | 0.07 | 0.05 | 0.07 |
| Insurance | 0.04 | 0.03 | 0.03 | 0.05 | 0.04 | 0.04 | 0.02 | 0.03 |
| ACC | 0.02 | 0.02 | 0.03 | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 |
| Rates | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Farm working expenses | 2.56 | 2.21 | 2.08 | 2.24 | 2.55 | 2.70 | 2.62 | 2.68 |
| Cash operating surplus | 1.62 | 1.70 | 1.59 | 1.65 | 1.48 | 1.39 | 1.25 | 1.31 |
| ADJUSTMENTS: MS BASIS | ||||||||
| Value of change in dairy livestock | 0.32 | 0.10 | −0.01 | 0.01 | 0.17 | 0.05 | 0.05 | 0.10 |
| Less labour adjustment | 0.66 | 0.57 | 0.74 | 0.79 | 0.58 | 0.65 | 0.31 | 0.35 |
| Plus feed inventory adjustment | −0.02 | 0.00 | 0.00 | −0.01 | 0.00 | 0.00 | 0.00 | 0.00 |
| Less owned support block adjustment | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Less depreciation | 0.23 | 0.17 | 0.12 | 0.16 | 0.15 | 0.18 | 0.11 | 0.12 |
| Net adjustments | −0.69 | −0.68 | −0.77 | −0.97 | −0.60 | −0.58 | −0.36 | −0.36 |
| OPERATING CASH & NON-CASH: MS BASIS | ||||||||
| Dairy gross farm revenue | 4.37 | 3.98 | 3.95 | 3.98 | 4.19 | 4.23 | 3.90 | 3.98 |
| Dairy operating expenses | 3.70 | 3.14 | 2.95 | 3.09 | 3.32 | 3.42 | 3.08 | 3.16 |
| Dairy operating profit | 0.85 | 0.83 | 0.89 | 0.80 | 0.80 | 0.81 | 0.87 | 0.80 |
| OPERATING CASH & NON-CASH: HA BASIS | ||||||||
| Dairy gross farm revenue | 3,943 | 4,507 | 3,855 | 4,575 | 4,332 | 4,434 | 6,157 | 5,034 |
| Dairy operating expenses | 3,039 | 3,439 | 3,023 | 3,545 | 3,621 | 4,043 | 4,831 | 3,738 |
| Dairy operating profit | 708 | 850 | 993 | 1,030 | 923 | 1,123 | 1,270 | 948 |
| Operating profit margin | 18.90% | 20.50% | 23.37% | 22.52% | 19.19% | 17.46% | 21.55% | 19.64% |
Operating return on dairy assets ranged from 13.4 percent to 17.6 percent across the regions reported in Table 10.2. Term liabilities per kg MS were higher in Northland and West Coast-Tasman. The relatively high debt to asset ratio in West Coast-Tasman reflects the higher term liabilities per kg MS, and may be influenced by the sample selection.
| Northland | Waikato | Bay of Plenty | Taranaki | Lower North Island | West Coast-Tasman | Marlborough-Canterbury | Otago-Southland | |
|---|---|---|---|---|---|---|---|---|
| RETURNS: | ||||||||
| Operating return on dairy assets % | 13.4% | 15.8% | 17.4% | 13.7% | 15.6% | 15.6% | 17.6% | 15.4% |
| Total return on assets % | 9.4% | 9.7% | 13.2% | 7.5% | 9.9% | 11.4% | 11.6% | 11.0% |
| Total return on equity % | 17.0% | 16.0% | 22.2% | 19.0% | 24.5% | 35.5% | 23.0% | 16.1% |
| Growth in equity % | 17.8% | 20.7% | 21.8% | 20.8% | 36.2% | 45.9% | 19.0% | 14.6% |
| DEBT: | ||||||||
| Closing term liabilities per kg MS | 3.35 | 2.52 | 2.39 | 2.37 | 3.01 | 3.31 | 3.14 | 2.17 |
| Closing debt to asset % | 54.0% | 45.9% | 42.1% | 49.1% | 54.3% | 72.2% | 54.8% | 45.2% |