10 50:50 Sharemilkers: Regional Financial Analysis

10.1 Regional Profitability

Tables 10.1 and 10.2 show key indicative performance for the average farm in Waikato, Taranaki, and Otago-Southland. Other regions do not have sufficient farm data to generate representative statistics, and the low number of farms in the regions presented here may also be less than perfecty representative.

Key Points from Table 10.1 include:

  • Otago-Southland had the largest farms by hectares, cows and milksolids, followed by Waikato and then Taranaki.

  • The cash operating surplus per kg MS was highest in Taranaki ($1.34), and lowest in Otago-Southland ($1.01)

  • All three regions had an average profit per hectare between $600 and $700 per hectare.

Table 10.1: Regional 50:50 Sharemilker Profitability

Waikato Taranaki Otago-Southland
PHYSICAL CHARACTERISTICS:
Number of herds 32 27 25
Effective hectares 116.6 98.3 208.0
Peak cows milked 347 285 601
Stocking rate (cows/ha) 3.0 2.9 2.9
Kg milksolids sold 134,461 117,059 257,951
Milksolids sold per hectare 1,153 1,191 1,240
Milksolids sold per cow 388 411 429
PAYOUT RECEIVED: $/kg MS sold 3.15 3.12 3.14
DAIRY CASH INCOME $:
Milk sales (net of dairy levies) 3.15 3.12 3.14
Net livestock sales (sales - purchases) 0.36 0.38 0.42
Other dairy cash income 0.02 0.01 0.01
Net dairy cash income 3.54 3.52 3.57
CASH FARM WORKING EXPENSES:
Wages 0.34 0.25 0.53
Animal health 0.25 0.23 0.21
Breeding & herd improvement 0.17 0.17 0.17
Farm dairy 0.06 0.06 0.04
Electricity 0.12 0.11 0.09
Net feed made, purchased, cropped 0.66 0.57 0.47
Stock grazing 0.16 0.15 0.39
Support block lease 0.01 0.01 0.00
Fertiliser (incl Nitrogen) 0.09 0.14 0.18
Irrigation 0.00 0.00 0.01
Regrassing 0.01 0.01 0.03
Weed & pest 0.01 0.01 0.01
Vehicles & fuel 0.20 0.17 0.15
Repairs & maintenance 0.07 0.07 0.08
Freight & general 0.05 0.04 0.03
Administration 0.10 0.10 0.09
Insurance 0.03 0.04 0.03
ACC 0.02 0.02 0.02
Rates 0.00 0.02 0.00
Farm working expenses 2.35 2.18 2.55
Cash operating surplus 1.18 1.34 1.01
ADJUSTMENTS:
Value of change in dairy livestock 0.09 0.04 0.03
less Labour adjustment 0.55 0.64 0.33
plus Feed inventory adjustment 0.01 0.01 -0.01
less Owned support block adjustment 0.00 0.00 0.00
less Depreciation 0.19 0.16 0.14
Net Adjustments -0.64 -0.76 -0.45
OPERATING CASH & NON-CASH: MS BASIS
Dairy gross farm revenue 3.62 3.56 3.60
Dairy operating expenses 3.08 2.98 3.04
Dairy operating profit 0.54 0.57 0.56
OPERATING CASH & NON-CASH: HA BASIS
Dairy gross farm revenue 4,177 4,239 4,465
Dairy operating expenses 3,553 3,555 3,770
Dairy operating profit 624 685 695
Operating return on dairy assets was similar (~10-11%) across the three regions reported in Table 10.2. Term liabilities per kg MS were much higher in Taranaki, consistent with last year. The relatively high debt to asset % in Waikato and Taranaki may be influenced by the sample selection, though Taranaki did have a difficult season in the prior year, which may have added to debt loadings.

Table 10.2: Regional 50:50 Sharemilker Financial Position

Waikato Taranaki Otago-Southland
Returns:
Operating return on dairy assets % 10.0% 10.8% 11.2%
Total return on assets % 16.3% 10.0% 23.7%
Total return on equity % 39.9% 59.8% 40.8%
Growth in equity % 5.1% 36.0% 1.4%
Debt:
Closing term liabilities per kg MS 4.38 6.14 3.31
Closing debt to asset % 69.8% 87.1% 56.8%