Farmers Need to Future-Proof Their Businesses
17 January 2008
Farmers Need to Future-Proof Their Businesses
Farmers should act now to ensure that their profits are sustainable in light of warnings the commodity price boom is coming to an end, according to strategic farming business specialist Peter Floyd.
Prospects for farming are starting to look less bullish as the slowdown in the US economy threatens to end the commodity price boom that has underpinned dairy farmers’ incomes. The ANZ world commodity price index last week showed a 1.7% dip in dairy prices in December 2007, the first decline since August 2006. And commentators are warning that Asian markets – up to now a ready recipient of much of New Zealand’s recent dairy exports – would start to balk at paying high prices as they felt the impacts of a slowdown in the Chinese economy.
Peter Floyd, Managing Director of eCOGENT, says low lamb and wool prices, the high Kiwi dollar, oil pushing US$100 per barrel and an extended dry period forecast for much of the country will also put increasing pressure on farmers’ livelihoods.
“Farmers need to act now and work smarter, not harder, by putting strategies in place to drive net profit in order to safeguard their future,” he says.
“Farmers need to protect their businesses against falling profits by re-evaluating their pasture management and stock policies. Measuring and forecasting daily profit is another critical tool for ensuring a sustainable business, no matter what the market is doing,” Floyd says.
“By measuring profit per kilo of dry matter eaten by stock, farmers can focus on the best ways of growing feed and the most efficient stock that will convert it into dollars of profit.”
Floyd points out that pouring on soluble phosphate and nitrogen fertilisers is no longer sustainable in terms of either profitability or the environment. Research shows that soil carbon and nutrients are being lost, and the capacity of soils to withstand dry periods is reducing.
“There is no quick fix, but farmers can learn and use better soil and pasture management strategies, and take advantage of new sustainable farming techniques and business technologies which also have the advantage of driving profit,” he says.
Profit driven and environmentally sustainable approaches to farm business management will be in the spotlight at a Farming For Change Conference in Christchurch next month, hosted by eCOGENT.
As well as renowned US biological agriculture scientist Dr Arden Anderson, speakers now confirmed include Australian soil carbon experts Michael and Louisa Kiely, and US vet Dr Paul Dettloff*.
“Daily profit assessment methods, carbon farming**, and soil and pasture cover management are now starting to be used very successfully to future-proof farming businesses and we believe these are going to become increasingly critical as the market evolves,” Floyd says.
Farming for Change Conference, 26-28 February, Christchurch Town Hall
Freephone 0800 433 276
NOTES TO EDITORS:
* Dr Arden Andersen. United States scientist and medical practitioner. A world authority in biological agriculture, Dr Arden has worked extensively with farmers throughout the United States, Canada, Australia and New Zealand to implement sustainable soil and pasture management to drive profit. Consultant to beef and dairy operations, fruit and nut producers, intensive horticulture and cropping farmers
Michael and Louisa Kiely. Australian merino farmers, climate change and soil carbon sequestration experts and members of the Australian Business Council for Sustainable Energy. Conveners of the world’s first Carbon Farming Conference and Expo, held in Australia in November 2007. Principals of Carbon Farmers of Australia, a company that aggregates and sells soil carbon credits.
Dr Paul Dettloff. Biological veterinarian and staff vet to Organic Farms, the United States’ second largest organic milk producer. International speaker on sustainable organic agriculture and specialist in organic/biological treatment of dairy and beef cows, sheep and goats.
**Carbon farming is the term given to pasture, fertiliser and animal management practices that increase soil depth and quality and in so doing lock in atmospheric carbon. Many New Zealand soils are losing carbon, but alternative management practices are being used by some Australian farmers to become carbon positive (not simply carbon neutral) and earn carbon credits that are being sold on the international carbon market.
eCOGENT is a comprehensive system of best practice strategic business management tools, tailored to farming and delivered through proprietary eTechnology – driving profitability and return on investment, and increasing farm value.
Founded by Peter Floyd, eCOGENT is the product of more than ten years extensive R&D, software development and application of best practice business methodology. It delivers a fundamental competitive advantage to farmers, offering a unique ability to drill down to daily profit indicators, allowing sustainable profit decisions to be made based on knowing the daily profit per kilogram of dry matter consumed for each animal on the farm.
The analysis takes into account actual and potential profits across a raft of of critical vectors including farm type, capital investment, livestock type, fertiliser, farming options (ie dairying versus drystock) and pasture conditions.
eCOGENT takes the guesswork out of farming and enables the farmer to work smarter, not harder. eCOGENT farmers have almost doubled profitability over a three year period, with average eCOGENT farmers improving sustainable profitability by 18% per year. Some have posted profit gains as high as 100%.