Dairy Farmers Must Redo Budgets, says Finance Spec

Dairy Farmers Must Redo Budgets, says Finance Specialist

Dairy farmers need to put their cheque books away and take stock of their financial situation urgently, according to Waikato farm finance specialist Donald Fraser.

This is especially true for recent entrants into the industry, and those who have expanded rapidly on the back of the high payouts of the last two years, he says.

With the 10c/kg MS drop in payout, a number of farms will be running at a cash loss and are now marginally economic because of their high debt and high cost structure. Some banks have over-lent on these properties, and they are going to start putting pressure on farmers to reduce debt, says Fraser.

Farmers need to be aware that the going is getting tougher, and its essential that they redo their budgets and talk to a financial adviser about how to handle the situation.

Fraser recommends that farmers minimise costs, avoid hire purchase, and look seriously at rearranging their debt structure as a means of taking control of their financial affairs.

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