Meat and fibre farm businesses in New Zealand have a track record of performing poorly in terms of business profit and return on investment.
The long term average is 1-2% ROI with barely a living being generated for the business owners. Industry grumblings abound and several industry wide attempts to “right the situation” have all ended up at dead ends. Large sums of industry money and grower funds have been invested and many people have worked very hard to achieve this unfortunate result!
Some farmers are exiting the industry and many others are trying to hang on. Some are doing OK and there are only a few doing very nicely. With this outlook it is totally understandable that there is a large wave of disillusionment rippling through the businesses of rural NZ.
From recent Beef and Lamb Economic Service calculations, the average trading profit for NZ meat and fibre farmers is less than $30 000 a year and that is without capital repayment, drawings and other expenses and adjustments taken into account! Some approximate calculations determined that the average profit was around 2 cents per kg DM eaten. 2 CENTS! With most farmers having a degree of debt, businesses are actually going backwards. If the average is 2c then half of the businesses are doing less than that.
What can farmers do about this? Well, there is actually a surprising amount. Much of it however is not based around asking cap in hand for more money from processors, markets or funding agencies. It actually has a lot to do with a paradigm change occurring in the minds of those who are prepared to make changes and take responsibility for their own actions and results.
What do I mean? Decide what is most important to you and your family and follow the 6 Profit Principles. Be coachable and accountable. Take control of your mind and business and drive them yourself. If you don’t and nothing changes, then nothing changes. Specifically, learn how to set your business up for profit opportunities and go out and capture them. Run animals when it is profitable to do so and fully feed them at those times. Set up for the next opportunity and then do it all over again. Work from profit opportunity to profit opportunity. This applies to any type of meat and fibre farmer. Other techniques such as selecting and producing quality well muscled and balanced livestock, or having nutrient dense and biologically well balanced soils and pastures, are no brainers. You can’t ask for more money from markets until you give them something worth it in return.
Does this all sound foreign to you or is it what you need to hear? Either way, you decide. However, know that success in your business is determined by successfully implementing a few key principles. The price is new thinking, pushing your boundaries out and taking continuous focussed action. The rewards (once you get the hang of it) are potentially mind blowing compared to the NZ average of 2c profit / kgDM eaten mentioned earlier. I have seen clients increase their profits 2 and 3 times (and sometimes more) in a single year once they understood how. A profit of 6 – 10c/kgDM eaten is certainly achievable and yes profits can go beyond that too.
I cannot promise what you will achieve but the main point is to give yourself the chance to achieve what you have always wanted but never knew how. Are you up for it? Contact GrowFARM today and get the business results you really want!