FARMING is a business, and regardless of the business structure it is imperative that the business derives a profit to be sustainable.

So, let’s take a look at what we need to consider to achieve a better bottom line.

Hudson Facilitation is an Agribusiness Consultancy covering everything from farm succession, strategic farm planning, negotiations, financial planning and business check-ups. Hudson Facilitation also provides workshops to improve your financial knowledge.

I caught up with Tony Hudson of Hudson Facilitation to talk profit drivers in livestock farming.

Tony was quick to point out that the cost of farming land - which is now two or three times more than it was five or six years ago. Now the issue with that is that as the land has tripled in price but the amount you can produce from it, has not increased at the same rate.

You can improve the land through good management, but it still will not have accelerated at the same rate as the increase in land costs.

If you happen to have invested in land in the last two or three years and taken advantage of the low interest rates, then you are now paying interest at a rate that is two or three times more on top of the land that was priced at a premium.

They may have started with interest at say 1.9 per cent and now they are paying around 6 or even as much as 7-7.5 per cent.

So, some of those farmers are now finding it difficult to manage those re-payments - the numbers just don’t work as well.

Tony said that over all the years he has been in the business of building stronger businesses, he has come to the realisation that ‘what you grow is less important than how well you grow it.’ I am really an advocate that if you do it - and do it very, very well, then there is still money to be made there. 

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As we all approach the end of the financial year, it’s a good time to reflect on where our money is made and the costs of production.

It is all in the numbers - and value for return on dollar invested.

While we all need to reinvest capital into farm maintenance - whether that be fencing or pasture renovation or machinery - that can really only be done in times of profit.

It seems that with livestock prices having dropped and the cost of production rising, and this year with the cost of supplementary feed, that margin is getting slimmer.

Let’s hope that decent rain is close, while the soil temp remains high enough for reasonable (preferably good) grass growth.