Hi Leon et. al.,
An interesting discussion ... it appears most of the pessimists actually
milk cows ;)
Please don't take that to heart because no offence meant.
If it's that good in NZ why are so many NZ dairy farmers moving to northern
Victoria?
Re making a small fortune ... an old bloke once told me if I wanted a small
fortune to "start with a big one and go farming".
Nobody has addressed the questions ... how many cows will you need to milk
in ten years time to maintain your present standard of living? OR Why so
many farmers have left the industry in the past 50 years?
Surely they can't all have been hopeless and inefficient.
And why is the average age of farmers generally rising?
Has anyone actually graphed the exodus from dairying? I did in 1976
(1950-1976) and the direction has not changed since then ... downward, ever
downward.
Why does one have to subsidise their farm income with outside
work/investment to stay financially viable?
Who reaps the benefits?
And then there is the question of rising rural debt ... why is it so?
That's enough for now ... let's see if there is any fire left in the belly!
Regards, Lou
----- Original Message -----
From: "leon" <leon@grazinginfo.com>
To: <vicdairy-l@unimelb.edu.au>
Sent: Saturday, February 04, 2006 3:23 PM
Subject: Re: The dairy game.
Cocky (Farmer) Talk
Thatıs what we in the Waikato, NZ, call, ³No money in farming, too dry (even
it itıs dry at that time every year), too wet (even if wet at that time
every year), payout too low, costs too high, government is no help, townies
are parasites (you try and farm without them), etc.²
Put the effort into improving your lot - on the farm you have and or buying
more land (we did so three times to end up milking 220 cows).
As a consultant I always started by asking the farmer or sharemilker what
their aims were.
My most successful and happiest most positive farmer client had 40 ha and
milked 120 cows and that is what he wanted to do until he couldnıt. Heıs 65
now and still doing it and happy. Milking takes only an hour so he has also
visited farmers to sell semen for a breed centre. Being a dairy farmer he
could discuss the buyers requirements usefully so sold plenty. He enjoyed
meeting farmer friends and discussing breeding.
Iıve always suggested to my clients to, as soon as possible, to buy retail
properties in their local town with money borrowed against their farm.
If you can borrow at 8% and earn 10% - plus capital gain which is tax-free
in NZ, then do so.
That farmer now owns a million dollarıs worth of other property bought at
about 10% and now earning an average of 13% (rents go up) or $130,000 pa
before tax and has little borrowed because the buildings have almost paid
themselves off.
He coaches rugby and has trips overseas with his team. If he milked 300
cows (the NZ average) he would not have as much time to enjoy life. He has
just bought a race horse and is training it as a hobby - after milking.
They have a nice home with swimming pool 15 minutes from town.
They are worth 2.5 million dollars.
His townie friends own their houses and not much more.
In New Zealand the wealthy retired people are the ex farmers.
Dairy farming has been fantastic for us.
>From six years of age I knew I wanted to dairy and would be up in the
morning and to the milking on most mornings and went on holiday to my
uncleıs larger dairy farm - and never regretted dairying.
I only milked on our own farm from age 25 (milking 28 cows) to age 30
(milking 100) then engaged a sharemilker and did agricultural contracting,
made farm machinery in winter, farm consulting and consulted for
agricultural companies.
Stick with dairying and be the best.
When you retire or when you feel like it consider selling the farm and
buying retail properties in areas in towns that have 99% occupancy. In NZ
your income could double and capital gain increase much faster.
I have written instructions on how to do this.
Best wishes,
Vaughan Jones
Hamilton
New Zealand
On 3/2/06 13:44, "Victorian Farmers Accountants"
<FARMERSTAXWIZZ@bigpond.com.au> wrote:
> Dairy farming isn't that bad is it?
> I am a public accountant specialising in taxation and business advice to
> farmers.
> I was bought up on a dairy farm at Leongatha and am a little disappointed
> my
> father always told me to not go dairying! I believe I could have a made a
> great go of it because dairy farms can be great businesses.
>
> While some farmers' profits are lean, most are not. And all land owners,
> farmers being large land owners, have enjoyed significant increases in
> their
> wealth of recent times. Had they not been farming, this would not have
> been
> possible. It seems when things are not great, farming gets the blame.
> Things
> are not great in every industry all the time. People also have their ups
> and
> downs and no matter what job or business they are in those ups and downs
> will
> occur. Farming may not be the culprit.
>
> The grass may not be greener on the other side of the fence! I love being
> in
> business and I think my clients are all great but not every day the roses
> are
> blooming.
>
> Dairying enjoys, for example: No demands from customers; no waiting on
> payment
> from customers; no need to advertise; no need to think about marketing; no
> need to worry if customers will be back again; great tax advantages via
> "averaging", depreciation, capital gains tax concessions and splitting
income;
> access to often significant government assistance; being outdoors and
> being
> involved in a very strong industry, are some. Yep, there are lots of
> disadvantage too.
>
> The Australian population is getting older and all industries will comment
> how
> the owners and senior people in an industry are at retirement age and who
> will
> take over? The tax industry has been saying this for years. I am 34 and I
> will
> probably say the same when I'm 64.
>
> I have averaged out the first 20 tax returns done this year of my dairy
> farming clients' and at taxable incomes of $60,000 after claiming
> depreciation
> of $26,000 I can tell you this is above the average earnings in Australia.
> Add
> to this capital gains and improvements to cattle values and it's miles
> ahead.
> Some years I know are bad, some are great. Return on investment and
> profits
> must include all this.
>
> Who cares if you don't get big? (So long as the milk is picked up.) My
> opinion
> is don't worry about what the guy up the road is doing, just be good at
> what
> suits you. Tidy profits can be made by small, large and in-between
> operators
> and land will on average always increase in value. Some are suited to
> larger
> operations, in any business, while others are not. I can't find any law
> which
> says a farm has to be a particular size to make money.
>
> I see the future of dairying, and for that matter, farming in general, not
> be
> so tightly connected to the ownership of land. Why? Buying land is more
> expensive than renting or leasing. A farm will have to be leased to build
> up
> the lessee's assets such as equipment, cattle and cash before buying land.
> When enough resources are available, then buy the land if it suits or make
> other investments.
>
> All the best for 2006.
>
> Matt Stewart
> Principal, Victorian Farmers Accountants (Absolutely nothing to do with
> the
> VFF!)
> 03 59417514
>
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