On 4/2/06 22:56, "Lou Cook" <cooklou@pacific.net.au> wrote:
> Hi Vaughan 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.
Lou, Iıve moved your questions around so the answers lead on to others.
> 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".
That joke, and that is all it is (how many dairy farmers go bankrupt?) is
also told about race horse owners and others, but GOOD race horse owners end
up millionaires.
Weıre talking about dairy farming.
I fell out of my cradle laughing when a jealous person who could not dairy
told me it, and I was born in South Africa and came here in 1954 when 23.
Good dairy farmers there were living in large homes so werenıt poor. My
father who started with nothing, and I on a small farm, were doing well. By
age 23 I owned 15 cows and a car and had money in the bank. We milked 50
cows and bottled the milk and delivered it in town. One other smaller dairy
farmer did the same in Greytown (population 4,000?), Natal, SA.
In USA now more and more farmers are supplying consumers direct and doing
comfortably.
At age 25 I bought 40 ha in New Zealand for 4,500 pounds, moved on a cottage
and built a farm dairy and milked 28 cows and increased it to 89 ha milking
220 cows by 1966, when we sold the herd to a sharemilker and retired for two
years after which Iıve worked for the love it - even now at 74. Those good
days are gone forever. Iım still a dairy farmer at heart and feel for them.
> Why does one have to subsidise their farm income with outside
> work/investment to stay financially viable?
In New Zealand not even one percent do that. If you are referring to my
comments read it all again. I also encourage townies to invest in retail
shops rather than leave it in the bank or risk shares. In Australia mineral
shares are mostly better than anything here.
At age 6, I thought that cows were pretty unique. Pasture in one end and
milk and fertiliser out the other. They produce a new one every year that
grows into money ($1,000) and they donıt rust. I came to New Zealand because
of its success in dairying and left SA because of its racial problems. One
brother has been murdered and the other shot, but survived. My best friend
murdered and another shot, but survived.
> Who reaps the benefits?
The farmer and the country. Dairying here is our top export earner of
overseas exchange and is increasing (we donıt have the minerals to export
that Australia has).
> Nobody has addressed the questions ... how many cows will you need to milk
> in ten years time to maintain your present standard of living?
My best client from milking 300 cows bought neighbours and with one helper
milks 800 cows. There are many 1,000 cow herds. The limiting factor them
becomes the walking.
OR Why so
> many farmers have left the industry in the past 50 years?
How many shops or stores were there 50 years ago in your home town compared
with now.
Farmers complain about having to expand, but they buy from the supermarket,
not the corner store.
> Surely they can't all have been hopeless and inefficient.
A hell of lot were and still are, but almost none goes bankrupt although I
know a Kiwi who bought a dairy farm in southern NSW and nearly did until he
sold up at a huge loss and moved south.
> And why is the average age of farmers generally rising?
Children today want to operate computers, not milk cows and see above.
> 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.
If all were still in it the price of milk would be a lot lower.
If you graph the price paid to farmers youıll see that in the future farmers
will have to pay the dairy companies to take it away.
A question you didnıt ask specifically is -
Why is the milk payout relatively low compared with the - farm investment,
price of petrol, coke and mineral water.
One reason is because too many like dairying so over-supply.
Any business person will tell you that it only takes 5% oversupply to lower
prices.
The worldıs fuel suppliers work together and here the five fuel companies do
the same so charge the same price for petrol while dairy companies compete
against each other within New Zealand and against other countries on the
world market at the producersı expense.
THE MOST IMPORTANT QUESTION YOU SHOULD HAVE ASKED IS HOW TO COMBINE AND GET
GET THE MILK PRICE UP?
Part of the answer in New Zealand, where over 90% of dairy products are
exported, is to stop over-prodution and dumping by subsidised countries such
as USA who a year ago gave (free) thousands of tonnes to Russia and sold a
lot very cheaply to Mexico. Both are our (NZ and Oz) markets.
New Zealand has tried for 50 years to stop US and EU subsidies, but NEVER
will. Our negotiators should forget that horse and attack dumping.
USA dumping their highly subsidised maize into South Africa has put a lot of
well over hundred year old maize farms out of business.
USA offered free maize to Zimbabwe, but should have dropped it on Mugabeıs
head. Under White rule they used to export it.
USA is extremely clever. They subsidise their farmers and many others and
keep world food prices so low that farmers in many countries canıt afford to
produce and compete on their own market against USA. So Africa starves and
USA is losing family farms to the big ones that get millions of dollars
gifted every year.
A very small apple grower friend in USA received a $1,000 cheque to
compensate for frost damage, but he didnıt have a frost.
A documentary a few years ago showed a UK grain grower who gets a million
dollar subsidy cheque every year - and he told the interviewer that he
didnıt need it.
These are the things Oz and NZ have to cope with.
Best wishes,
Vaughan Jones
Hamilton
New Zealand
> 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
This archive was generated by hypermail 2b29 : Tue Mar 07 2006 - 02:38:03 EST