Production Focus Leads to Financial Loss on Farms

Production Focus Leads to Financial Losses on Dairy Farms

According to statistics just released, more than 70% of dairy farmers made a loss last season, and an unwise focus on production is the main cause says farm business management specialist Peter Floyd.

“Too many farmers and their advisers are preoccupied with increasing production and this has led to the crazy situation where 71% of farmers recorded losses,” says Floyd.

“This was at a time when international dairy prices had been high and interest rates moderate, and yet farmers don’t appear to be making money.”

Floyd believes that despite Fonterra and advisory groups talking about increasing productivity, the end result has been that production has risen but farmers are not better off. He is convinced that dairy farmers should ignore the talk of productivity and focus solely on profitability.

“Some farmers may well make more profit if they reduce production rather than putting on more stock, more fertiliser and working even harder,” he says.

“It's a matter of collecting the right information, having it analysed, and using the results to make profit-based decisions. Increasing production and hoping for a better outcome is no way to run any business, let alone a farm.”

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