THE value of generating a cash budget and balance sheet was highlighted at the first workshop of the NSW dairy Focus Farm project.
The whole-of-business learning initiative, a first of its kind in NSW, will focus on improving operating surplus at the Lismore district farm of fourth-generation milk producer Andrew Wilson.
Over the next two years, a support group made up of fellow producers, financial and accounting experts, dairy industry consultants and advisers and livestock and pasture experts will meet regularly to put in place strategies for reducing fixed costs, maximising natural resources like home-grown feed and boosting productivity and profitability on the 250 milker farm “Torokina”, Woodlawn.
Officially called the Northern Rivers Resource Efficiency Focus Farm, the is funded by the federal government’s Department of Agriculture and Dairy Australia and is being facilitated by Victorian dairy consultant Phil Shannon.
It kicked off at the end of last year with an intensive two-day workshop in Lismore, where the challenges of balancing profit and risk and the role of business analysis in good decision making were explored in depth.
Financial expert Charles Hope, a rural manager with Rabobank based in Armidale and one of the support team members, said putting together a comprehensive cash budget was critical for farming enterprises looking to plan where their business is headed.
“It’s a mud map of where you are heading and that allows you to make decisions accordingly but it also allows for the assessing of various options, such as investment in new equipment or technology that might lead to cost savings,” he said.
A balance sheet, which looks at how a farm is positioned and what portion of debt and assets it has, also paves the way for more informed decisions on what ability there is to do further improvement, he said.
Dairy Australia’s Marguerite White said the first workshop of the Focus Farm project took a ‘foundations and fundamentals’ approach with the aim of articulating what drives profit and how risks are balanced on dairy farms.
“As the overall aim of a Focus Farm is to challenge the farmer’s decision making at the whole farm system level, and explore the outcomes of any changes on the triple bottom line of the farm, it is imperative the support group is appropriately armed with the knowledge required to support Andrew on his journey,” she said.
She said the wider dairy community would have an opportunity to follow the decision making processes and outcomes and open days would be conducted regularly.
The next support group meeting will be on Thursday, where a SWOT (strength, weaknesses, opportunities and threats) of the Woodlawn business will be put together and priorities set.
The first open day has been earmarked for April.