Farmer Focus Arable: Bill Davey is finding it hard to predict cash flow
Loans to agriculture now account for 15% of total bank lending in New Zealand, up from 10% earlier this decade; and the country’s debt is 90% of GDP. Those are two key points from a bank seminar we attended last week.
The notable decline of farm sales could also signal a significant fall in land values, not helped if we have to live with a sustained downturn in commodity prices.
How things change so quickly and how increasingly difficult it becomes to compile budgets and project cash flow with any accuracy.
It’s interesting to compare two dry land farms near here, both about 350 acres. Last year one sold for £5400/acre, the other sold this year for £3400/acre.
Milling wheat is leaving our farm today at last season’s £200/t while contracts for 2010 are back to about £165/t.
I have contracted all our crops for 2010 harvest apart from malting barley, as we await that contract being confirmed.
In light of lower fuel and fertiliser prices I’m reasonably comfortable with the margins achievable and feel that we should “lock in” to avoid the price volatility we’re witnessing. I may be wrong, but time will tell.
Looking at next season’s cropping, we are mindful that we will no longer have a two-tier harvest. By that I mean an early dry land harvest, which is usually over before the irrigated crops are ready, so taking pressure off the combine.
We’re considering the options of hiring a second Lexion or bringing in a neighbour to help. That, of course, is subject to him being available when we need him.
With 1800 acres to harvest and a large proportion of that windrowed plus 200 acres of direct cut clover, which is slow going, the decision must be the right one.
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