Planning to succeed

26 Jul, 2016 04:00 AM
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Brody Kennedy has a strong focus on financials.
We are too close to the line for gut feel.
Brody Kennedy has a strong focus on financials.

Brody Kennedy reckons the next 12 months will be tough enough without having to deal with any unwanted surprises.

The dairyfarmer from Forge Creek, Victoria, near Bairnsdale is trying to nail down every cost on his 330-hectare farm to give him an accurate picture of where the business stands at the moment and where it will be placed every month for the next year.

Mr Kennedy has developed a month-by-month spreadsheet that tracks costs and income, giving him a clear picture of his finances and how decisions will affect the monthly balance sheet.

His forensic assessment of financials gives him confidence that he can keep the farm operating at a sustainable level, even with the current low milk price.

"We are too close to the line for gut feel," he said.

"We think we are pretty good at what we do, but when you have millions of dollars of debt, you need to do better than gut feel.

"We have made up our own program that has all our monthly costs and income and in the column next to it, you have the next month. We're running 12-month scenarios of what is going to happen under a certain management system.

"I can be sitting here and see that if we change the litres and feeding in February, I can straight away see what effect that will have on March. I'm pretty much running the farm on the computer.

"At the end of the year, we enter our annual numbers into DairyBase and can start to further scrutinise and compare our total farm business performance."

Mr Kennedy and his wife, Allisa, lease the property at commercial rates from their family at an annual cost of $180,000. The couple owns their farm machinery and 350-strong Holstein and crossbreed herd, and provide themselves with a family income of about $80,000.

Break-even milk price for the business is about $4.30 a kilogram milk solids.

Keeping costs down this year has meant making decisions across the farm, although Mr Kennedy said he believed he was better off finding a series of small savings, rather than looking for major cut-backs in farm expenditure.

"We are going through and finding $100 here, $500 there or another $1000 somewhere else, and all of a sudden you have $50,000 saved," he said.

"For instance, we would normally have been doing AI for a bit longer, but we cut that to be shorter," he said.

"There's a shorter calving period and more bulls put out. Those bulls are then choppered to free up cash flow.

"Instead of having three bulls and having them out there for longer, we have five bulls for a shorter time and then chopper them all. That's one thing that can make a small difference."

Jobs like fencing are still getting done, but Mr Kennedy and his staff are doing a lot of the work themselves, rather than engaging contractors.

"We're aiming to do jobs that are time consuming but not major costs," he said.

"So where we might have spent money to get someone in to do a job, we might do half the job ourselves.

"It chews up a fair bit of time, so therefore we are pretty busy, but it means we don't have to pay out as much for those jobs."

While the extra workload puts a physical strain on the 30-year-old, he said he could cope better with that than having the mental and emotional stress of unsustainable farm costs.

"If you have a handle on things, you can sleep a bit easier at night knowing that, if you stick to the plan, it will be looking pretty good on the computer," he said.

"It works better than getting up in the morning and asking 'what are we going to do next' and not really having a plan of attack."

A long-term program to improve soil fertility has seen Mr Kennedy adding minerals such as calcium and magnesium to his paddocks.

This has meant that fertiliser and feed additive costs have not been major issues and herd health has remained stable.

Mr Kennedy said the latest milk price set-back had reinforced his ideas on developing plans for reaching goals in the short, medium and long term.

"I learnt pretty early on that you have to make a decision and stick to your plan of attack and you have to keep moving forward," he said.

"If you stop and let things build up, you can start going backwards quickly. You have to be positive, know your destination and keep striving for it each day."

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