Toby, Lyn and Nick Leppin believe that precise planning at the beginning of last season was a key factor in the success of their business. Here they discuss their farm business approach. We use a budget spreadsheet, and we sit down at the start of the season and look at what we think grain prices are going to be, what our costs are going to be, the milk price, our cow numbers and production targets, and we work out where we are going to finish up at the end of the year. We did that last year and, of course, we did it on the opening price, so every time we got a step-up it was bonus. We were confident, with the opening price, of where we were going to be sitting at this time of the year.
I've never done it as precisely as we did this year, because my son just started sharefarming with us. We needed to know exactly where we were going to finish up, because he was deciding whether he was actually going to go ahead with it. Looking back, we did it extremely accurately. It looked like he wasn't going to make much, or just scrape by, but the step-ups came and it made a fair difference. We worked it out on $4.40 a kilogram milk solids (MS) opening price and we will finish on $4.91/kg MS.
I kept adjusting figures all the time and as the season went on I got three income estimates done by the factory. We would plug them in each time and update it, so it became more and more accurate as we went along.
An understanding of their situation and detailed assessment of their position enabled the Leppins to prioritise spending. We knew what we could spend, so there were no capital expenditure improvements this year. Everything went 'steady as she goes'. There was no cut-back in fertiliser and no cut-backs with animal health. It's nice to buy some new machinery to replace something that is playing up, but you just say 'no, let's nurse it another year'. Nicholas (Toby's son and sharefarmer) and I thrash numbers around every day about one decision or another.
Their production focuses on achieving the best yield possible per hectare. The end result is not focused on cow production, it's focused on per hectare production. The per-cow production is a performance indicator of efficiency. What are we doing with the grass? What are we doing with the grain? Is it being used efficiently? But ultimately, production is what we do per hectare.
Knowing their situation and annual business analysis allows the Leppins to track their progress. We have been doing comparative farm analysis since the 1990s. I've always done it so I can see the trends from year to year. How many farmers do you hear saying 'I'm getting nowhere, why am I dairyfarming?' Most of the people who talk like that don't know why they're in the situation they're in. So when you can look back over the years and you can see that 20 years ago the cows were doing 410 kilos of solids and have done up to 580 - you can see that you are going somewhere. My favourite saying is, if you can't measure it, you can't manage it. If you don't know what's going on, how can you make a decision to change it?
The focus for next season is building herd numbers. We will be trying to get our cow numbers back up again. We will end up having about 420 cows to calve down, so we will try and get up over 385.D
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