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The Muster- Lawrence Field: Beef and Lamb NZ · The Muster on Hokonui

• 0:05
  Speaker 1: Lawrence Field joins us this afternoon. He's an agricultural accountant,
• 0:16
  Speaker 1: also a part-time farmer based up in the Wairarapa. And
• 0:19
  Speaker 1: he's coming down south to chat to a beef and
• 0:22
  Speaker 1: lamb focus group regarding all the financial things he needs
• 0:26
  Speaker 1: to know about at the moment. G'day, Lawrence. Good to
• 0:28
  Speaker 1: catch up. Hi, Andy.
• 0:30
  Speaker 2: Thank you.
• 0:31
  Speaker 1: Firstly, you're on the water wrapper. You're putting some grass
• 0:34
  Speaker 1: in today. I'll be honest, we're quite envious of that.
• 0:38
  Speaker 2: Yeah, that's right. We haven't had the wet like you've had,
• 0:43
  Speaker 2: but we've had it cold. This is one of the
• 0:45
  Speaker 2: first mornings that we haven't had a frost. But yeah,
• 0:48
  Speaker 2: I must admit, ground conditions are spot on for drilling.
• 0:54
  Speaker 1: Now, we're talking about analysing farm financials at the moment,
• 0:57
  Speaker 1: making key decisions, and just putting the season into perspective
• 1:01
  Speaker 1: from a financial viewpoint.
• 1:04
  Speaker 2: Yeah, I think one of the challenges for farmers currently, Andy,
• 1:10
  Speaker 2: perhaps even more so than going back five or ten years,
• 1:14
  Speaker 2: is the volatility that we've got. So for a lot
• 1:19
  Speaker 2: of sheep and beef farmers, The 2024 season, the year
• 1:25
  Speaker 2: ended 2024, was one of the worst ever, you know,
• 1:28
  Speaker 2: and maybe half the industry ran at a loss. And,
• 1:32
  Speaker 2: you know, if you go back to then, who would
• 1:35
  Speaker 2: have thought that we're getting $ 9, $ 10 a kilo for
• 1:38
  Speaker 2: beef and $ 11, $ 12 a kilo for lamb? So we've
• 1:39
  Speaker 2: had a huge variation. And so to be able to
• 1:47
  Speaker 2: do some analysis around that is very timely and could
• 1:52
  Speaker 2: help with making good decisions.
• 1:54
  Speaker 1: Well, that's the big thing, I suppose, having seasons where
• 1:57
  Speaker 1: you're having to navigate volatility springing into what we're seeing
• 2:00
  Speaker 1: at the moment and people are budgeting on pretty good
• 2:03
  Speaker 1: margins for red meat.
• 2:06
  Speaker 2: Yeah, I think, well, I'm not sure how good of
• 2:10
  Speaker 2: margins they'll be budgeting on, Andy. It depends whether you're
• 2:14
  Speaker 2: a finisher or a breeder. If you're a breeder and
• 2:19
  Speaker 2: you're obviously selling progeny, then yes, the returns are really good.
• 2:24
  Speaker 2: I just do a bit of trading and sort of
• 2:27
  Speaker 2: finish around 120 cattle a year. And whilst we might
• 2:31
  Speaker 2: get close to $ 3, 000 when we sell them, we're having
• 2:35
  Speaker 2: to pay $ 2, 000 to buy them in. So our margin
• 2:39
  Speaker 2: is no different and could even be tighter than what
• 2:42
  Speaker 2: it's been previous years. And so that's what we're going
• 2:46
  Speaker 2: to look at with this focus group is we're really
• 2:49
  Speaker 2: going to hone in on what is your margin that
• 2:53
  Speaker 2: you're making between income and operating expenses. I think what
• 2:59
  Speaker 2: we'll do at this group, and I encourage all farmers
• 3:04
  Speaker 2: to do this, is to look at the last three years,
• 3:08
  Speaker 2: the year end, 24, 25 and 26. And I think
• 3:13
  Speaker 2: we'll do a bit of a benchmarking exercise with this group,
• 3:16
  Speaker 2: and we'll also use the beef and lamb economic data,
• 3:20
  Speaker 2: because they even have provisional figures for this coming season,
• 3:24
  Speaker 2: is when we're looking at the margin, yes, we can
• 3:28
  Speaker 2: look at the surplus, the dollar figure, but then I
• 3:33
  Speaker 2: like to delve into it and look at it per hectare,
• 3:37
  Speaker 2: perhaps per stock unit, But the other thing that the
• 3:41
  Speaker 2: sheep and beef industry has been perhaps a little bit
• 3:44
  Speaker 2: slow to really embrace is measuring the net production that
• 3:52
  Speaker 2: you're doing on farm. So how many kilograms of carcass
• 3:56
  Speaker 2: weight per hectare are you producing? And then we can
• 4:00
  Speaker 2: actually look at your margin on a per kilogram basis.
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  Speaker 2: And that compares, Andy, to what the dairy farmers do
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  Speaker 2: in that, you know, most dairy farmers now are very
• 4:14
  Speaker 2: focused on their farm working costs. You know, what are
• 4:17
  Speaker 2: their costs per kg of milk solids? So I would
• 4:21
  Speaker 2: love to help this group identify what is it costing
• 4:25
  Speaker 2: them to produce that kilo of lamb that they're sending
• 4:29
  Speaker 2: out the gate.
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  Speaker 1: And I suppose a cold reality at the moment as well, Lawrence,
• 4:33
  Speaker 1: is the fact that you're getting the money we are
• 4:36
  Speaker 1: for meat compared to, say, a couple of seasons ago.
• 4:39
  Speaker 1: You know, your balance sheet should be looking pretty good too.
• 4:43
  Speaker 2: Yeah, yeah, yeah. We're getting good returns, and I think
• 4:49
  Speaker 2: we all needed a decent profit. And, you know, the
• 4:54
  Speaker 2: interesting beef and lamb came out a few weeks ago,
• 4:56
  Speaker 2: and yes, the returns are really good. But be aware
• 5:00
  Speaker 2: of the margin. And so, you know, for the year
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  Speaker 2: just finished, 2026 would have been probably a record year,
• 5:07
  Speaker 2: record profit for a lot of farmers, which, as you say,
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  Speaker 2: helps the balance sheet, whether it's paying back some debt,
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  Speaker 2: it's investing on farm, it's really strengthening things. And that's
• 5:19
  Speaker 2: a great position to be in. But the challenge going
• 5:23
  Speaker 2: forward is we all know about on-farm inflation. You know,
• 5:27
  Speaker 2: we've got fuel prices. We've got agrochemicals. We've got fertilizer.
• 5:34
  Speaker 2: We've got wages, you know, rates and insurance, all of
• 5:37
  Speaker 2: those things. And they don't seem to sort of bounce.
• 5:40
  Speaker 2: They're a ratchet, eh? When they go up, they stay up.
• 5:43
  Speaker 2: So being aware of what our costs are, you know,
• 5:46
  Speaker 2: for what could be for this current season will give
• 5:50
  Speaker 2: people a lot better position to make some good decisions.
• 5:56
  Speaker 1: You just took my next question away from me, Lawrence.
• 5:58
  Speaker 1: I was going to say exactly that. On farm inflation
• 6:01
  Speaker 1: and how we view it. Yeah, yeah, yeah.
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  Speaker 2: And look, that's where, at a starting point, I really
• 6:07
  Speaker 2: encourage people to work out what are your costs per hectare?
• 6:12
  Speaker 2: What does it cost you to run your farm? Are
• 6:14
  Speaker 2: you at $ 800 a hectare type farm? If you were...
• 6:20
  Speaker 2: two or three years ago, well, then you're now probably
• 6:23
  Speaker 2: an $ 1, 100, maybe even $ 1, 200 per hectare farm because of
• 6:28
  Speaker 2: that inflation. That's no reflection on you. That's just the
• 6:31
  Speaker 2: environment that we're dealing with. And so to be aware
• 6:35
  Speaker 2: of what those numbers are, and I tend to use
• 6:38
  Speaker 2: that as the basis of my budgeting. Where do we
• 6:41
  Speaker 2: want our farm operating expenses to sit? We've got to
• 6:45
  Speaker 2: kind of target dollars per hectare. Let's see if we
• 6:47
  Speaker 2: can cut our cloth to fit within that.
• 6:51
  Speaker 1: Do you think that's where business owners are naive and
• 6:53
  Speaker 1: they're not looking at kilos that are going out the
• 6:55
  Speaker 1: gate and breaking it down to that level as such?
• 6:59
  Speaker 2: Yeah, I think it's a lost opportunity in that, you know,
• 7:05
  Speaker 2: I shouldn't tell you how old I am, Andy, but
• 7:07
  Speaker 2: I've been through a few ups and downs and when
• 7:10
  Speaker 2: the dairy payout went from $ 8. 40 to $ 3. 90 and people
• 7:12
  Speaker 2: worked out that their farm operating costs were maybe $ 6
• 7:21
  Speaker 2: per kilo, then they realized, geez, we're going backwards. You
• 7:26
  Speaker 2: know what I mean? And so it is, I think
• 7:29
  Speaker 2: it's a good opportunity, and it will set us up
• 7:33
  Speaker 2: really well for farming into the future, which inevitably is
• 7:37
  Speaker 2: going to keep having volatility.
• 7:39
  Speaker 1: So when are you down in the south?
• 7:41
  Speaker 2: Yep, it's a whistle-stop tour. I won't get to check
• 7:46
  Speaker 2: out my old farm at Nibble, but I'm coming down
• 7:48
  Speaker 2: on Tuesday for Claire's focus group, down and back in
• 7:53
  Speaker 2: a day. So it's leave Marserton at 4.30 in the
• 7:57
  Speaker 2: morning and get home about midnight and catching up with
• 8:01
  Speaker 2: her group in Gore.
• 8:04
  Speaker 1: Good on you, Lawrence. Thanks for your time and enjoy
• 8:06
  Speaker 1: your trip down south next week.
• 8:08
  Speaker 2: Looking forward to it. And thanks for the opportunity, Andy.
• 8:10
  Speaker 2: Much appreciated.
• 8:13
  Speaker 1: Lawrence Field, coming down south next week. beeflamnz.com slash events
• 8:19
  Speaker 1: will give you more information regarding Lawrence and talking about
• 8:22
  Speaker 1: farm accounting. And of course, receive the e-diary into your
• 8:25
  Speaker 1: inbox every Friday morning. Nathan Burden's up next.