Managing farm debt

If you’re feeling uncertain about your next year of farming, you’re not alone. Farmer confidence is low, with more than 11% of respondents to a Federated Farmers survey expecting profit to drop over the next year.

Whatever your position, it’s always beneficial to talk about managing farm debt.

How you handle cash flow is important to suppliers and lenders, so even if you have a great accountant, make sure you personally have a grasp on your finances. You could ask your business banker for a budget template or jump online.

DairyNZ has handy budgeting tools to take some of the head scratching out of the equation. It provides templates and guides you can print and work through, including:

  • The Contract Milker Premium Calculator, comparing the profitability of contract milking with managing a farm
  • The Variable Order Sharemilking Calculator, giving an overview of income and expenditure you can expect in your first year
  • The Herd-owning Job or Sharemilking Calculator, helping you understand how much money you’ll need and how you can fund a herd-owning job
  • a sensitivity table helping you assess risk from changes in pay out, production, and farm working expenses.

Lincoln University also has budget templates for farmers, and ASB Bank suggests a cloud-based budget system called Figured that plugs into Xero.

And don’t forget that Inland Revenue’s income equalisation schemes may allow cashflow flexibility on tax payments arising from income fluctuations.

Talk to us about which options might best suit your business.