Words by: Chris Neill
Ruawai sharemilkers Luke and Sunny Oud experience in the Northland Extension 350 project was highlighted at an E350 field day in November when they shared their story of change.
As contract milkers on the family farm, they started as target farmers in the project along with Luke’s parents Tony and Sue two and a half years ago. The farm is now operated by the family’s fourth-generation having previously passed from Sue’s grandmother through three generations of women. Supported by farmer mentors Peter Flood and Garth Preston and farm consultant Tafi Manjala, the Oud family have completed many of the goals they initially considered aspirational. For Tony and Sue it is a realistic succession plan and for Luke and Sunny a new life adventure in dairy farming.
The transition from year 1 when the challenges were “too hard and we wanted to quit” to now boldly asking, “come on then, what’s next” is inspiring.
The two generations of Oud farmers have come to understand and actively support each other to achieve their vision and goals. Communication and trust are key ingredients along with the desire to learn and adapt to change. It’s been quite an intense journey with some key learnings that Luke identifies are now part of their business:
- “It’s really important to invest time in the $1000/hr jobs rather than burning all your time on the $20/hr jobs.”
- “Employing staff to get work done can be more profitable than spending capital.”
- “Knowing your targets to monitor your progress against and the trigger points to identify when you have to act with a new plan are must haves.”
- “Maintaining pasture residuals is the key to feeding cows what they want at the lowest possible cost.”
- “Body condition score 5 at calving is non-negotiable.”
- “Farm Environment Plans are not as scary as expected.”
- “Reducing emissions – we’ll find out what we need to do and just deal with it.”
- “Running a profitable business is vital, so make it happen.”
- “Regular monitoring of our cash flow budget is essential.”
Now in their first year of sharemilking, Luke and Sunny are highly motivated to reduce debt and be ready for the next “adventure” which could be more cows or land. They are hungry for opportunities to capitalise on what they have learned to date. Through the project they have accepted the balanced approach of profitability, environmental sustainability and personal wellbeing. They see a profitable, sustainable farming business as their means to achieve this.
Sunny manages their business finances and uses the DairyNZ Sharemilker budget template.
The first draft of the budget is based on the previous year with adjustments for the milk price projection and expenditure required for known system changes or plant upgrades.
Sunny utilises her effort of completing bi-monthly GST returns to provide actual expenditure and income for the period to update their budget.
The updated cash flow budget supports an informed conversation where Sunny and Luke look at options for applying additional income to debt reduction or reassessing the need and timing of expenditure.
If there is a significant variation to the original budget, they will do a full budget review to ensure the year is profitable. The discipline of working together to agree on and work within the budget gives both Luke and Sunny a greater sense of ownership of their business and pride in what they are achieving. Luke is comfortable with justifying expenditure such as a new tractor to prove to them both that it is a financially sound decision.
Regular reviewing of their financial position as well as projected income and expenditure gives them confidence that they control their business. It enables them to manage unexpected needs for expenditure which in turn maintains a positive relationship with their financier. Luke and Sunny recognise the necessity of selling themselves as competent financial managers to their accountant and banker as pursuing future opportunities relies on their confidence.