With the dairy payout at $6.00/ kg milksolids (MS) and foreign buyers shut out of the market there are endless opportunities in the sector, farm business consultant Tony Robertson said at the Bright SIDE conference session for younger and newer farmers about building a successful business in the dairy industry.
The Invercargill Genesis Group principal said the dairy business outlook might look mildly depressing with land values falling 20% and Fonterra shares sliding 40%, Micoplasma bovis and staff problems, high dairy debt and environmental challenges.
“If the milk price drops more there are even more opportunities for you people if you are into buying land.
“Many older farmers struggle with the new environment for dairying – they desperately need good people to staff their farms and also to lease them – which I think we will see more of in the future.
“You will get much better deals in the future if you can prove your value to farmers.”
As a farm consultant, Robertson said there is a growing desperation with failed farm sales and with declining staff numbers, getting good people is the biggest issue for his older clients.
“You good young people are in short supply – we are seeing an increasing difference between Joe-average and the good operator.”
Environmental issues are stretching all farmers, but Robertson thinks it will also provide huge opportunities.
“We have seen a vast improvement in the last five years with more to come – and now that peak cow has arrived with a sinking lid on numbers, I see massive opportunities – now we can get rid of the ‘growth-at-any-cost’ mentality and we can get better at managing people and improving our efficiency.”
Robertson put it bluntly when he said people in the cities don’t give a damn about the farming industry – and why would they?
“They are busy getting on with their lives and putting food on their table – we need to forget about trying to get people to love us and just get on with our jobs.”
His top tips for success in dairying:
- Know your WHY – why am I doing this? If you have no joy, then change your attitude or change your job. You need to enjoy what you do!
- Work for people who value and respect you as a person.
- Be yourself – don’t try and live someone else’s dream.
- Think about the journey as much as the destination – don’t sacrifice everything on the altar of work.
- Make sure an opportunity is an opportunity – do your homework.
- Try and find a trusted advisor – no need for a fancy title.
- Look for the steady accumulation of skills and equity – don’t go for the big play or the miracle pass.
- Fight fear and greed.
- Don’t assume – many sharemilkers over the last few years would’ve been way better off if they had stayed on management wages. Don’t assume anything about a contract.
- Check out your potential owner/partner – find out how they react under pressure and listen to what other people say. Check out if they are broke or not.
- Be sceptical of corporate style systems and high production models, of people who use the words “win:win” a lot. Check out the financials of the people you are dealing with – you are dealing with people who have a lot of power – you need to know their position.
- Be realistically positive – I have never seen such good progress in the top 20% of dairy farmers in the last three years, with some farmers making returns of 10% ROC each year. At the other end of the spectrum I have never seen such poor performance among the bottom 20%.
- Be good with staff – the biggest challenge is people – there are different ethnicities, religions, new purpose and goals. “This is the new world, we need to learn to negotiate and be nice – that would go a long way.”
- Work as a team, share power, share profit – and that is tough, the 60-year-olds need to let you share power but they don’t really want to do that.
“All of the soft skills, which traditionally haven’t been important in dairying, now matter big time and many, many dairy farmers struggle with that.”
- Follow people that treat you well, I have found that joy and success generally follow.