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Farming has its challenges

  Apr 18, 2023

Farming has its challenges

It doesn’t seem that long along that we started the farming season with a favourable spring and an early summer that resulted in more grass grown, more silage and baleage put into reserves (ideally for a raining day). However, what followed was hotter days and very little rain, aside from the odd thunderstorm in places, as a result most of Southland and West Otago experienced a dry summer. 


The issue with droughts is they tend to sneak up on us slowly. The feed on farm gradually starts to disappear and farmers need to start making plans to introduce supplement feed or reduce animal numbers. This is nothing new and the majority of farmers manage it well.

However, this season was slightly different and farmers are having another challenge to navigate. The economic environment has changed quickly: We have seen Interest rates jump rapidly from less than 3%p.a to, in some cases, over 8%. A dairy farmer with the industry average debt of $18kgms is now paying an extra 5% interest, that equates to an additional $0.90kgms in interest cost. A sheep and beef farmer with say debt of $400 Stock Unit is paying an extra $20/stock unit in interest. While the bank will say they have prepared and budgeted for this, what they probably haven’t accounted for is rising costs, and a drop in commodity prices falling at the same time. 


You can’t escape the economic conditions, just like you can’t escape adverse weather. So what can you do to best manage them?


Here are a few simple actions you can take to prepare your operations for difficult periods.

  • Know your own numbers. Knowledge is power!
  • Prepare or update your budget, taking into account all factors and forecasts.
  • Talk to your Banker early to ensure you have facilities in place.
  • Talk with your accountant about planning your tax to better reflect your projected income.
  • Don’t make rash decisions—make calculated ones!
  • Have a long term view. History shows that every industry has cycles.


As Accountants and Business mentors, the team at Malloch McClean understand the ups and downs of operating a business through highs and lows. As specialists in the rural sector, our dedicated agri team understands the nature and challenges of farming. We can provide specialised business advice and do it in a way that’s clear and free from accounting jargon—bespoke guidance suited for farmers who want to tackle the financial side of their business equipped with the best tools of that particular trade.


The best way to get through tough times, climate or economy-related, is to plan ahead. To do so effectively, you need the very best information available. Are you prepared? If you’re wanting to have a chat about any of the above or find ways to farm smarter and plan for success, book a chat with us. 

Written by: Blair Evans, CEO & Farm Owner

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