Expenditure is being carefully scrutinised in Ross and Jess Bowmar’s farming operation as they hunker down for tougher times.
The young couple farm sheep and beef on their high country station Redcliffs in the Rakaia Gorge.
Balancing economic growth with environmental and social enhancement has its challenges but of more immediate concern are the falling meat prices and subdued wool prices.
Born and raised in Southland, after attending Lincoln University Bowmar headed offshore for further study at Michigan State University in the United States. After graduating he gained experience in direct management of sales, import and export logistics, processing, risk management and profit and loss ownership in various roles across the US, Canada, Australia and New Zealand.
Three years ago he returned to farming Redcliffs, a 1935ha property running 8500 stock units.
With the farm in winter mode at the moment, there’s time to review the cashflow and consider options to counter the falling income.
“We don’t start the lambing until later in September. We have the Merino ewe shearing out of the way with a 10-year rolling NZ Merino Company Icebreaker contract taking a significant amount of the wool clip.
“This contract provides stability in income, which is good news in a year like this.
“We’ve yet to do the hogget shearing. The wool is not contracted and the markets will be back on last year.”
There’s been added emphasis on ensuring wool meets contract specifications this year given the difference to current market prices.
“Shearing is the highlight of the year on a Merino farm.”
How is the rest of the business doing, given the forecast farmgate prices?
“Well, we have to be really careful running calculations across other areas of the farming business,” Bowmar said.
“You can change the business but you can’t necessarily change fast. For example, you can adjust numbers in various stock classes but you could easily swing the wrong way.
“We are dialling back on non-essential expenditure; a lot of the money is going to the bank.
“We are weighing up fertiliser and weed control this year but obviously reducing inputs in those areas is not sustainable long term.
“We have applied for our sustainability loan, which earns an interest rate deduction. A lot of the requirements we have to do for various farm assurance programmes so we may as well have a saving as well.”
Touching on meat schedule prices, Bowmar said: “It’s ugly.”
Many farmers won’t have made any money out of trade lambs this year, and nor have some breeders.
“We are fortunate to have a Silere contract through Alliance, but unfortunately the price is still tied to the meat commodity market so meat income is well down on past years.
“What we need to see is prices heading in the right direction to give us some confidence.”
That requires innovation from the downstream processing companies in the red meat sector to extract more value from every animal and effectively put some viability into the sector.
“Sheep are more work than cattle and people will move to other ventures if we don’t get improvement very soon.
“We really are still a commodity-reliant industry as is shown by the fluctuations in price.
“All of us need to get our thinking caps on as to how to evolve our systems and the industry to at least attempt to be viable.
“While it’s a challenge we would rather not have, I’m sure, like the generations before, we’re up for the challenge.
“You have got to be optimistic, keep enjoying what we are doing, look for opportunities and talk to other farmers.”
He welcomes political polls suggesting a change of government may happen in October.
“This would bring welcome relief to farmers with a greater chance of more pragmatic regulations or potentially even less regulations.
“With most farmers unlikely to pay tax this coming year, the incoming government is going to need to be prudent financial managers with a focus on efficiency and getting more bang for every dollar, just like us farmers.”